Export barriers must go down, experts say

via Khmer NZ

Wednesday, 25 August 2010 15:00 May Kunmakara

CAMBODIA’S exporters still face barriers that reduce shipments of its goods abroad – particularly its poor infrastructure and high costs of transportation, experts say.

Domestic imports have increased faster than exports, widening the Kingdom’s trade deficit to nearly US$800 million over the first seven months of the year, according to Ministry of Commerce statistics obtained earlier this week.

Bretton Sciaroni, partner at Cambodian law firm Sciaroni and Associates, said he was not surprised that statistics showed exports were increasing, but highlighted several barriers to further growth in exports.

“One significant reason that we do not export more is the high costs associated with transportation in Cambodia,” he said Monday. “It is not inexpensive to ship goods out of Cambodia.”

The International Monetary Fund’s managing director, Dominique Strauss-Kahn, last month highlighted Cambodia’s exporting industries as an area that required improvement by the government.

Speaking to reporters at a conference in South Korea, he said the Cambodia was “still in a difficult situation”, as its economy relied on development aid.

“What Cambodia has to do is strengthen its infrastructure – this is of the highest importance,” he said.

Cambodia imported $2.613 billion in the first seven months this year, while exports totalled $1.826 billion during the period, resulting in a $787 million trade deficit from January to July. The domestic trade deficit stood at $595 million during the same period last year, Ministry of Commerce statistics showed.

However, both exports and imports have grown year on year, according to the statistics. The trade deficit has grown as imports outpaced exports by 20 percent and 16 percent respectively during the first seven months compared to the same period last year.

Ministry of Commerce Statistics Department Director Kong Putheara said that addressing deficient infrastructure and high transportation costs would make it easier to export products from Cambodia, but that relying on government action alone would not solve the problem.

“I recognise these issues, but the Ministry of Commerce alone cannot solve them. We need cooperation from concerned institutions and local exporters too,” he said.

High electricity prices and a lack of rail connections constituted export barriers, but the Kingdom was addressing these issues through discussions with its ASEAN neighbours, he said.

Cambodia is not alone among ASEAN nations in its widening deficit.

One of the biggest deficit increases in the region has been in Vietnam, whose deficit almost doubled for the seven months to July 31 compared to the same period in 2009.

Its currency has subsequently hit hit record lows as it sought to boost exports by devaluing the dong.