News

• 13 April, 2023
• Posted by: EuroCham Cambodia

This week, we sat down with Bunthan Suy, DHL Operations Manager and Chairman of the Transport and Logistics Committee, to discuss ongoing conversations on the topic with the government and the status of the industry. Mr. Suy has been working in the sector for almost 20 years and has long been involved with public-private sector dialogues on infrastructure and transport with the government.

EuroCham: Could you tell us a little bit about why you chose logistics as a career? How has the sector changed over the years?

Bunthan: I’ve been at DHL since 2005 and in in addition to my role as Chairman of the Transport and Logistics Committee, I’ve been a member in the G-PSF Working Group (F) on Transport and Infrastructure with the Cambodia Chamber of Commerce since Mar 2019.

One of the things I appreciate most about my career in this industry, and working for my current employer in particular, is there’s always new challenges, learning opportunities and international exposure as the world keeps changing. When COVID started, we were skeptical that this industry would be impacted, but it was the other way around. The demand grew and we kept flying, connecting people and improving lives. I am blessed having this job as I’ve been able to travel to most countries in Asia and Europe.

The industry has changed so much since DHL started its operations in Cambodia in 1993. I’ve been blessed to witness the growth that we’ve seen in this country, not only in infrastructure, but in trade volume between Cambodia and the rest of the world. When I first joined, we were handling less than 50 packages and letters per day but now we move around 3 thousand packages and letters per day mainly for our garment industry!

EuroCham: As Chairman of the Transport and Logistics Committee, you recently met with the General Department of Customs and Excise (GDCE) to introduce the committee and discuss issues within the sector. What were your takeaways from the meeting?

Bunthan: The committee had the chance to meet His Excellency Dr. Kun Nhem to introduce ourselves and raise some requests in relations to Customs. I strongly hope that the updated regulations or procedures will be released in the near future. After that, an IT platform that supports the processes would have to come into the picture to further enhance the processes.

Form a wider perspective, global trade has drastically changed the way we do business, and I think we should update our regulations to reflect this. E-commerce specifically has changed the industry, and we do need support from the public sector to help streamline cross-border procedures. Logistics is always the backbone of other industries and we can help support these industries if processes are more streamlined.

EuroCham: What are some of your top concerns when it comes to updating customs processes?

Bunthan: As outlined in our EuroCham Whitebook in 2019, the surge in cross-border trade places increasing demands on resources from both private and public sector. The level of documentation and scrutiny required for Customs to process clearances and release goods is the same for any package valued at $50 or more. This means, for example, three copies each of master airway bills, house airway bills, invoice & packing lists, business registrations, Value Added Tax (VAT) certificates and letters of authorization.

The level of automation and utilization of the current customs system, ASYCUDA, is limited. After the entry of the cargo information (declaration) into the system, hard-copy documents are required to be physically submitted and are handled by customs brokers or importers. Ideally, this should be handled using a single-window concept.

The complexity and the corresponding delays lead to higher cross-border administrative costs. If we look at a recent World Bank report, these costs stands at 2.4% of GDP for Cambodia while for Thailand, this figure is only 1.1%. In 2021, we conducted a survey on cross-border clearance costs and on average, importers spend an average administrative cost of $220 per declaration on top of official Customs processing fees. It is very high compared to other countries in the region.

In this globalization era, the acceleration of international trade and Cambodia’s integration into global supply chains have been fundamental drivers in the Kingdom’s continued economic growth and therefore, we find the simplified cross-border procedures play significant role. If logistics companies are unable to meet tight delivery schedules due to inefficiencies within the clearance process, this creates unpredictability and reduces the capacity of manufacturers and suppliers to plan, manage and optimize their supply chains, increasing the costs of production. It also increases demands on the resources both from private and public sector. The private sector considers these complexities, and higher costs to be potential barriers that could affect Cambodia’s competitiveness.I view the challenges as a structural issue where the government needs to update regulatory framework and utilize technology to support the reform initiatives to align with global trend.

EuroCham: What were your takeaways from the recent policy dialogue you attended, hosted by the Ministry of Economy and Finance (MEF) and the World Bank?

Bunthan: I was honored to represent EuroCham at the policy dialogue hosted by the MEF. This was the second dialogue chaired by H.E. Vongsey Vissoth, Minister attached to the Prime Minister. I am glad that MEF always includes Transport and Logistics sector in these dialogues as it’s an important time to share ideas and look for solutions.

We had a chance to listen to experts from the World Bank, who shared their recommendations with public and private sector representatives. A few points that stood out to me, which are quite in line with what we want to see in customs, were:

• The promotion of full automation and transparency in customs clearance processes
• Expanding the “Best Trader Scheme”
• Further rationalising duties and special taxes on new truck imports

Beside these, we heard some new recommendations in area of Transport and Logistics such as:

• Regular monitoring of performance of the main trade gateways
• Better and resilient road connectivity for domestic production
• Unlocking the potential for private sector to invest through competitive transactions, ensure efficiency and value-for-money
• Increasing infrastructure capacity focusing on efficiency and cost reduction
• Improved regional connectivity requires strong commitment and cooperation from the respective countries
• Increase and utilize capacity of the existing rail and inland waterways
• Northeast corridor, a potential economic corridor to support regional connectivity (with Thailand, Laos and Vietnam) and boost local economy

EuroCham: Perhaps we could look into the future a little, how you hope things proceed concerning transport and logistics in Cambodia.

Bunthan: I am very hopeful, especially when considering the commitment Cambodia has made to the Regional Comprehensive Economic Partnership (RCEP), which came into effect on 01 Jan 2022. Transport and logistics are clearly on the agenda of each member country. This means the relevant government agencies will have to take action on its commitment listed in the RCEP agreement. Even though logistics services are supplied overwhelmingly by the private sector, public sector actors and institutions play an essential role, without which logistics competitiveness is unlikely to improve.

Regarding trade agreements, I do think there has been some unfair treatment on Cambodia, with some preferential schemes being revoked in the past. It’s hard not to see this as a double-standard, with both Thailand and Vietnam enjoying more generous trade privileges. These preferences don’t only affect trade and logistics demand, but they also affect people too. More than 700,000 workers are in the garment industry in Cambodia, and they are potentially affected by changing trade policies. Nevertheless I do have a positive outlook as Cambodia has been very successful at negotiating trade policies with other countries.

Other global trends are emerging which may have negative affect on Transport and Logistics such as

1. Energy Security: market stress was a contributing factor behind the pressure on eurozone growth.
2. Russian-Ukraine war: Russia is intensifying it operations in Ukraine. Additional military aid from NATO will bolster Ukraine’s counter-offensive capabilities but is unlikely to be sufficient to turn the war around.
3. Banking stress: Turbulence in the banking sector in the US and Western Europe.
4. US-China Decoupling: It is unlikely that the US economic engagement policy with China will be restored.

These trends would have negative impact or may disrupt the supply chains and constrained the flow of the trade and investment.

We understand the government is exploring other sectors to not become overly reliant on the garment sector, which is another positive. We’ve seen the real estate and construction sector experience a boom, and we’re seeing more priority given to agriculture. With improved logistics, our sector could contribute to ensure the country continues its upward trajectory, and I’m confident this will happen.