Despite improving cross-border trading procedures, Cambodia still slipped in the worldwide annual Doing Business report, leading business people to acknowledge progress but say more still needs to be done.
Doing Business 2011, which was released earlier this week by the World Bank, uses nine categories to determine the “ease of doing business” in 183 nations. Cambodia ranked 147, two spots below where it stood in the 2010 edition.
Huot Chea, World Bank country economist, attributed Cambodia’s drop in ranking to other countries’ “accelerating their reforms” even though Cambodia had improved in the cross-border trading category.
The report noted that Cambodia had streamlined some import and export procedures by reducing paperwork and shorting the time it takes a company to ship a product. It highlighted the elimination of pre-shipping inspections on exports, which mainly applies to garments, and a reduction in paperwork, down from 11 documents last year to 10 this year.
“Improvements in export procedures are necessary for the government to achieve its goal of exporting more agricultural products, particularly rice, where it targets to export 1 million tons by 2015,” Julia Brickell, resident representative of the Bank’s International Finance Corporation, said in a statement.
Despite the reform–the only one the country was credited with in the past two reports–Cambodia ranked 118 out of 183 nations in the “trading across borders” category, in which it placed 127 last year. Cambodia also reduced the amount of time it takes to import goods, from 30 days last year to 26 in this year’s report.
Ken Loo, secretary-general of the Garment Manufacturers’ Association in Cambodia, said trade between Asean members “should be paperless” and shipping costs should be reduced, calling Sihanoukville Autonomous Port one of the most expensive in the region.
According to the report, the cost per shipping container for export was $732 in Cambodia, compared with $625 in Thailand and $555 in Vietnam. He also noted higher costs associated with Cambodia’s terminal handling charge and the lift-on-lift-off fee.
“In general, the costs need to come down,” Mr Loo said.
A Commerce Ministry official who requested anonymity because he was not authorized to speak to the media said Cambodia was working on reducing paperwork.
The official said Cambodia was aiming to join Asean’s Single Window pilot program in 2012, which aims to put all import and export documents in one location, something he said should reduce the amount of time it takes to move goods in and out.
The official said the government-private sector forum, which brings high-ranking government officials and business people together, is an avenue that can be used to reduce costs.
Other categories considered in the report were starting a business (Cambodia was 170), dealing with construction permits (146), registering property (117), getting credit (89), protecting investors (74), paying taxes (57), enforcing contracts (142) and closing a business (183).
Regionally, Cambodia ranked lower than almost all its neighbors in terms of ease of doing business: Thailand (19), Malaysia (21), Vietnam (78) and Indonesia (121). Singapore topped the list of 183 nations, while Laos was 171.
John Brinsden, vice chairman of Acleda Bank, said Cambodia’s low rank was undeserved.
He citied unclear regulations, the lack of a stock exchange to raise capital and reduced long-term loans as hindrances to developing businesses in Cambodia, but he said access to government officials and the strengthening of the banking sector made up for the shortcomings,
“It is relatively easy to talk to people in government and thrash things through even when regulations are not clear,” he said.
Mr Brinsden said Cambodia’s banks were beginning to regain confidence in making long-term loans following the aftershock of the recent global financial crisis.