Why do you need Documentary Credit?

It is an irrevocable undertaking issued by a bank whereby it undertakes to make payment to the named beneficiary.

What do you expect to learn from here?

You will find alot of informations containing herein ie. letter of credit, document examination, documentary collection, international and local trade law...

What information should I look for ?

This blog provides a basic understanding of international trade where you need it most.

Will we tell you more besides our content?

We shall answer your enquiry as soon as we receive.

Custom Permit in Cambodia

In accordance with General Department Custom and Exercise (GDCE), imported/ exported goods which are required to apply for Customs Permit at GDCE include as follows:
- All kinds of goods imported by Qualified Investment Projects (QIP) outside any Free Zone and whose duties and/or taxes are borne by state.
- All imported/exported goods in the list of prohibited and restricted goods in importation and exportation of Annex 1 of Sub-degree No. 209 ANK.BK dated 31 December 2007 on the Enforcement of the List of Prohibited and Restricted Goods
- All imported goods whose duties and taxes are borne by the Royal Government under public investment framework.
- All imported goods whose duties and taxes are borne by the Royal Government under Grant Aid, Loan, and Humanitarian Aid framework.
- All imported goods whose duties and taxes are borne by the Royal Government and which are imported for foreign diplomatic or consular missions, international organization and technical cooperation agencies of other governments for use in the exercise of their official function and for personal use of their official personnel
- All imported goods, whose duties and taxes are borne by the Royal Government, which are household goods, personal effects, and other belongings excluding motorized vehicles that are imported by persons who have moved into Cambodia
- Other goods determined by the Minister of Economy and Finance.

Person who can carry out customs formalities in Cambodia

Exported or imported goods must be declared by their owners or by persons that are authorized to carry out customs formalities on the owners behalf.

Persons authorized to carry out customs formalities include:

- persons who are authorized as customs brokers by the Prakas of the Minister of Economy and Finance;

- any person who, without exercising the profession of customs broker, makes customs declarations for their own business. Such persons may be authorized by the Minister of Economy and Finance to carry out customs formalities on behalf of others on a temporary basis for specific goods.

Cambodia Import-Export Inspection and Fraud Repression Department (CAMCONTROL)

According to sub degree No.59 A NKR-BK On Upgrading Cambodia Import-Export Inspection and Fraud Repression Department (Camcontrol) to Cambodia Import-Export Inspection and Fraud Repression Directorate-General (Camcontrol), Cambodia Import-Export Inspection and Fraud Repression Directorate-General (Camcontrol) is led by one Director General, together with some Deputy Director Generals upon its necessity. Cambodia Import-Export Inspection and Fraud Repression Directorate-General (Camcontrol) has its responsibilities as follows:
- to provide import-export inspection services with Customs and Excise based on the Trade Facilitation through Risk Management;
- to protect consumers, to ensure quality, safety of products and to repress fraud in  collaboration with relevant agencies;
- to issue certificate of quantity for export goods upon the request from applicants so  as to fulfill importing country requirements;
- to check National Standard Conformity on quality, safety of products which use  sign of National Standard;
- to conduct cooperative pre-check on declarations of products and services that may  affect safety, consumers’ health or production, trade of those products and  services provided by competent authorities;
- to inspect products and services in stage of circulating in markets;
- to manage Laboratory Department of Ministry of Commerce to diagnose quality of products;
- to cater for commercial services;
- to collect import-export inspection fees and fee on diagnostic of product quality;
- as a secretariat for National Codex Committee;
- as a Contact Point of receiving and disseminating Sanitary and Phyto-sanitary  (SPS);
- as a Contact Point of providing information on food safety under framework of  ASEAN-China cooperation;
- to carry out other duties designated by Ministry’s leaders.

This is the procedure of the application for the Pre-Arrival Assessment at CAMCONTROL, a department of the Ministry of Commerce (MoC). The Pre-Arrival Assessment is requiredfor all imports and issued for the following categories of products:
Food
Chemicals
Drugs
Electric and Electronic Equipment

No official document is issued as a result of this process other than the application being stamped by CAMCONTROL to give the authorization.
The imported should then present the authorized application letter with all other supporting documents to CAMCONTROL
at the border where CAMCONTROL will, in all cases, inspect the goods.

The Pre-Arrival Assessment authorization is a required document submitted, with other commercial documents, to the CAMCONTROL office at the border location to request inspection of goods by CAMCONTROL. Such inspection is conducted jointly with Customs and it is necessary to obtain CAMCONTROL’s approval following inspection to ensure that, once Customs has provided their approval for release of cargo, the goods may exit the cargo holding area.

Pre-shipment Finance

As far as i know, Pre-shipment finance is a kind of working-capital finance provided by  the bank
to an exporter, with-recourse basis,  against either an export sell contract/ perchase order (not our bank practice) or against a Letter of Credit.

Key benefits to exporter
+ The exporter is offered credit terms so that it can add flexibility to its cash flow.
1. Procure raw materials.
2. Process and pack the goods.
3. Ship the goods to the buyers.
4. Meet other financial cost of the business.
5. Secure warehousing

key risks
+  Non payment risk or buyer risk: the risk that the foreign buyer does not pay exporters.
+  Non performance risk or supplier risk: the risk that the exporter will not fulfill the export order, cannot manufacture the product for technical reasons,
or cannot deliver it on time and according to the price and quality standards identified in the export purchase order or the letter of credit (L/C).
+  Third party risk: other risks that are involved in the transactions process, such as risks related to transport, bank, country risks, international regulation risks
ie. Antimoney Laundering, Economic sanction, Financial crime.

How to mitigate risks
Be a ware of the following terms:
+ Promissary note?
Protect against non payment
+ Document of title ?
Allow the holder to hold the possession of that of title
+ Credit rating ?
Investment indicator
+ Warehousing managment?
The control the movement of goods
+ Trade credit insurance?
To secure buyer payment risk
+ Loan guarantee by third party
Add gurantee to the preshipment finance
+ Transportation and insurance
Holding possession of goods until the documents is presented and Insuring any lose or demage during the shipment of goods.

Insurance policy- Franchise and excess

ISBP paragraph K14 state that An insurance document may indicate that cover is subject to a franchise or excess (deductible). However, when a credit requires the insurance cover to be irrespective of percentage, the insurance document is not to contain a clause stating that the insurance cover is subject to a franchise or an excess (deductible). An insurance document need not state "irrespective of percentage".
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What is franchise and excess mean?
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Answer:
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A franchise is a provision in the insurance policy whereby the insurer will not pay unless damage exceeds the franchise amount.

For example - You are shipping goods and your insurace is for $50,000. The insurance policy contains the
franchise provision that claims must exceed 10% ($5000).
If the total value of the damage to the goods is $4000, you are responsible for the entire $4000.
If the total value of the damage to the goods is $8000, the insurance company is responsible for the entire $8000.
You do NOT have to pay $5000 of your own money first.

An excess (deductible) is a provision in the insurance policy whereby the
insurer will pay any amounts of damage that exceed the excess (deductible) amount.
For example - You are shipping goods and your insurace is for $50,000.
The insurance policy contains the excess (deductible) provision that the insurance company will not pay the first 10% ($5000).
If the total value of the damage to the goods is $4000, you are responsible for the entire $4000.
If the total value of the damage to the goods is $8000,
you are responsible for the first $5000 and the insurance company is responsible for the remaining $3000.