More than half the companies in Cambodia are being hampered by nontariff measures (NTMs) when trading goods internationally, with exporters most severely affected, according to a report released Friday by the Geneva-based International Trade Center.
In a survey of 502 randomly selected import and export companies, 69 percent said they faced burdensome NTMs and other obstacles to trade over the course of 2014, says the report, “Cambodia: Company Perspectives – An ITC series on non-tariff measures.”
The report says NTMs were reported by 82 percent of export companies and 55 percent of import companies.
“The rate of affectedness in Cambodia is similar to that experienced in other LDCs [least developed countries]: Malawi (80%), Rwanda (71%) and Madagascar (67%),” it says.
In Cambodia, 89 percent of obstacles were attributed to regulations imposed by destination countries—such as the need for certificates of origin and product certificates—largely affecting companies that export agricultural products, according to the report.
“Many importing countries do not recognize Cambodian product certificates and tests results,” it says.
Companies surveyed said the remaining 11 percent of challenges were due to arduous local requirements.
“Exporters applying for licences and permits require an extensive list of documentations and procedures. This process is time consuming and results in duplication,” the report says. “This leads to higher costs for the companies. Depending upon the product, export licences are valid for a few months or up to a year and must be renewed regularly.”
With Cambodia poised to enter the Asean Economic Community (AEC), which would see the free flow of goods between member countries starting at the end of this year, Jayant Menon, lead economist at the Asian Development Bank’s regional economic integration office in Manila, said nontariff barriers (NTBs) to trade must be closely monitored.
“[T]he issue is not whether [NTMs] are burdensome or not. It is whether they serve to protect vested interest at the expense of consumers,” Mr. Menon wrote in an email.
“With tariffs already low in the ASEAN countries, including Cambodia, NTBs pose the greatest challenge to liberalizing trade and realizing the AEC,” he added, referring to nontariff barriers, protectionist or discriminatory impediments to trade.
“There is still a lot of work to do in reducing red tape and related trade costs that operate as NTBs in Cambodia.”