Cambodia could benefit more from trade in the Greater Mekong Subregion (GMS) by implementing time and cost, cutting measures and removing constraints on exports, according to a new book by the Asian Development Bank.
“Cambodia’s exporters are well-positioned within the GMS to grow and expand,” Peter Brimble, senior country economist and author of one of the book chapters, said in a news release.
“Policy adjustments can help reduce cost and transport times, making Cambodian exporters more competitive and enhancing their credibility.”
During a media briefing yesterday, Brimble said logistics costs in Cambodia were high compared to other countries in the region. Using the GMS Southern Economic Corridor, which links Bangkok, Phnom Penh and Ho Chi Minh City, as a case study, he identified factors contributing to higher costs and delays in cross border trade.
According to the news release, transport costs in Cambodia are US$9 per tonne per 100 kilometre from Bangkok to Phnom Penh and $13 per tonne per 100 kilometres from Phnom Penh to Ho Chi Minh City, compared to $6 in Thailand and $7 in Vietnam.
With $19 to $20 per tonne per 100 kilometres, logistics costs for the Cambodian section are almost double the costs for the Thai and Vietnamese sections.
To overcome trade constraints, the book recommends nine policy measures, prioritizing an increase in the availability of information about agreements, laws, rules and regulations; minimizing checkpoints along the corridor and expediting issuance of certificates of origin.
“If certain improvements are made, we can cut the costs and time down significantly in Cambodia,” Brimble said during the briefing.
The book, jointly produced by AusAID, also looks at export constraints in Cambodia’s private sector, covering garments, rice and wood exporters.
Based on interviews with enterprises and export companies in the private sector, the book identifies a lack of reliable energy supply, shortages of labour with sector-specific skills, financing limitations and government regulations among the challenges.
“If you get trade and logistics right in countries, it not only allows the Cambodian private sector to grow and flourish but also allows for foreign direct investment,” said Gordon Peters, manager at Emerging Markets Consulting and author of one of the chapters.
The book says despite export growth, Cambodia’s share in the total 2009 trade share of the GMS5, excluding China, accounted only 2.2 per cent.
To contact the reporter on this story: Anne Renzenbrink at [email protected]