Customs authorities should work quickly to adopt an envisioned online registration system for cross-border cargo shipments that would expedite delivery and cut out pesky middlemen who tack on unofficial fees, Transport Minister Sun Chanthol said yesterday.
“Online registration is important because right now for the trucks crossing the border [everything is] done manually,” he said. “Eventually this will be shifted online so that shipments crossing from Vietnam, Laos and Thailand can cross easily.”
The minister’s comments came during a workshop for the development of a National Logistics Council, a program spearheaded by the Ministry of Public Works and Transport (MPWT) and given the greenlight by Prime Minister Hun Sen that seeks to create a coordinated plan for lowering the Kingdom’s high logistics costs.
Chanthol said the government’s plan to implement an online customs registration, along with other online initiatives for vehicle registration and driver’s licence applications, aimed at boosting the Kingdom’s low ranking on the World Bank’s Logistics Performance Index (LPI).
Cambodia’s overall LPI ranking improved from 83 to 73 from 2014 to 2016 on improved timeliness and ease of exports. However, scores for infrastructure and customs environment fell over the course of two years.
Chanthol is looking to lift Cambodia’s rankings.
“We have reformed the ministry to make it better because we are not happy with our score and need to improve on the World Bank’s index,” he said. “Logistics is still more expensive in Cambodia compared to our neighbouring countries.”
Speaking to the Post, he said that if adopted, an online strategy for cross-border trade would reduce the unofficial fees that companies operating in Cambodia’s logistics sector have continually claimed are hampering competitiveness and delaying shipments.
“We need to provide the sector with an efficient structure,” he said. “Online registration would cut down and reduce unofficial payments caused by middlemen at the borders.”
Sin Chanthy, president of the Cambodia Freight Forwarders Association (CamFFA), said any measure that cut out these troublesome middlemen would be a welcomed step.
“Cambodia’s high [logistics] costs will continue to be a problem until unofficial fees and informal payments are wiped out,” he said. “The problem with unofficial fees means that we can’t fully register our costs with the tax department when asking for a rebate.”
He added that compliant companies were already subject to 20 percent profit tax and unofficial payments continue to “eat into our profits”.
Pha Eng Veng, director of technical department at the General Department of Customs and Excise, said that while online customs registration would help, it would be difficult to adopt such a system until the government passes its long-awaited e-commerce law.
“Until we have an e-commerce law that can facilitate payments and handle electronic documents, customs officials will stay have face-to-face problems,” he said.
Nevertheless, he said that the customs department was developing a separate online pre-arrival customs clearance system and continually updating its procedures and informing border-control agents of new regulations.
While he said online registration had its advantages, the current basic system the department employs is rarely used by customs brokers, and officials must still inspect individual inventories crossing the border.
Ruth Banomyong, an associate professor at Thammasat Business School in Thailand and a consultant hired by the World Bank to help Cambodia develop its National Logistics Council, said that an online customs clearance initiative was “just one piece of the puzzle” in solving Cambodia’s high cost for logistics.
“Cambodia needs to create a comprehensive strategy that takes into account all aspects of logistics,” he said. “Currently what we see is that the import process is not the same as the export process, which is relatively easy.”
Banomyong said companies operating in the time-sensitive logistics sector are often pressured into paying bribes to avoid delays.
“Logistics companies need baseline reliability because they make promises to clients,” he said. “It is not good to have things held by the customs department for two to five days when you can pay a large amount in unofficial payments to get it across the border in a couple of hours.”
While he believed that developing a comprehensive strategy was greatly needed for Cambodia to remain competitive, and that various countries in ASEAN have developed government-led plans with mixed results, Cambodia appeared to be approaching a strategy undertaken from the institutional side.
“What is interesting is that Vietnam has focused on developing a national logistics master plan while here they are coming from the institutional side first like Thailand did,” he said. “But really these things should operate hand-in-hand.”
Massimiliano Cali, World Bank’s senior economist for Indonesia, said experiences in other countries have shown that to be effective, Cambodia will need a comprehensive logistics strategy backed by the full weight of the law.
“In Indonesia, a plan was enforced with limited resources and port operators were unwilling to give up their monopoly,” he said. “So any plan needs to have enough power to tackle vested interests that typically resist reforms.”