Written by Lian Jye
Sihanoukville is a growing port city in Cambodia. Located at the country’s southern tip, the city is famous for its white beaches and beautiful resorts. More importantly, the city has the country’s only deep-water port. It has an international airport and a weekly freight train service running from Phnom Penh, the country’s capital.
However, it needs more boost to maximize the use for transporting goods. “[T]rains do not run directly from the port at Sihanoukville to the port in Phnom Penh, meaning you have to hire trucks at each end,” Kann Kunthy, CEO of Battambang Rice Investment Co. aired his frustration.
Logistics has been a big issue in Cambodia. Despite the fact that the country lies within a region of high economic growth with potential of low wages, the country is still performing poorly compared to its mainland counterparts. In the newly released Logistics Performance Index (LPI) by the World Bank, Cambodia ranked 83 out of 160 countries, lagging far behind Thailand and Vietnam.
At the moment, there is a quota system in place for the flow of trucks from Thailand into Cambodia. Only 40 trucks are allowed to enter Cambodia each day, with 30 of them being passenger trucks. This contributes to massive traffic jams in the mainland region of ASEAN, and eventually leads to a bottleneck in the logistics. Currently, trucks from Thailand are required to offload their cargos at the border and transfer the cargo with Cambodian-owned trucks to respective destinations. Cambodian trucks are often smaller and prone to breakdown. Plus, there is no cargo transfer facility between large and small trucks.
Railway infrastructure needs to be improved as well. Cross-border railway line into Thailand and Vietnam is now defunct, making cross border freight train service unavailable. Since the existing train service is relatively poor, vehicle transportation is more favored.
However, observers point out the massive improvement compared to 2010’s LPI ranking, where Cambodia ranked 101 out of 160 countries. For the past four years, Cambodian government worked hard to reduce import-export barrier by reducing documentation red tape. More infrastructures in weight stations along highway, toll roads and paved and laterite roads have been constructed.
Currently, there is an ongoing negotiation between Thai National Shippers Council (TNSC) and the Cambodian government to allow more trucks to enter. The suggestion is to ease the daily quota to 400 trucks. There will be uplifting in the airport infrastructure too. In October 2012, Prime Minister Hun Sen has announced a new international airport to be constructed at Kampong Chhnang after 2025. This is to meet the increased demand of international tourism.
The ASEAN Economic Community will commence in 2015, aiming to create a single market and production base that is highly competitive. For Cambodia to gain the most out of this economic development, World Bank has made several recommendations to Cambodia to improve its regional logistic integration. Recommendations include introduction of regional third-party liability insurance scheme and encouragement of healthy competition between ports in Cambodia’s main trade corridors.
–Edited by Kristine Diaz