Cambodia enthusiastically embraces the prospect of being at the
heart of a regional supply chain by promoting transport route
improvement.
The quality of Cambodia's road network rivals that of Thailand,
and upgrades worth a further US$ 110 million are planned over the next
five years.
Cambodia's ambition to play a bigger role in the regional and
global supply chain has driven its government to streamline multiple
infrastructure projects to improve logistics and land transport.
Geographically sandwiched between two major economies of the
Greater Mekong Sub region (GMS), Thailand and Vietnam, Cambodia wants to
become a hub for goods transport in the GMS and strengthen the
backbone of a new labour-intensive production base.
"You invest in Cambodia not to serve the consumer market of 15
million, but you need to invest to serve the 200-plus million in the
GMS, the 600 million of Asean and eventually the whole world," said Sun Chanthol, Cambodia's minister of commerce.
As a cornerstone of its policy, the country has approved 34
special economic zones (SEZs), with 11 currently in operation and 23
being built. Some are located along the borders with Thailand and
Vietnam,while the rest are mostly located in Cambodia's coastal provinces.
The government is committed to investing heavily in infrastructure to
better support business activity in the SEZs, the minister said at a recent seminar titled "Logistics: Cambodia's New Growth Engine", co-hosted by Post Publishing Plc in Phnom Penh.
The priorities, he said, would be road networks linking essential
strategic spots such as major border crossings, provinces with high
economic potential, and seaports. The cost of logistics in Cambodia is around 18% of gross domestic
product (GDP), according to Oranooch Pakarat, vice-president of the Thai
Business Council in Cambodia and a former logistics adviser to the Asian Development Bank (ADB).
The average logistics cost for developing countries in the region
is in the range of 10-15%. Thailand spends around 15% of its GDP,
Malaysia 13%, Indonesia 24% and Vietnam 25%.
Asean Highway 1, connecting Thailand to Cambodia and Vietnam, has
been completed and the section from Battambang to Serei Soaphoan in
Cambodia will soon be enlarged to four lanes. A bridge over the
Mekong River to Vietnam has also been completed, eliminating the need
for ferry services. Road No. 7, also designated Asean Highway 11,
linking the deep-sea port in Sihanouk Ville to the border with Laos has also been completed, said the minister.
The Cambodian government is also improving its main airports in
Phnom Penh, Siem Reap and Sihanoukville, as well as upgrading the main
rail line from Phnom Penh to Sihanoukville, and also another line from Phnom Penh via Serei Soaphoan to Poi Pet to connect with the State Railway of Thailand network.
"Thailand and Cambodia share 798 kilometers of borders, with six
border-crossing points currently in operation and another four will be
open soon," said Nuttavudh Photisaro, the Thai ambassador to
Cambodia. As well, he said, about 100 kilometres of roads running parallel
to the border on the Cambodian side are now on par in terms of quality
with roads on the Thai side.
"Cambodia is getting ready for Asean connectivity. Some parts of
the road are well-paved, and even better and newer than those in
Thailand," he said.
Under the GMS development programme, supported by ADB and other
donors, physical connectivity in the region is improving. Nearly 7,000
kilometres of roads have been constructed, upgraded or improved. The GMS consists of Cambodia, Vietnam, Laos, Thailand and Myanmar,
as well as Yunnan province and the Guangxi Zhuang Autonomous Region in
southern China.
Logistics routes linking the GMS countries have been mapped out
with support from development institutions such as the ADB. One of the
most widely promoted is the East-West Economic Corridor, a road
stretching 1,450 kilometres from the port city of Mawlamyine in Myanmar. It
travels east through the Thai provinces of Tak, Sukhothai, Phitsanulok,
Phetchabun, Khon Kaen, Kalasin and Mukdahan, enters Laos at
Savannakhet and continues into the Vietnamese provinces of Quang Tri, Hue and Da Nang at its eastern terminus.
However, at the moment "it barely has any potential. There is no
supply chain," cautioned Mr Nuttavudh. "There is nothing apart from
beautiful scenery along the route. Da Nang doesn't have a deep-sea
port, so it can't be promoted for anything except tourism."
Ms Oranooch said that infrastructure, especially deep-sea ports in
Myanmar and Vietnams, as well as streamlined border-transit regulations
in Thailand and Myanmar, would be the priorities for strengthening the East-West corridor.
However, she believes that even more potential exists in the
Southern Economic Corridor, along Asean Highway 1 connecting Bangkok,
Phnom Penh and Ho Chi Minh City.
"All the routes in the economic corridors have been agreed on
among the six GMS countries," she said. "So whether one agrees with them
or not, they will have to follow the designated routes in order [for member countries] to pursue their investment and logistics plans."
The Southern Economic Corridor could be extended farther westward
through Myanmar to Dawei, where a major industrial and port complex
backed by Myanmar, Thailand and Japan is being developed.
As well, the ADB has approved UScopy10 million over the next five
years for Cambodia to upgrade roads from Poi Pet to Phnom Penh in the
first phase, followed by improvements from Phnom Penh to Ho Chi Minh City.
Mr. Nuttavudh agrees the Southern Corridor is an important
strategic link with abundant economic and logistics potential. The route
connects with Vietnam's largest deep-sea port in Ba Ria-Vung Tau
province southeast of Ho Chi Minh City, giving access to the Far East. A
link to Dawei would provide access to the Indian Ocean, South Asia,
Africa, and onward to Europe.
"And Cambodia is geographically at the heart of all the activity,"
he added. "Take the automotive industry for example. Vehicle parts are
manufactured in Vietnam and Cambodia, then assembled in Thailand. That's the value chain that the Southern Corridor can offer.
"However, logistics efficiency in the economic corridors is still
constrained, most notably by the inability of trucks to freely cross
borders as the promoters of Asean connectivity would like to see.
Smooth goods transfers cannot be ensured and too many toll fees are collected along the routes, according to Ms. Oranooch.
Coastal shipping is more cost-effective while land routes are more
suitable for transport of dangerous or perishable goods, she added.
The framework for Asean logistics connectivity gives each country a
quota of 500 trucks to travel out of the country. Vietnam, Cambodia and
Laos already authorize their trucks to run freely in and out of each others jurisdiction. However, Thailand has yet to sign on
because of regulatory inertia and local truck fleet operators'
inability to agree on quota sharing. Agreement is also complicated by the fact that vehicles drive on the left side of the road in Thailand and on the right side in Indochina.
"Infrastructure conditions are not ready, while supply and demand
(for the use of the routes) is not conspicuous. But if it can become a
reality, it's a good infrastructure to have," Ms. Oranooch said.
"Though [the economic corridors] have yet to actualize
larger-scale GMS connectivity, at least they will help to promote
economic growth domestically."
Compared with Thailand, she said, Cambodia was more aware of the
utilisation of the planned GMS economic corridors and Asean
connectivity, as evidenced by installation of "Asean Highway" signs.
