The Royal Government of Cambodia considers the integration of the country's economy into
the regional and world economies as not only a necessity for its sustained growth but as
part of the irresistible worldwide process of globalization. The Government took already a
series of reform measures with a view to ensure the full-scale economic and social
development of the country in the interest of its people.
Trade liberalization has resulted in expanded transactions with the convertible zone.
Until 1987, all foreign trade was under state monopoly and most transactions governed by
annual protocols with Council for Mutual Economic Assistance (CMEA) countries. Starting in
1988, private companies were gradually allowed to operate in foreign trade. The expansion
of trade with the Western world was further supported when, the port of Kompong Som was
opened up to international shipping and the coastal provinces of Koh Kong and Kampot were
authorized to trade independently with Thailand and Singapore. In addition, owing to its
low customs duties and weak enforcement, Phnom Penh has become a hub of sorts for transit
trade in the region, especially with Viet Nam. In the first six months of 1995, 18
companies investing in Cambodia have exported locally- manufactured goods worth US$
7,097,354 to 15 countries, according to the report of the General System of Preference
under the Ministry of Commerce. Of that figure, the report said, $1,410,515 worth of goods
have been exported over the period of June with an increase of $87,569 compared to May.
The countries involved included France, England, Germany, Belgium, the Netherlands,
Switzerland, Australia, Denmark, Norway and the US.
The principal recorded exports are rubber latex and timber; other registered agricultural
exports include maize, soybean and mungbean, sesame, and pepper. A small amount of kapok
was shipped each year to the Soviet Union before the recent collapse of the earlier trade
agreements. Again, unquantifiable amounts of rice, fruit, and vegetables are also known to
cross the border, particularly into Viet Nam and food-deficit areas in northeast Thailand.
Sales of vehicle tires are the only significant recorded industrial export, but there are
reports of a contraband trade in cigarettes and alcohol. Exports of stamps also bring in a
small but regular amount of foreign exchange.
Extensive unrecorded logging activities and gem sales are widely considered to have
occurred. A recent study by the Thailand Development Research Institute provides clear
evidence of the "illegal" sale of sawn logs from Cambodia to Thailand. Similar
sales of lumber are being made to Viet Nam, where a construction boom is under way and
outlet routes to external markets are probably closer, as well as -easier and safer. Cut
and uncut precious stones are also finding their way onto the Bangkok gem market. These
two activities are important foreign exchange earners, but it is not clear that the
benefits have accrued to the civilian economy.
Cambodia's main imports up to the time of the end of the spedal arrangements with that
Soviet Union predominantly comprised capital goods and raw materials, in particular
machinery ant equipment, heavy vehicles, oil, fuel, and yarn and cotton fabrics,, the last
generally intended for further domestic processing. Consumer goods hardly figured at ALL
in this trade, and cheap household ware (made of metal and porcelain) and simple consumer
products were imported from China, But the last two years have seen a huge influx of
personal transport equipment,. especially Japanese motorcycle, as well as other Japanese
consumer durables, such as cameras, stereophonic goods, television sets, fans, and
air-conditioners.
Substantial progress toward a liberal import regime had already been made before the
beginning of 1994. Most non-tariff barriers and import licenses had been eliminated. With
regard to tariffs and import duties (which ranged from 3 to 100 percent and were applied
within 10 rate categories) , the structure had already been simplified in 1993 to a
four-band system, with rates narrowed to a range of 7 to 50 percent. However, more steps
were still needed to liberalize trade. As a result of measures taken in the course of
1994, the following situation applies:
(i) the import license system has been abolished, with the exception of fire arms and
pharmaceutical products;
(ii) quantitative import restrictions have now all been eliminated;
(iii) export licenses are no longer required, except for logs, sawn timber, precious
metals and stones, and antiquities; and
(iv) the following items are exempt from import
The Government has announced that it will end the ban on rice exports in November 1995.
and drop the duties for school materials and equipment, pharmaceutical products, sporting
goods, and agricultural equipment and inputs. In addition, in its recently adopted
investment law, the Government eliminated foreign exchange restrictions applying to
investors in Cambodia.
INSTITUTIONAL DEVELOPMENT
Institution-building efforts, in the short- term,, will concern the Ministry of Commerce,
in particular its Directorates of Foreign Trade and of Domestic Trade.
Producers-exporters' associations per product group will be created. These associations
are expected to facilitate the administrations' and other official or professional
entities' relations and communications with those producers producing for export in
matters relating to quality specifications and quality control, or market information.
These associations will have to closely co-operate with the Chambers of Commerce (one of
them - the Phnom Penh Chamber of Commerce - has been elected since October 1995),
divisions of which will serve as exporters' and importers' professional bodies,
representing their interests and functioning in the same manner as the
producers-exporters' associations.
Finally, the capacity-building for institutions responsible for multilateral and bilateral
trade negotiations - the Ministry of Commerce, the Directorate of International
Co-operation in the Ministry of Foreign Affairs and International Co-operation, and the
Directorate of Economic Co-operation in the Ministry of Planning - will be served by
specialized training courses in trade negotiating techniques.
At medium-term, a Cambodian Center for the Promotion of Foreign Trade (CAMBPROM) will be
created to carry out all actions and operationalize all commercial strategies decided upon
by the Ministry of Commerce. This organism should be autonomous, and should become a
self-financing institution charging users of its services to cover its costs without
making any profits; nevertheless, during its start-up activities and its first years of
existence, it should receive a fairly large- scale technical assistance from international
institutions.
DEVELOPMENT OF FOREIGN TRADE
The actions to be undertaken in the short- term, carried out by the Ministry of Commerce
will consist of export potential (per product or product group) and market research
studies (per product or product group a s well and on selected markets), the latter also
serving import rationalization efforts by comparing conditions of procurement from various
sources. These studies will also include efforts to reduce bureaucratic hurdles
obstructing export development. Another sphere of immediate action should be in the field
of acquisition and channelling to the interested parties of badly needed, because at
present unavailable, market- and trade information. The Ministry of Commerce will start an
essential information collection and dissemination activity, acquiring, for example,
regular information on the world prices of the country's major export or import products
and on other market indicators through subscription to specialized services (the
ITC/UNCTAD/GATT in Geneva can supply some of this information free) or to catalogues and
other published sources. This information should be disseminated to producers and trading
enterprises directly or through their professional associations. The Ministry has already,
started to build up a Documentation Center open to businessmen and scholars.
Among the actions at medium-term, it is necessary to mention as examples a product
adaptation programme as soon as the first export potential and market research studies
were completed, followed by a further move, conditioned by the progress of the
rehabilitation and reconstruction programme and, especially, by the renascent industrial
structure of the country, the creation of new export products.
ROUTES FOR INTERNATIONAL TRADE
Except for the traffic via the ports of Phnom Penh and Sihanoukville, there are no
official statistics of the trade volumes in tonnes. More informal exports and imports,
crossing the borders outside the official customs posts, are not included but could be
substantial (the illegal timber export during 1992 was estimated at the order of 770,000
tonnes).
Most of the traffic by far in both of the two main ports is from or to Singapore,
including traffic from more remote ports and transhipped in Singapore. Most of the
official trade with Thailand is divided between Road 5 and the port of Koh Kong. Official
trade with Vietnam has decreased substantially in recent years. Much of the traffic along
the Bassac River and Roads 2, 21 and 78, for example, is local between adjacent provinces
in the two countries. the volume of transit traffic through Cambodia is insignificant at
present.
GENERAL CARGO AND BULK TRAFFIC
Some 90% of the international traffic using Phnom Penh port is trade with Singapore,
Thailand or Indonesia. This traffic has the alternative of using Sihanoukville (or Koh
Kong). The Mekong route adds about 450 km to the shipping distance compared with
Sihanoukville. Coupled with the need to drop anchor at night, as there are no lights to
help night navigaion, the round trip takes about six days longer than a round trip to
Sihanoukville. Nevertheless, Phnom Penh is often preferred to Sihanoukville because it is
close to the customer. For example, less-than-container- load traffic arriving in
Sihanoukville has to be stored until the consignee in Phnom Penh can arrange customs
clearance. After clearance, it has to be staffed into containers for security on. the road
journey to Phnom Penh. It is much easier for the consignee to clear and collect his goods
in Phnom Penh. The total price paid for shipping from Singapore to Phnom Penh, including
transhipment and the road joumey on the Sihanoukville route, is broadly the same on the
two routes.
POL (PETROL, OIL AND LUBRICANTS)
Most oil is now imported via Phnom Penh and stored at two main sites along the River Tonle
Sap or via Sihanoukville, while the storage area belongs to the “Compagnie Kampuchea
des Carburants” (CKC) - a state-owned company under the Ministry of Commerce. These
arrangements dates from 1980s when CKC had a monopoly of the national oil import
(CKC’s current market share is only about 25%). In practice, CKC is now managing the
facilities, some of which are being let out to Shell. While Shell and CKC may combine to
improve the jetty, this would only be designed for their own traffic. In the very near
future CKC is going to be privatized and would form a joint venture with a private local
oil company - Sokimex - while other foreign oil companies such as Shell, Total, Petronas,
Caltex, etc. would be competing for a place in the market on a same footing.
CONTAINERS
World-wide, containers are increasingly carried in specialised ships designed for quick
turn-round. Such ships operate liner services to Sihanoukville but not to Phnom Penh. Even
after the planned improvements, the capacity of Phnom Penh port for container handling
will only be half that of Sihanoukville today. Sihanoukville is thus likely to retain its
dominance for container traffic.
KOH KONG PORT
The main other international port is Koh Kong. This port could grow in importance as trade
with Thailand and Malaysia increases despite the fact that it does not have the status of
an international port. On the other hand, however, some of the Thai traffic may divert to
Roads 5 or 48 in the future. Road 48 is impassable at present., but if rebuilt with a
ferry at Koh Kong, the Bangkok-Phnom Penh distance would be some 720 km (compared with 682
km via Road 5). Trade with south- Eastern Thailand would be generated. Some of the sea
trade might switch to road, but Malaysia and Singapore traffic would not be affected
except that it might use Koh Kong town port and Road 48 rather than proceeding to Sre
Ambel by sea. This might require expansion of the town port.
PROPOSED DRY PORT
The bulk of Cambodia's general cargo imports, including most of the -containers,, are
coming, through Sihanoukville, but with Phnom Penh as the ultimate destination. This
presents a problem as the original documents have to be produced at the port, and any
customs dues paid, before the goods can be released. Transport has to be organised to
Phnom Penh. If through bills of lading could be organised by the shipping companies, so
that goods could be sent CIF Phnom Penh, this would reduce the need for Unnecessary
joumeys and allow for more speedy delivery. There would also be advantages for
Sihanoukville port, as goods could be more swifly despatched and through put increased.
Many of these problems would be facilitated with the establishment of an inland clearance
depot (dry port') in the Phnom Penh area. On receipt in Sihanoukville, the containers
could immediately be forwarded by road or rail for clearance and delivery in Phnom Penh.
The dry port facilities would include road and rail access' handling and storage
facilities, customs facilities, etc., and could also be extended to cleal with other goods
than containers. As this is being writen, Government has just signed an agreement with a
private, Singapore based company for the construction and operation of such a dry port.