unctad.org | Cambodia's animators boost services exports despite barriers
Cambodia's animators boost services exports despite barriers
08 May 2018
Flag of Cambodia
Why does a World Trade Organization deal designed to boost service industries in least developed countries lie dormant?

Check out the website of Phnom Penh-based animation studio iThinkAsia, and you’ll get a sneak preview of a new film coming to screens in 2018 – “Funan, the New People” by acclaimed French director Denis Do.

Using Cambodian animators was important for Mr. Do because the film tells the story of his mother, who fled the country for France at the time of the Khmer Rouge.

“I really wanted to involve Cambodians, but I didn’t know how,” Mr. Do told Asia Life Magazine in 2017.

Later he was introduced to iThinkAsia and contracted them for about half the work on the 80-minute production.

Cambodian animator  

Moving pictures

But it’s not all good news for service providers like iThinkAsia from economically weak countries. They often face an array of problems accessing foreign markets, from securing finance to upgrading skills or even travelling for business meetings.

Such challenges could be addressed by a 2011 deal between World Trade Organization members to help the poorest among them export more services.

A new UNCTAD report has looked at specific service sectors in four countries to suggest ways to improve the utility of the WTO agreement.

Among the case studies was the animation industry in Cambodia, where UNCTAD found service providers facing constraints that the WTO deal was meant to address.

Providing animation expertise for foreign film producers is an example of services trade that developing countries like Cambodia need to create jobs and boost economic growth.

“Supporting a healthy trade in services has long been known to lead to economic and social benefits because it requires, for example, better educated, often younger, workers,” senior UNCTAD economist Bonapas Onguglo says.

“Just as crucially, services command higher prices than, say, exporting unfinished raw materials for use in manufacturing in some other country,” he says.

“Yet countries like Cambodia account for less than 1% of the global share of services exports.”

Services waiver

Services trade isn’t limited to the creative industries. It also includes:

  • Professional services (legal, medical and health, accountancy and architecture)

  • IT and IT-related services

  • Tourism

  • Education

  • Insurance

  • Banking

  • Construction

When WTO members agreed in 2011 that trade in such services offered a good way to boost jobs and growth for its 36 poorest and most disadvantaged members – also known as least developed countries (LDCs) – they devised a waiver from the usual WTO practice of treating trade between all members equally.

“The WTO services waiver was an important stepping stone of trade liberalization for LDCs,” Mr. Onguglo says.

“The novelty of the waiver was that it was for LDCs only – so LDCs didn’t need to compete with other WTO (non-LDC) members.”

Little impact

However, the waiver appears to exist more in theory than in practice, with few examples of members using the waiver to make trade in services from LDCs easier.

“Existing waivers for commercial services exports from LDCs will have little impact unless backed by lowered regulatory barriers and supply-side capacity building,” UNCTAD Secretary-General Mukhisa Kituyi says.

As the global market for services increases, LDCs are seeking ways to make the most of agreements designed to help them.

Ambassador of Cambodia to the World Trade Organization Rithi Pich says that in Cambodia “the services sector is the largest contributor to GDP, accounting for 41 % of value added in 2016, followed by industry – 32% – and agriculture, fishery and forestry at 27 %.”

“From our experience rapid economic growth and job creation cannot occur by relying on domestic markets alone but require market access abroad,” he says.

The UNCTAD case study of the animation industry in Cambodia, for example, found that studios could be helped if more special exemptions (or “preferences”) were granted under the services waiver.

Barriers encountered

The first barriers identified were constraints on access to finance, according to the report, which in this instance translated into constraints on access to technology. It also identified a “shortage in skills and weak exposure of Cambodian staff to creative content”.

This was compounded by “a disconnect between the academia and the requirements of the marketplace,” resulting in skills gaps, “infrastructure constrains including an unreliable electricity supply and connectivity, and challenges related to marketing and outreach,” the report says.

As Dr. Kituyi says, these “supply-side” constraints are often seen as the most daunting in LDCs – many countries are simply not yet geared up to provide the services other countries would like to buy, so the preferences available under the waiver lie dormant.

To plug skills gaps, Cambodian animation studios like iThinkAsia and Phare Creative Studio are proactive and provide their own training.

iThink Asia has developed its own 2D animation curriculum, which the company intends to certify soon and develop into an online learning system. It has also been granted exclusivity over a 3D curriculum developed by Edenz Colleagues – a tertiary institution based in New Zealand. The company currently provides training to over 20 young Cambodians free of charge.

Phare Creative Studio provides training in 2D animation through its sister institution Visual & Applied Art School. The school has developed its own curricula in graphic design, animation and visual arts. Both organizations are part of Phare Ponleu Selpak (“The Brightness of the Arts”), a non-governmental organization founded in 1986.

More hurdles

As well as supply-side constraints, the UNCTAD case study points out that countries like France which might want to outsource film services to countries like Cambodia are prevented by “local content” rules when funding comes from the state.

A “co-production” model is often used to get around this, but Cambodia is not party to such an agreement.

Another hurdle facing Cambodia’s animators is restrictions on travel to attend meetings and film-services events like the Cannes Film Festival.

This makes it difficult for companies to market their services – especially, the case study says, “when the service provider is established in countries with weak regulatory frameworks (e.g. weak intellectual property protection) which can affect the building of trust” between potential partners.

Many of these barriers were foreseen in the services waiver deal, which is why a list of special exemptions or preferences was drawn up. But take up has been slow.

Help at hand

The UNCTAD report on Cambodia – Effective Market Access for LDC Services Exports – Is the LDC Services Waiver Being Implemented? – also includes case studies of services sectors in Nepal, Senegal and Zambia.

UNCTAD’s work to help LDCs maximize trade in services, initially funded by the Swedish government, is designed to help LDCs to expand services exports to boost development and achieve the Sustainable Development Goals.

UNCTAD offers:

  • A comprehensive and consistent package of assistance that provides information on the services waiver on a country-specific basis

  • A platform for establishing the links between the public and private sectors, as well as exchanges of best practice and lessons learned at national, regional and international levels

UNCTAD consultant Hannes Schloemann says that the waiver is “only one tool in the box” to help least developed countries boost services trade.

But he says that lessons from the LDC waiver could help preference-granting WTO members to experiment without affecting their relationships with other WTO members.

The waiver process could also be useful in developing South-South cooperation.

Mr. Schloemann, who spoke at a March 2018 UNCTAD workshop on the issue, says there is a need to systematically follow up with the exchange of best practice among services providers in various sectors.

What works in one sector, he says, could probably be replicated in others.

As for the Cambodian animation sector and others like it, the UNCTAD report recommends such possible measures under the waiver as reducing “local content” requirements to allow a greater share of inputs from LDCs, extending the benefits of “co-production” agreements, and creating special visa categories for cultural services providers.


Please wait....