If high costs for transport and customs are hurting many of Cambodia’s export sectors, it is killing the rice farmers, a Ministry of Commerce official says.
Bad roads, illegal checkpoints, and mysterious fees at customs and ports drive up the cost of doing business in Cambodia. But with rice, the profit margin is so low, it frightens foreign buyers away, said Sok Siphana, secretary of state for the Ministry of Commerce.
Without specifying which groups were involved in collecting the fees, he called on “everybody along the line” to stop taking money.
“These farmers are getting poorer and poorer,” he said. So “reduce your take…help them survive.”
Last June, a group of rice executives paid a visit to Cambodia to see if it were possible to buy rice. They spoke to farmers, middlemen, millers, other companies and officials. In the end, they decided they could not buy from Cambodia.
“The problem was that the Cambodian prices quoted were too far off the competition,” Cheang Kok Yun, an official of Singapore Trade Development Board, reported after the visit.
By the time traders bought Cambodian rice, transported it and shipped it, Cheang wrote in his report, the cost of buying a single 6.1-meter container of 22 tons of rice was $900 more than the price in Vietnam.
Most of the costs came from unofficial customs and port charges, but also included the high cost of transport on bad roads with illegal checkpoints.
For example, the cost for a 6.1-meter container to clear customs is $280, according to the report. The cost in Vietnam is zero. A “customs permit” in Cambodia costs $300. In Vietnam it costs $2.41. Port and container charges were more than twice those of Vietnam.
Recent reports from both the Japanese International Cooperation Agency and the Cambodian Development Resource Institute both cited illegal fees as harmful to Cambodia’s rice export industry.
“With police and army heading the list, government officials collect illegal fees from the private sector,” according to a JICA report.
The JICA report singles out illegalities in road fee collection, including inside Phnom Penh and Sihanoukville, customs clearance and other exporting procedures.
The Singaporean rice traders found that prices quoted by farmers due to the above conditions were about $80 higher per ton than prices quoted in Vietnam, according to the trade development report.
In its first annual economic review of the country this year, CDRI listed nine separate “expenses without proper receipts” that were driving up the cost of rice. It also said a government requirement for export licenses was increasing those fees for small rice traders and middlemen.
“The quality of the rice is good; that is clear,” Sok Siphana said. But all the officials taking bribes “from the farm to the deep sea port” threatened to devastate Cambodia’s rice-based economy.
He called on them to “lower [unofficial] processing fees or waive the [unofficial] fees for rice export.”
“If the price exceeds the price of Thailand or Vietnam, no one will make a dollar,” he said. “We should think about national survival.”