Prime Minister Hun Sen recently unveiled a new campaign to boost economic independence and reduce the reliance on preferential trade statuses offered by advanced countries, saying the government will provide better trade facilitation and eliminate unnecessary procedures.
At a dinner with 5,000 Cambodian journalists on Friday, Hun Sen revealed a series of trade facilitations and announced a plan to relieve Camcontrol from its inspection duties at border checkpoints to reduce the burden for businesses.
Camcontrol is the Ministry of Commerce’s Cambodia Import-Export Inspection and Fraud Repression Directorate-General.
He said the custom clearance procedures will be reduced and informal charges will be barred. He said the fee for container goods scanning will be reduced in order to reduce the cost for traders.
“[We will] open a campaign to strengthen Cambodia’s independence in which some [decisions] will help our businesses and allow Cambodia to survive despite the absence of preferential trade treatment."
“I decided just now that along border check points, government institutions are no longer needed aside from immigration police and customs for export and import goods. Only these two are allowed and everything else will need to be removed – even Camcontrol,” he said.
Hun Sen did not disclose when the new decision will come into force. The EU and US are the Kingdom’s main markets.
The EU warned the Kingdom in October that it would lose its Everything But Arms initiative to the world’s largest trading bloc, in a punitive response to the Kingdom’s alleged move away from democracy.
Two US senators on Wednesday introduced the Cambodian Trade Act of 2019 bill, requiring the administration to re-examine the Kingdom’s eligibility to access the preferential trade treatment granted by the US under the General System of Preferences.
Centre for Policy Studies director Chan Sophal said on Sunday that reducing barriers and costs at the border will help exporters reduce trading costs and time. In addition to formal fees, he said the reduction needs to be extended to informal fees.
“The move will help improve Cambodia’s competitiveness, but I don’t think it is sufficient to compensate for the loss of trade preferential status if it’s removed. In order to be a full-fledged competitor, Cambodia needs to further reduce the cost of doing business at each step – from starting a business to getting quality and low tariff electricity and to [obtaining] quality legal and judicial services,” Sophal said.
He said Cambodia is not endowed with many natural conditions for efficient logistics connecting to its seaports and thus, the business environment has to compensate for it.
The Garment Manufacturers Association in Cambodia (GMAC) told The Post on Sunday that the new government decision is a good initiative as it will facilitate trade and lower the costs of doing business.
He said that reducing customs clearance procedures to boost business competitiveness is something private sectors have been working constructively with the government through various mechanisms such as the Government-Private Sector Forum.
According to GMAC, there are two main inspections entities from the government when it comes to the Kingdom’s apparel sector – customs and Camcontrol officials.
“We always pay fees for goods inspection by customs and Camcontrol, so the decision to remove Camcontrol from [goods inspection] procedures will help to reduce our costs,” it said.
The GMAC said that Camcontrol inspection fees were higher than custom inspection charges, and are set at 250,000 riel ($62.50) for the first container – with decreasing fees for second and third containers, while customs charges are 60,000 riel per container.
“The fee charged for Camcontrol inspection has been part of our cost burden and it makes the cost of documentation in our country higher compared to other countries."
“More reforms will reduce our production cost and if our labour productivity keeps increasing, our industry will survive in any tough situation [such as the withdrawal of the preferential agreement],” the GMAC said.
Keo Mom, the CEO of Ly Ly Food Industry Co Ltd, which exports to 11 countries, said on Sunday that the government should only relieve Camcontrol of its inspection duties for export goods and it should retain Camcontrol’s quality inspections for imports.
“If the government removes the inspection procedures for only exports, it will encourage local production to strengthen export potential. But, if we reduce the inspection procedures for import goods too, it will seriously affect us as the flow of low quality and expired goods to our country might increase and affect people’s health."
“Neighbouring countries require our products to go through a lot of inspection procedures. So, if we remove inspection duty for imports, we are going to lose an advantage and this will affect local production,” she said.