Trade policy and trade facilitation in Cambodia

The Project at A Glance

Cambodia was recognised as one of the fastest-growing economies in Southeast Asia over the past decade, recording an average growth rate of around 7% annually. However, the COVID-19 pandemic resulted in a contraction in the country’s Gross Domestic Product. Between 2010 to 2019, the country’s growth was driven by the export of garments, agriculture, and tourism. Despite considerable progress, certain challenges continue to hinder Cambodia’s trade potential.
With funding from the Asian Development Bank (ADB), International Economics Consulting Ltd. (IEC) provided technical assistance to Cambodia in the context of the Asian Development Bank’s Country Partnership Strategy with Cambodia for 2019-2023.
The programme aims to support policy and institutional reforms to accelerate the structural transformation of Cambodia’s economy and enhance its international competitiveness, especially within the context of recovery from the COVID-19 pandemic.

What We Found

The aim of this assignment was to develop an analytical study and formulate recommendations concerning gaps in Cambodia’s policy, institutional, and regulatory frameworks for trade and trade facilitation; compliance issues relating to existing trade agreements; customs-related matters; non-tariff measures (NTMs), technical barriers to trade (TBT) and sanitary and phytosanitary measures (SPS); border management; as well as infrastructure weaknesses.
According to our situational analysis, three interlinked development challenges were identified as impacting the trade and business environments in Cambodia, namely:

the weak enabling environment for investment and the development of small firms;
the various barriers that continue to inhibit cross-border trade; and
the unexploited potential of e-commerce and digital technologies.

These constraints reduce Cambodia’s competitiveness across multiple trade sectors by increasing costs and restricting innovation.

Our Strategy and Impact

Our recommendations were structured around the three key challenges identified and included:

Enhancing the Enabling Environment for Investment and Business: Among multiple other recommendations in this area, the Government has been advised to issue a sub-decree on the functioning of the Municipal-Provincial Investment Sub-Committees for reviewing and approving private investments and providing one-stop-services to investors; and issue a sub-decree on the implementation of investment law.
Creating New Sources of Growth Through Digitalisation: One of the key proposals made in this regard is for the Government to draft Data Protection and Privacy Laws in order to enhance trust in, and offer legal protection for, users of e-commerce, especially as it concerns cross-border trade.
Improving Trade Facilitation and Digitalizing Trade Processes: Among other various recommendations, the Government has been advised to facilitate paperless customs procedures and the e-payment of customs duties, taxes, and other fees. This can be accomplished by onboarding commercial banks into the Cambodia National Single Window, and by streamlining documentary procedures through the adoption of e-certificates.

Our Core Solutions

At International Economics Consulting, we build tailor-made strategies for both import and export-oriented business solutions. We carry out sensitivity analysis and prepare detailed resource scheduling and standard performance dashboards to track the implementation process and financial ratio performance of your products and services. We help investors assess the opportunities in different markets, determine the feasibility and viability of projects, and benchmark the wider ecosystem to support business growth. We also assist clients in building economic indicators to analyse the trade flows and identify patterns, trends, and trade complementarity in value chains of goods and services between member countries.