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Cambodia’s economic growth is significantly driven by Small and Medium Enterprises (SMEs), which make up 99.8% of Cambodian businesses, constitute over 70% of Cambodia’s employment and 58% of its Gross Domestic Product (GDP). However, they account for just 10% of exports. The potential to increase domestic exports mirrors that of some ASEAN countries, where SMEs account for 30% of total exports. If Cambodia can strive for this target, it would significantly boost its economy with an additional $3.2 billion in export revenue.
The rise of e-commerce has helped SMEs thrive in the business of exporting small packages across borders. The Express Mail Service (EMS) business volumes account for 47% of Cambodia Post’s revenue in 2019, yet a lack of Electronic Advance Data (EAD) hampers trade facilitation and challenges progress under the WTO Trade Facilitation Agreement (TFA). Currently, 36 countries require EAD for border clearance.
As part of the Improving Small Package E-Trade for SMEs (SeT4SME) objective to contribute to Cambodia’s undertaking of digital trade facilitation, the initiative is assisting in the development and deployment of Electronic Advance Data (EAD) and a one-stop e-Portal.
This comes at a crucial time as without EAD, postal shipments from Cambodia to the EU and the US cannot be cleared by their respective customs administrations, which is required by the EU-Import Control System and US Stop Act. Failure to comply with this regulation could result in Cambodia Post losing its competitive edge over other carriers in the domestic and international markets.
The Set4SME initiative conducted a situational analysis to gather baseline information from the private sector and assess the EAD development perspective from Cambodia Post and GDCE. The analysis involved three studies: an Inception Report, a Baseline Study, and a Time and Cost Measurement study. The aim was to assess the current state and prepare for the implementation of pre-arrival and pre-departure procedures for postal shipments and the deployment of the Electronic Advance Data (EAD) interface. The analysis was carried out in collaboration with Cambodia Post, GDCE, UPU, UNCTAD, and other international consultants.
The Baseline study analyzed the current situation and contributed to capacity development and the monitoring framework. It included international and regional best practices for EAD in postal items to lay the foundation for implementing pre-arrival and pre-departure processes.
The UNCTAD inception report evaluated the existing business processes, legal framework, and clearance workflow for international postal shipments in Cambodia. It also provided recommendations for future business requirements and technical specifications for the EAD interface.
The Time and Cost Impact Measurement Report, prepared by Swisscontact Cambodia, outlined the project’s impact measurement framework with a focus on time and cost aspects. It described the expected changes with the introduction of EAD and an e-Portal, defined the methodology and scope of measurement, and presented the expected impacts along with their indicators and data points.
The Situational Analysis revealed several key findings regarding the challenges faced by inbound and outbound processes in customs and postal operations.
Inbound processes encounter obstacles such as manual steps, the absence of computerized systems, inefficient customs controls, and coordination challenges for postal operators and customs in handling postal shipments. To address these challenges and enhance impact measurement, a closer collaboration between Customs and the Cambodia Post is crucial. This collaboration should focus on accurate data sharing, advanced risk analysis, increased transparency, and reduced time spent at Customs. By doing so, it will also help in mitigating informal payments, thereby ensuring a more streamlined and accountable process.
Similarly, outbound processes face their own set of challenges, including low documentation requirements, the need for manual filling of paper labels, burdensome duplicated data entry work, and time-consuming procedures. To improve impact measurement, it is recommended to implement e-trade portal facilities for online label fill-in. This approach will significantly reduce repetitive data entry tasks and provide information on packaging requirements and restrictions. Additionally, incorporating a track-and-trace capability will enhance transparency and provide customers with increased certainty regarding their shipments.
To ensure continuous improvement and gather valuable insights, future assessments, and workshops are vital. An end-line assessment to evaluate the implementation of the Electronic Advance Data (EAD) system, collecting data on customs clearance times, identifying areas for improvement, and assessing the overall effectiveness of the system has been planned, as well as workshops with e-portal users and postal customers to foster discussions on lessons learned and explore future opportunities for support. These workshops will facilitate knowledge sharing, enable feedback collection, and pave the way for collaborative solutions in the customs and postal sectors.
Based on the study’s findings, several key recommendations have also emerged. These recommendations include prioritizing the connection of GDCE to Cambodia Post’s CDS system, introducing services and mobile applications, developing a process for up-country taxpayers to clear items through mobile payment, implementing pre-arrival/pre-departure processing for postal items in alignment with express delivery services, and developing risk profiles for postal and express shipments. Furthermore, it is advised to consider increasing staff levels and extending business hours, applying a decentralized approach to the clearance of international postal items, and measuring the impact of the new ASYHUB/AW system in combination with the CDS using critical Key Performance Indicators (KPIs) for postal operations. Striving to meet UPU-suggested benchmarks for E2E (End-to-End) inbound and outbound performance is also recommended.
The Electronic Advance Data (EAD) system, once fully operationalized, will eliminate the risk of postal shipments to key markets such as China, the EU, and the US being returned or destroyed due to non-compliance with EAD regulations. This will increase certainty in the shipment process and enhance productivity and efficiency in resource allocation.
With the ability to fill in package labels or postal shipment declarations online from anywhere and at any time, the duplication in data input is reduced, and access to essential information such as packaging guidelines, international shipment restrictions or restricted goods, and upfront postal charges and track-and-trace capabilities is made easy. With the automation of data capture from CN22 and CN23 Customs forms attached to postal items, the customs clearing process for inbound and outbound small packages will be significantly reduced, streamlining the customs clearance process.
Cambodian MSMEs and Women-Owned Businesses are expected to benefit significantly from the e-portal, which will save both time and costs associated with export documentary compliance. The e-portal provides the convenience of checking export documentary compliance requirements beforehand, thereby saving travel time, costs, and queueing time. Electronic data entry via the e-portal reduces time even further by allowing options such as drop-down menu selection and avoiding repetitive data entry for subsequent shipments.