Asean and Being Connected

Khmer Times
CHHEANG VANNARITH

Lao dancers perform during the opening ceremony of the Asean Summit in Vientiane yesterday. Reuters

The Asean Summit and related summits have kicked off in Vientiane, the capital of Laos, with a mission to build a roadmap and action plans to implement the Asean community vision 2025.

Asean’s vision is to realize a rules-based, people-oriented, people-centered community and a peaceful, stable and resilient community with capacity to respond effectively to challenges.

Asean’s core strategy is to remain an outward-looking region within a global community of nations, while maintaining Asean centrality.

To realize that vision, the Asean member states resolve to harmonize regional regulations, keep improving the institutional capacity of Asean, including a strengthened Asean Secretariat.

There are several important documents to be adopted by the Asean leaders at the summits. One of the most important regional roadmaps is the Asean connectivity plan 2025.

Seamless logistics is one the five core pillars of the connectivity plan. The other four pillars are sustainable infrastructure, digital innovation, regulatory excellence and people mobility.

Logistics is a strategic sector involving a wide range of subsectors and actors, including shippers, traders, public and private service providers, regional and national rules and institutions and transport and communications infrastructure.

Institutional reforms, particularly customs reforms, are key to improving logistics in Asean.

A study by the Asean Secretariat with support from USAID found that “more than 30 percent of the total export logistics costs are derived from institutional rules and regulations.”

It takes on average 22 to 23 days to clear paperwork for both exports and imports, the study showed.

The less developed economies in Asean need to develop a national strategic plan on logistics, invest more in logistics services and infrastructure.

Cambodia’s logistics is relatively under-developed. The World Bank’s study in 2014 found that the export costs in Cambodia are about 33 percent higher than Thailand and 30 percent higher than Vietnam.

According to the World Bank’s Logistics Performance Index, Cambodia scored 2.7 out of 5 in 2014.

The index includes assessment of the efficiency of the clearance process, quality of trade and transport-related infrastructure, ease of arranging competitively priced shipments, competence and quality of logistics services, the ability to track and trace consignments and timeliness of shipments in reaching destinations within the scheduled or expected delivery time.

So what should Asean do to strengthen its logistics capacity and realize its vision of achieving seamless logistics?

First of all, Asean needs to forge a common understanding on logistics, including definition, scope and the strategic importance of the sector in national development and regional integration.

Liberalizing the logistics sector is a politically complicated process. It requires a strong Asean consensus and domestic political support in each Asean member country.

There is a need to create an Asean working group on logistics to identify the challenges, issues and deficiencies of logistics in the region.

Meanwhile, Asean need to speed up institutional reforms and capacity building on logistics, which are critical to improving the logistics sectors, particularly for the less developed member countries.

Asean should establish an Asean logistics service hub to facilitate networking, information and knowledge sharing and coordinate capacity building programs.

More technical and financial support for the small and medium-sized logistics service enterprises is needed to assist them in regional and global competition in a more liberalized logistics environment.

International cooperation and multi-stakeholder partnerships for logistics development are fundamental to cementing the regional and national policy blueprints on logistics.

Cambodia considers logistics as one of the key sectors in sustaining its economic growth, better integrating itself with the region and the world and catching up with the more developed members of Asean.

But it does not have a concrete strategic action plan on logistics yet.

Cambodia needs to create a functional and effective national committee on logistics in order to develop a national master plan on logistics and coordinate related institutions from both the public and private sectors to provide quality and an efficient logistics service.

Hopefully, by the time the meetings in Laos finish, the 10 member countries of Asean will find ways to better connect the large community that stretches across our region.

Chheang Vannarith is a co-founder of the Cambodian Institute for Strategic Studies.