Nation preps to drop tariffs

CAMBODIA has 180 days to reduce trade tariffs to fall in line with the Association of Southeast Asian Nations’ Trade in Goods Agreement (ATIGA) that came into force on Monday, according to a statement released by the ASEAN Secretariat.

The “landmark economic agreement” is being implemented in a bid to bring transparency and simplification for trade within the 10 members of the regional bloc, the statement read.

It stipulates that the Kingdom has to reduce trade levies to 5 percent or less on 80 percent of goods that have separate import codes within 180 days.

Tariffs on all but a handful of imports must be eliminated by 2015, according to documentation provided by the Cambodian branch of the transport company TNT Express Worldwide.

An official at the Ministry of Economy and Finance, who spoke on condition of anonymity, said Tuesday that the Kingdom is preparing to meet the deadline.

The government has targeted eliminating tariffs on 60 percent of some 8,300 products this year, he said, while maintaining tariffs of 5 percent on the remainder.

We don’t have a problem with the time frame,” he said.

But according to the source, who is working on the file with the ministry’s Economic Integration and ASEAN department, the reduction on trade taxes may result in higher domestic levies.

“I think ATIGA does not impact our national tax revenue because [it] focuses only on import tariffs. We reduce import tariffs, [and] we increase excise tax – which is [covered] under our domestic tax.

“If other members move [the] system like us, ATIGA will be nonsense because it just reduces import tariffs but increases excise without market-access improvement,” he said.

ASEAN officials say they believe that the deal is a step forward.

“ATIGA is a major achievement towards the establishment of a single market and production base under the ASEAN economic community,” said ASEAN Secretary General Surin Pitsuawn in a statement.

Nevertheless, members of Cambodia’s economic community said uncertainty still surrounds implementation of regional free trade.

Cambodia Economic Association President Chan Sophal said the eventual impact of the agreement was uncertain because it opened up the Kingdom to foreign competition.

Sam Rainsy Party spokesman Yim Sovann added that with trade liberalisation, Cambodia will need to improve the quality of domestic production to curb a potential influx of imports.

“We can do this if the government is willing to reduce bureaucracy, corruption, eliminate export barriers and especially improve infrastructure to allow fair competition,” he said.

Barriers have already been reduced to 5 percent or less for 1,224 products including construction materials, cosmetics, food supplements, tobacco and gaming equipment, vehicles, motorbikes and computer technology, TNT Express Worldwide (Cambodia) Ltd country general manager Sjaak de Klein wrote in an email Tuesday.

Tariffs on some of those products had been reduced from 35 percent, he said.

“It will allow for increased intra-ASEAN trade flows, which will [ultimately] benefit the consumers,” he added.

Garment Manufacturers Association of Cambodia President Ken Loo also welcomed the agreement.

For the garment sector, he said, the removal of intra-ASEAN trade barriers meant that fabric from neighbouring countries could be brought to Cambodia more easily in order to help the final production process.

Cambodia’s intra-ASEAN trade stood below the group’s average in 2008, the last year for which information was provided from ASEAN’s Trade Statistic Database.

Statistics showed 21 percent of Cambodia’s US$8.73 billion worth of trade in 2008 was conducted among ASEAN nations, below the 26.8 percent average for member nations.
(source from phnompenh post newspaper, Wednesday, 19 May 2010 15:01 May Kunmakera and Jeremy Mullin)