Moc Trade Project Issue

T.R.A.D.E. Project

Trade Related Assistance For Development & Equity Project Implemented by the Ministry of Commerce Supported by UNDP A Quarterly Publication

Issue 1 Volume 1

November 17, 2008 - January 17, 2009

E MAD IN IA OD B M CA

The Making of Cambodia’s TRADE SWAp By Roger Lawrence IN THE BEGINNING... he Royal Government has long recognized that international trade can be a potent force for increasing employment and alleviating poverty in Cambodia. Since the 1990s, it has worked to put in place policies that can facilitate the growth of exports.

T

Several years ago it became clear that the new aid initiatives that were being launched by developed countries were creating new opportunities for Least Developed Countries (LDCs) to work with the international community to strengthen the role of international trade in their development.

The Royal Government of Cambodia was determined to take full advantage of these new opportunities. The first thing that happened was the increasing willingness of development partners to support trade and trade-related assistance initiatives aimed at helping LDCs harness trade policy for development and expand their exports. The Integrated Framework, established by the IMF, ITC, UNCTAD, UNDP, the World Bank, and the WTO was specifically designed to foster greater assistance to the trade sectors of LDCs. The IF has recently been reviewed and strengthened. Also, Governments, meeting in their sixth WTO

ministerial session in Hong Kong in December 2005, adopted an “Aid-for Trade” initiative and set up a task force to operationalize developed countries’ commitments to new aid to trade. The United States, the EU, and Japan also announced large increases in such aid at that time. Meanwhile, developed countries had been taking additional steps to make their overall delivery of assistance more effective. The “2005 Paris Declaration on Aid Effectiveness” by members of the OECD Development Assistance Committee (DAC) laid out new guidelines to harmonize donors’ continued to page 6

Cambodia’s 2007 Trade Integration Strategy Report By Thierry Noyelle

remains in the countryside. The robust activities and the rise of skyscrapers in Phnom Penh might easily give the impression that Cambodia is developing rapidly. That is not the case everywhere. Cambodia’s social indicators still rank low among other Asian countries.

Cambodia has been remarkably successful in growing its economy through rapid increases of its exports since the late 1990s. GDP per capita has doubled since the early 2000s from approximately $300 to $600 according to the World Bank report.

The strength of Cambodia’s current economy is also her weakness. Two sectors dominate her exports –tourism and garments. According to the Ministry of Economy and Finance (MEF), garment exports totaled US$2.8 billion.

Domestic investment, international aid from donors, foreign direct investment, and fast growing exports all lead to a surge in economic growth, with real GDP peaking at 9.5 percent in 2007. Despite this economic growth, there is great disparity in incomes

between city dwellers and the 85 percent of the population that

continued to page 6

Cambodia’s TRADE Project By Thierry Noyelle The MoC-UNDP Trade Related Technical Assistance for Development and Equity (TRADE) Project aims to support Cambodia’s TRADE SWAp and promote the country’s socio-economic development. Despite recent, double-digit economic gains, Cambodia remains one of the world’s poorest countries with a GDP per capita of approximately US$600. Expanding trade is one means for Cambodia to reduce poverty. The TRADE Project seeks to address this challenge. BACKGROUND In 2000, Cambodia was identified as one of three pilot countries of the Integrated Framework (IF). Subsequently, Cambodia was the first country to complete a Diagnostic Trade Integration Strategy (DTIS 2002) under that program. In December 2005, with the support of the UNDP, Cambodia’s Ministry of Commerce (MoC) launched its Trade-Related Assistance for Development and Equity Project – or TRADE Project, a successor to an earlier UNDPfunded assistance. The initial focus of the Project was threefold: date the DTIS 2002, to the impact of Trade on

TRADE to upanalyze Human

continued to page 7

T.R.A.D.E. Project Newsletter October - December 2008

Closing Remarks by H.E. Cham Prasidh Senior Minister, Minister of Commerce at the Launching of Cambodia’s 2007 Trade Integration Strategy, December 5-6, 2007, Le Royal Hotel, Phnom Penh ... Since the late 1990s, Cambodia has embraced trade integration as an opportunity to bring about positive change and human development. Trade has become a major, if not the main driver of development in Cambodia. But it is because trade has become so important for us that Cambodia cannot stand still in the face of a continuously changing world economy. ... Cambodia’s 2007 Trade Integration Strategy goes a long way in pointing to some of the new challenges we are facing. We are facing a new “competitiveness paradigm.” ... Our producers must learn to develop products and services that meet international technical standards. Our producers must learn to boost productivity and lower unit costs at home by embracing new technologies and making more efficient use of better-trained workers. We must strengthen our current export sectors – including garment and tourism – by grabbing more value added through deeper linkages to the local economy. We also must diversify our exports. We must lower our infrastructure and transactions costs. We must strengthen our legal and institutional reforms and create an environment within which business can feel sufficiently secured and rewarded in order to prosper.

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to meet the new competitiveness challenge. ...Cambodia’s 2007 Trade Integration Strategy is also helpful in pointing to the many opportunities for Cambodia to flourish in the new international market environment: Cambodia is blessed with many natural resources that it can use to build a diversified export economy, especially in agriculture. This should help us reduce poverty and boost income among a very large share of our population.

H.E. Cham Prasidh, Senior Minister, Minister of Commerce

Cambodia is blessed with being located in the world’s most dynamic region with many opportunities to sell its products and services. ... Lastly, Cambodia already has demonstrated it is capable of developing the kind of “unique” comparative advantages that our producers and exporters need in today’s global markets to stand out and distinguish themselves from their competitors.

... But we must also make sure that Cambodia is blessed with many ...Our Better Factories practices in the trade development addresses our key natural resources that it can use to garment sector have provided our prohuman development needs. We must ducers with a unique advantage that find ways to bring the benefits of trade build a diversified export economy, I believe will help our garment sector to our poorest population largely by especially in agriculture. to continue to prosper in the years integrating our rural economy more ahead. strongly into global markets. Trade development must also be a way for Cambodia to create many new jobs for our youth who, every year, are joining the labor market in growing We are learning to develop similar unique comparative advantages with organic agriculture and, I believe that our current efforts to turn ourselves numbers. into Asia’s Number One “Green Garden” can succeed. We also are learnTo meet these new requirements requires a strengthened dialogue and ing how to redevelop our traditional silk sector and capitalize on its rich partnership between Cambodia’s private sector and Cambodia’s Govern- cultural heritage to turn it into a unique, luxurious consumer experience. ment. Clearly also, Cambodia’s Government has a major role to play in creating conditions and “clearing the way” for Cambodian producers ... Under the leadership of H.E. the Prime Minister, Cambodia has a very energetic Government-Private Sector Forum that already has proven quite effective in addressing issues of concern to our business community.

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... The preparation of Cambodia’s 2007 Trade Integration Strategy has been extremely helpful in forging a new consensus for strong coordination between the Cambodian Government and its Development Partners. ... Last but not least, the Government of Cambodia has made a strong commitment to taking ownership of the process of trade development and exercising its leadership. In short, the key pieces to build Cambodia’s next success stories in trade are in front of us. Now the challenge is for us, together, to build those new success stories. n

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T.R.A.D.E. Project

Pillar 2 Strengthening Export Supply Capacity in Rural Provinces Newsletter October - December 2008

By David Van

O

ne of the top priorities of the Royal Government of Cambodia is to push forward with the provision of more effective support services at the provincial level and the devolution of more decision-making responsibilities to local governments.

Within that context, the Ministry of Commerce is launching a major effort to further its understanding and to provide better services to the needs of exporters in rural provinces throughout the country. Three Pilot Areas for Targeted Interventions To explore this issue, the TRADE Project launched a series of fact-finding missions to nine provinces led by H.E. Mao Thora, Secretary of State, during the second half of 2007 and the first half of 2008. The missions consulted with local governments, local producers and other stakeholders. From this initial exploration, the Ministry decided to focus on three pilot areas for additional field visits and targeted interventions to be developed during late 2008 and early 2009. F Kampong Cham province: this area is characterized by substantial cross border trade with Vietnam, and with a strong, pro-active private sector. The province exports informally; the main products are soybeans, cassava, cashew nuts, pepper and rubber. F Siem Reap: the province is home to famed Angkor Wat with an increasingly important industry to develop as well as a major rice producing area of the country and a rich handicrafts sector serving the tourism industry, not forgetting a strong and pro-active private sector. F North-West Area: comprising the provinces Battambang & Banteai Meanchei and the municipality of Pailin characterized by substantial cross border trade with Thailand and of course a strong and pro-active private sector. The area is a major producer of rice, cassava, corn and jatropha. In each pilot area, TRADE will focus on working with producers in one or two product sectors selected for their economic importance to the area and for their inclusion in the list of 19 priority product and services included in Cambodia’s 2007 Trade Integration Strategy. Bottlenecks to Export Development in the Three Pilot Provinces Typical bottlenecks identified by producers and exporters in the three pilot provinces are weak or non-existent support services in areas such as: • Trade Support Network (Support to Business associations and public institutions) • Dialogue between public and private sectors • Trade Information Services (Market Intelligence) • Trade financing • Agricultural extension services • Packaging/Labeling • Transport & Documentation Response by the TRADE Project A first focus of intervention by the TRADE Project is to try to initiate or build on earlier efforts to develop a Public-Private Dialogue at the provincial level (PPPD) between the Provincial authorities and local producers through associations. Where business associations are lacking, TRADE is helping selected group of producers to organize themselves into such associations. The TRADE Project effort in this area will be well coordinated

TRADE Project Team, MAB YOU, Project Manager (right), listens to concerns of Cambodian stakeholders. Establishment of Northwest Agricultural Market Association (NAMA). Members of the association includes local farmers, producers, silo owners, & traders dealing with cassava as major crops. Sept. 2008

with parallel efforts from other Development Partners (particularly, IFC, GTZ, UASAID and Asia Foundation). A longer-term objective is to use the PPPD as a tool to assist the provincial authorities and relevant key ministries in producing comprehensive Provincial Investment Plans and SME Development Plans through dialogue and consultation with the private sector. During 2009, TRADE will also explore how best to address some of the other bottlenecks using the project resources and/or jointly with other development partners. Short Term Interventions During 2008, the project has focused on providing some early, initial responses to very specific requests from farmers and exporters in the three pilot areas including: F Set-up two associations in the agri-business sector in Komrieng and Rattanak Mondul (both located in Banteai Meanchei province): (1) Northwest Agricultural Market Association (NAMA), and (2) Battambang Agricultural Market Development Association (BAMDA). Membership in the two associations includes local farmers, producers, silo owners, and traders dealing with cassava and corn as major crops. F Organized a study mission of rice millers and producers led by the Ministry of Commerce to Senegal from October 20 to 24. This mission followed up on a specific request from the Government of Senegal to buy rice and a desire by producers and rice millers to learn more about such market. The study mission included rice millers/producers from Siem Reap, Banteai Meanchei, Battambang, Kampong Cham, Takeo, Prey Veng provinces. The mission returned with concrete enquiry from Senegal importers for 3,000 MT and rice producers involved are now exploring ways to meet this specific enquiry. F Organized a group of Cambodian Rice producers to participate in a regional buyer-seller meeting to be held this month on November 25-27, in Ho Chi Minh City, Vietnam. This meeting is organized by ITC and sponsored by La Francophonie. The goal is to expand commercial exchanges between Cambodia and Francophone African countries. F Launched Prohoc (Fish Paste), as a Cambodian national icon, during a November meeting. Prohoc is made in the Siem Reap province by women using a traditional method and is made from a specific fish called “Trei Kamphleang” (in Khmer language) from the Tonle Sap Lake. Initially organized under the OVOP (One Village One Product) concept, Prohoc presents an interesting opportunity to be upgraded to a Geographical Indication (GI). n

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T.R.A.D.E. Project Newsletter October - December 2008

Upcoming Activities & Workshops and Private ovincial Public

Pillar 2: Pr

Pillar 3: Capacity Developmen t Com

ponent

D)

Dialogue (PPP

the ucers led by illers and prod m on e si is ric m of is on 20 to 24. Th study missi F Organized amerce to Senegal from October ernment of Senegal to Gov Ministry of Com specific request from the n more about a millers to lear on e up ric d ed an w s llo er fo uc ducers from od ro pr /p rs by a desire ed rice mille ud cl in buy rice and on m, Takeo, si is ha The study m , Kampong C such market. i, Battambang quiry from he en nc te ea re M nc i co ntea returned with on are now Siem Reap, Ba si is ed m lv e ovinces. Th producers invo e ric d an T Prey Veng pr 0M rters for 3,00 quiry. Senegal impo this specific en t ee m to s ay a exploring w participate in e producers to ic 7, R -2 an 25 di r bo be th on Novem group of Cam F Organized a eller meeting to be held this monis organized by ITC and r-s g ye tin ercial exregional bu m. This mee expand comm h City, Vietna The goal is to . . in Ho Chi Min es ie tri on un ph co co La Fran phone African sponsored by a and Franco di bo am C n ee changes betw l icon, on bodian nationa e), as a Cam st eap provR Pa h em is Si (F e ohoc in th F Launched Pr Siem Reap. Prohoc is made is made from a specific in l method and nle Sap November 17 ) from the To ing a traditiona us en om w mer language oduct) Kh Pr ince by (in ne g” O an rei Kamphle P (One Village graded to a VO O e th fish called “T r de to be up organized un g opportunity Lake. Initially ts an interestin en es pr oc oh concept, Pr Indication (GI). Geographical

F Capacity Development Plan of the Department of Internationa l Cooperation, MoC, completed by Novemb er 15 F Capacity Development Plan of the Department of Legal Affairs, MoC, completed by November 10 F Capacity Development Plan of the Department of Trade Promotion, MoC, completed by December 1st F Capacity Development Plan of the Department of International Coo peration, MAFF, completed by Decemb er 1st F Kick off of MoC provincial departm ent training plan, Battambang /Banteay Mancheay December 1st 200 8 F Retreat of department of investme nt evaluation and incentive, and department of investment monitoring, November 25, 2008 F Proposed Launch of Cambodia

TRADE SWAp website (www.tradeswap.org.kh), Jan 15, 2009

• Cambodia TRADE SWAp retre

at, Jan 25, 2009.

FOR IMMEDIATE RELEASE Photo: Socheat Kong

RICE EXPORT TO SENEGAL CAMBODIAN DELEGATES VISIT SENEGAL PHNOM PENH, NOVEMBER 5 – Trade ties between the Cambodian and Senegalese governments have been strengthened following a visit by 10 Cambodian delegates to the West African nation. The purpose of the visit was to explore potential market options for Cambodian agricultural products in the African region.

Back in the 1960’s, Cambodia and Senegal developed economic ties. The mission re-established the existing technical, commercial and cultural cooperation between the two governments. The Senegalese government saw the mission as part of its exploration of possibilities for bi-lateral commercial exchanges with the Mekong sub-region, in particular Cambodia, Laos and Vietnam .

Ministry of Commerce Secretary of State H.E. Mao Thora (right) explains to journalists the MoC/UNDP TRADE Project & rice producers are taking concrete steps to expedite the export of rice to Senegal in the next coming weeks. H.H. Pheanuroth Sisowath, ITC Focal Point in Cambodia (left), lead the delegation to Senegal. Photo: Socheat Kong

The Cambodian mission consisted of rice millers and producers from six different provinces, led by the Ministry of Commerce (MoC). The delegates traveled to Dakar on October 20-24, and during this time Cambodian representatives met with Senegalese officials to discuss options for importing Cambodian-grown rice. The Senegalese government showed interest in importing the product, expressing the wish to import from Cambodia 3,000 metric tonnes or 6.6 million pounds of rice.

By visiting Senegal, which is a major commercial hub for other Western and Central African countries’ agricultural markets, Cambodian rice producers were able to better understand how the African agricultural markets operate and tailor their export approach to meet their needs. Delegates were also given insight into the many facets of agricultural exporting, including the range of parties involved in the process, such as banks, insurance firms, inspection firms and freight forwarders. This information will help to provide better trade facilitation between the regions and boost the export of Cambodian agricultural products.

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First Press Conference of the MoC/UNDP TRADE Project - Mission to Senegal. Ministry of Commerce Secretary of State H.E. Mao Thora and members of the delegation discuss and explain in detail about the mission to Senegal to the media last week at the Ministry of Commerce. November 2008.

T.R.A.D.E. Project Newsletter October - December 2008

Pillar 3

Raising the Bar Higher

From Capacity Building to Capacity Development By Sven Callebaut Photo: Botumroath Lebun

TRADE Project support to Pillar 3 In support to the Trade SWAp Pillar 3, the Capacity Development component of the TRADE Project provides assistance in several areas: • Guidance and coaching to MoC’s Department of International Cooperation (D/ICO) to help it fulfill its functions as the Secretariat to the Trade SWAp Secretariat and the Coordinator of all Aid-for-Trade. D/ ICO is a brand new Department of the Ministry of Commerce that came into operation at the beginning of 2008 and needs skills, knowledge and procedures to meet its mandate. . Ministry of Agriculture, Fishery and Forestry (MAFF) staff participate in Capacity Development workshop. October 2008.

For Cambodia to rebuild again from ground zero was a major challenge. This challenge continues today.

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is to transfer skills and knowledge to all of those, in Phnom Penh and in the provinces, in ministries, provincial departments, and trade support institutions that will be responsible to make TRADE SWAp work and, ultimately, contribute to international trade expansion and poverty and you reduction.

Hear forget; see and you remember; do and you understand...

Thus, over the last 15 years, Development Partners have been working closely with all Cambodian stakeholders to provide assistance for basic infrastructure, re-build capacities and training. But that is not enough. For example, although the country and ministries have gone a long way in rebuilding capacities, they need to go further and develop their skills to manage and implement the country’s trade integration strategy.

“Hear and you forget; see and you remember; do and you understand,” wrote Confucius. This motto could not apply more to Cambodia. Trade SWAp Pillar 3 Capacity Development The goal of the TRADE Project capacity development (CD) team

The CD team includes officials from several ministries and departments. Under the coaching of a Capacity Development Advisor, they are learning new techniques and are being exposed to new situations and challenges.

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• Expertise to support the formulation and implementation of trade policy research and the development of specific cross-cutting and sectoral specific technical training programmes. Ongoing studies focus on pricing mechanisms (and possible pricing distortions) in a number agricultural commodities as well as barriers to investment that could move Cambodia’s producers up the value chain. These studies are coordinated with the World Bank’s Sources of Growth study under preparation. • Coordination of Capacity Development for trade under the One UN initiative. The TRADE Project CD component develops partnership arrangements with international and local organizations to deliver appropriate and adequate training. Particular attention is given to UN organizations active in the trade sector including ITC, UNCTAD, and UNIDO. The project, under MoC’s and UNDP’s leadership, provides a platform for the implementation of the UN Inter-agency cluster on TRADE and Productive Capacities in Cambodia.

There needs to be a close relationship between project management and capacity development.

Photo: Botumroath Lebun

B

y the end of the Khmer Rouge regime, Cambodia’s education, infrastructure, economic base, political and administrative were completely destroyed.

• Access to all necessary expertise by all key departments from MoC and other line ministries (MAFF, CIB) to strengthen their capacities at three levels: institutions, systems, and individuals. This is done by using a customized six-step methodology that ensures active participation from stakeholders in the design of a long term capacity development strategy.

Experienced foreign experts and advisers working with less experienced local staff must make sure that skills and knowledge transfer take place, benefiting the country as a whole. Failing to do this would mean that the project core objective was not met. The third “Pillar” of development assistance to Cambodia under the TRADE SWAp addresses these issues for the trade sector. The pillar focuses on strengthening

Ministry of Agriculture, Fishery and Forestry (MAFF) staff attend TRADE Project Capacity Development workshop at Cambodiana Hotel. October 2008.

the capacity of the Royal Government of Cambodia, including the Ministry of Commerce, pertinent line ministries, and other stakeholders to implement, update and manage the Government’s trade development agenda, through an

upgrade of their skills and institutional capacity, the creation of a robust TRADE SWAp Secretariat in MoC, and the development of well-focused research and planning capacities in both MoC and other relevant line ministries. n

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T.R.A.D.E. Project Newsletter October - December 2008

Trade SWAp... continued from page 1 practices and increase the effectiveness of their aid. These new guidelines were brought together under the concept of the “sector wide approach” (SWAp). SWAp’s ROLE A SWAp seeks to focus national policy and international support on a set of actions across an entire economic sector, on the basis of a single comprehensive program endorsed by all sector stakeholders. The declared intention of donors to increase sharply their assistance to the trade sector, and their preference for delivering that assistance through a SWAp posed a challenge to Cambodia. Cambodia needed to adapt its own procedures and expand its own capacity to formulate and execute trade policy and manage external assistance.

Khmer Silk. One of Cambodia’s Geographical Indication (GI) products.

But the Royal Government also understood that this was a unique opportunity for Cambodia to play its part in making the delivery of aid more effective and to absorb higher levels of trade-related assistance.

This, in turn, would set in motion a virtuous circle in which the observation that Cambodia can absorb more aid would lead to increased assistance, resulting in expanded export capacity and export performance, leading again to further increases in trade-related assistance. In 2006 the Royal Government began making the changes needed to take full advantage of the new international environment. CAMBODIA’S FIVE STEPS TO TRADE SWAp 1. The first step was for the Government to adopt the concept of a TRADE SWAp. This was done in early 2007. Cambodia’s TRADE SWAp is defined very broadly. It is led by the Senior Minister, Minister of Commerce, and the Ministry of Commerce is the lead agency. 2. The second step was the establishment of a consultative body – the Sub-Steering Committee for Trade Development and TradeRelated Investment – that the Royal Government could use to

Strategy Report... continued from page 1 Meanwhile, tourism generated over US$1.4 billion annually to the local economy.

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The tourism industry generates upwards of 200,000 jobs by

some estimates. But the country remains at risk of a downturn in one of these two sectors.

Cambodia’s 2007 Trade Integration Strategy was developed during 2006 and 2007 jointly by the Royal Government of Cambodia and its Development Partners

enter into detailed and frequent dialogue with its development partners and the private sector. Participants in the work of this body are representatives from various line ministries and government agencies; representatives of development partners providing trade-related assistance; and representatives of the business community. The principal mandate of the Sub-Steering Committee is to provide overall direction to the TRADE SWAp, encourage progress, and foster proper coordination of individual activities. 3. The third step was to re-organize the Ministry of Commerce, to strengthen its capacity to lead and implement the TRADE-SWAp. The main changes lead to the consolidation and strengthening of the departments dealing with trade promotion and export development; the creation of a dedicated department to deal with all multilateral (especially WTO) trade and trade-policy issues; and, the creation of a new department charged with managing all Aid-for-Trade assistance. 4. The fourth step was to strengthen the Royal Government’s own internal coordination procedures with regard to international trade policies. An existing coordination body was revamped to establish the “Inter-ministerial Coordinating Committee for Implementing the Obligations and Commitments of Cambodia in the WTO”. With these steps taken, the institutional machinery for dialogue and coordination of trade policy and trade-related assistance was largely in place. But what, exactly were these consultative bodies to do? What was needed was a substantive agenda of actions to be taken to expand and diversify Cambodia’s exports. Cambodia needed the single, comprehensive strategy that is at the heart of a SWAp. 5. The fifth step—which was four-- was the preparation egy. This effort was carried the Ministry of Commerce ment Partners. The joint report entitled Cambodia’s

actually begun before the other of a common trade sector stratout during 2006 and early 2007 by in collaboration with its Developeffort produced a comprehensive 2007 Trade Integration Strategy.

The Strategy was formally endorsed by the Sub-Steering Committee on March 13, 2007. Soon after, the Sub-Steering Committee created three mixed teams -- or “Pillars”-- of government officials, development partners and private sector stakeholders with the task of developing detailed work plans and proposals for the government activities and Aid-for-Trade assistance needed to implement the Strategy. Cambodia’s development partners have already begun to respond. Some will provide assistance by pooling their resources in a trust fund, to be managed in the framework of the SWAp; others will use the SWAp to ensure proper coordination of their individual programs and projects; in some cases, a single project will span two or more ministries, reflecting the fact that a concerted and coordinated effort across ministries is sometimes needed to achieve Cambodia’s goals. n

to help address these two challenges: remaining high-levels of poverty and over-dependency on two export sectors. Using an Export Potential Assessment analysis, the Strategy identifies 19 products and services with strong potentials to drive export

diversification in Cambodia. These include current exports such as garments, tourism, footwear or labor services with strong prospects for continued growth as well as new ones such as livestock, wood products, light manufacturing or even web-based services. continued to page 8

T.R.A.D.E. Project Newsletter October - December 2008

Chief among them, the TRADE Project had brought a lot of support to the new Department for International Cooperation (DICO) established as of January 2008 with the mandate to manage all Aid-forTrade, including management of the TRADE SWAp and Enhanced Integrated framework resources.

Photo: Botumroath Lebun

Investment in January 2008. During the meeting, the Senior Minister proposed turning the strategic directions identified in the 2007 study into three programs of action to be prepared by three mixed teams of Cambodian Officials and stakeholders as well as Development Partners – the so-called three TRADE SWAp “Pillars.” Wisal Hin, UNDP Poverty Reduction Unit Leader (left) and H.E. Mao Thora, Secretary of State, Ministry of Commerce (right), discuss the success, challenges and the future of the TRADE Project. TRADE Project Retreat, Sihanoukville. October 2008.

Development in Cambodia, and to strengthen Cambodia’s capacity to manage and promote positive change in its trade sector, both within Government and among producers. While the TRADE Project was being set in motion, Cambodia and its Development Partners were absorbing the implications of the 2005 Paris Declaration on Aid Effectiveness.

sultants, international experts, and DP staff labored over a period of several months to prepare Cambodia’s 2007 Trade Integration Strategy. Their efforts included intensive new research, extensive consultations, and numerous review workshops. The new strategy as endorsed in March 2007 by the Government’s

While the TRADE Project was already taking shape, by early 2008 there was room to take stock of the developments of the previous months and respond to the emergence of the TRADE SWAp. The MoC and the UNDP agreed that TRADE should be re-focused as much as possible to support clearly Pillar 2 (Development of Export Supply Capacity) and Pillar 3 (Human and Institutional Capacity Development) of the newly born TRADE SWAp.

Under the initial impulse from the European Community, it was agreed that Cambodia and its Development Partner should aim for a Sector-Wide Approach – or SWAp – for its trade sector. SWAp seeks to strengthen Government leadership over the use and management of Technical Assistance resources. At a minimum, a SWAp seeks to formulate a single sector strategy, shared by all stakeholders – Government, private sectors, civil society, and Development Partners – that serves as a reference against which all Technical Assistance is being deployed and coordinated. In response to this new development, in mid-2006, MoC and UNDP agreed to use the TRADE Project to launch a true, collective DTIS updating effort that would engage not only the six core IF Agencies, but other Development Partners and the Ministry of Commerce as well. The updated DTIS would then serve as the strategy at the heart of Cambodia’s TRADE SWAp. Together, a team of some 24 government officials, local con-

Support to Decentralization: Three Pilot Areas Meanwhile, also during 2008, the MoC, with the support of the TRADE Project, was able to launch initial assessments of exporters needs in nine provinces.

Photo: Botumroath Lebun

Trade Project... continued from page 1

Together with GTZ, the TRADE Project also helps DICO conceptualize and launch its website at www.tradeswap.org.kh.

From this initial assessment, three provinces were selected for pilot activities: Kampong Cham, Siemreap, and the North-West area bordering Thailand (Battambang, Banteai Meanchei, and Pailin). In those three pilot areas, key products are being selected for emphasis (from the Trade Strategy 19 priority product list) and activities are being launched to establish product associations and institutionalize a provincial-public private dialogue. These activities are being linked to those of other donors (IFC, GTZ, USAID) working in the area of public-private sector dialogue.

TRADE Project Pillar: 2 - Development of Export Supply Capacity. Core Team Member, Phanith Nuon, interviews fishing community in Battambang province. The fishing community is located near the Tonle Sap, the largest fresh water lake in Cambodia. September 2008.

Committee in charge of TRADE – the Sub-Steering Committee on Trade Development and TradeRelated Investment. The March endorsement was followed by a December 2007 official launch event opened by H.E. Prime Minister Samdach Hun Sen. The event attracted international participants and was held at Phnom Penh’s Le Royal Hotel. MAIN FOCUS Immediately following the December meeting, H.E. Cham Prasidh, Senior Minister, Ministry of Commerce, convened a meeting of the Sub-Steering Committee on Trade Development and Trade-Related

With this new breath of energy, the TRADE Project team spent much of 2008 developing a range of activities that are aligned even more closely with the TRADE SWAp objectives. Support to Capacity Development By the end of 2008, the TRADE Project had launched capacity development assessments and plans in seven government departments (four in the MoC, one in the Ministry of Agriculture, Fishery and Forestry, two in the Cambodia Investment Board.) These departments had been identified because of their direct responsibility in implementing objectives of the TRADE SWAp.

In addition, producer themselves have pointed to capacity gaps to the TRADE team during the field visits. In response, the TRADE team is looking at how the infrastructure of key support services – trade information, trade promotion, trade finance, extension services, packaging, and transport logistics – might be strengthened and the role of various government and private institutions might play in filling up such gaps. Looking forward to 2009-2010, the TRADE Project intends to expand its work in the areas launched over the past 18 months or so and to deepen its coordination with other developing partners (DPs) that are supporting the TRADE SWAp. n

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T.R.A.D.E. Project Newsletter October - December 2008

Strategy Report... continued from page 6 These 19 sectors stand out as a result of a combination of favorable factors including rapid increase in world demand, domestic supply conditions, or their potential positive impact on income creation and poverty reduction. As part of the Export Potential Analysis, an Attractive Market Analysis was also conducted. Such analysis can help understand which destination markets Cambodian exporters might target for those 19 products and services and the kind of competition they might encounter in those potential markets. (See chart) Two powerful findings emerged. Some of the most attractive markets for Cambodian exporters are likely to be in Asia, the Middle East, former Soviet Union countries, and Africa even while traditional markets of the “North” remain important. This is a strong reflection of the fundamental transformation of the world economy since the late 1990s. The second important finding is that, in most potential or even current markets (with the excep-

T.R.A.D.E. Project Newsletter

Publisher

MoC/UNDP TRADE Project

Managing Editor

Botumroath Lebun

Editor

Thierry Noyelle

Contributors

Roger Lawrence Thierry Noyelle David Van Sven Callebaut

Core Team

Mab You, Proj. Manager Buntha Um Sakura Samrith Phanith Nuon Yanno Yin Sopheak Lim Komira Sieng Sokleng Rin

Ministry of Commerce #20 A & B Preah Norodom Boulevard. Phnom Penh, Cambodia Phone / Fax (855) 23-722-169 For FREE Subscription, please contact Sokleng Rin (855) 23-722-169

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Cambodia’s 19 Product and Service Export Potentials 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19.

Garments Footwear Rice Cassava Rubber Fishery Cashew Nuts Silk Soybeans Livestock Corn Beer Fruits & Vegetables Wood Products Light Manufacturing Tourism Labor Services Web-based Services Transport & TransportRelated Services

tion of current garment exports), Cambodian exporters no longer benefit from tariff preferences and advantages. This is so either because their main competitors in those markets are firms from other LDCs that benefit from similar tariff advantages, or because import tariffs are extremely low as a result of multiple rounds of multilateral or regional trade negotiations. These important findings lead to another major theme of Cambodia’s

2007 Trade Integration Strategy, namely that Cambodian exporters are facing a new “competitiveness paradigm.” Due to the disappearing tariff preferences and advantages, Cambodia exporters must increasingly learn to compete based on the strength of their domestic supply capacity. Quantity, productivity, timeliness, and quality of domestic supply have become the key drivers of export success. It is here that government has a key role to play. While progress has been made in recent years, the RGC, in partnership with trade stakeholders, must continue improving the legal and service infrastructure that help exporters strengthen their supply capacity. Chief among these priorities are necessary improvements and progress in areas of trade facilitation, investment facilitation, intellectual property protection, technical standards and packaging, sanitary and phyto-sanitary standards, trade information and promotion, as well as a push forward on the legal reform agenda aimed at

strengthening environment.

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A third and final major theme of Cambodia’s 2007 Trade Integration Strategy is that success in implementing the strategy will require strong ownership by the Government, strengthened coordination across ministries, and vigorous development of institutional and human resources required to manage the process. These three major themes led the Sub-Steering Committee on Trade Development and TradeRelated Investment, under the chairmanship of the Senior Minister, Minister of Commerce, to propose the formulation of three main sub-programs or “Pillars” to implement the Strategy and coordinate Development Assistance under the TRADE SWAp: The goal is to: • Legal and Institutional Cross-Cutting Reform for Trade Development (Pillar 1) • Product and Service Export Supply Development (Pillar 2) • Capacity Development for Trade SWAp Management (Pillar 3). n

Protected Geographical Indication (GI) approach in Cambodia The Ministry of Commerce of the Kingdom of Cambodia is preparing a law for the protection of Geographical Indications. Protected Geographical Indications are an Intellectual Property tool, recognized by the TRIPS agreements. They aim to protect the geographical name of goods which reputation is related to a particular area of production and to provide guarantees to consumers referring to the origin and the quality of such goods. To register a Geographical Indication, producers and operators have to define the specificity of their product, delimitate the area of production, characterize key points of the production method and prove the link between the product specificity and the territory. Reliable control and traceability mechanisms have also to be developed.

Kampot pepper

Kampong Speu palm sugar

Phnom Srok silk

Kampot Pepper has very distinct flavor and smell. It develops an enthralling aroma, strong and delicate. Between mountain and sea, Kampot province special climate & soils, as well as the experience from generations of farmers, make it unique.

Palm Sugar production is a long tradition in Kompong Speu. This area’s sandy soils and low rainfalls, combined with the know-how of producers, make Kompong Speu palm sugar particularly tasty, concentrated and aromatic.

In Phnom Srok area, knows-how built on centuries of experiences and breeding of specific Khmer silkworms leads to the production of a premium quality. A high quality silk with beautiful golden color.

Protected Geographical Indications are an efficient way to enhance the value of traditional product, raise incomes of small scale producers and promote local development. Contact: Geographical Indications Office, Ministry of commerce, Cambodia

Email: [email protected]

French Agency for Development (AFD) supports the Kingdom of Cambodia in its development of GI protection mechanisms.