Cambodian goods benefit from the lowest export tariff rates in the world but the Kingdom’s trade is still held back by lengthy bureaucratic procedures and corruption, according to a new study by the World Economic Forum (WEF).
The Global Enabling Trade Report 2016, a study published by the WEF every two years, showed that the Kingdom ranked 98 out of 136 countries surveyed, climbing four spots since the last report. The WEF attributes the better performance to the country’s openness to foreign firms and decreasing tariffs for imports, in addition to very low export tariffs.
“The country faces the lowest average tariff in the world [only 2.2 percent, down from an already low 2.7 percent in 2014] and enjoys a good margin of preference over other countries [13th], granting it the fifth-best foreign market access globally,” the report said.
However, inefficient procedures for trade and high levels of corruption severely limit Cambodia’s trading potential, according to the study. Poor transportation infrastructure also negatively affects trade, with the country ranking 113 in the category.
Jos Stiers, director of Narita Logistics and Services, said the costs of transporting goods within Cambodia to its seaports are a major hindrance to the development of the country’s exporting activity.
“The main problem is bringing goods like agricultural products to the ports at a reasonable price,” he said. “If you have rice in Kampong Thom and you want to send it to a costal port, it can cost thousands of dollars.”
He said the country needs to develop its major transportation routes by providing better quality inland ports for barges as well as improved rail and road infrastructure. “There is a need for well developed waterways, for barges for example, to reduce those costs,” he said. “They [the government] do a lot already but much more needs to happen.”
According to the report, some of the most problematic factors that Cambodia faces for imports are corruption at the border and burdensome procedures. At the same time, the major barriers for exports are inadequate production technology and a lack of skills, often creating difficulties for suppliers to meet quality or quantity requirements of buyers.
“The benefits of improved market access will not accrue unless the country tackles the significant issues it faces in terms of trade facilitation,” it said.
It noted that 132 hours were needed for documentary compliance when importing or exporting goods, while border procedures were inefficient and opaque, resulting in a high level of corruption.
However, Cambodia benefits from its position in ASEAN, according to the report, which claimed the regional market was now more open and accessible than the US or Europe.
“ASEAN members have become more open while enjoying better foreign access, as a result of the region’s steady integration and thanks to a number of trade and investment agreements with its main partners.
At the same time, the current ‘trade fatigue’ in advanced economies is reflected in the lack of progress in trade liberalisation in Europe,” the WEF report said.