The Indian ambassador to Cambodia is calling on the government to reduce exorbitant shipping costs and take better advantage of a tariff scheme that India offers, two obstacles that the diplomat says are discouraging bilateral trade.
Ambassador Dinesh Patnaik said on Tuesday that Indian businesses exporting goods to and from Cambodia are paying port fees estimated to be as much as $800 per 20-foot container, compared with $400 in Vietnam.
Consequently, Patnaik described how instead of shipping directly to and from Sihanoukville Autonomous Port, Indian businesses are sending goods to Vietnam’s Ho Chi Minh port and moving them overland.
“Indian businesses are opting to ship bulk to Ho Chi Minh port as their main entry point, then transporting by road to Cambodia,” he said. “Cambodia’s government needs to keep port prices down.”
His second complaint refers to a 2009 duty-free trade agreement under which the Indian government grants Cambodia an 85 per cent reduction on Indian customs fees.
Patnaik said that while major Indian exports of pharmaceutical drugs and raw textiles to Cambodia are growing at a healthy rate, more can be done to publicise the tariff preference deal and boost Cambodian exports to India, namely rubber, palm oil and pepper.
“India provided this duty-free agreement to bolster trade lines, but at the end of the day, all that matters is if Cambodians actually utilise them,” he said.
Despite the dire picture, bilateral trade between the two countries is climbing.
According to the Indian Department of Commerce, volumes (imports and exports) between India and Cambodia increased nearly 17 per cent, from $106 million in the 2011-2012 fiscal year to $124 million in the 2012-2013 period. India’s fiscal year runs from April 1 through March 31.
Cambodia exported more than $11 million in goods to India during the 2012-2013 financial year compared to just $5 million in 2009-2010, when the tariff preferences were first introduced.
Between 2009 and 2013, total bilateral trade between the two countries increased 145 per cent, according to Indian government records. Trade volumes for the current period are expected to be consistent with the year before.
“There is potential for much, much more export business given the concessions,” Patnaik said.
Chan Sophal, spokesman for the Cambodian Economic Association, backed the ambassador’s suggestion that more Cambodian businesses capitalise on trade with India, especially in black pepper.
However he added that access to information remains the biggest barrier for increasing volumes.
“In general, trade with any economy is good, but I would say there is a lack of awareness from Cambodian businesses on the benefits and opportunities in doing business with India,” he said.
“Pepper is a signature commodity for the Kingdom, so this is an obvious trade route, which can and should be exploited.”
Ken Ratha, spokesman for the Ministry of Commerce, said the ministry has held numerous talks with exporters and embassies, including India’s, regarding shipping and port fees, and said that a revision of the cost structure is currently under way.
“We are aware of exporters transporting goods to other countries for shipment, and we are still in the process of finding the best solution to bring Cambodia’s shipping fees down, as well as establishing better transportation means to and from the ports,” he said.
Representatives from Sihanoukville Autonomous Port could not be reached for comment yesterday.