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Economy

Ruth Banomyong: Border agreements must lead to action

The border gate at the Aranyaprathet-Poipet crossing from Thailand into Cambodia (Photo by Ruth Banomyong)

ARANYAPRATHET, Thailand -- It is late morning at the border crossing between Thailand and Cambodia. The Aranyaprathet-Poipet crossing is bustling with people walking between the two countries. Thai trucks, however, are parked or idling in a queue stretching more than 1km along the main road leading to the border post. The traffic is restricted to just one lane. This chaotic situation is considered "normal," even though a free trade area encompassing Thailand and Cambodia has been implemented by the Association of Southeast Asian Nations. The ASEAN FreeTrade Area was established in 1992. But as Cambodia joined ASEAN in 1999, the country was given until 2010 to bring standards into line with the free trade agreement.

     The queue gradually gets shorter during afternoons, but the following day, it starts all over again. What is wrong with the export and import process between the two countries? All the Thai trucks have already cleared export customs formalities on their side of the border and are waiting for the Cambodians to allow them into the country to go through import clearance procedures. On the Thai side, customs officers admit these daily queues reflect badly on their efficiency levels, even though they have already cleared the trucks and the goods. They are resigned to often being blamed for delays in cross-border traffic -- even though, in this case, the congestion is not due to Thai procedures.

     Export formalities in Thailand have been smoothed out by an electronic data interchange system, implemented by customs authorities. Even so, many of the import procedures in Cambodia are still done manually. If a driver has all necessary documents in order, then the actual time for a commercial vehicle to clear Thai customs takes less than a minute. The challenge for the Cambodian side lies with its limited border infrastructure, which cannot accommodate fleets of Thai trucks. Additionally, domestic import rules and regulations do not really facilitate the free flow of goods -- and can sometimes hamper cross-border trade.

     Theoretically, congestion at border crossings between ASEAN countries should become a thing of the past with the advent of the ASEAN Economic Community on Dec. 31, 2015. This milestone date is often officially discussed by the ASEAN Secretariat and domestically within most of ASEAN's 10 member states. In many member countries, the message of a "single market and a single production base" is repeated continuously. But there are still glaring problems for the successful implementation of an ASEAN common market, as these land border crossing challenges illustrate.

Actions and words

Having adequate border crossing infrastructure is important for the ASEAN Economic Community, if it is to achieve its key goals. But it will not be sufficient in itself to streamline overall intraregional trade, as many existing difficulties lie in the rules and regulations for operating these border crossings more effectively.

     Even as cooperation has increased between neighboring countries in the past few years, it is clear that many nonphysical barriers to the cross-border movement of goods, people and vehicles remain. In the early 1990s, ASEAN member countries had inconsistent and complicated border crossing formalities and procedures. Restrictive visa requirements and constraints on the entry of motor vehicles were the norm. There were also often widely differing standards on vehicles and drivers in different countries. Regulations governing transit traffic were complicated -- or sometimes land transit was prohibited by some member countries.

     The problems prompted ASEAN after the implementation of its free trade area in 1992 to develop four transport facilitation agreements. There is also a subregional agreement under the auspices of the Greater Mekong Subregion economic cooperation initiatives that are supposed to facilitate cross-border movement and logistics in the region.

     There are a multitude of regional agreements in Southeast Asia, but one cannot help noticing that full implementation of these agreements has yet to be achieved. Major procedural issues are difficult to overcome; signing the agreements alone is not sufficient. ASEAN members still need to ratify and accede to agreements. Full implementation is the final step to make any of these regional facilitation agreements a reality in member countries.

     All six Greater Mekong Sub-region member countries -- Cambodia, China, Laos, Myanmar, Thailand and Vietnam -- signed a Cross-Border Transport Agreement in December 2003. That agreement covers all the relevant aspects of cross-border transport facilitation in one document. These include:

  • Single-stop and single-window customs inspection.
  • Cross-border movement of people (i.e., visas for people engaged in transport operations).
  • Transit traffic regimes, including exemptions from physical customs inspection, bond deposit, escort, and agriculture and veterinary inspection.
  • Requirements that road vehicles will have to meet to be eligible for cross-border traffic.
  • Exchange of commercial traffic rights.
  • Infrastructure including road and bridge design standards, road signs, and signals.

     However, the Greater Mekong transport facilitation agreement does not deal with border crossing fees and costs.

     Full implementation of the transport agreement and its annexes and protocols was expected for 2009. The deadline passed with many Greater Mekong countries having difficulties in implementing the agreement. Signing and ratifying such a regional agreement does not mean that all the signatories are able to implement it. Numerous national laws need overhauling to accommodate the procedures as prescribed by the subregional agreement.

     This situation has been exacerbated by different legal traditions in countries of the region in terms of implementing international treaties. In certain countries, international agreements are considered to carry more weight than domestic law, and therefore can be implemented relatively rapidly -- this is the case in Laos. Other countries see international agreements as having to be "domesticated" into a national law to enable implementation -- this is the case in Thailand. The legal procedures required are a big factor in delays in the implementation of transport facilitation agreements.

     The next challenge with all these ASEAN and Greater Mekong transport facilitation agreements relates to the technical capability of officers stationed at the borders to uphold new guidelines and standards for crossings. New rules and regulations are being put in place with field operatives not knowing how to apply them. The ASEAN officials who negotiate the agreements are not the ones who have to implement them. As some officials have noted, standard operating procedures have to be further developed after an agreement has been reached.

     Recent research indicates that the ease of border crossings in the region is positively correlated to the amount of money paid for transactions. Fees to cross borders are composed of many activities-related parts, such as costs for inspection, export and import clearance, documentation, labor overtime, and the like. The higher the amount paid, the faster the procedures for clearing a border crossing.

     In 2011 a study by the Asian Development Bank found that it costs around $2,330 to transport a container from Bangkok to Phnom Penh, and that it took around 22 hours to travel the 660km route. This high freight fee is in place because there is a large pre-shipment cost of $650 for the Bangkok-Phnom Penh route. Almost half the paid pre-shipment cost is used to apply for the import permit.

     As Thai trucks are not allowed to operate in Cambodia, the cargo is generally transshipped onto Cambodian trucks. The transshipment can be as simple as a container swap or the physical discharging and loading of cargo in the case of loose loads such as cement. Swapping the container costs around $80.

     Once the cargo is on the Cambodian trucks, they can proceed to Phnom Penh. Along the way, there are two weigh bridges and four police and military checkpoints. The cost of each checkpoint inspection is estimated at around $10. Of course, these fees are averages, and depending on the capability of the customs broker at the border, it is possible to pay less or more.

     By the same token, the less the amount paid, the longer the border crossing time can be. This is particularly true in locations where the information systems to facilitate border crossings have not been put in place. The advent of the so-called national single window system in respective ASEAN member states and the ASEAN single window concept in general is a step in the right direction. A single window is a facility that allows parties involved in trade and transport to lodge standardized information and documents with a single entry point to fulfill all import, export and transit-related regulatory requirements. If information is electronic, then individual data elements should only be submitted once and do not need to be done at the border. Regardless, the regional ASEAN National Single Window system will not be fully in place by the economic community's launch date of Dec. 31, 2015.

     Back at Aranyaprathet, it is now midafternoon and Thai trucks are moving out of Cambodia into Thailand. The flow is relatively smooth, with minimal inspection. The majority of these trucks are empty -- but they know that the following day, it will be the same routine when going back into Cambodia. The advent of the ASEAN Economic Community is supposed to reduce these inefficiencies at borders between member countries. But for these truck drivers, the main complaint is that there is too much wasted time when crossing borders and they cannot afford to leave their trucks while waiting, as the queue might move anytime. This is not how a single market and single production base should be.

Ruth Banomyong is head of the Department of International Business, Logistics & Transport at Thammasat Business School, Thammasat University, in Bangkok.

 Transport facilitation agreement in Southeast Asia

Name

Date

Status

Full implementation

ASEAN Framework Agreement on the Facilitation of Goods in Transit

1998

Signed

No

ASEAN Framework Agreement on Multimodal Transport

2005

Signed

No

ASEAN Framework Agreement on the Facilitation of Inter-State Transport

2009

Signed

No

ASEAN Framework Agreement on the Facilitation of Cross Border Transport of Passenger

N/A

Draft

N/A

GMS Cross-Border Transport Agreement

2003

Signed

No

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