Application of New Safety Standards REF#6270

26 Sep 2023 | Automotive Issue Tackled

Last modified date: 14 Nov 2023

Issue Description

Road safety is a concerning issue in the country; although the figures of accident-caused fatalities and injuries have been going down in recent years, they remain high. The National Road Safety Committee calculated, over the first 6 months of 2023, a total of 1,548 road accidents nationwide, with 2,072 injuries and 756 fatalities.

The Royal Government of Cambodia (RGC) has been working hard in recent years to increase vehicle safety for users.

Back in June 2016, to increase safety standards, the Ministry of Industry, Science, Technology and Innovation (MISTI) issued Prakas No.150, which introduced 19 Technical Regulations for Automotive Products. These regulations were harmonised in ASEAN and fully followed the regulations of the United Nations Economic Commission for Europe (UN-ECE). Prakas No.150 applied to anyone who produced, transformed, imported, advertised, or sold automotive products in the Kingdom of Cambodia. It required producers or distributors to have a licence and to label the Cambodian safety standards on the vehicle.

Considering flexibility for distributors, MISTI then issued Prakas No.99, which extended the delay of the implementation of the 19 UN-ECE regulations to December 2019. However, it was clear that enforcing all 19 UN-ECE regulations at once would be impractical. Understanding the difficulty of the automotive industry, MISTI promulgated a new regulation, Prakas No.266, which presented a step-by-step enforcement of the aforementioned automotive regulations. This new regulation extended the implementation of vehicle standards across a period from 2020 to 2024.

EuroCham’s Automotive Committee strongly welcomed Prakas No.266, which provided more flexibility for distributors. However, the new regulation only applied to new automotive products. Used cars are still freely imported and sold in Cambodia. Used cars represent a major share in the total vehicle market, estimated by the Cambodia Automotive Industry Federation to be around 70% in 2021. In addition, the regulation did not mention any instructions or homologation process for parallel and grey market vendors. This absence of procedures would favour unauthorised importers to freely distribute vehicles in the Cambodian market.

EuroCham’s Automotive Committee had the opportunity to raise these policy shortcomings with H.E. Kitti Settha Pandita CHAM Prasidh, Senior Minister, Minister of Industry, Science, Technology and Innovation. During a constructive meeting with EuroCham in late March 2023, the Minister and other MISTI representatives reviewed Cambodia’s progress in improving vehicle safety standards, and agreed to work further to improve enforcement of such standards across the country, including by working more closely with the Committee.

Impact on business

EuroCham’s Automotive Committee appreciates the ongoing efforts of MISTI and the Institute of Standards of Cambodia (ISC) to introduce a series of regulations with the objective to promote homologation in Cambodia. We understand that the regulation mainly aims to maintain safety for users.

However, we believe Cambodia will struggle to maintain the safety and roadworthiness of its vehicles because the current regulations provide more flexibilities to unauthorised distributors. There is also a lack of strong enforcement of automotive regulations. Many parallel and grey market distributors are importing new vehicles without applying for the safety standard licence, and they have not labelled the safety standard mark on vehicles in their showrooms.

The ISC has conducted visits to the vehicle showrooms of a few authorised distributors with the purpose of informing other unauthorised distributors to start complying with the standard regulations. However, only conducting inspections on the authorised distributors will not make the grey market and parallel importers follow the law.

While the provisions of Prakas No.266 and other vehicle safety standards only apply to new cars, which represent around 30% of the total market, this will not effectively contribute to the common objective of the regulation that intends to promote the roadworthiness and safety for consumers. The brunt of the risks faced by consumers on the road comes from driving used cars or ones that do not comply with requirements laid out by official distributors. Enforcing the regulation mostly on authorised, new cars will only serve to perpetuate an unfair business and safety environment.

As the regulation seems to place more burden on the new car importers, this circumstance will rather favour the used car, grey, and parallel importers. Cambodia will lose potential investments in the automotive sector in the future. As the authorised distributors, we believe that having a fair playing field and stronger enforcement of the regulation would contribute to better safety for users.

Recommendation

  • Ensure stronger enforcement of homologation regulations for all distributors.

EuroCham’s Automotive Committee respectfully encourage the Royal Government of Cambodia to promote stronger enforcement of homologation regulation for all distributors, including:

  • Conducting regular inspections of vehicle showrooms of unauthorised distributors;
  • Including the regulation standards in the Customs import procedures and in the safety technical inspection process of the General Department of Land Transport;
  • Providing automotive distributors with at least 12 months’ lead time to plan and react to released policies and planning documents.

We believe that enforcing the regulation for all importers, including authorised and unauthorised distributors, grey market and parallel importers, will create more confidence for prospective and existing investors to invest more in Cambodia. Introducing the verification procedure for used car distributors would also reduce the potential risk or accidents on the road. We strongly believe that the Royal Government of Cambodia will be able to maintain the safety for consumers after fairly enforcing the regulations for all importers.

Dialogue with

Royal government of Cambodia

Initiative from Eurocham: he issue has been raised by Automotive Committee within The White Book edition 2024 in the Recommendation No. 12.

No response from the Royal Government of Cambodia

National Counterparts

Ministry of Industry, Science, Technology & Innovation 

Contributors

Mr. Chhoeurn Makara