Eight Meeting of the Working Group on Agriculture (WGA8) g p Enhancing Competitiveness on Sustainable Sourcing and Tracing of Agri-food Products

in the GMS 25-26 October 2011, Siem Reap, Cambodia.

 Established

in October 2000 it is a private sector organization formed by National CCIs of six GMS countries and of corporate multinational enterprises operating in the GMS. Its role is to provide needed private sectorsector related products and services to facilitate the implementation of the GMS Economic Cooperation Program (ECP). Its strategic focus and scope is to contribute to th ff ti implementation of th ECP t the effective i l t ti f the through the involvement of the private sector in program activities and investment investment.

to enhance connectivity of the Economic Corridor C id areas b reducing cross-border by d i b d transactions and transportation costs; to increase competitiveness through economies of scale by cross-border investments and valueadding processes; to empower the private sector by promoting joint financial, technological, marketing, production and other collaborations in the production, Economic Corridor areas; to reduce poverty by supporting development of p y y pp g p rural and border areas, and increase the earnings, provide employment to the low-income groups. groups

Road infrastructures d f have been put into place by GMS Governments with the support of ADB and other d th development l t partners A Cross Border Transport Agreement (CBTA) has been prepared and has been almost ratified b b l f d by all Governments. The CBTA is not into place yet.

GMS countries especially, Chi ti i ll China (Yunnan), Thailand and Vietnam are prime exporters of agricultural and food products Agriculture and food value chains are developing rapidly along the GMS Economic Corridors because of increased trade of agriculture and food products between GMS Countries

T d of fruit and Vegetables is t bl i Trade f f it d V remarkable between China and Thailand; China and Myanmar; China and Vietnam. Trade of grains (rice, maize, etc) is between Thailand and Laos, Thailand and Cambodia, Vietnam and Laos, Vietnam and Cambodia, China and Laos

Agro-industry f A i d from Chi China, Vietnam and Thailand are extending their production base to Myanmar, Laos and Myanmar Cambodia along the GMS Corridors

Mitr Phol Sugar Industry Mit Ph l S I d t CP poultry production, feed mill and maize H ll G Holley Group casava plantation, etc.

There are large potential for developing f d value chain d l i food l h i along the Economic Corridors tapping on the demand of the Chinese Market Market.

 Despite

the large potential for agriculture and food production, the Economic Corridors competitiveness is very low, especially within p y , p y Laos, Cambodia and Myanmar. There are a number of constraints related to:

The business environment in respective countries High costs of production and transport g p p Timeliness of delivery Agriculture and food safety standards infrastructure The economy of scale to guarantee quantity of shipment

number of surveys and the World Bank Doing Business Indicators show th t I di t h that the business environment for agri-business enterprise are not favorable favorable. This also discourage foreign investment in h field f i the fi ld of agriculture and food production.

T Top

constraints are: t i t

Cost and supply of energy Government regulation Availability of skills labor Lack of working capital Lack of finance for capital investment Lack of knowledge of export markets

 Added

constraints are:

High government processing costs expensive licensing and certification (CO) ( ) High cost of transportation High fixed cost requirement of minimum shipment and high working capital Lack of infrastructure access to Inland Container D t t Depot (ICD) etc. Complicated product certification for agriculture and food products and compliance to importing countries requirements Cross border trade NTBs

Cambodia 2011 Doing Business Rank (1/183) Starting a business Dealing with construction permit i Registering Property Getting credit Protecting investor Paying Taxes Trading across border Enforcing contract Closing a business 147 170 146 117 89 74 57 118 142 183 2010 145 172 146 120 87 73 58 126 140 183 +3 -2 2 -1 +1 +8 -2 +/ -2 +2

Lao PDR 2011 171 93 115 163 152 182 116 170 110 183 2010 +/ 169 -2 87 -6 114 -1 162 -1 150 -2 2 182 109 -7 170 110 183

The cost element is the most important actually there are:

High government processing costs expensive licensing and ( ) certification (CO) High cost of transportation due to trans-shipment, road control etc etc. Unnecessary Road Control High fixed cost requirement of minimum shipment and high working capital

 Timeliness

of

delivery

Truck are held at the border limited operating ho rs hours Slow customs documentation and inspection. Un necessary transtrans loading

 St d d Standards

of f products and services

Products Quality standards Phyto-sanitary and quarantine I i d Inspection and certification Agriculture Best Practice Traceability y

 Th There

is a l k of i lack f equipment and infrastructure

Laboratory for certification Combined facilities for customs, phytoi d sanitary and quarantine inspection and certification Storage and milling

Laos, Laos Cambodia and Myanmar agriculture are still under subsistence and small b i t d ll holders production Cooperative p production and modern farming are not well developed ot It is difficult to get the economic scale for industrial investment and for export

 GMS-BF

is involved in trade and transport facilitation in the economic corridors

Cross border customs and transit system E t bli h Establishment of FRETA t enhance road t f to h d transport traffic and standards

GMS-BF GMS BF

support SME promotion investment networking

Access to finance Export shipment g guarantee p p

GMS-BF

Promote investment in special economic and industrial zones Promote investment along the Economic Corridors