The factory owner’s shipment was stalled again. An official on the border was asking him to redo his export permit because of “mistakes” in the text.
The factory owner knew that redoing the form would entail paying another fee, but he had no choice. His buyers were waiting for their orders to be fulfilled and further delays would endanger the credibility of his business.
He paid the fee, his exports were cleared and he won the respect and endorsement of an important client. That was three years ago, when the factory owner’s firm was the new kid on the block struggling to make a name for itself as one of the few European garment manufacturers in Cambodia.
Today border checkpoints in Cambodia are automated and red tape has been cut. It takes less time and money to move goods to markets.
This cost in time and money is measured by The World Bank Group Logistics Performance Index (LPI). Cambodia’s LPI ranking has risen spectacularly by 46 places, to 83rd out of 160 countries, up from 129th four years ago.
The time to clear customs fell from 5.9 days in 2010 to only 1.4 days in 2014. The share of consignments selected for inspection has fallen from 29 per cent in 2010 to 17 per cent in 2014, suggesting that customs’ efforts to improve risk management are paying off.
Good logistics allow farmers and manufacturers to move their goods to markets efficiently, reduce challenges to exporters supplying overseas customers and allow Cambodia’s exporters to integrate more successfully into regional production networks.
Cambodia is an export-driven economy, and more exports mean higher growth and income, more jobs, less poverty, better livelihoods and shared prosperity for the Cambodian people.
How has Cambodia achieved this impressive turnaround? The key has been significant reforms to facilitating trade.
With the help of World Bank assistance and the EU-financed Trade Development Support Program trust fund, it has automated and streamlined many import/export customs procedures to comply with international standards.
Continued improvements in logistics will pay off as Cambodia moves into full participation in the ASEAN Economic Community (AEC) 2015. Cambodia’s AEC commitments include cross-border trade agreements that facilitate the movement of goods and the automation of border arrangements.