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Julian Latimer Clarke, Senior Economist
SNEC Investment Workshop
4th August 2014
What are the opportunities?
Number of respondents
2. ASEAN is an opportunity to 5
Source: Foreign Investor Perception Survey, Question 11 (108 Responses) and Question 28 (95 Reponses)
Why do foreign investors invest here?
Increased connectivity
Constraints to Doing Business
Constraints: 30%
25%
20%
Electricity 15%
Corruption 10%
Transportation 5%
Skills 0%
Constraint
SEZs are not special enough
20
Firms report using generators 15
for up to 30% of their
production needs 10
5
Rate of electrification is only
0
35%, compared to 99% in Phnom Bangkok Hanoi Ho Chi Yangoon Vientiane Diesel
Penh Minh City
Thailand and Vietnam
Corruption is less of an obstacle
30%
25%
20%
15% Reported Informal
10% Payments as main
5% obstacle to growth in
0% 2012
Firm Faced a Firm Faced a
Situation Situation
conducive to conducive to
payments in 2007 payments in 2012
Worker skills are still lagging
non-SEZ SEZ
Labor productivity (value added / 4,117 4,948
worker)
Unit labor costs 0.40 0.42
TFP
5.5 5.0
Capacity utilization (%) 74.5 71.0
A Missing Middle of exporting firms
Source: authors computation using the World Bank Enterprise Survey Database..
Simulated Impact of Streamlining
Cambodia is an outlier, indicating that the size of Cambodian exporters is very big compared
to the size of exporters in other countries with a similar level of development.
Concentration and Survival rate
Cambodia is an outlier, having the lowest level of concentration and one of the highest
survival rate (because of very few new entrants). This indicates low dynamism which, in the
long run, increases vulnerability.
Firms Participation in Exports and Trade Costs
The firms that are able to overcome the trade costs to export are usually
the biggest and most productive.
The more expensive the trade costs are the larger and more productive
firms need to be in order to successfully engage in exports.
Who exports?
The percentage of
exporting small and large
firms is similar to
comparator countries;
N.B.: Cambodias data are from 2011; while for the other countries they are
while medium firms
from 2009. participation in export is
much lower.
Estimated Probabilities to Export, by firm size
Who is likely to
export?
Large firms have a 30%
chance to export,
compared to about 50%
chance of large firms in
Vietnam. What explains
this difference?
Cost/time to Trade Across Borders
What is the
coverage and
ratio of export
licenses?
Out of 49 countries in
the NTM database,13
report to use export
requirements. Only in
Cambodia and Sri
Lanka exporters need to
be registered. Source: Authors computation using the global non-tariff measures database.
Simulated Impact of Streamlining
Im/Export cost
reduced by
$100 each
The Doing Business Trading Across Borders index measures the time, cost, and the number of
documents required to export and import a standardized shipment of goods by sea. The entire
process is tracked for import or export, from the initial contractual agreement, to obtaining the
letter of credit, to the actual departure (or arrival) of the goods at the port.
Time & Cost for Export/Import Procedures
Real gains could be obtained by reducing the time and cost for documents preparation:
documentary requirements should be simplified to meet best international practices.