The acceleration of international trade and Cambodia’s integration into global supply chains have been fundamental drivers in the Kingdom’s continued economic expansion, with an impressive average annual GDP growth of 7% between 2009 and 2019. Post-COVID-19, the economy has continued to grow, by 5.2% in 2022. The surge in cross-border trade has placed increasing demands on the resources of the General Department of Customs and Excise(GDCE), due to the complexity of Customs procedures required to facilitate the transfer of goods in and out of the country.
World Customs Organisation (WCO) guidelines suggest that Customs authorities categoriseincoming shipments into the following categories for clearance purposes: documents/correspondence, De Minimis, low-value, and high-value consignments. Each of thesecategories has different documentation requirements. Although we recognise the RoyalGovernment of Cambodia’s energetic efforts in speeding up Customs processing times,including by formally adopting these guidelines, we have reports from our members in the logistics sector, of such guidelines not being implemented by officials at border crossings.
Reportedly, these officials are not distinguishing between different types of cargo, value, size, or expedited shipping services for international consignments, other than for shipments under the declared value of USD 50, following the successful implementation of the De Minimis regime in 2018. This means that the level of documentation required by officials to process and release goods is the same for any weight and value above USD 50, e.g. three document sets for master airway bill, house airway bill, invoice and packing list, business registration, value-added tax (VAT) certificate, and a letter of authorisation.
The lack of practical differentiation between types of shipments for Customs clearance raises questions concerning the efficient cross-border movement of goods. Smaller and lower-valued shipments—typical for e-commerce users, for example—are expected to receive the same level of scrutiny from Customs as higher-value shipments, despite their risk being lower. This causes particular issues for consignments sent via express or airfreight, as segregation for
these services is similarly unavailable, often resulting in a delayed release as clearance cannot be expedited and companies must submit the same lengthy documentation as other forms of shipping.
Cambodia’s current challenges in processing times are reflected in the country’s internationallogistical rankings. The World Bank’s 2022 Logistics Performance Index (value from 1 to 5, with 5 being the highest) saw Cambodia lag behind Thailand, Vietnam and Lao PDR on two key indicators: “Efficiency of Customs clearance processes” and “Frequency with which shipments reach the consignee within scheduled or expected time”, with scores of 2.2 and 2.7, respectively. The country fared slightly better on Overall Performance, still behind Thailand and Vietnam but tied with Lao PDR at 2.4. In addition, a 2018 estimate indicated logistics costs over sales in Cambodia at 20.5% in 2018, higher than Thailand and Vietnam.
Impact on business
Simplified customs clearance procedures are important for ensuring the efficient and timely movement of goods in and out of Cambodia.
The lack of simplified customs clearance procedures in Cambodia can have several detrimental impacts on the logistics and trade industry. Firstly, it can result in increased delays for shipments, which can have a cascading effect on the entire supply chain, leading to lost sales, decreased customer satisfaction, and increased inventory holding costs.
Secondly, the lack of simplified Customs clearance procedures can increase logistical costs for businesses. This is because customs Clearance procedures often involve complex documentation and lengthy bureaucratic processes, which can result in additional fees and charges for businesses. These costs can ultimately be passed on to consumers, leading to increased prices for goods and services.
Thirdly, the lack of simplified Customs clearance procedures can result in reduced revenue for Customs. This is because delays and inefficiencies in the Customs clearance process can result in reduced volumes of goods being cleared, leading to a decrease in Customs revenue.
Lastly, the lack of simplified Customs clearance procedures can reduce overall business competitiveness in Cambodia. This is because it can deter foreign investment, limit export opportunities, and make it more difficult for businesses to operate efficiently in the country.
In today’s globalised economy, businesses need to operate efficiently and effectively to remain competitive, and the lack of simplified customs clearance procedures can hinder this.
- Continue simplifying Customs clearance procedures.
Whilst acknowledging the Royal Government of Cambodia’s efforts in speeding up Customs procedures, we would respectfully recommend that it continue engaging in tackling the remaining bottlenecks, by:
– considering the promulgation of a Prakas specifically dealing with express clearances. The Prakas would recognise the unique nature of express goods and the need for them to be treated differently from general cargo for Customs purposes, as enunciated for example in the WCO Immediate Release Guidelines;
– separating procedures for returned good consignments (for example, those deriving from e-commerce) from general cargo and simplifying said procedures, in recognition of their different nature from general cargo, particularly the temporary nature of storage in Customs bonded facilities;
– increasing the De Minimis shipment threshold to a value between USD 300 and 500;
– streamlining processing and approval steps for high-value clearance shipments.
Simplifying Customs clearance procedures in Cambodia can help the overall business environment by reducing the time and cost of importing goods, increasing trade, and improving the competitiveness of Cambodian businesses.
Royal government of Cambodia
Initiative from Eurocham: EuroCham in its 2024 Edition of the White Book decided to respectfully request to the Royal Government of Cambodia to simplify the Customs Procedures (Recommendation No.1 of the 2024 Edition of the White Book).
General Department of Customs and Excise (GDCE)
Mr. Suy Bunthan
Mr. Seng Vichet
Mr. Matthew Owen