Congestion is a problem at border checkpoints. Even in process efficient Singapore
there are 1-2 hours of traffic jam at the checkpoint. For Laos, although the shipment
volume is low, bureaucracy is very high. An LSP has to provide ample advance notice.
Shippers do not want their cargo to get stuck at any of the terminals. Culture plays a part
too. For example, on Friday since the Malaysian customs do not operate 24 hours for
religious reasons, a number of trucks have to queue overnight at the Singapore-Malaysia
border. Problems in domestic land transportation are also faced in Thailand due to
traffic congestion and restricted hours for entry of trucks into Bangkok.
4.1.8 Multiple uncoordinated offices. Some customs jurisdictions have several
offices, which often run independently. It is a problem in countries with more than one
port, such as Indonesia and the Philippines as these countries are archipelagic in
nature, thus being widespread and hence difficult to control. In Indonesia, while the
major ports are coordinated, the small ports lack coordination. The East and West
Malaysian ports also lack coordination in terms of the customs rules. Thailand also has
a large number of private ports which tend to interpret existing regulations differently.
4.1.9 Improper penalties. Penalties are often imposed by the customs officials without
adequate cause to extract fine which one must pay to be repealed. It impedes free trade
by increasing the total time for shipment, and hence a higher cost of shipment. Moreover,
such penalties may lead the shipment to lie at the yard, thus influencing the quality of the
shipment. In most of ASEAN, such penalties are rare. In Malaysia, Cambodia and
Myanmar, however, penalties are imposed on late submissions, amendments, and
related to inspections in order to elicit arbitrary money. In Indonesia, such penalties
are quite common.
4.2 Foreign investment-related barriers
Foreign ownership regulations pertain to those regulations that either limit equity
ownership in the firm or regulate the form of establishment, such as through a
separately-capitalized subsidiary, representative office, or joint venture. Each country
wants to protect its national interest. While some counties are quite liberal and allow
foreign companies to have majority equity, other countries require local majority
ownership. Such regulations inhibit foreign firms as they struggle to find the right partner for joint ventures. The lack of management control also results in lower quality
and reliability of the service provided to shippers, thus leading to inefficiency in trade.