In Malaysia, there are restrictions on government projects which are granted only to
government employed LSPs. Foreign firms are not granted contracts for government
projects. Malaysia does not issue trucking and brokerage licenses to foreign firms.
In Indonesia, representative offices cannot issue invoices as their role is only to do
research and coordination. In Thailand, bonded warehouses tend to favor a local
company more than a foreign one. In Vietnam, the document processing time is two-three
days for foreign firms and around one day for local firms. In addition, while import taxes
are zero under the WTO agreement, value added taxes are imposed on goods.
In some countries, discriminatory licensing policies are practiced. Some examples of
such policies include varying licensing requirements across provinces or districts,
duplicative licensing requirements depending upon services, uneven enforcement of
licensing requirements and preferential access to domestic competitors regarding
information affecting regulations than to foreign competitors. Such policies raise the
barriers to free trade as foreign firms find it difficult to operate in such an environment
and thus the quality and reliability of shipment is affected.
In Malaysia, customs brokerage is much sought after. This licence, granted by the
customs authorities requires passing a ten-day course offered by the local customs and
freight forwarder association. Once the certificate is granted, a firm can operate as a
customs brokerage house. Container trucking is still controlled by the government.
A firm needs to have a licence before beginning operations. East Malaysia and West
Malaysia have different state control, so licensing is different. This results in more cost
and duplication operations for both local and foreign firms.
4.3 Mode-specific barriers
4.3.1 Fleet size limitation, equipment usage and hours of operation. Limitation on,
arguably, any fleet size, equipment usage and on the hours of operation decreases the
connectivity and increases the cost of the shipment within any country. Brunei imposes
a restriction on the economic life of 12 years for a truck. Likewise, in Myanmar,
although there is no barrier to trucking within the country, rice export is prohibited
using trucks so as to prevent illegal exporting of rice.
4.3.2 Aviation cabotage regulations. Cabotage regulations in air transport are
regulations that restrict the domestic movement of cargo by a foreign airline from one
airport to another airport within a country. It impacts the total cost of shipment. As most of
the economic activities of a country are centered around major ports, unless the consignment
size is large, foreign firms may wish to operate domestic cargo transport services.
Most ofASEANhave only one capital airport such as Brunei, Laos, and Cambodia and
hence there is no question of cabotage. Myanmar has low volumes of domestic trade
through air which makes investment by foreign firms nonviable. In bigger ASEAN
countries such as Malaysia, Indonesia and the Philippines, there are cabotage issues.
First, the practice of cabotage does not allow domestic operations by foreign airlines.
For example, in Malaysia, transshipment within the country can only be carried byMAS
cargo. However, the Singapore Government does not allow commercial (cargo) coach to
transfer from Changi Airport to Senai Airport or to airports in East Malaysia.
So, the affreightment is a challenge.
Ideally, ASEAN would want to have an open sky. However, seventh freedom rights
are limited to some countries or service providers. Under seventh freedom rights,
foreign carriers can pick upcommercial loads in a foreign country and carry them to other