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Logo of Phnom Penh Post newspaper Phnom Penh Post - Customs responds slowly to PM's order

Customs responds slowly to PM's order

Just a month after Prime Minister Hun Sen called for reform in Cambodia's notoriously

corrupt Customs Department, the agency has taken small steps to streamline import

and export processing.

But private sector members and trade experts say trade facilitation in Cambodia is

still far from meeting international standards.

"It's nothing big at this moment, just small steps," said Ken Loo, secretary

general of the Garment Manufacturers Association in Cambodia. "We'll have to

wait and see what happens."

In a speech given August 20 at the seventh Government-Private Sector Forum, Hun Sen

described trade facilitation as a "top priority and urgent matter," highlighting

the importance of changing current customs procedures.

The country cannot progress economically, he said, without promoting trade through

"rationalizing government agencies that impose high costs and delays on private

sector ... particularly the Customs and Excise Department."

As part of the streamlining effort, Hun Sen ordered that Customs and CAMcontrol begin

joint inspections as of September 1, and that agencies associated with imports/exports

take action to reduce paperwork, costs and the number of inspections.

Such changes are necessary for Customs, a department considered one of the most corrupt

in Cambodia. In a 2004 investment climate survey commissioned by the World Bank Group,

Cambodian firms identified corruption as the leading constraint to the country's

economic growth, with Customs and the judiciary viewed the most negatively in terms

of agency integrity.

"Import and export processing, involving a multiplicity of steps, introduce

substantial delays, uncertainty and discretion into the process of trading goods,"

the report said. "On average, firms report imports take 6.5 days to clear customs,

while exports take 4.5 days."

But, business owners say that time can vary greatly depending on how much you're

willing to pay.

"The more you pay, the faster you get it," Loo said.

This hurts Cambodia's economic competitiveness.

"The buyers in the United States and Europe want the process to be as fast as

possible," said Preben Andersen, country manager for MCC Transport-Maersk (Cambodia)

Ltd., which contracts with a third party for shipping. "You can't be standing

around waiting for documentation between the order and selling - it might mean missing

the Christmas sale, or spring opening."

All of the unofficial costs associated with trade also weaken Cambodian businesses.

"The competitiveness of Cambodia compared to the time it takes other countries

to process shipping is still not good," Andersen said. "Without lowered

costs, the country will find it difficult to thrive in international markets."

But changing an entrenched system of fees and paperwork isn't easy.

"Customs wants an extra $200 because of a documentation problem, or goods weren't

reported correctly - they find all kinds of ways to get money out of you," said

one factory owner, who asked not to be named. "Buyers in America don't want

to know about these problems. The attitude is, '*&?# the Customs chief if you

have to, but get the stuff to my store on time.' "

So far, experiences with importing and exporting since September 1 have been mixed.

Business owners report that one measure has definitely been implemented: joint inspections

done by Customs and CAMcontrol. Previously, the two agencies were performing mostly

redundant tasks. Now, they have shortened the process and cut down some on paperwork

involved.

While many in the private sector welcomed this change, an expert who has been advising

Customs for the last year said it is only the beginning of reform efforts. He spoke

with the Post on the condition of anonymity.

Last month this expert submitted a list of recommended changes to the Customs department,

strongly suggesting the elimination of superfluous agencies currently involved in

the inspections process. Such agencies - with more related to export than import

- collect fees independently.

"This kind of inspection by other agencies is not done in other countries around

the world, only in Cambodia," the expert said. "Customs does its checks,

then everyone else wants to check too and the importer is informed it's all Customs."

He advised that staffers employed by such agencies be retrained to create new departments

promoting Cambodian trade. He has not yet received a response from Customs.

"Joint inspections is a first step," he said. "We want to move to

the second step."

Aside from the Customs-CAMcontrol collaboration, firms have reported few changes.

This may partly be due to the fact that many businesses use a third party to handle

import/export issues, and it's never clear how much money they're taking off the

top.

"They want money to grease the wheel," said a factory owner. "My middle

man will spin a story to tell me why it's like this and probably 90 percent is untrue."

The somewhat sluggish rate of change may also be due to kinks in implementation.

"Top officials I speak to are very supportive of change and reform," Loo

said. "But it's only been a month, and it's difficult to say whether this sentiment

has trickled down to staff on the ground."

Some business owners claim that size and clout make a difference: Big companies can

use their power as leverage, while small and medium-sized firms are still suffering.

Despite these discrepancies, those who work for companies of all sizes said they

are optimistic. Changes are small, but there have been changes, and in Cambodia that's

something.

"Differences have not yet been fully felt in the industry," said Roger

Tan, second vice-chairman of GMAC. "But I'm hopeful. We wouldn't be fighting

so hard for change if we weren't hopeful."

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