Table of Contents Foreword 2 Introduction 3

1 Accessing the Export Market Thru the Export and SME Training and Coaching Service Project

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2 Modernizing Customs Valuation System in Cambodia 19 3 Gearing Forward for the Information Dissemination of Top 10 Products in

Cambodia 23

4 Enhancing Teaching and Learning of Intellectual Property Rights in Cambodia 27 5 Capacity Building for the Department of Trade Statistics and Information 30 6 Strengthening Institutional Risk Management Capacities at the CAMCONTROL

General Directorate, Ministry of Commerce 33

7 Support to the Government – Private Sector Forum 38 8 Strategic Proposal for the Support of the ASYCUDA World System 46

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Foreword Setting up a national mechanism is in itself one of the most traditional and most important trade facilitation measures to ensure that the main public and private stakeholders are consulted and engaged in the elaboration and implementation of national trade facilitation reforms. From 2009 to present, the Trade Development Support Program (TDSP) has supported 29 projects, that ranged from trade facilitation to capacity building, with the end in view of contributing to increase the capacity of the Royal Government of Cambodia’s efficiency in formulating and implementing effective trade policies. This booklet provides some success stories and lessons learned from the first set of eight projects funded by TDSP. It highlights, among others, the achievements and results of these seven completed projects, including early outcomes achieved by an on-going project, the ASYCUDA World System of the General Department of Customs and Excise of the Ministry of Economy and Finance. It is the hope of this initial publication on success stories and lessons learned to provide the readers with some materials that they can use in policy preparation and in decision making towards improving the trade sector in Cambodia.

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Introduction The Trade Development Support Program (TDSP) has been designed to contribute in increasing the Royal Government of Cambodia’s efficiency in formulating and implementing effective trade policies. From its inception in March 2009 until today, TDSP has produced several wide-ranging sets of national strategies and policies, and have implemented projects precisely to facilitate the development of trade and industry in Cambodia in preparation for its more extensive participation in regional and international trade in the years ahead. All these have been tempered by the government’s leap-frogging efforts in the advancement of trade and industry in the country, most specifically with the adoption of a strategic approach to trade development called Cambodia’s Trade Sector-Wide Approach (Trade SWAp), a wholistic approach to the development of trade in the country and the formulation of Cambodia Trade Integration Strategy for 2014 to 2018 (CTIS 2014-2018). It has always been clear to decision-makers of the country’s trade sector that a sector-wide approach, coupled with the determination of challenges and identification of potential solutions to those challenges, could be more effectively and efficiently addressed through an over-all understanding of the depth and breadth of the trade system, both from the point of view of domestic as well as international scenarios. This precisely was a significant reason why the Government of Cambodia embarked on an ambitious development program called the Trade Development Support Program (TDSP), a multi-donor program-funded by the European Union (EU), Danish International Development Agency (DANIDA), and the United Nations International Development Organization (UNIDO). The collective fund is managed by the World Bank. As expounded by LCT. TEKRETH Kamrang, Secretary of State, Ministry of Commerce and Program Coordinator for TDSP and Focal Person for EIF, and Mr. Chhieng Pich, Director of the Department of International Cooperation, Ministry of Commerce and Project Director of both the TDSP and the EIF, since the inception of the TDSP,

“… the Royal Government of Cambodia, together with the development partners, have set an ambitious Program Development Objective of improving the Government’s efficiency in formulating and implementing effective trade policies. From the time the Program became effective, TDSP has been an instrument in promoting economic integration, stimulating ongoing reforms and strengthening Cambodia’s relationship with trading partners in the Southeast Asian region and other neighboring countries. “

As a development program, the TDSP is comprised of various national projects implemented by various implementing agencies, mostly government agencies that are attached to the Ministry of Commerce and other line Ministries, and a couple of institutions representing the private sector and non-profit organizations. There were a total of 29 Projects under the TDSP, two of which were dropped, and another one absorbed by the Royal Government for partial financing. Out of the 29, 18 were already completed, two (2) were dropped without any action, and nine (9) others are currently being implemented and expected to be completed on or before August 2016.

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This booklet on Success Stories1 of selected TDSP-funded projects was designed to provide a summary of the achievements of those selected proejcts, including the benefits derived by project beneficiaries, some early impacts that were reached, and lessons learned. In the end it also provide suggestions on the next steps to leverage the implementation of TDSP’s Results-Based Action Plan to achieve the expected results and outputs. Objectives of the Booklet on Success Stories The over-all aim of this booklet is to provide a quick reference document for success stories of some selected projects implemented under the Trade Development Support Program of the Ministry of Commerce. More specifically, the objectives are, as follows:

• To present success stories of selected projects funded by TDSP in order to gain lessons learned and benchmark from their experiences;

• To provide a quick backgrounder for selected Projects under the TDSP;

• To provide basic information following a format that facilitates quicker and better understanding of the structure of projects under the TDSP; and

• To present the completed projects in terms of summarized information about project background, objectives, procedures, expected outputs, and achievements or results that would provide an understanding of these Projects’ impact on national development.

1 Disclaimer: This booklet does not lay claim to ownership and originality of contents. In fact, it should be clear that all the information provided in this volume come from various sources, more specifically, the Memoranda of Agreement (MOU) between the Department of International Cooperation (the Executing Agency) and the respective Implementing Agencies, TDSP Quarterly Progress Reports, and various other documents and references such as powerpoint presentations by implementing agencies and the officers and staff of the Department of International Cooperation, Ministry of Commerce and some websites of specific departments concerned.

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Accessing the Export Market Thru the Export and SME Training and Coaching

Services Project 1.1 Project Background Implementing Agency: Trade Promotions Department, Ministry of Commerce Total Budget Disbursed: US$53,600.27 (97.63%) Pillar Focus: Pillar 1: Trade Facilitation TDSO Component Focus: 1b: Trade Facilitation Duration: 14 July 2010 to 30 September 2012 Main Objective: To assist SMEs in establishing their potential as exporters and provide them opportunities to enter and access new international markets for Cambodian products. Main Activities: A formal “transfer of technology” (ToT) of training of provincial officials, members of the Provincial Chambers of Commerce, and representatives of small and medium enterprises (SMEs), associations, and cooperatives on how to use the “Handbook on Export Procedures” published in 2008 by the Ministry of Commerce, with assistance from IFC. 1.2 Expected Outcome and Achievements The expected outcome of this project was an increase in the number of submissions of business documents with reduced mistakes, errors or omissions in providing information. The following were the achievements: • Rooted on economic base, AEC (ASEAN Economic Community to begin by end of 2015) is

expected to bring about both opportunities and challenges to Cambodian small and medium enterprises (SMEs). Cambodia has 505,134 business establishments, the majority of which are SMEs.

• With the ASEAN regional integrated market, it could be a good prospect for Cambodian

entrepreneurs to expand their businesses to the ASEAN Region. • As ASEAN is moving toward visa-free regional travel, local businesses are expected to

benefit more in their trades as well as gain in terms of reduced time in business transactions. Getting entry to markets of other Southeast Asian countries would mean local entrepreneurs would be able to access new and much wider business environment, opportunities, and new knowledge. This condition would, in return, inspire Cambodian entrepreneurs to introduce innovations to their product lines. In recent years, there have been few franchises coming to Cambodia, but this will likely improve when cross-border barriers ease up as trade among ASEAN states continue to expand.

• Through this experience, the integration of countries into AEC would be beneficial to those

business starters as they can become joint venture partners, shareholders, or suppliers given available estate properties.

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1.3 Outputs and Results Achieved Cambodia’s small and medium enterprises (SMEs) are busy preparing for the ASEAN Economic Community’s free flow of goods in 2015. They are probably not any different from those from the other 10 ASEAN member states’ own SMEs. Upon completion of the project, the following were reported to have been undertaken:

• The training curriculum on export procedures was developed by the Ministry of Commerce to promote formal exporting. New procedures and requirements related to export included in the manual were: export license, certificate of origin, SPS, insurance, border check point procedures, and forestry export.

• One pilot training on export procedures was conducted for a group of 60 trained trainers from 24 provinces. The trainers were mostly from provincial departments of commerce, chambers of commerce, and university lecturers.

• Two pilot training courses were facilitated by the trained trainers organized in Kampong Cham and Battambang.

• One workshop to review the training materials was conducted with 10 participants.

• Four training courses were conducted for trainers from 24 provinces with 80 participants.

• Eight provincial training courses facilitated by the trained trainers organized in Takeo, Kampot, Svay Rieng, Pursat, Siem Reap, and Koh Kong, with participants of about 300 from SMEs, provincial departments of commerce, university students, and chambers of commerce.

• Final workshop was organized.

• Final review meeting was conducted on June 20, 2013.

• Project completion report was prepared and submitted. 1.4 Impact of the Project The government’s policy reforms have transformed Cambodia’s virtually closed economy into one of the most open in the region. More liberal trade and investment policies in the context of deeper integration into regional and global economies are widely perceived as a means for Cambodia to strengthen peace and stability and to increase trade, investment and competitiveness. With the various reforms implemented by the Government in the area of trade and the effective trade policies introduced under TDSP, specifically in terms of the various capacity building projects related to export procedures and trade, the value of Cambodia's international trade increased by about 9 percent in the first six months of this year compared with the same period last year. The overall value of Cambodia's trade with other countries rose to $9.75 billion in the first six months, compared to $8.95 billion last year. Over the same period, exports rose by 9.5 percent to $4.13 billion this year, up from $3.77 billion last year. Cambodia’s total trade volume reached $18.1 billion in 2014, a 13.8 percent increase over $15.9 billion in 2013. Goods exported amounts to $10.64 million in 2014 from a humble beginning of US$4.985 million in 2009 or an average yearly increase of $1.132 million or 15.07%.2

2 Statistical data from Ministry of Commerce’s Import and Export Department, August 2015, extracted from the reports of the General Department of Customs and Excise (2009-2015) and the Department of Bilateral Trade, General Directorate for International Trade, Ministry of Commerce (2009-2015)

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1.5 Success Stories of Beneficiaries of the Export and SME Training and Coaching Project Five success stories are presented here from the stories of some participants of the Export and SME Training and Coaching Project of the Trade Promotions Department of the Ministry of Commmerce. 1.5.1 The Ngov Heng Fish Sauce Experience The Ngov Heng Fish Sauce is well known throughout the country for producing tasty fish, soy and chili sauces. It is one of those SMEs busy developing and enlarging their businesses. Chan Sitha, one of the participants of the Export and SME Training and Coaching Project of TPD/MOC and the owner of the Ngov Heng Fish Sauce company, said he has been exerting lots of efforts in upgrading his products for almost 10 years now. He expects that very soon, his fish sauce will be well known brand not only in Cambodia, but also in the United States and throughout Southeast Asia. In 2007, he decided to prepare to export to the U.S., but due to the global economic downturn the following year (2008), the export of his product was postponed indefinitely. “Other ASEAN member countries export their products to Cambodia, and so we will export our products to them,” Mr. Sitha said. The Ngov Heng Fish Sauce factory started producing fish sauce in 1995 but for some time it could only produce about 1,000 litres of it per month, hence, could only supply Kampot province. Today, however, Ngov Heng Fish Sauce produces up to 100,000 litres a month and ships it to all of the provinces in Cambodia. The rapid increase in the volume of production at the Ngov Heng Fish Sauce factory has been made possible by use of machines in the production process. Mr. Chan Sitha said, “before we produced our fish sauce 100 percent by hand, but now we use some machines.” In preparation for the ASEAN economic integration of 2015, Mr. Sitha plans to purchase a steaming machine to clean bottles. Right now, he uses wood and charcoal to boil water to clean bottles but he intends to install a steaming system that will likely cost him about USD 100,000.

The nation's top brand of fish sauce is expected to be exported to the United States at the end of the year. Two containers of Kampot fish sauce will soon appear in stores in Los Angeles and San Francisco, said Chan Sitha, owner of Ngov Heng Kampot Fish Sauce factory.3 Chan Sitha visited the US last month in a bid to find local distribution partners for fish sauce.

3 http://www.tpd.gov.kh/index.php/home/trade-news/28-cambodian-fish-sauce-to-be-exported-to-us

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"I am working with two partners who will wholesale my products in California, and they are waiting for the first export," he said. "I plan to send two containers containing 1,000 cases each to test and survey the market."

Each case contains 12 bottles of 750 mL each, Chan Sitha said, adding that wholesalers will target other Asian residents in California, not only Khmer-Americans.

"And we are working to get permission from the relevant institutions to accelerate my exports," he said, adding that he had received the ministry's guideline on how to obtain Cambodia's Standard Certificate proving quality control. "The certificate will make exporting easier, so we plan to ask for that and get it soon."

The Ngov Heng factory has 40 storage tanks that daily refine 2,000 litres of fish sauce, soy sauce and chilli sauce.

Heng Heang, the president of Phnom Penh's association for small and medium-sized enterprises (SMEs), said Cambodian industry is improving fast because many businesses are upgrading their capacity and technology.

"Some SMEs produce poor-quality products, and others produce good quality," Heng Heang said. "But we are seeing many domestic industries capable of making high-quality goods that can compete with imported products." 1.5.2 Lyly Food Industry Co. Ltd. The Lyly Food Industry Co Ltd in Phnom Penh, which is well known throughout Cambodia for producing tasty snacks, is ready for ASEAN 2015. “I am ready for 2015 because I have been preparing for the last few years,” said Keo Mom, a participant of the Export and SME Training and Coaching Project and the chief executive of the Lyly Food Industry Co. Ltd. “For my own company, I am preparing both to defend our business and compete with other ASEAN member countries’ products,” she said. Keo Mom said her company was established in 2002 with USD 100,000 capital. She started her business with only three product lines and 25 workers. An important factor that SMEs might do well to consider as they plan their future under the ASEAN Integration of 2015, may include the fact that in Cambodia, SMEs represent around 65 percent of the nation’s GDP and employ 85 percent of its population. The ASEAN Economic Community would be both a positive and negative influence for SMEs in Cambodia. SMEs in the country provide services in the following sectors: tourism, ICT (information and communication technology), trading and rental sectors (22), so they have enough influence in those areas.

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1.5.3 Cambodian Pepper Traders 1.5.3.1 Cambodian Pepper a Potential Trade Winner Cambodia hopes to cash in on an expected boom in global pepper trade in 2015. High international demand for pepper is making it imperative that Cambodia increases its hectarage for pepper cultivation this year. Right now, there is no data regarding the total area planted to pepper so far this year, but it is well beyond the hectarage in 2013 which was 2,225 hectares, according to information from the Agro-Industry Department. “Cambodians have increased the cultivation of different types of pepper, especially in Kampong Cham” in the provinces of Kampot, Mondulkiri and Rattanakiri, said the Agro-Industry Department’s Director, Mr. Khan Samban. The average local price of pepper in Cambodia is USD 6 per kilogram. However, growers can earn from USD 10 to USD 20 per kilogram in the international market. 1.5.3.2 Pepper is Good Business: Success Story of Starling Farm Kampot Pepper When Him Anna, a participant of the Export and SME Training and Coaching Project, started cultivating pepper seven years ago, she never thought it would turn into a profitable business one day. Starting with half a hectare, the 43-year old and her family initially planted the famous Kampot product solely for their own use. Today, Anna is the Chief Executive Officer of Bright Starling Holdings Co., which owns Starling Farm Kampot Pepper. Established in 2010, Starling Farm Kampot Pepper today exports pepper to international markets. When she started, Anna hardly saw any companies exporting pepper except the Farm Link Company in Kampot which shipped to France. Anna was born in Kampong Cham province’s Prek Por commune in Srey Santhor district, and is married to Dutch national Mark Hanna. “We never had any experience in planting pepper, but we are lucky that we have an uncle who loves his career in agriculture, so I asked him to help us,” she said. So far, the pepper farm consists of five hectares of land, but only three hectares are currently bearing crops, while the rest will become productive in at least two more years. Anna employs 25 people to care for the pepper plants right on the farm, while another 15 work in processing and packaging the harvest. According to Anna, her farm produced about six tons of pepper last year. But demand was higher than the output in her farm, so she bought about 1.5 additional tons from the Kampot Pepper Farmers’ Association (KPFA) and an extra two more

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tons from other farmers in the area. “Now the KPFA is happy to have contracts with many companies, but they are also upset because they don’t have enough pepper to sell,” she said, adding that “next year, I plan to buy 10 tons from them.” Buying one kilogram of black pepper from KPFA cost her USD 11 this year, but her company sold a kilo at USD 35, mainly because her company put in much more work sorting out the best quality peppercorns for export. Anna said that about seven to eight tons, the bulk of her company’s pepper production, is exported to Germany, Canada, the US, France, UK, and Australia.

1.5.3.3 The Success Story of Dar Memot Pepper Agriculture Development Cooperative

For centuries Cambodian pepper was famous for its splendid flavor and taste. Pepper cultivation in Cambodia has a more then 700 years tradition.

Due to excellent soil and climate conditions the Memot District in Kampong Cham Province is the most important Cambodian pepper plantation area. Around 90 % of Cambodian pepper is cultivated in this area. The quality of black pepper is rated as one of the best in the world savored by high international recognition.

The success of the increasing pepper production in Memot District, Kampong Cham Province, Cambodia, is connected to establishing a pepper farmers’ cooperative. With new knowledge gained by the Cooperative’s representatives: Mr. Yin Sopha, Executive Director, and Mr. Pum Pheara, Office Manager, from TDSP’s SME Export Training Program conducted by Trade Promotions Department, Dar Memot Pepper Agriculture Development Cooperative, located in Dar Phsar Village, Dar Commune, Memot, Kampong Cham has expanded its operation in the export market.

The Cooperative: The Dar Memot Pepper Agriculture Development Cooperative was established in March 2010 with technical assistance and support by the German Organisation DGRV (Deutscher Genossenschafts- und Raiffeisen Verband), an umbrella organisation supporting cooperatives in developing countries worldwide.

In the past times, pepper farmers were isolated lacking export market access, technical know how, information about market development and depended on one monopolistic trader.

Now the cooperative is acting as a trader for pepper, buying from farmers and selling to national and international traders. Some of the activities of the cooperative are as follows:

• The Cooperatives equity capital, brought in by selling 1570 shares $25 is used to give credits to poor pepper farmers.

• Cooperative runs a supply shop for organic fertilizer

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• Tasks are shared in working groups for credit, trade, marketing, training and supply

• Field trips to share information with pepper farmers from other Cambodian provinces

• Training on producing organic fertilizer and combating pests and diseases

• Sharing information about daily pepper price development

• Annual survey to gain exact figures on the number of farmers, cultivation areas and yields

The members understand the cooperative as the farmers company, as it improves farmers business and individual economic situation significantly. The enthusiasm and initiative is admirable. Despite the cooperatives achievements there are still plans for the future:

• Renting or building a cooperatives warehouse

• Export by the cooperative mainly to international markets on a Fair Trade level

• Improvement of pepper cultivation and pepper quality by establishing a test field researching different plants and new cultivation methods

• Processing of black pepper

• Product diversification producing white and green pepper

And last but not least the Memot pepper farmers’ cooperative will support and assist to new pepper cooperatives which will be established in other Cambodian provinces like Kratie, Mondulkiri and Ratanakiri.

The Pepper Farmer: In Memot district now 2,174 farmers produce pepper, mainly in Dar Commune, the center of Cambodian pepper production. In this “pepper commune” 1,745 farmers

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proudly produce pepper. On the average one farmer/family cultivates 0.5 hectare. During the season from March to May more than 6,500 people are involved in harvesting. The pepper farmers are proud on their product and are eager to maintain the pepper fields with high diligence.

The Quality of Pepper: Black pepper produced in Memot is from highest quality. The unique flavor of this aromatic and spicy pepper delivers a delicious taste.According to international standards the density of Dar-Memot black pepper range > 550 GL and a moisture < 12.5 %. According to the quality and the importance for Cambodian economic development the pepper is selected by the Government as one of the Cambodian Top-Ten Products.

Plantation Area: The Memot District, Kampong Cham Province, is the center of Cambodian pepper production located in the northeast of Cambodia closed to Vietnamese border. Almost 90 % of Cambodian pepper is grown here as the soil and weather conditions are excellent. The red soil is called the “golden soil” by the pepper farmers. Due to excellent yields the pepper plantation area increased in recent years:

2009: 519 ha

2010: 635 ha

2011: 885 ha

2012: > 1,050 ha

As the farmers produced around 5,500 MT of black pepper in 2011 the expectation for the future is a yield of 15,000 MT in 2015.

Recent Activities: In recent months, the following were the activities carried out by the Cooperative:

• November 2012: IPC (International Pepper Community) annual congress in Colombo, Sri Lanka. From 30 October to 03 November delegates from the Dar-Memot pepper farmers’ cooperative accompanied by delegates from Ministry of Agriculture attend the annual IPC congress and represent Cambodian pepper. This is an excellent opportunity to improve business connections and to learn from other pepper producing countries from all over the world.

• October 2012: Study trips to pepper farmers in Cambodian provinces. End of October a delegation of the cooperative will visit the neighbouring provinces Kratie, Mondulkiri, Ratanakiri and Stung Treng in the North-East of Cambodia. The success of the pepper production in Kampong Cham Province encouraged farmers in other provinces as well to plant pepper. Till now there were different requests from these provinces for assistance and technical know how. In order to organize support and assistance for the farmer in these provinces it will be discussed to establish pepper farmers’ cooperatives as well aiming a network of pepper cooperatives in the North-East of Cambodia. These efforts are supported by German organization DGRV.

• October 2012: Survey on pepper farmers and production. From end of September till mid of October members of the cooperative visited all communes and villages in Memot district to find out how many farmers are cultivating pepper, the size of the fields and the yields. The result of this years’ survey showed that pepper production is increasing significantly in this district: Pepper farmers 2010: 750 in Memot District, 600 in Dar Commune 2011: 1,539 in Memot District, 1,319 in Dar Commune 2012: 2,174 in Memot District, 1,745 in Dar Commune

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The pepper plantation area increased from 2011 with 885 hectare to more than 1050 hectare in 2012.

• August 2012: IPC workshop on pest and diseases in Vietnam. The International Pepper Community organized a “Workshop cum demonstration on controlling pest and diseases on black pepper” from 6 to 9 August in Ho Chi Minh City, Vietnam. Participants came from pepper producing countries and IPC member like India, Sri Lanka, Indonesia, Malaysia and Vietnam. Cambodia was invited as well even if not yet a IPC member. From Cambodian site the Executive Director of the Memot pepper farmers’ cooperative, two participants from General Department of Agriculture and the cooperative’s DGRV advisor joined workshops.

1.5.4 Success Stories on Wines Manufacturing and Exporting

1.5.4.1 Wild Grapes Association

Pursat’s Krakor district, located on the southern bank of the Tonle Sap lake, is known more for its prahok factories than wineries. But instead of fermenting fish, one local entrepreneur has reaped the forests’ wild grapes to make local vintages. When Nou Virak first made wine from wild grapes in the local forest, his neighbors thought he was mad. Sweet and sour with a light tart kick and high acidity that gives it a slight vinegary aroma, the wine won’t turn connoisseurs’ heads anytime soon, but Nou Virak’s three-person team managed to bottle and sell 20,000 bottles last year.

The Wild Grapes Association, which sells wine certified organic by the Cambodian Organic Agriculture Association in three Phnom Penh shops, was started in 2003 and is based in a single shed surrounded by paddies just off Highway 5. It began, Virak said, as a foolhardy dream that made him a laughingstock among his neighbors.

“People thought I was going crazy because I was spending so much money on making wine and buying grapes,” said Virak as he recalled the eight years he spent teaching himself how to learn the process.

“Now they don’t know what to say because they see me selling so much, and they’re afraid to ask for wine from me.”

Wild grapes grow naturally around Pursat, but are seldom eaten due to their unappealing flavor and texture. Their most common use before Virak showed up, he said, was as toys for children.

“They’re hard to eat because the seed is big, the outside is thick, and when you eat it makes your mouth itch.” But Virak, a 41-year-old Prey Veng native who was working in Pursat on an NGO-sponsored agricultural development project, decided winemaking could be a creative way to capitalize on the unused resource. Knowing little about wine production, however, he invested his

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savings and spent the next decade teaching himself the trade. His only prior experience had been the basic theory he learnt studying agriculture in Thailand.

Without anyone else brave enough to try his concoctions, he was forced to test all the wine by himself which caused him to be frequently sick. The project became all-consuming, said Virak, adding that he has chosen to forgo family life in favor of winemaking.

“The reason I don’t want a wife right now is because if I have a wife, I’ll waste all the money I need to make this wine. I’ll have to take care of her and the kids.”

His obsession is particularly remarkable considering that he doesn’t particularly enjoy wine.

“I will taste it, but I do not like to drink very much,” he said.

The manufacturing process is similar to ordinary wine, with grapes crushed and yeast added. They sit for three months in plastic barrels before palm sugar is added to aid fermentation and egg whites to absorb the gunk. The wine Virak has sold in the past has been aged for a full year, but he plans to soon start selling booze aged for three.

After attending the Export and SME Training and Coaching at TPD, Virak has considered the feasibility of cultivating the grapes, he currently enlists local villagers to harvest the grapes from the nearby forests at the edge of the Cardamom mountain range. He pays 500 riel per kilo and uses around 72 tons to produce 20,000 bottles.

His neighbors have taken notice of his winery and have asked Virak for drinks, but Virak refuses, explaining that a single bottle carries a $6 price tag in Phnom Penh. He does, however, give free wine to women after childbirth.

“When a woman gives birth, they drink it and think it helps them,” said Virak, adding that he could not personally vouch for the claim but did not doubt his neighbors’ testimonies. It is not just the wine that helps with women’s health issues, said Virak, adding that the roots were also in demand to treat urinary tract infections in women. This created problems for Virak when the local medicine man, unaware that Virak was using the grapes, dug out the roots of the trees that the

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grapevines hang off. The issue was resolved after the medicine man agreed to stay off Virak’s turf.

Virak’s wild grape wine has proven popular enough that he is now expanding his operations to Preah Vihear, where he says additional rain makes the grapes even better. He now divides his time between his Pursat winery and Preah Vihear, where he hopes the first batch is still being aged. Virak also hopes to export the wine to China, which he visited earlier this year for the China-Asean Expo in Nanning. “They seem to like it a lot in China, and I really want to find somewhere abroad to export it,” he said, adding that he wants the wine’s unique flavor to catch on internationally. Virak recommends drinking his wine with very rare beef. 1.5.4.2 Chan Thay Chhoueng Plantation in Battambang

When Leng Chan Thol and her husband Chan Thay Chhoueng decided to grow grapes for wine production just outside Battambang city, people thought they were crazy. "You would have to be very strong, courageous or foolhardy. Wine grapes are not a profitable Cambodian crop, and they are sure to fail,' were the types of things people whispered," said Leng Chan Thol.

Fortunately, the young entrepreneurs didn't let the idle chatter discourage them from pioneering Cambodia's first valiant attempt at viticulture.

The couple planted their first vines in 1999, and in 2004 the first bottles of Cambodia's only home-grown grape wine were ripe for drinking.

"Our families have always been farmers," said Leng Chan Thol from the small wooden tasting gazebo, set amid snaking grape vines and lush tropical foliage on the Chan Thay Chhoueng plantation, 16 kilometerss south of Battambang.

"In the past we grew oranges on this land, but in the late '90s my husband saw ads on television about making wine, and we became interested in the process," she said.

“Each day we get anywhere from 10 to 100 tourists tasting our wine. At first, it was not easy, and we faced many challenges with the grapes, like insects, birds, over-watering and disease," she said. "But we are farmers, so we just kept growing them, keeping an eye on them and learning from each challenge."

Leng Chan Thol explained that, although some grapes do grow naturally in Cambodia, they are not necessarily the best variety for wine production.

The grapes grown and harvested at Chan Thay Chhoueng are mainly Shiraz, cabernet sauvignon and merlot varietals imported from France, America, Australia and Japan.

Typically, these varieties take well to warm climates, and the 3 hectares of mineral rich and fertile soil at Chan Thay Chhoueng, combined with plentiful sunshine and adequate rainfall, work together to provide an abundant harvest for Leng Chan Thol and her family.

"November to March is the best growing season for the grapes, but sometimes we can harvest the grapes up to three times a year, unlike Europe or the Americas where you might only get one harvest a year," Leng Chan Thol said.

"Usually it takes about six months to a year after harvesting for the wine to be ready to drink."

After harvesting the grapes, Leng Chan Thol and her family crush them by hand in large plastic containers. They then transfer the wine to stainless steel vats where yeast is added to aid in the fermentation process, and the wine is left to ferment for six months to a year. All bottling, corking and labeling is done on-site.

The most popular product is the 2005 vintage Shiraz-merlot blend, which retails at US$15 a bottle. Typical of young Shiraz and merlot varietals grown in hot climates, the wine is a rich

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ruby-red color, with aromas of blackberries, raspberries and chocolate. Another big seller is the Phnom Banon brandy produced at the plantation and named after the nearby mountain and ancient temple site. Caramel-gold in colour and 40 proof, the brandy packs a powerful punch but is not harsh, with a smooth, sweet aftertaste reminiscent of tropical whiskeys without the bite. Bottles retail at $12.

The Chan Thay Chhoueng plantation also sells a sweet, blush-colored rose for $6 and a light, fruity, non-alcoholic grape juice for $1.50 per bottle.

For Leng Chan Thol and her family, the effort and risk has paid off after they have attended the TPD’s Export and SME Training and Coaching. After knowing the procedures to export and getting the ins and outs of attending and participating in local trade fairs, they were able to open their doors to the international market. Small buyers and wholesalers now come from all over Cambodia and abroad to buy their products, and in 2013 Prime Minister Hun Sen paid Chan Thay Chhoueng a visit, lauding Leng Chan Thol for her pioneering spirit.

"Each day we get anywhere from 10 to 100 tourists tasting our wine," she said.

"So now, all those people who thought I would fail, well, I think they are quite embarrassed about their lack of faith."

And Leng Chan Thol's ambition doesn't stop there. Her plans for the future include purchasing more land to plant different grape varietals and a small restaurant that serves dishes using fresh, organic produce grown on-site.

1.5.5 Rice Millers’ Success Stories

1.5.5.1 Pou Poy Rice Mill in Battambang

Since 1990, Phou Poy Rice Mill Factory Co. Ltd. has grown from a small rice milling company to one of the largest Cambodia manufactures and exporters of rice in the city. Mr. Phou Poy, the company’s president who attended the Export and SME Training and Coaching at TPD said, “We are installing the modern rice machinery for example drying and storage silo, whitening, polishing, color sorter and packing... The mill production capacity is 6 tons of paddies per hour.”

Phou Poy’s rice products are processed with full-fledge equipment including color sorting machine, water polishing machine, de-stoner, drying silo, packing machine etc. The product of rice which are currently available to supply consists of 5 different type of rice:

• Jasmine Rice (Pka malis, neang malis, romdoul), • Ginger Rice (Pka knhei), • Pearl Rice (Neang Khon), • White Rice (IR),

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• Broken Rice.

In the course of the company's production process, milled rice is cleaned to move extraneous material like dust, gravel, sand, and even substandard rice grains that do not meet the specifications of the Ministry of Commerce. It is then transferred to a temperature-controlled silo. Then it process to machinery that once removes any remaining stones, gravel or heavy metals, and then to equipment that treats the surface of the individual rice grains to remove fungus or insect eggs that may be attached. The rice is then polished conveyed on to equipment that remove broken grains and separates the grains according to size and using laser apparatus color. The next step is to transfer graded rice to the machinery that gives it a final check for cleanness and purity, after which it is sent on to a silo where it will await packaging by automatic equipment.

Mr. Phou Puy, who is also the president of the Cambodian Rice Millers Association informed that their association has purchased 380,000 tons of paddy over the past seven months for processing, a 10 percent increase on the period a year before. The growth is due to increased financial support from the government through loans from public and private banks, though millers themselves still supply the majority of capital, he said.

“The rice we bought directly from local farmers averaged US$250 per ton, of which the millers pay 55 percent directly and the rest come from loans,” he said yesterday. Phou Poy highlighted increased opportunity for exports to Asian and European markets, noting the association’s members had exported over 40,000 tons of milled rice this year.

He added that increasing access to capital was the main requirement in boosting the Kingdom’s milled rice exports to one million tons by 2015.

Traditionally, much of Cambodia’s paddy was exported to neighboring countries for processing before being shipped abroad. “But now a lot of paddy is processed in Cambodia as milled rice for export to international markets,” he said.

“This year saw millers buying more rice because of a growth in capital and the loans supplied by ACLEDA Bank.”

He noted his business had increased between 15 to 20 percent so far in 2014 compared to the same period last year. However, a lack of capital to acquire paddy would limit the firm's purchases to about 1,200 tons this year, he said.

1.5.5.2 Bou Sokha Rice Miller – Kampong Cham

Bou Sokha Rice Miller is located in Chang Va village, Ampel commune, Oraing Ov district, Kampong Cham province. It is owned and managed for the past 10 years by Mr. Bou Sokha, 53 years old, with 20 people running the rice milling company.

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Mr. Bou Sokha, attended twice the training on Export and SME Training and Coaching, first in Kampong Cham, and then in Phnom Penh. He said that the training provided him with several details on the various procedures for export and has given him some target markets to export. Aside from export procedures, he learned on various aspects of sanitary and phyto-sanitary procedures for rice products, the rules of origin and the preparation of Certificate of Origin for export, techniques for packaging rice, the process of drying to keep the level of moisture, among others.

After the training, he talked with some friends who also own rice milling companies in Kampong Cham on the possibility of consolidating their production for export. In 2013, his company was able to produce rice mainly for domestic trade with only 1% for foreign market. Nowadays, Bou Sokha Rice Miller is exporting about 120 tons of rice monthly to Europe and in China, with the following ranges of prices: US$420 per ton (rice varieties of IR54, IR66 and IR80) to China; and US$850 per ton (jasmine variety) to Europe.

With only one rice mill after attending the training, Bou Sokha Rice Miller now has four rice mills that can produce 25 to 30 tons per day of rice. He plans to get additional loan from the Bank of about $2 million to expand his business, mainly for buying stocks, engage in branding and packaging in Oraing Ov district, purchase new machineries for milling and drying, and build additional storage facility for paddy rice.

By 2016, Bou Sokha Rice Miller expects to produce rice from 150 tons to 200 tons per day. Exporting rice will be their main business of about 60% to 70% of their production, while the remaining will be sold to the domestic market.

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Modernizing Customs Valuation System in Cambodia

2.1 Project Background Implementing Agency: Department of Planning, Technique, and International Affairs, General

Department of Customs and Excise, Ministry of Economy and Finance Total Budget Disbursed: US$44,232 (88.46%) out of US$50,000 Pillar Focus: Pillar 1: Trade Facilitation TDSP Component focus: 1b: Trade Facilitation Duration: 01 October 2010 to 31 March 2013 Main Objective: To improve the Customs Valution System (CVSS) in Cambodia to conform with the requirements of international trade and the ASEAN Customs Valuation System. Main Activities: The Project required the completion of the following activities: Conduct feasibility studies, and needs assessment; automation of the Customs Valuation System in Cambodia; data input and testing; connect to other automated systems such as ASYCUDA and Risk Management; final evaluation, and roll-out. 2.2 Expected Outcomes and Results The General Department of Customs and Excise (GDCE) has enough tools to ensure effective implementation of the New Law on Customs as well as the WTO Valuation Agreement. This was expected to result in all cargoes passing Customs facilities would be properly evaluated and taxed. The following achievements were noted: (1) The preparation for the Customs Valuation System has been fully developed and the database structure finalized by Mr. Sek Socleat, national consultant, who started work on August 6, 2012 until March 2013. A Systems Manual was completed and a system server is functioning. (2) All equipment requirements were procured by DICO and delivered to GDCE. The greater use of electronic systems throughout the supply chain has led to more information being available in an electronic format for use by Customs and other government agencies, to influence the growth of e-commerce and hereby improve economic performance. In addition to this structured trade data, the Internet provides Customs with an invaluable source of information for its control and enforcement functions across the board, including valuation, identity management, goods classification and track trace activities. The development of paperless customs valuation systems was seen as the crucial starting point for any country, like Cambodia, to influence the growth of e-commerce and hereby improve economic performance. The spread of ICT was an opportunity for customs administrations to strengthen their position as the vanguard of strategic developments in all countries. Customs should pay special attention to their standards policies because they have the power to impose their requirements. These have special legal status and business people who have to observe customs standards will tend, for convenience, to support their use in other interchanges. So customs become standards trend-setters and exercise considerable influence on international standards strategy.

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2.3 Success Story in Modernizing Customs Valuation in Cambodia Customs valuation in the ports of Cambodia are now modernized and WTO standards compliant. Such is the over-all conclusion arrived at upon the completion of a TDSP project that was designed to modernize the customs valuation system in Cambodian ports through the establishment of the Customs Valuation Support System (CVSS). When the project started in September 2010, after the Memorandum of Understanding was signed by the Department of International Cooperation, Ministry of Commerce, and the General Department of Customs and Excise, Ministry of Economy and Finance, it was clear that through the project enough tools to ensure effective implementation of the new law on customs and the implementation of the WTO Valuation Agreement were going to be provided. Why Modernize Cambodian Customs Valuation System? Before Cambodia’s accession to the WTO, valuation of goods in Cambodian ports was based on the “price or value” principle, which was a bit subjective most of the time. In 2004, the WTO gave Cambodia five years to pass the Cambodian Customs Law, which was passed two years earlier in 2007. The following year, 2008, Prakas 387, also known as the Customs Valuation of Imported Goods, was issued. This Prakas adopted the WTO standards for valuation of goods, using any one of the following as basis: • Transaction value (TV), which is based on the actual value of the imported merchandise with

which a customs duty was to be assessed. Under this situation, there would be no restrictions other those imposed by law, or geographical limit where the goods would be resold, or when there is no substantial change in the value of goods.

• Transaction value of identical goods (TVIG), Where the TV could not be determined, the

customs value was to be determined by the transaction value of similar goods.

• Transaction value of similar goods (TVSG). Where the TV or TVIG of imported goods could not be determined, customs value was to be based TVSG of similar goods that were exported to Cambodia.

• Deductive value (DV). Where the TV, TVIG, or TVSG could not be determined, customs value of the goods was to be the DV based on information that was available in Cambodia on the basis of a value derived from the methods of valuation set out in Prakas 387.

Results Achieved from Implementation of Project The intention of the project was to enable the GDCE to gain knowledge, skills and tools to ensure effective implementation of the new Customs Law as well as the valuation agreement with WTO. To this end, the following were achieved by the project: • Using the risk-based approach, the number of import declarations and number of non-energy

export declarations selected for physical inspection at designated sites were reduced. • The average import clearance time was reduced to four hours (entry of vehicle at import

clearance terminal to exit from customs control).

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• The average customs clearance time was reduced to two hours (from lodging of customs declaration to release).

• The transaction from the time the SAD was lodged until release of goods was reduced to less

than one hour, which contributed to the reduction of import transaction time from 30 days to 10.5 days on the average, and for export transaction time from 6.6 days to 20 hours on average.

• The average transaction costs for processing exports decreased from $952 to $732, and an

average import cost from $2,477 down to $872. Impact of the Project The greater use of electronic systems throughout the supply chain has led to more information being available in an electronic format for use by Customs and other government agencies. In addition, the Internet provides Customs with an invaluable source of information for its control and enforcement functions across the board, including valuation, identity management, goods classification, and track/trace activities. The development of paperless customs valuation systems is seen as the crucial starting point for any country, like Cambodia, to influence the growth of e-commerce and thereby improve economic performance. The spread of ICT is an opportunity for customs administrations to strengthen their positions as the vanguard of strategic developments in all countries. Customs should pay special attention to the standard policies because they have the power to impose their requirements. These have special legal status and business people who have to observe customs standards will end up, for convenience, supporting their use in other interchanges. In a manner of speaking, Customs becomes the standards trend-setter, and ultimately exercises considerable influence on international standards strategies 2.5 Lessons Learned

Capacity Building in the area of Customs Valuation and Trade Facilitation must be at the center of the Change. The initiative for it came from the General Department of Customs and Excise of Cambodia who have been the owner of the development process over the whole time period.

One lesson learned is that for successful and sustainable capacity building it is fundamental to prioritize and sequence actions and continuously assess the Customs Administration and Trade capacity to cope with the changes implemented. The development of respective management skills on Customs Valuation System within administrations is of utmost importance.

Secondly, Cooperation and Partnership are equally important. Without them, no progress would have been possible in Cambodia such as technical and financial support, exchange of best practices with neighboring countries, and benchmarking from the best Customs Valuation System within ASEAN.

The success of the Cambodian Customs Valuation System (CCVS) development triggered other administrations to engage in WCO Tripartite Arrangements to even further support the development. CVSS is a very successful example of a mid- to long-term commitment towards development in customs administration and operation. It proved fundamental to identify priorities and plan the development process to be able to streamline the international assistance and capacity building support.

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Gearing Forward for the Information Dissemination of Top 10 Products of

Cambodia 3.1 Project Background Implementing Agency: Trade Promotion Department, Ministry of Commerce Total Budget Disbursed: US$39,880 (82.72%) out of US$48,211 Pillar Focus: Pillar 2: Various TDSP Component Focus: Component 1a. Technical Barriers to Trade (TBT) and Sanitary

and Phyto-Sanitary (SPS) Duration: 14 July to 13 November 2010 Main Objective: To write and publish a booklet on the top ten products each from 24 provinces to promote linkages and integration of value chains and improve business/investment opportunities for these products. Main Activities: Funds were requested to print booklets (in English and Khmer) that contained information collected from 24 provinces. The intention was to promote products among consumers and facilitate the creation of conditions for business links among provinces. The most common products were selected and listed for each province based on production quantities and potential for business and trade opportunities. Funds requested included expense for printing CD-ROMs, uploading information on the Internet, and conduct of promotion events related to the products.

3.2 Expected Outputs, Outcomes and Achievements

Expected output: The project intended to publish a booklet listing the top ten products for each of the 24 provinces of Cambodia.

Expected outcome: The intended outcome was for provincial producers to have accessed the information in the booklet and use such information in determining which product they may decide to engage in as business enterprises.

3.3 Achievements and Results

The output of this project was a 216-page book published by the Ministry of Commerce. The aim was to list ten products that have potential for further development and mass production in each of the 24 provinces, but the resulting book listed less than 10 potential products for most of the provinces. Among the top products produced from among the 24 provinces include: rice, cassava, corn/maize, fish and other aquatic products, Cambodian silk, soybeans, stone carvings, pepper, cashew nuts, sesame, reptile products and assorted vegetables. Other products mentioned include fruits such as oranges, rubber, handicrafts, sesame, and garments and garment products, as indicated in the following matrix:

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Matrix 1. List of provinces and their respective potential products. Province Potential Products

Banteay Meanchy Cambodian Silk, stone carvings, sesame, maize, cassava, mungbean (green), soybeans

Battambang Rice, cassava, cotton, grapefruit, pineapple, oranges, fruit wines Kampong Cham Rice, rubber, soybeans, cashew nuts, cassava, maize, pepper,

tobacco, sesame Kampong Chhnang Pottery, poultry, rice, maize, mungbean (green), assorted

vegetables, lotus kernels, fresh water fish, reptile products, cashew nuts, assorted handicrafts

Kampong Speu Palm sugar, rice, assorted vegetables, brick tiles, garments, pig/pork, cement, poultry

Kampong Thom Stone carvings, assorted handicrafts, soybeans, roof tiles, organic rice, reptile products, cashew nuts, cassava

Kampot Durian, pepper, sea salt, fish products Kandal Garments, Cambodian silk, maize, rice, palm sugar/juice Kep Sea salt, pepper, fish products, fish sauce, crabs, prawns, and

assorted products Koh Komg Honey, marina products, dried shrimp, fruit wine, cane juice Kratie Rubber, rice, maize, pepper, cashew nuts, cassava, soybeans,

sesame Mondul Kiri Traditional jars, rice, peanuts, soybeans, mungbeans (green),

honey, rice Oddor Meanchey Cassava, soybeans, assorted vegetables, mungbeans (green) Pailin Rice, soybeans, longans, rubber, maize, mungbeans (green),

cassava, sesame Phnom Penh Processed food, beverages, pharmaceuticals, coffee Preah Sihanuok Palm oil, pepper, rattan, fish sauce and other fisheries products Preah Veng Rice, Cambodian silk, cassava, cooking stoves, water purifier

equipment Preah Vihear Rice, Cassava, mungbean (green), bananas, cashew nuts Pursat Oranges, rice, fish and fishery products, stone artworks, cassava,

maize, palm products, rattan products, sugar can products Rattanak Kiri Gemstones, rubber, cashew nuts, cassava Siem Reap Cassava, reptile products, mungbeans (green), fish, assorted

handicrafts, Cambodian silk Stung Tung Pineapple, plum fruits, rubber, cashew nuts, cassava, oranges Svay Rieng Rice, Cambodian silk, bamboo handicrafts, cassava Takeo Rice, precious natural stones & jewelry, Cambodian silk, fish and

fisheries products, coconut SOURCE: Ministry of Commerce. (2012). Top Ten Potential Products from 24 Provinces of Cambodia. Trade Promotion Department.

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3.4 Impact and Lessons Learned

As Cambodia prepares to play an active role in the ASEAN Economic Community beginning this year (2015), investors in Cambodia can now take advantage of opportunities in agribusiness in the country. At least fifteen commodities produced in the 24 provinces of the country have been identified as potential products to be further developed as export products and, therefore, become big business commodities in the next few years.

In 2012, the Ministry of Commerce published a book entitled Top Ten Potential Products of Cambodia. This book was supposed to list the top ten products for each province, but ended up publishing only the products that had potentials for further development in terms of yield and in hectarage. On the basis of the book’s list, the top ten products of Cambodia are rice, cassava, maize, mung beans, pepper, soybeans, sesame, fish sauce, fish and fisheries products, and cashew nuts.

Cambodia’s jasmine rice was awarded last year the World’s Best Rice (three years in a row). Cambodia is also the world’s tenth producer of cassava, and its pepper production has been in existence for more than a thousand years. Within the year, it is expected that Cambodia’s fish sauce will be exported to the ASEAN Economic Community, the United States, and other countries.

The publication of the book has provided provincial producers and potential investors access to information on what products are prioritized in the different provinces. Producers and investors alike can now decide quickly which commodities they would want to invest in and pursue such business not only at the national level but in the regional as well as international levels.

The export volume for some of the top ten potential products of Cambodia increased tremendously in 2013 and continued on to the third quarter of 2014. The “winners” for that period were rice, rubber, and pepper.

It may not be accurate to say that everything was a result of the promotional activities of the Trade Promotion Department or the publication of the book, but it has also been reported in TDSP’s progress report that the project implementers believed that there were a number of positive results that have contributed to the realization of the following:

First, it is believed that the information from the book has provided business opportunities and market linkages among producers, traders, and product buyers.

Second, the resultant public awareness about the top products in each of the 24 provinces is believed to have substantially strengthened the interest and motivation of producers to mobilize and organize themselves into producer associations.

Third, the project to publish the book on the top potential products is believed to have contributed immensely to the implementation of the Diagnostic Trade Integration Strategy or DTIS 2007 because the products identified to be top products were the same as those listed in the DTIS for 2014-2018.

Fourth, implementation of the project under the TDSP enabled the Trade Promotion Department of the Ministry of Commerce to implement effectively its priorities and strategies particularly in generating trade information and promoting products as well as identified market development opportunities.

Fifth, the information materials produced as well as the book published by the Project, have been used by the Trade Promotion Department in trade fairs and product exhibitions which provided excellent trade exposures for the products in provincial, national, and international fairs.

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Finally, given the appropriate exposure gained from the implementation of the Project, the confidence and capacity of the Trade Promotion Department officers and staff had been significantly enhanced, especially in organizing seminars, workshops, and trade fairs and product exhibitions.

Worthy of mention are specific achievements and trade impacts are the following commodities:

• Rice. Cambodia exported 269,370 metric tons of rice as of September 2014, an increase of about 1.2% over the period 2013 according to data from the Secretariat of One Window Service of Rice Export Formality (SOWS-REF). i

• Garments. Cambodia’s garments exports have continued to rise although there was a slow down earlier in the year (2014), according to government data. Garment exports reached $4.44 billion worth in the first nine months of the year, up 5.9 percent for the same period the previous year. That was a slower rate of growth than over the first six months, when exports were up 16 percent compared to the same period in 2013. The garment and footwear industry, Cambodia’s largest income earner, reported a 12.6 percent rise in exports in the first seven months of 2014, according to the data of the Ministry of Commerce. The country exported apparel and footwear products worth USD3.47 billion during the January-July period of 2014, up 12.6 percent from USD3.08 billion over the same period the previous year (2013), the data showed. Products are mainly exported to European countries and the United States. ii

• Rubber. Cambodia has reportedly seen an increase in natural rubber export in the first seven months of 2014, hitting nearly 40,000 tons. Volumes of rubber exports were from state-owned rubber plantations (100 tons), private rubber plantations (more than10,092 tons) and agro-industrial investment on economic concession lands (27,563 tons), a report of the Ministry of Agriculture, Forestry and Fishery pointed out. However, as late as 2013 until the first six months of this year (2014), the price of rubber had gone down to US$1,900 per ton from US$2,000 per ton last year (2013). iii

• Trade Volume. For the first semester of 2014, Cambodian total trade reached USD 8.95 billion, an increase of 17.6% from USD 7.61 billion during the same period in 2013. The country’s export from January to June 2014 was valued at USD 3.77 billion, up 20 percent from USD 3.14 billion for the same period the previous year (2013), whereas its imports increased by 16 percent, from USD 4.47 billion to USD 5.18 billion. The growth was attributable to the macroeconomic stability and good investment environment, which have been attracting foreign direct investment from the region and around the world. The recent surge in foreign direct investments specifically from China, Japan, Korea, Thailand, and Malaysia was expected to fuel Cambodia’s exports in the future.iv

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Enhancing Teaching and Learning of Intellectual Property Rights in Cambodia

4.1 Project Background Implementing Agency: D/IPR/Secretariat of NCIPR, Ministry of Commerce Budget Disbursed: US$ 110,539.78 Pillar Focus: Pillar 1: Legal Reform TDSP Component Focus: 1c: Other Legal Reforms and RGC WTO Obligations Duration: 01 Oct. 2010 to 30 August 2013 Main Objective: Assess IP training needs throughout Cambodian government agencies and institutions of higher learning and promote coordination among various institutions and agencies in developing IP curricula. Main Activities: (1) Assess capacities and needs in the area of IP training. (2) Establish IP curriculum and draft training materials in Khmer. (3) Develop a team to translate IP materials and texts into Khmer. 4.2 Expected Outcomes Better quality and reliability of information on IP and IPR available in Cambodia by putting in place a system of accessing and assessing information in order to have improvement in terms of efficiency in the implementation of IPR regulations in the country. 4.3 Achievements of Outputs and Results

Specific activities that have been completed by the project are, as follows:

• An IP training needs assessment was conducted with the following outputs: one assessment report, one presentation material produced, one presentation conducted, and IP curriculum completed.

• Two consultation workshops were conducted on 7 and 9 February 2012, with 46 participants from universities, Royal School of Administration, Royal Academy, and several line ministries.

• One IP manual (800 pages) was prepared with 100 copies distributed to various stakeholders who were consulted about the manual in two workshops with 46 participants.

• Transfer of technology was conducted where 43 trainers were trained. Eighty percent of these claimed they would actually apply what they have learned.

• One two-day training was conducted for 52 participants.

• One IP Lexicon of 30 pages was prepared.

• Translation of IP treaty (1,400 pages) was completed.

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4.4 Impact and Lessons Learned As Cambodia shifts gears and quicken its pace to join the developing world, it is also increasing the rate at which its officials and citizens are learning intellectual property issues, matters that play significant role in international relations and trade. In its Cambodia’s accession to the WTO, the Royal Government of Cambodia (RGC) identified in early 2004 an ambitious “Work Program” of trade- and business-related legal reforms intended to improve the enabling environment and bring Cambodia’s trade- and business-related laws into WTO compliance. Of the 74 laws, Government sub-decrees and Ministerial regulations identified over time to implement this Program, 50 laws were promulgated and adopted as of early 2011. Many of the reforms adopted already have had a major, positive impact on business development, giving rise in particular to a significant increase in both domestic and foreign investment in Cambodia, major improvements in the area of trade facilitation, or significant advances in the implementation and use of Intellectual Property Rights protections. The IP Manual and other IP training materials are now being used by lecturers and instructors from 11 major universities in Cambodia, translating to over 2,000 students trained and informed on intellectual property rights, copyright issues, and trade mark. This was the essence of the project Enhancing IP Teaching and Training that has been completed under the Trade Development Support Program of the Ministry of Commerce. The project assessed intellectual property training needs among government agencies and institutions of higher learning as basis for the design of an IP curriculum that could be offered in various learning institutions in Cambodia. The TDSP reported that many of the reforms adopted already have had major, positive impact on business development, giving rise in particular to a significant increase in both domestic and foreign investment in Cambodia, major investments in the area of trade facilitation, or significant advances in the implementation and use of intellectual property and intellectual property rights protection. The manual and other IP training materials are now being used by lecturers and instructors from 11 major universities in Cambodia. This is tantamount to saying that the project at the time it was closed had successfully reached some 2,000 students, who all intents and purposes, may be considered trained and informed on intellectual property rights, copyright issues, and trade marks. By the end of 2015, it is assumed that more than 30,000 consumers shall have been made aware of the mechanics of IP as well as IPR by just word of mouth. The important point here is that as a result of the TDSP project, the government has successfully developed a curriculum on IPR that may be accessed by anyone in Cambodia at any given time through the universities and other institutions of higher learning.

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Capacity Building for the Department of Trade Statistics and Information

5.1 Project Background Implementing Agency: Department of Trade Statistics and Information,

Ministry of Commerce Budget Disbursed: US$ 90,343.51 (65.59%) out of US$137,540 Pillar Focus: Pillar 3: Strengthening Key Ministry of Commerce

Departments and Department Functions TDFSP Component Focus: Component 3: Human and Institutional Capacity Building Duration: 06 August 2010 to 30 November 2012 (officially closed June 2013) Main Objective: To develop the department’s capacity to collect, analyze, and publish trade statistics and information. Main Activities: (1) Undertake a survey to assess needs of trade information users. (2) Draft format for new publications (yearly and monthly) and for websites, tools or platforms (on-the-job training) and verification. (3) Conduct training to use ICTs market analysis tools such as Trade Maps and Market Access Map (access to these tools is free for users in developing countries thanks to grants from the World Bank and ICT’s Global Trust Fund). (4) Training on statistical analysis and interpretation of data. (5) Training on IT. (6) Publication of Annual Statistical Yearbook and hosting of a Website. (6) Study tour in provinces on trade map, product map, market access map and investment map with report preparation. (7) Workshop on Monitoring and Evaluation. 5.2 Expected Outcomes/Outputs Data and trade statistics have become readily available for decision-making and policy making in the Ministry of Commerce through online means. 5.3 Achievements of Outputs, Results, and Outcomes

The following were the specific achievements of the project:

• The survey of trader users was conducted with a sample of 137 (43 female), who were senior officers, directors, and staff of national and international business firms.

• Forums for the electronic data format were produced and new Website design interfaces were completed and implemented.

• Fifteen staff were trained for 10 days in statistical analyses (such as time series designs, sampling techniques, and data encoding/entry processes), and ITC tools for market analysis and market mapping.

• An effective template for ITC information is now included in the Ministry of Commerce Website.

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• On-the-job training on IT technical system, data base, network, and server management was partly provided alongside with management of ICT by a local IT consultant (hired for 6 months but completed only 5 months). An international consultant was not hired.

• Thirty-five participants from each targeted provincial department of commerce, CCC, associations, companies, and related stakeholders were trained on basic understanding on trade analysis tools of ITC during the study tour in three provinces: Battambang (for rice), Pailin (for cassava), and Rattanakiri (for cashew nuts).

• A final workshop was held on November 23, 2012 during which time 235 copies of the Statistical Yearbook for 2011, which were already printed, were distributed to present stakeholders from various institutions like embassies, universities, and the private sector. Of the 235 copies distributed, 179 we given to participants of the workshop. The excerpts from the Trade Statistical Yearbook of 2011 were published in the Ministry of Commerce’s Website.

• DTSI submitted its project completion report officially in May 2013, and a final review meeting was held in June 2013.

5.4 Impact and Lessons Learned

Statistics, in general, and on international trade, in particular, are essential for guiding economic and business decisions. Developing economics, like Cambodia need clear and accurate information about their performance with business partners to enable policymakers to better identify promising sectors and countries to be considered when creating, monitoring, and evaluating regional trade development programs. The Project aims at enabling the Department of Trade Statistics and Information of the Ministry of Commerce to develop and deepen in-house capabilities to initiate and coordinate trade development statistics and information initiatives on a sustainable basis. To ensure that DTSI are anchored in an organizational structure that is conducive to such initiatives, a trade focused institutional assessment has been undertaken within the department, reviewing the current structure and staffing, assessing training needs, as basis for an appropriate organizational structure in charge of gathering, analyzing, publishing, and disseminating trade information and statistics for the Ministry of Commerce, and for other stakeholders in the trade sector in Cambodia.

It is increasingly recognized that the implementation of Cambodia’s regional integration agenda to the ASEAN Economic Community by the end of 2015 requires appropriate institutional capacities to guide and support the economic operators, traders, and other business people at the enterprise level, within a common regional framework of statistical information on trade. Accordingly, statistical information on trade and commerce has been a critical priority at the Ministry of Commerce, next to the preparation and implementation of effective trade policy functions. The linkage between policy and regulatory efforts on the one hand, and trade development and enterprise support in the form of trade statistics and information, on the other, requires however an institutional middle field of private and public service providers of trade information and statistics, which is often missing or ineffective.

The key challenge to DTSI is to upgrade their capability as an institution and provide the necessary networking capability to enable them to effectively develop the necessary supply response at the trade sector and enterprise levels on trade statistics and information requirements, as well as in improving their marketing skills, decision making capabilities, and facilitating export linkages with the information and statistics provided to them by DTSI.

The following were some of the impacts and lessons learned of this Project:

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• Adoption of a new structure at DTSI - The Project has put in place, with the assistance of an international and a local consultant, an appropriate organizational structure for DTSI, with key technical and operational capabilities agreed upon, its management in place, and institutional capabilities further strengthened. It has carried out several training programs, starting first within the department itself, and later on to the other offices at the Provincial Departments of Commerce. The initial training programs carried out were aimed at transferring capabilities on results-based management (RBM) of statistical and information support tools and methodologies. The process of conducting the RBM training in the provinces were mostly carried out as national consultation sessions that have contributed to improve communication flows between the central Department of Trade Statistics and Information at the Ministry of Commerce and the provincial departments of Commerce, while strengthening DTSI’s visibility and lead role in gathering trade and information within the country.

• Training on Market Analysis Tools and Methods – Staff at the DTSI and the provincial levels were trained by the International Trade Centre officers and consultants, including the international consultant hired by TDSP, on the use of market analysis tools and methods. These training conducted by ITC were later on expanded to other offices and departments at the Ministry of Commerce, and then later on with the traders and businessmen in order for them to use market analysis tools and methods in prioritizing products and markets for national and regional export promotion, with consideration to poverty reduction, women, and environment. Capacity building activities involved studying trade statistics and other performance indicators as well as research on export competitiveness through consultation with companies. As a result, participants improved their market analysis skills and learned how to use tools and methodologies for assessing export potential. They also identified priority sectors for regional trade promotion on the basis of indicators such as export performance, enterprises’ assessment, conditions of access to international markets, production capacity, trends in world markets, and impact on job creation, employment of women, poverty reduction and rural development.

• Sustaining the publication of Statistical Yearbook. DTSI is now contemplating to sell their monthly bulletins and statistical yearbook to sustain the future publication of trade information and yearbooks.

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Strengthening Institutional Risk Management Capacities at the Camcontrol

General Directorate, MoC 6.1 Project Background Implementing Agency: Cambodia Import-Export Inspection and Fraud Repression,

General Directorate of CAMCONTROL, Ministry of Commerce Budget Disbursed: US$143,723.78 (95.59%) ouf of US$105,550 Pillar Focus: Pillar 3: Capacity Development for Trade TDSP Component Focus: Component 3: Strengthening Human and Institutional Capacity Duration: 01 January 2011 to 23 March 2014 Main Objective: To enable CAMCONTROL to establish risk management unit that is properly equipped and appropriately staffed with trained personnel. Main Activities: (1) Strengthening management structures for CAMCONTROL General Directorate. (2) English language training for CAMCONTROL Risk Management Unit. (3) Equipment Procurement Unit for CAMCONTROL Risk Management Unit. 6.2 Expected Outcomes • Institutional Risk Management capacities at CAMCONTROL shall have been strengthened. • On completion of the project, CAMCONTROL shall have established risk management unit

according to appropriate management structures and processes. 6.3 Achievement of Results, Outputs and Outcomes The achievements of this project, in terms of outputs, were the following: • Preliminary risk level report on food imports was completed in January 2012. • Regulations report on imported food into Cambodia was completed in March 2012. • Revised job description report completed in March 2012. • Report on the options for management structure on risk management. • Monitoring and evaluations for Risk Management Unit prepared in June 2012. • Standard operating procedure and training plan for RMU completed in June 2012. • One half-day workshop on risk management completed with 83 participants in March 2012. • One term of English class completed; 3 more terms to be continued after completion of

procurement process. Fourteen staff joined private English classes and six staff attended a ten-hour technical English (English for laboratories) class.

• CAMCONTROL has already revised the structure of Risk Management Unit based on recommendation of consultant but needs approval by Ministry of Commerce management.

• Final workshop completed in March 2014.

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In terms of outcomes, the following were achieved:

• A new unit, the Risk Management Unit, of CAMCONTROL has been established and resulted to better coordination with the GDCE in the Risk Management System’s implementation at the checkpoints and other borders.

• With the implementation of a risk-based approach in the management structures and organizational processes at CAMCONTROL, the number of containers and goods passing the red channel has reduced from 35% to 25% in most checkpoints and borders.

6.4 Impact and Lessons Learned The practice of most governments is to assign aspects of regulatory responsibility at the border to a number of different agencies. Each of these agencies has its own specific mandate from government and, taken together, they cover issues as diverse as health, product safety, biosecurity, immigration controls, revenue collection and transport security. Nevertheless, the fundamental nature of the challenge that each agency confronts is the same, that is, to facilitate the legitimate movement of people and goods while, at the same time, maintaining the integrity of the border by ensuring compliance with relevant legal requirements. Proper border management is critical to the cost effectiveness of international trade transactions and the smooth flow of legitimate goods and people from the perspective of both the public and private sectors. And while some agencies may have particularly good procedures in place, the achievement of effective and efficient border management is ultimately a whole-of-government task, requiring the involvement of all government agencies with responsibilities at the border. The following examples, while far from being exhaustive, highlight the breadth of agencies’ roles and responsibilities at the border. In Cambodia, border management are the responsibilities of two agencies: the General Department of Customs and Excise and Camcontrol. In the case of CAMCONTROL, it has the responsibility of enforcing government policies designed to mitigate a wide variety of risk to policy objectives at the border. It has its own Risk Management Unit that has to carry out various risk control responsibilities. By the authority of Prakas 155-MOC/SM2010 dated September 13, 2010, a Risk Management Unit (RMU) has been established within the Cambodia Import-Export Inspection and Fraud Repression Directorate General (Camcontrol), Ministry of Commerce of Cambodia. Pursuant to Sub-decree No.21 A’NKR.BK dated 1st March 2006 on Trade Facilitation through Risk Management, the Unit will guide and facilitate the introduction of a risk-based approach in all of Camcontrol’s activities. The Unit will carry out its work within the framework of the Camcontrol Directorate-General Strategic Risk Management Plan (GSRMP). The RMU will work systematically through the goods/activities for which Camcontrol has regulatory responsibility to ensure that within a reasonable period of time a risk-based approach can be implemented throughout the organization. It is essential for the Unit to go about its work in a logical, coherent and consistent manner, and that its internal working processes should be transparent in order to build confidence in the competence of its analytical and advisory work.

The two most important objectives of CAMCONTROL authorities are to “provide the international trading community with an appropriate level of facilitation, and ensure compliance with regulatory requirements,” according to Professor David Widdowson of the School of Law at the University of Canbera in Australia. If these two things cannot be provided, then they pose risks at how control of goods at the border are being undertaken.

We follow Professor Widdowson. He says, risk refers to the “possibility of events and activities occurring that may prevent an organization from achieving its objectives.” These are not the only

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risks facing CAMCONTROL; some include violation of trading laws (e.g. not following licensing requirements), violating rules of origin, avoiding valuation provisions, violating trade restrictions, and failure to facilitate international trade, among others. Managing all these is a preoccupation of CAMCONTROL and Customs officials. Risk management, according to the Revised Kyoto Convention, is the “application of management procedures and practices which provide CAMCONTROL and Customs with necessary information to address movements and arrangements that present risk” regarding the flow of goods and containers through CAMCONTROL and Customs.

There are five main steps in the standard CAMCONTROL and Customs risk management process, as follows:

• Establish context;

• Identify risks, such as revenue protection (specifically, undervaluation of goods, authenticity of the Certificate of Origin); prohibitions; restrictions, etc.

• Analyze risks (such as the likelihood of risk occurring);

• Assess and prioritize risks, such as establishing impact and possible consequences;

• Address risks, like defining counter measures, assigning rates (whether or not these can be tolerated, treated or transferred/terminated).

Widdowson’s Risk Management Matrix

Widdowson provides a practical framework for risk management in this matrix: TRADITIONAL GATE KEEPER STYLE RISK MANAGEMENT STYLE

Indiscriminate intervention or 100% check.

Focus on high risk areas, with minimal interaction f flow risk areas.

Physical control focus. Information management focus. Focus on identifying compliance. Focus on identifying both compliance and

incompliance. Post arrival import clearance. Pre-arrival import clearance. Physical control maintained pending revenue payment.

Breaks nexus between physical control and revenue liability.

No special benefits for recognized compliers. Regards for recognized compliers.

On top of these, Cambodia had additional concerns, which were contained in a project proposal titled Strengthening Institutional Risk Management Capacities in Camcontrol General Directorate, Ministry of Commerce. A review of the proposal concept note provides specific information that could help in understanding the significance of risk management in CAMCONTROL operations.

According to Prakas 155-MOC/SM2010 dated September 13, 2010, the Risk Management Unit has the following roles and responsibilities:

• Develop and implement the Risk Management Plan for Camcontrol DG;

• Identify the risks that the program activities of each branch are intended to control;

• Implement risk analysis (risk assessment, risk management and risk communication) under the mandate of Camcontrol, taking into account international good practices and Cambodia’s international obligations;

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• Propose the detailed methods for controlling the risks addressed by program activities, for implementation by Camcontrol branches;

• Jointly with program managers (departments and/or branches), establish Standard Operational Procedures (SOP) for import-export programs based on risk management;

• Provide other relevant guidance to each branch on the implementation of a risk-based approach;

• Communicate within Camcontrol and with key stakeholders about principles and practice of risk management;

• Monitor and review the implementation of Risk Management Plan and revise the plan as appropriate.

The completed project was premised on two important problems that needed to be addressed: 1) identification of activities at CAMCONTROL that were not based on risk management approach, and 2) that risk management approach was needed to ensure Cambodia’s compliance with WTO rules and regulations.

In other words, the project intended to strengthen risk management capability of Camcontrol in order to: a) enable the environment by using the risk management procedure; b) provide necessary hardware; and c) address serious skills needs of the Risk Management staff, particularly in English.

It had been observed at Camcontrol that the limited English capability had been a major impediment in the work at RMU because this relied heavily in the use of information in he Internet, which is in English.

At the end of the project, the Risk Management Unit was indeed re-established and has resulted in better coordination with GDCE in the risk management system implementation at Customs check points and other borders. CAMCONTROL and Customs Risk Management operations have improved substantially as a result of the outcomes of this project. For example, with the implementation of risk-based approaches in the management structures and organizational processes at Camcontrol, the number of containers and goods passing the red channel has reduced from 35 percent down to 25 percent in most checkpoints and borders. This has, undoubtedly, quicken the pace of movement of goods and containers through Customs and CAMCONTROL.

6.5 Success Story at the Border

This story happened in 2010, when the factory owner’s shipment was stalled again. An official on the border was asking him to redo his export permit because of “mistakes” in the text.4

The factory owner knew that redoing the form would entail paying another fee, but he had no choice. His buyers were waiting for their orders to be fulfilled and further delays would endanger the credibility of his business. He paid the fee, his exports were cleared and he won the respect and endorsement of an important client. That was three years ago, when the factory owner’s firm was the new kid on the block struggling to make a name for itself as one of the few European garment manufacturers in Cambodia.

Today border checkpoints in Cambodia are automated and red tape has been cut. It takes less time and money to move goods to markets. This cost in time and money is measured by The World Bank Group Logistics Performance Index (LPI). Cambodia’s LPI ranking has risen spectacularly by 46 places, to 83rd out of 160 countries, up from 129th four years ago. The time to clear customs fell from 5.9 days in 2010 to only 1.4 days in 2014. The share of consignments selected

4 https://www.worldbank.org/en/news/opinion/2014/03/21/cambodia-is-on-the-move

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for inspection has fallen from 29 per cent in 2010 to 17 per cent in 2014, suggesting that customs’ efforts to improve risk management are paying off.

Good logistics allow farmers and manufacturers to move their goods to markets efficiently, reduce challenges to exporters supplying overseas customers and allow Cambodia’s exporters to integrate more successfully into regional production networks.

Cambodia is an export-driven economy, and more exports mean higher growth and income, more jobs, less poverty, better livelihoods and shared prosperity for the Cambodian people. How has Cambodia achieved this impressive turnaround? The key has been significant reforms to facilitating trade.

With the help of World Bank assistance and the EU-financed Trade Development Support Program trust fund, it has automated and streamlined many import/export customs procedures to comply with international standards. The Risk Management Unit of CAMCONTROL at the Ministry of Commerce was re-established to work with the GDCE on various risk management control responsibilities at the border. Continued improvements in logistics will pay off as Cambodia moves into full participation in the ASEAN Economic Community (AEC) 2015. Cambodia’s AEC commitments include cross-border trade agreements that facilitate the movement of goods and the automation of border arrangements. The signs are that Cambodia is on the move.

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Support to the Government-Private Sector Forum

7.1 Project Background Implementing Agency: Cambodia Chamber of Commerce Budget Disbursed: US$182,267.25 (65.82%) out of US$ 276,906 Pillar Focus: Pillar 2: B. Trade Support Institution TDSP Component Focus: Component 2: Increased Transparency ad User Feedback

Mechanisms on Trade-Related Process. Duration: 01 October 2012 to 30 June 2015 Main Objective: The main objective of proposal is to improve business environment through enhancement if public and private sector dialogue. Main Outputs and Activities: (1) Support and consult with Working Groups to complete members survey; (2) Training of BMO representatives to provide efficient support to public-private dialogue; (3) Establish cooperation with research and learning institutions; (4) Conduct analytical works to identify policy issues to be discussed in GPSF. 7.2 Expected Outcomes and Indicators The following are the expected Project outcomes: • Increased effectiveness of the BMDs (Business Membership Organization) in providing

evidence-based input into the policy and law-making. • BMOs enabled to identify and prepare high quality actionable reforms recommended to G-

PSF mechanism. • Enhanced links between the private sector ad the trade SWAp in ensuring that appropriate

follow up is taken, including with the provision of technical assistance for the implementation of identified reforms.

Following indicators were measured: • The capacity of the BMOs participating in the G-PSF is strengthened. • Studies on the identified technical issues are carried out and reviewed. • Results of dialogues, surveys and studies are fed into the Trade SWAp Pillars to contribute to

the ongoing updating activities. 7.3 Achievements in Results, Outputs and Outcomes Output # 1-Member Survey completed and achieved the following results: • Approximately 1,700+ individual companies and business operators participated in the

survey. The survey has been grouped in 3 main categories: (a) 15 Phnom Penh and Provincial Chambers of Commerce; (b) 9 PSWGs via lead association acted as PSWG secretariats; (c) 12 non-PSWGs business associations. Survey report was completed in February 2014.

• Membership Assessment Survey already completed and submitted to DICO. The Members’survey was conducted in early 2014, with a total of 1,478 companies and business

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operators surveyed and 326 completed the surveys. The survey is a systematic approach to regularly collect information from members, analyze the information and identify policy issues. The findings were shared with PSWG executive committee members and used to improve the dialogue with government counterparts.

• From members’ survey, key and cross cutting issues were identified for in-depth studies: high cost of electricity and supplies and tax related issues.

Output #2-BMO’s representatives trained to provide efficient support to public-private dialogue and achieved the following results: • Face to face meetings with all PSWG co-chairs and secretariat were conducted to gather their

inputs and suggestions to move the project forward. • Workshops in Phnom Penh and 12 training workshops in the provinces completed.

Output #3 –Cooperation with research and learning institutions established and achieved the following results:

• Signed MOUs with the Royal University of Phnom Penh, Pannasastra University of Cambodia, Mekong University, National University of Management, and Build Bright University.

Output #4-Analytical works in identifying policy measures to be discussed with the Government based on issues identified in the members survey completed and achieved the following results: • The in-depth study on Electricity Cost and Supplies have been conducted and completed in

March 2015 by William Derbyshire, Economic Consulting Associates, supported by Setha Hong, Lead Consultant of the GPSF Project.

• The Study on Tax Related Issues was dropped.

Output #5- The GPSF provides regular inputs into the Trade SWAp Pillars completed and achieved the following results: • The 17th GPSF was conducted successfully at the Peace Palace. • Organized Sub-National Workshops on Public-Private Dialogue for Better Business

Environment in Kampot Province (9 June 2014, attended by 62 participants from Kampot, Takeo and Kep provinces); Sihanoukville (11 June 2014 with 68 participants); Koh Kong Province (13 June 2014 with 47 participants); and Kampong Cham Province (20 June 2014 with 63 participants from Kampong Cham and Kratie).

• The five Provincial Workshops on Government and private Sector Forum (G-PSF) were successfully conducted in October 2014 (Pursat on Oct 22, BTB on Oct 24, BMC on Oct 27, SRP on Oct 28, and KPT on Oct 30, 2014).

• The last Provincial Workshops on Government and private Sector Forum (G-PSF) was conducted in Prey Veng on November 3, 2014.

• A National Workshop on Mechanism for Private Sector Development was held on March 3, 2015 at Cambodiana Hotel attended by more than 100 parrticipants.

Output #6 – Enhanced capacity of CCC in project management, monitoring and evaluation, and communications completed and achieved the following results. • Detailed work plan of CCC has been reviewed and finalized for incorporate into the RBAP. • On 24 Oct 2014, PRC approved contract negotiation with Mr. Thidet and the contract has

been signed. • National Website Consultant signed contract on 17 Nov 2014 and established a website for

GPSF with a beta version in March: www.gpsf.org.kh. • The First Issue of the Newsletter was published, printed and distributed in March 2015.

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• Database has been developed and used as a tool for reform tracking and linked with the website: www.gpsf.org.kh.

• Proposed Public Private Dialogue Framework and composition for establishment of Provincial Public Private Dialogue has been fully developed, including the development of standard operating procedures for PSWGs.

7.4 Impact and Lessons Learned

Cambodia’s Government-Private Sector Forum (G-PSF), established at the initiative of the Royal Government of Cambodia in 1999, is a mechanism for public/private sector consultation on investment climate issues ranging from long range policy to day-to-day operations. The G-PSF also gives Government a channel for getting private sector feedback on draft policies, laws and regulations. Chaired by the Prime Minister, the G-PSF has two plenary meetings a year which have the status of cabinet meetings, and decisions made by the Prime Minister are binding. 5

The sub-decree establishing the G-PSF sets out its objectives as follows:

• Discuss and exchange ideas with private sector dialogue partners to identify measures that resolve complaints in individual sectors in a timely manner, and propose these solutions to the authorities concerned.

• Identify, in consultation with private sector dialogue partners, strategic initiatives for supporting and encouraging existing companies as well as attracting investors that will bring new businesses to Cambodia.

• Provide a regular report to the Head of the Royal Government on the activities and direction for follow-up work, which is required for continuous implementation so that the Head of the Royal Government can propose solutions at the twice-yearly plenary sessions.

• Address other problems as necessary within the framework of individual sector meetings and as mandated by the Royal Government.

From the very beginning of the G-PSF, the Government has played a very strong leadership role in management of the dialogue, while the private sector has lagged behind in terms of organizing itself and in substantiating the problems raised with Government. Since 2002, at the request of the Government, IFC has supported a G-PSF Coordinating Bureau to help the private sector advocate more successfully for itself. At any time, the PSWGs and Government counterparts are negotiating solutions to more than 300 different problems.

Since IFC’s involvement began in 2002, the dialogue between the Government and the private sector has matured, and the private sector now shows sufficient capacity to engage directly with their Government counterparts. Therefore, IFC has started working with stakeholders on an exit strategy.

The main reason why the Forum has been so successful is the strong commitment from both Government and the private sector. Jointly they contribute hundreds of hours a year to Forum Working Group meetings and other activities. Also because the Government and the private sector have taken ownership of PPD, they consider this as the key channel for raising problems and resolving them. The plan for IFC to exit and fully leave management of the G-PSF in the hands of the private sector is a first of its kind and the lessons learned and will definitively

5 www.publicprivatedialogue.org/.../Cambodia%20PPD%20Case%20Stud

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influence the way IFC-WB manages its exit from the other 30 or so public/private dialogues they currently support.

To ensure the sustainability of the G-PSF, business associations will need to play a greater role in the management of the WGs and perform the role of PSWG secretariat. Some working groups such as Law, Tax and Governance; Banking and Financial Services; Export Processing and Trade Facilitation; and Industrial Relations are already supported by associations that play a leading role in managing group activities and reporting to their constituents. These business associations will gradually take over roles and responsibilities that used to be undertaken by IFC’s Coordinating Bureau. Despite some success with this hand over, the working group process remains largely that of participation by individual business representatives, with IFC continuing to facilitate the process.

Challenges to Overcome:

Capturing impact: despite a sophisticated M&E framework developed by the network of PPD practitioners - which was used in the evaluation of the G-PSF in 2007 - a key challenge faced by the coordination team is that of reporting on the impact of public/private dialogue using the IFC monitoring indicators. This is crucial in order to demonstrate its real value to IFC management. Increasingly, the IFC monitoring and evaluation indicators that we are expected to track are defined according to IFC business lines and core products, which are, by definition, limited. For example, the indicator on the “number of laws, regulations, amendments, codes that were eliminated/improved” limits the “count” to only the areas where IFC has provided technical assistance. However, technical assistance can only be provided if it corresponds to core IFC products. On the contrary the issues raised by PPD cover a number of sectors and encompass hundreds of areas of reform. Establishing a PPD that covers only IFC core products will be of limited use for Government and private sector participants, because instead of focusing on the priorities of stakeholders, we will be focusing on IFC’s priorities.

On the sustainability plan, there are several major risks to be considered:

• Weak associations: The model for the sustainability of the G-PSF is that business associations will take over managing administration of the G-PSF. Currently, although some are well organized, most Cambodian business associations are weak, and lack both sufficient members and adequately skilled management. Even after receiving two years of capacity building through IFC, business associations may still not be able to deliver the services required of a secretariat to a Private Sector Working Group.

• Lack of an institutional home for the G-PSF: A second key risk is that there is no document describing the operations of the G-PSF. Currently the sub-decree issued by the Government covers only the Government’s mandate and operational procedures on how to participate in the G-PSF, but does not cover the roles and responsibilities of the private sector. By-laws for the proposed private sector umbrella (the Private Sector Forum) have been developed with support from IFC, but these bylaws have not yet been endorsed by the Government and other stakeholders. According to these by-laws, the G-PSF will become an independent entity under the umbrella of the Cambodia Chamber of Commerce. If this model is not adopted, it could cause existing Private Sector Working Group members and their Co-chairs to disengage from the dialogue because they fear loss of their independent views and that their problems will not be accurately reported to, or addressed by, Government.

• Lack of capacity: Due to lack of capacity (financial and human resources) or their lack of commitment to ensure outreach, when business associations act as secretariats to the Working Groups, they could call only upon their members, and in doing so, cut out other important companies and sectors that participate in the PSWGs. For example, the export processing

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working group could reflect only the concerns of the garment manufacturers’ association, rather than the concerns of other exporters such as the exporters of handicrafts and of agricultural products. The dialogue could then shrink to a bilateral dialogue (between one association and its Government counterpart), instead of covering cross-cutting issues from several sectors. An associated risk is that the Forum will no longer represent the Cambodian private sector as a whole, but will degenerate into a number of parallel dialogues that are uncoordinated with each other. This would weaken the PSWGs capacity to advocte and also cause confusion for the Government which would not like to negotiate with so many separate entities and would no longer have coordinated views from the private sector as a whole.

• Lack of advocacy skills: Lack of business association capacity may also be reflected in the difficulties associations have in clearly articulating problems and finding the statistics and other evidence needed to explain problems and proposed solutions. Because business associations can only afford to hire junior staff who have limited education and training, staff will likely not have the capacity to prepare effective position papers. The key risk here is that PPD becomes an ‘empty egg’ with little impact on the reform process.

IFC and the WB are addressing these risks in working closely with the Government to set up a clear institutional framework for the private sector to operate, and in increasing the capacity of the Government to monitor the impact of the dialogue and the effectiveness of the Private Sector Working Groups. If the quality of the discussion were to decrease, the Government’s role will be to demand that the private sector provides better inputs in the dialogue. There is still a role for IFC and other donors to support the private sector with sectoral research and expertise on issues raised. IFC plans to continue such support in the future. From the associations’ side, IFC’s intervention has its limits as the private sector is young and many business owners still lack formal education. As the private sector grows in Cambodia and access to education improves, it is expected that business associations will grow stronger themselves.

Impact and Lessons Learned:

Some results from the Cambodian G-PSF are readily quantifiable, others less so. Each of the seven Working Groups has made progress in their sector or cross-sector work. The Law, Tax & Good Governance Working Group (LTGG WG) has had substantive involvement in the review of a number of laws and regulations. This includes the recently passed Sub-Decree on Special Economic Zones.6

When the LoI was recently published and distributed during the G-PSF, the LTGG WG’s long term input was given recognition in the published edition of the work. A substantive issue for developing countries is the role of the private sector in the provision of infrastructure, and since 2002 main arterial road leading to Cambodia’s sea port has been operated under a toll concession. The Energy & Infrastructure Working Group has provided the platform for a long-term dialogue on the cost and management of this concession. This dialogue has led to negotiations on toll cost, maintenance, management and other related issues. As it is a government policy to initiate other similar concessions, the WG has provided the government with a ‘lessonslearnt’ input for use in their ongoing deliberations on this challenging issue.

Another issue for many developing countries is land management. During the G-PSF, the Government agreed to establish a working committee with the private sector to identify and review economic land concession disputes. The Forum is a malleable institution whereby cross-

6 http://www.publicprivatedialogue.org/case_studies/Working%20Group%2009%20Case%20Study%20-%20Cambodia.pdf

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cutting WG meetings can focus on an issue that impacts more than one sector. For example, participants of the seven WGs were heavily involved in the building of the World Bank Group’s Private Sector Development Program.

WG participants actively contributed to the development of a value chain study. This work identified trade facilitation issues as a significant barrier to growth. The Export Processing & Trade Facilitation WG provided important input into the subsequent US$ 10m trade facilitation support program that is ongoing. The twelfth point of this program is a requirement that an update of progress must be provided to the G-PSF held every six months.

The Manufacturing & SME WG spent a considerable amount of time building an ‘issues and recommendations priority matrix’. This matrix has been an important contributing reference in the government’s SME Framework policy. Updates of the Framework’s progress are provided to theM&SME WG.

In general, one of the main results from the Forum is clarifications provided by the government on a wide range of issues such as WTO accession, licensing, regulations and application procedures. Less easy to quantify is the issue of trust and relationship building. From the outset, trust between the private sector and the government had to be established. Before this could happen, trust building within the private sector had to take place. Trust and relationship building are ultimately as important and substantive outcomes as many of the more tangible and quantifiable results.

The G-PSF is an example of dialogue as a post-conflict tool. Throughout the concluding decade of the war the government had become focused on instituting a market economy in Cambodia. Although there had been some early success with the rise in the garment sector, by the late 1990s the Asian financial crisis was impacting on Cambodia and this led to a realization that the emerging private sector needed to be included in the development of the economy if it was going to grow.

Once this recognition was made, the government initiated the G-PSF. When this mechanism was put in place, deep distrust existed within the community. The privations experienced by Cambodians under successive communist governments made them cautious with regard to business or personal exposure. An open dialogue between government and private sector was something new to the emerging private sector.

An important factor that enabled the Forum to move forward was the focus on a neutral, shared, non-political platform which could be used for constructive consultation on issues, not criticism. If the Forum had been perceived as other than a constructive, participatory process that was understood and appreciated as such by the government, it would not have encouraged businesspeople to engage in a participatory process for development.

From an early narrow base of participation, and sometimes difficult consultations, the G-PSF has continued to evolve to provide a structure for private sector participation. As a process that depends on personalities and building relationships where they otherwise had not existed, the process needs to be constantly worked with to build a trust-based dialogue focused on private sector development.

Private Sector Development is critical if countries are going to move away from war and provide opportunity for conflict-afflicted populations. An inclusive, participatory approach such as that being developed in Cambodia can play an important role in such development.

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7.5 Recommendations

As the G-PSF embarks on empowering the private sector to manage the dialogue and undertake direct consultation with the Government, there are some lessons which can be shared with other PPDs7:

• Do not create a PPD secretariat in the aid agency. The secretariat should be embedded in both Government and private sector institutions. The Government’s PPD secretariat coordinates with various public institutions and the private sector’s PPD secretariat coordinates with various business membership organizations (chambers of commerce and industry associations). Ideally the national chamber of commerce should play this role, but it could be that the chamber will have so little capacity that solutions will need to be found that utilize other business membership organizations (such as the local employers’ association). Development partners have now developed well-designed tools that they can provide to these PPD secretariats and a network of PPD experts can be assigned as advisors. These PPD experts should be contracted initially for one year or more, but should not lead dialogue management. Rather, these PPD experts should be in the background, providing advice, training, setting up an M&E system, ensuring outreach and helping to build trust.

• PPD needs endorsement from the highest level of authority. To achieve reforms and ensure commitment from Government institutions to listen to the private sector, it is crucial that the PPD is chaired by the highest level of authority, whether the Prime Minister or the President. Without such authority, there is no motivation for Government officials to address the needs of the private sector, especially when issues have to be resolved through inter-ministerial cooperation. In the case of Cambodia, the Prime Minister is making PPD relevant for all PSD initiatives and encouraging Cambodian agencies to consult with the private sector. This consultation was particularly crucial in early 2009, when the Government needed private sector inputs on how to resolve the current economic crisis. Thus PPD needs a legal mandate which covers both Government and private sector roles, defines who participates and clearly sets the objectives.

• Provide support to the private sector and to the Government to make good decisions. In frontier countries like Cambodia, the private sector is young and not organized. Eighty seven percent of provincial businesses8 are not fully registered and 80% of the population is rural. The capacity of the private sector to articulate problems and recommend solutions, especially on strategic concerns, is limited. The private sector’s comprehension of national and international laws/environment is also limited. To support the issues raised, there is a role for development partners to provide research, expertise and ad-hoc advice. However, development partners should be willing to fund consulting assignments and research in areas proposed by stakeholders, and not limit their assistance to what matches the donor agency’s agenda.

7 www.publicprivatedialogue.org/.../Cambodia%20PPD%20Case%20Stud... 8 Source: 2008 Provincial Business Environment Scorecards, IFC and Asia Foundation

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Strategic Proposal for the Support of the ASYCUDA World System

8.1 Project Background Implementing Agency: General Department of Customs and Excise, MEF Budget Disbursed: US$1,023,152.29 (73.13%) out of US$1,399,088.80 Pillar Focus: Pillar 1. Trade Facilitation; Pillar 3: TDSP Component Focus: Component 1b. Trade Facilitation Duration: 13 July 2012 to August 2016 Main Objective: The main goal of this proposal is to obtain financing from the TDSP to ensure the successful completion and operation of the AW System. Specifically, financing is requested to support the most successful and cost-effective elements of the existing arrangements financed under the TFCP in order to ensure certainty, sustainability, and enhancement of the Support Project will maintain and further enhance the momentum already established and will build on the gains in operational effectiveness already achieved. In addition, the project will finance the progressive improvement in AW functionality and platform stability by securing ongoing support ad maintenance from the AW system developer – UNCTAD. As described above, this will include, but not limited to, the upgrade of the AW software being used in Cambodia to be latest release of the AW software and further capacity building for the NPT to develop staff competence and ensure system reliability and resilience. 8.2 Expected Outcome The main outcome of the project is to ensure the certainty and sustainability of AW system operation, enhance its effectiveness and efficiency thus further promote and strengthen trade facilitation and increase competitiveness of Cambodia. This program will aso contribute to capacity building for the ICT skills, and who will be responsible for the implementation of the National Single Window in the future. Through ASYCUDA World System, time and cost to import and export products are reduced and made more predictable. Following indicators will be measured:

• Numbers of documents required to clear imports reduced.

• Share of export shipments that are physically inspected reduced.

• % reduction in time required to clear expert shipments.

• Share of customs declaration processed through ASYCUDA system increased.

• System availability of ASYCUDA should be increased.

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8.3 Achievements of Results as of September 2015 Even if the Project has not been completed, it has already registered several results: • ASYCUDA World System is now used by traders in the various checkpoints and Special

Economic Zones that speeds up the process of preparing the Single Administrative Window (SAD). The time and cost to import products are reduced and made more predictable. Number of documents required to clear import had been reduced from 10 to 8.

• The percentage of cargoes passing through the red lane has been reduced to only 25%, thus

reducing physical inspection. Systems availability of ASYCUDA World System has increased with 10 more checkpoints operating.

• Cambodia’s ranking in the Logistics Performance Index has greatly improved by at least 46

places with the use of ASYCUDA World System. 8.4 Impact and Lessons Learned

There are two majors trade facilitation initiatives/projects that was and currently implemented in Cambodia with the support of development partners: (1) Trade Facilitation and Competitiveness Project (TFCP) and (2) Trade Development Support Program (TDSP).9

Trade Facilitation and Competitiveness Project (TFCP) are programs of reforming and modernization. They are designed to promote economic growth of Cambodia with the objectives of reducing transaction costs associated with trade and investment, and to introduce transparency in investment processes and facilitating access. The project is under management and guidance of Ministry of Commerce. The project consists of 4 components: (1) Trade Facilitation Strengthening, including introduction of customs automated system; (2) Export Market Access; (3) Private Participation in Infrastructure and Foreign Investment; and, (4) Legal Transparency. The Component 1 of the TFCP targets mainly on information technology systems in order to manage border activities, especially customs automation. In this connection, the ASYCUDA World system was selected in mid 2006 to automate Customs' border management with implementation activities. This sub-project is under the overall guidance and leadership of a Project Steering Committee (PSC) led by the Director General of General Department of Customs & Excise.

Trade Development Support Program (TDSP) is a project to introduce a Sector-Wide Approach (SWAp) for the development of Cambodia’s trade sector. The program composes of three pillars namely (1) Legal reform and cross cutting issues; (2) Product and service export sectors development; and (3) Capacity development for trade.

Status and Challenges: The program mainly focuses on physical infrastructure connectivity and trade facilitation initiatives. The program has been implemented in the medium and long term period. Within the period, there were some challenges have been occurred such as physical infrastructure and trade facilitation project.

• Physical Infrastructure. In terms of physical infrastructure connectivity corridors, the progress has been achieved including roads, power, and telecoms linkages. In 1992, transport sector there were only few small dust and weather roads in Cambodia. Now, the

9 http://unnext.unescap.org/tfforum11_cam.pdf

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sub-regional transport corridors are largely and almost completed. Railway has also been renovated in part and ongoing under loan from ADB. Electric power, new transmission lines and power cable linkage has been developed and connected and continue to extent. Telecommunications, nationwide backbone is already in place as in the advanced stages of developing and sharing information.

• Trade Facilitation Project. The trade facilitation initiatives have already provided benefits to traders after being implemented in Cambodia. However, there are challenges which become impediments for full and effective implementation of trade facilitation measures in Customs. The Sub-Decree on Risk Management designated Customs as the leading agency at the border to coordinate any required inspection of imported and exported goods. This coordination and cooperation mechanism is laid down in the Service Level Arrangement (SLA) separately and is concluded by Customs and other government agencies. Although in some cases, it is difficult to reach for agreement, the SLAs were gradually concluded with some competent agencies. The Government is contemplating to further improve trade facilitation performance through expansion of customs automation system to other customs checkpoints. This project is supported by TFCP and is expected to complete by mid 2012. Upon successful implementation of customs automation system, the Government will move to establish the National Single Window (NSW).

Lessons learned

The Royal Government of Cambodia has made significant progress in term of physical infrastructure and trade facilitation. It has been accompanied by the willingness to reform. Furthermore, a strong leadership on the part of the agency has also been positively impacted.

This included customs automation and the introduction of a Risk Management approach by Customs. Changes and steps are being taken to reform and modernize the critical area of trade-related SPS border controls and inspections. In this regard, it will be necessary to improve the border facilities in number of border checkpoints in the SEC to facilitate the cross border movement of people, vehicles and goods.

The Way Forward for Development

• To support physical infrastructure development in the border provinces including linkage rural areas to the main road arteries in the corridor for the purpose of facilitate cross-border travel and ensure the public safety of the people living along the corridor.

• To support the development of special economic zones, especially in the border areas, and to strengthen the links between these zones.

• Streamline customs inspection and other border crossing formalities to facilitate the cross border movement of people, vehicles and goods. In this regard, it will be necessary to improve the border facilities in a number of border checkpoints in the SEC and Coordination and cooperation of border agencies of juxtapose check points (sharing of common facility, coordination of working hours; special or emergency case to open the border gates etc...).

• To consider creating regional AEO and provide them with special clearance procedures.

• To speed up of Customs automation expansion to nationwide. In term of Paperless Trade Systems, currently the customs automated system is the only trade facilitation IT project being implemented in Cambodia. Its application mainly deals with customs processing of import and export declaration. Therefore, by nature of business process, it is the customs system and has no interface or connectivity with other national system (yet to be developed in Cambodia).

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• To enhance inter-agency coordination and cooperation. This can be achieved through the conclusion of SLA in which a clear demarcation of roles, mandate and functions of competent agencies is marked. It is recognized that, in addition to customs, there are different agencies working at the border to enforce relevant laws and regulations such as SPS, quarantines etc. Those competent agencies should establish a mechanism (like one stop shop) to share and re-use available information and documents required to exercise their functions.

• Elimination of unnecessary steps and superfluous documents for import and export would provide good benefits for traders. Therefore, regular review of procedure steps and document requirement must be done in order to improve clearance procedure and make contribution to trade facilitation.

• Consultative mechanism with the private sector is important as it provides excellent forum to discuss and solve many problems in the business transaction. In addition to existing mechanism (at ministerial and government levels), the GDCE should continue to enhance consultative cooperation with the private sector through the creation of a Trade Consultative Committee (at customs-to-business level).

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i http://www.khmerfoods.com/cambodian-rice-export-statistics-september-2014/ iihttp://www.khmertimes.com/news/4809/cambodia-s-garment-footwear-exports-up-12-6-pct-in-7-months/ iii http://www.akp.gov.kh/?p=50586 iv http://www.akp.gov.kh/?p=48371

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