High Costs Cripple Trading Firms, Report Says

Import and export companies in Cambodia believe that high costs stemming from burdensome bureaucracy and poor infrastructure are putting them at a disadvantage compared to other firms transporting goods in the region, according to a recently released report by the Asian Development Bank.

“Firms noted that customs procedures were a constraint on the timely delivery of input supplies, adding to the costs and forcing the firms to use local supplies, and thereby affecting the overall quality of the final product,” states the report, Greater Mekong Subregion Power Trade and Interconnection.

Surveying 39 export companies from the garment, food and timber industries, the report concludes that businesses in Cambodia feel that the amount of paperwork and clearances needed before goods can leave the country is still too much. Companies are also unhappy with the high costs associated with transportation companies as well as the outdated trucking fleets that exist.

Transportation costs are more than double that of other regional countries, according to the report. Trucking costs in Cambodia are $10 to $15 per ton per 100 km of distance covered, compared with just $4 per ton in Thailand and $7.50 in Vietnam, the report says.

“Restrictions on foreign-owned trucking companies operating in-country provide a relatively protected domestic environment for transport service providers to operate in,” the report states. The report goes on to say that taxes on goods coming into the country are often too high.

“If the costs of importing become too high to compete and export, and production inputs are restricted to those available in Cambodia, the production of certain goods can stop altogether,” the report states.

Despite the concerns, the value of exports from Cambodia increased 11.8 percent to $2.9 billion in the first seven months of the year compared to the same period in 2011. However, more than 80 percent of those exports were comprised of garments.

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