Photo by: HENG CHIVOAN
TNT Express Worldwide (Cambodia) Country General Manager Sjaak de Klein says road transport stands to benefit from economic slowdown as firms look for cheaper substitute for air freight.
Friday, 09 October 2009 15:00 Nathan Green
TNT Express Worldwide (Cambodia) Country General Manager Sjaak de Klein talks about the impact of the economic slowdown on the transport sector and TNT’s prospects for growth
CEO Talk
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By Nathan Green
The So Nguon Group has reported a 40 percent decline in freight volumes over the first nine months of the year. How is TNT doing?
We are lucky in that we have a diverse portfolio of customers, including mining, oil and telecoms. We also have imports by land and air as well as exports, while So Nguon obviously had a strong focus on connecting with the export shipping lane in Sihanoukville. Our Asia Road Network, which we extended into Cambodia this year, is also really starting to see some success because the crisis is encouraging people to look for a cheaper option than air freight. And it’s much faster than moving goods by sea from Bangkok through Sihanoukville, which can take up to 15 days. We drive overnight, so there is a tremendous opportunity for customers to get their goods shipped quickly. The garment slowdown has affected us because we import accessories and fabrics and export documents and garment samples, but we have not been as adversely affected as the freight forwarders that focus on exports of ready-made garments to the US.
What import sectors are proving resilient?
Consumer goods, especially consumer electronics and computers, are holding up as the middle class is rising and people have more spending power. There is also a lot of imports of baby stuff. The telecoms industry is very dynamic, and they are bringing in a lot of equipment to build towers. We are also seeing a pickup in garments, with many factories receiving new orders and showing interest in bringing in fabrics and accessories.
There was a Greater Mekong Sub-region (GMS) meeting in Phnom Penh recently where GMS ministers pledged to accelerate economic corridor development. Is enough being done in Cambodia?
Cambodia is lagging behind in GMS development, which is unfortunate as building a strong economic corridor will not only stimulate the economy but also provide jobs in the transport sector and increase economic productivity near those roads. Some countries are picking it up faster than others. For example, Laos realised very quickly that as a landlocked country they had to do something, much like Switzerland did in Europe. They got proper funding to build a bridge across the Mekong and built some extremely good roads across the southern part of Laos. They also have incentives for companies to register trucks there. In Cambodia, the government doesn’t have special incentives for the transport industry, which is a pity.
What incentives are needed?
What the industry most urgently needs is incentives to bring in proper equipment instead of having all these local companies with secondhand trucks that are 10, 15, 20 years old. If you import a truck now, you pay a 40 percent import tariff, including duty, special tax and VAT. We would like to become a showpiece for the transport industry, but at the moment its is expensive to bring in a good fleet.
ASYCUDA (Automated SYstem for CUstoms Data) is being rolled out and TNT has introduced e-invoicing. What impact will electronic data interchange have on the sector?
ASYCUDA is only used at the port in Sihanoukville. They are still trying to roll it out at the international airport, but I have heard nothing about a rollout plan at land border crossings. But in general, we are embracing IT technology and like to exchange data with customs electronically. It will speed up our clearance processes as long as the government starts using electronic data interchange and applies risk management profiling to that data. For our express products, that’s important. Electronic data exchange also benefits our customers, and the bigger customers are definitely interested in that.
The economy is expected to contract this year and begin expanding again next. What’s your growth projection for TNT?
We haven’t really seen that contraction and are still growing year on year. And we are optimistic about the future. There is still an opportunity to develop a domestic network, and I am convinced that special economic zones (SEZs) will be successful in attracting new investments like Ajinomoto, which is setting up in the Phnom Penh SEZ. I’ve been here three years and I fell pretty comfortable about the buzz here. The economy has perhaps not been affected quite so much by the global economic crisis as believed because it is cash-based, and we still predict to grow our revenue by a substantial percentage.
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