OECD Competition Assessment Reviews Asean 2021

FOSTERING COMPETITION IN ASEAN
OECD Competition Assessment Reviews

ASEAN
LOGISTICS SECTOR
OECD Competition Assessment Reviews:
Logistics Sector in ASEAN
PUBE
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Please cite this publication as:

OECD (2021), OECD Competition Assessment Reviews: Logistics Sector in ASEAN
https://www.oecd.org/competition/fostering-competition-in-asean.htm
This work is published under the responsibility of the Secretary-General of the OECD. The opinions
expressed and arguments employed herein do not necessarily reflect the official views of the OECD or of
the governments of its member countries or those of the European Union.
This document and any map included herein are without prejudice to the status or sovereignty over any
territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city,
or area.
The OECD has two official languages: English and French. The English version of this report is the only
official one.
© OECD 2021
OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN ASEAN © OECD 2021

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Foreword
Southeast Asia, economically one of the fastest growing regions in the world, has benefited from broadly
embracing an economic growth model based on international trade, foreign investment and integration into
regional and global value chains. Maintaining this momentum, however, will require certain reforms to
strengthen the region’s economic and social sustainability. This will include reducing regulatory barriers to
competition and market entry to help foster innovation, efficiency and productivity.
The logistics sector plays a significant role in fostering economic development. Apart from its contribution
to a country’s GDP, a well-developed logistics network has an impact on most economic activities. An
efficient logistics system can improve a country’s competitiveness, facilitate international trade and
enhance its connectivity to better serve consumers, and meet the needs of regionally integrated production
facilities for reliable delivery of inputs and outputs.
This report, OECD Competition Assessment Reviews: Logistics Sector in ASEAN, undertaken within the
framework of the ASEAN Competition Action Plan, assesses the impact of regulation on competition in the
sector. This report covers the five main subsectors of the logistics market: freight transportation, including
transport by road, inland waterway and maritime; freight forwarding; warehousing; small-package delivery
services; and value-added services. In parallel, the OECD has assessed the impact of state-owned
enterprises on competition in ASEAN in OECD Competitive Neutrality Reviews: Small-Package Delivery
Services in ASEAN.
The OECD assessment was conducted in consultation with the authorities and local stakeholders in each,
and with the support of the ASEAN Secretariat and the ASEAN Economic Reform Programme under the
UK Foreign, Commonwealth & Development Office (UK Government). The assessment prioritises about
500 pieces of legislation across the region and identifies 475 regulatory barriers where changes could be
made to foster greater competition in the logistics sector. This is especially important for ASEAN where
logistics currently accounts for about 5% of GDP. This report offers policy recommendations that can help
ASEAN governments address structural and regulatory shortcomings in this sector.
These structural reforms have become even more pressing as the ASEAN economy is expected to have
contracted by 4.4% in 2020 (compared to a growth rate of 4.4% in 2019) due to the COVID-19 pandemic,
with containment measures severely affecting key economic activities such as exports and tourism. These
policy recommendations can contribute to reforms that help the economy resume sustainable growth and
job creation by enhancing competitiveness, encouraging investment and stimulating productivity in the
logistics service sector, with knock-on, economy-wide effects and benefits for its consumers.
I congratulate the governments of the ASEAN member states, as well as the ASEAN Secretariat and the
UK Government, on their efforts to analyse and lift regulatory barriers to competition and to improve the
business environment. The OECD looks forward to continuing and broadening its co-operation with
ASEAN to further support its reforms to the benefit of its citizens.
Greg Medcraft
Director, OECD Directorate for Financial and Enterprise Affairs

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Acknowledgements
The report builds on the country reports on the ten ASEAN member states, prepared in the context of the
Fostering competition in ASEAN project.
The substantive chapters of the report were drafted by the following members of the OECD Competition
Division: Chapter 2 – Saïd Kechida; Chapter 3 – Gaetano Lapenta; Chapter 4 – Sophie Flaherty and
Gaetano Lapenta; Chapter 5 – Sophie Flaherty and Gaetano Lapenta; Chapter 6 – Gaetano Lapenta,
Sophie Flaherty and Takuya Ohno; Chapter 7 – Leni Papa; Chapter 8 – Patricia Bascunana-Ambros (on
secondment from the UK Financial Conduct Authority), under the supervision of Federica Maiorano,
Competition Assessment Project Leader. In addition, the OECD team working on the Fostering
Competition in ASEAN Project included Ruben Maximiano, Fostering Competition in ASEAN Project Co-
ordinator, Wouter Meester, Competitive Neutrality Project Leader, and Matteo Giangaspero, all from the
OECD Competition Division. They provided useful inputs and comments throughout the project and on the
final report. Michael Saller led the competition assessment project during its initial phase. Antonio
Capobianco, Acting Head of the OECD Competition Division, provided overall leadership and advice, as
well as useful comments throughout the project and on the report.
James Mancini (OECD Competition Division), Stephen Thomsen, Fernando Mistura and Alexander De
Crombrugge (OECD Investment Division), Stephen Perkins and Olaf Merck (International Transport
Forum, ITF), Nick Malyshev, Daniel Trnka, Mike Pfister and James Drummond (OECD Directorate for
Public Governance, Regulatory Policy Division) and Kosuke Suzuki (Economics Department) provided
valuable comments on the final report. The report was edited by Tom Ridgway and prepared for publication
by Eleonore Morena and Erica Agostinho.
The project was funded by the ASEAN Economic Reform Programme under the UK Foreign,
Commonwealth & Development Office (UK Government) and benefitted from co-ordination support by the
ASEAN Secretariat.
Thecountry reports were prepared in collaboration with the following authorities and public companies who
participated in meetings and provided information and feedback throughout the project:
1. ASEAN Secretariat and UK Government.
2. Brunei Darussalam: Competition Commission Brunei Darussalam (CCBD); Ministry of Transport
and Infocommunications; Maritime and Port Authority of Brunei Darussalam; Registry of
Companies and Business Names Ministry of Finance and Economy; Darussalam Assets; FDI
Action and Support Centre.
3. Cambodia: Ministry of Commerce (Consumer Protection, Competition and Fraud Repression
Directorate General)(Department of Competition), Ministry of Public Works and Transport (MPWT)
(Logistics Department, Directorate of Administrative Services, Directorate of Transport (Road
Transport, Land Transport, Water Transport and Merchant Marine departments)), Ministry of
Economics and Finance (Public Enterprise Department), Sihanoukville Autonomous Port Authority,
Phnom Penh Autonomous Port Authority, Ministry of Land Management, Ministry of Posts and
Telecommunications and Cambodia Post.

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4. Indonesia: Indonesia Competition Commission (ICC); Ministry of Trade; Ministry of Finance;

Ministry of Transportation (Directorate General of Land Transportation);Ministry of Transportation
(Directorate General of Transportation Infrastructure); Ministry of Transportation (Directorate
General of Rail Transportation); Ministry of Transportation (Directorate General of Sea
Transportation, Directorate of Sea Traffic and Transport and Directorate of Ports); Ministry of
Communication and Information Technology (Directorate General of Post and Information
Technology); Ministry of State Owned Enterprises; Coordinating Ministry for Economic Affairs;
Ministry of Cooperation and Small and Medium Enterprises; Investment Coordinating Board
(BKPM); Pos Indonesia; Motor Transport Enterprise of the Republic of Indonesia (DAMRI);KAI
Logistik; Indonesian National Shipping (PELNI); and Pelindo.
5. Lao PDR: Lao Competition Commission (LCC), Competition Division (Department of Internal
Trade, Ministry of Industry and Commerce), Ministry of Finance, Ministry of Public Works and
Transportation.
6. Malaysia: Malaysia Competition Commission (MyCC); Ministry of Transport (Logistics, Maritime,
BLPD and NLTF); Malaysia Productivity Corporation (MPC); Road Transport Department (JPJ);
Land Public Transport Agency (APAD); Port Klang Free Trade Zone (PKFZ); Port Klang Authority
(PKA);Maritime Institute of Malaysia (MIMA); Royal Malaysian Customs Department (RMCD);
Ministry of Economic Affairs (MEA); Attorney General’s Chambers (AGC); Malaysian Investment
Development Authority (MIDA); SME Corporation Malaysia; Malaysia Communications and
Multimedia Commission (MCMC) and Pos Malaysia.
7. Myanmar: Myanmar Competition Commission (MCC); Ministry of Transport and Communications
(Postal Regulation Division, Inland Transport Department, Department of Marine Administration);
Directorate of Investment and Company Administration; Customs Department; Ministry of
Commerce; Myanmar Port Authority; Myanmar Post; Myanma Railways; Myanmar Shipyards;
Ministry of Investment and Foreign Economic Relations; Ministry of Planning, Finance, and
Industry.
8. Philippines: Philippine Competition Commission (PCC); Anti-Red Tape Authority (ARTA); Bureau
of Customs; Bureau of Immigration; Department of Information and Communications Technology
– Postal Regulation Department (DICT – PRD); Department of Trade and Industry (DTI);
Department of Transportation; Metropolitan Manila Development Authority (MMDA); National
Economic Development Authority (NEDA); Philippine Postal Corporation (PHLPOST); Philippine
Ports Authority (PPA); The Board of Investments (BOI); Cebu Ports Authority (CPA)(Freedom of
Information Office); Department of Interior and Local Government (DILG); Philippine Economic
Zone Authority (PEZA); The Department of Public Works and Highways(DPWH).
9. Singapore: Competition and Consumer Commission of Singapore (CCCS); Enterprise Singapore;
Economic Development Board (EDB); Infocomm Media Development Authority (IMDA); Ministry of
Transport; Singapore Land Authority (SLA); Singapore Maritime Institute; PSA Corporation;
Ministry of Industry and Trade; Singapore Post.
10. Thailand: Office of Trade Competition Commission (OTCC), Thailand Post Co., Ltd., State
Enterprise Policy Office (SEPO), Port Authority of Thailand, Ministry of Digital Economy and
Society, Department of Land Transport and Marine Department.
11. Viet Nam: Viet Nam Competition and Consumer Authority (VCCA); Viet Nam Business Registrar;
Viet Nam Inland Waterway Administration (VIWA); Central Institute for Economic Management;
Viet Nam National Railway Administration; Viet Nam Maritime Administration (VINAMARINE);
Ministry of Information and Communications, Postal Department.
The following trade associations and private companies were interviewed:
1. Brunei Darussalam: Muara Port Company; Brunei Darussalam Malay Chamber of Commerce and
Industry; Brunei Darussalam International Chamber of Commerce & Industry; DHL Express;

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Shipping Association of Brunei Darussalam; Bee Seng Shipping Sdn. Bhd; Brunei Darussalam
Freight Forwarders Association; Federation of Transportation and Stevedoring of Brunei
Darussalam; MOC Sdn. Bhd, Archipelago Group; Bollorè Logistics; SDV Logistics; Brunei
Darussalam International Air Cargo Centre; and Sivli Logistics.
2. Cambodia: Cambodian Truckers’ Association (CAMTA); Cambodian Freight Forwarders’
Association (CAMFFA); EuroCham; AmCham; Royal Railway; Phzar; Kerry Logistics; FedEx; DHL;
Advance Glory Logistics and Fair & Easy.
3. Indonesia: Association of Indonesian Hauliers (AMH); Federation of Indonesian Freight Forwarders
(FMFF); Indonesian Shipowners’ Association (INSA); Land Transportation Association
(ORGANDA); Association of Indonesian Loading and Unloading Companies (APBMI); Association
of Indonesian Express Delivery Service Companies (ASPERINDO); EuroCham Indonesia; Lazada;
RPX; JNE; Pandu Logistik; and J&T Express.
4. Lao PDR: DHL Express Lao Sole Company Limited; Fair & Easy; Bollorè Laos.
5. Malaysia: Association of Malaysian Hauliers (AMH); Federation of Malaysian Freight Forwarders
(FMFF); Malaysian National Shippers Council (MNSC); Malaysian Ship Owners’ Association
(MASA); Malaysia Institute of Transport (MITRANS) and Women in Logistics and Transport
Malaysia (WiLAT).
6. Myanmar: British Chamber of Commerce; DHL; EuroCham; Myanmar International Freight
Forwarders Association; MGL Express; UK Department of International Trade; ZawGyi Mart.
7. Philippines: Confederation of Truckers Association of the Philippines; Philippines Interisland
Shipping Association; Supply Chain Management Association of the Philippines; and LBC.
8. Singapore: AmCham; DHL Express; Singapore Shipping Association; Supply Chain Asia.
9. Thailand: Thai National Shippers’ Council (TNSC); Thai Retailers Association; Thai Federation on
Logistics; European Association for Business and Commerce.
10. Viet Nam: Viet Nam Association of Small and Medium Enterprises (VINASME); Viet Nam Chamber
of Commerce and Industry (VCCI); US-ASEAN Business Council; Viet Nam Association for
Women Entrepreneurs; Viet Nam Automobile Transportation Association (VATA); European
Chamber of Commerce; AmCham Viet Nam.
A number of local experts provided valuable inputs: David Fruitman (Cambodia), Noor Amini, Professor
Ningrum Sirait and Mohammad Reza (Indonesia); DFDL (Laos); Shila Dorai Raj (Malaysia), DFDL and
Myanmar Marketing Research & Development (Myanmar), Lai-Lynn A.B. Barcenas and Leni Papa
(Philippines); Nimisha Tailor (Singapore), Deuden Nikomborirak, Urairat Jantarasiri and Ruth Banomyong
(Thailand); and Alice Pham (Viet Nam).
The information in this report is updated as of the date of finalisation of the individual country reports, while
economic forecasts have been updated with more recent figures reflecting the impact of the COVID-19
pandemic.

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Fostering competition in ASEAN
ASEAN member states have agreed to implement significant advances in competition policy as part of
the ASEAN Competition Action Plan 2016-2025 (ACAP 2016-2025), which provides strategic goals,
initiatives and outcomes to fulfil the competition-related vision of the AEC Blueprint 2025. In order to
increase awareness of the benefits and role of competition in ASEAN, the ACAP 2016-2025 provides
for an assessment to be conducted on the impact of non-tariff barriers on competition in the markets of
ASEAN member states followed by recommendations.
The logistics sector was chosen by the ASEAN Secretariat and ASEAN Experts Group on Competition
(AEGC), together with the OECD, as it can play a significant role in increasing ASEAN’s economic
development, and is included in the AEC Blueprint’s 12 priority integration sectors. Indeed, efficient
logistics can play a significant role in increasing a country’s economic development by facilitating
international trade and improving its competitiveness. By developing an efficient logistics system, a
country can enhance its connectivity to better serve its importers and exporters, and satisfy the needs
of regionally integrated production facilities for reliable just-in-time delivery of inputs and outputs.
Against this background, the ASEAN Secretariat, with funding from the ASEAN Economic Reform
Programme under the UK Foreign, Commonwealth & Development Office (UK Government), tasked
the OECD to assist with the implementation of Initiatives 4.1 and 4.2 of the ACAP 2016-2025. These
two initiatives require an assessment of the impact of competition law and policy on the markets of all
10 ASEAN member states, both in general (4.1) and with a focus on state-owned enterprises (4.2).
This report contributes to ACAP Outcome 4.1.2 (Impact of non-tariff barriers on competition), building
on a competition assessment of regulatory constraints on competition in the logistics services sector.
More specifically, the agreed scope for the project is to cover:
1. freight transportation, including transport by road, inland waterways and maritime, and rail
2. freight forwarding
3. warehousing
4. small-package delivery services
5. value-added services.
This regional report concludes a series of 10 similar assessments, one for each ASEAN member state.

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Table of contents
Foreword 3
Acknowledgements 5
Abbreviations and acronyms 13
Executive summary 15
1 Introduction 19
1.1. Introduction to the ASEAN Competition Assessment Project 19
1.2. The benefits of competition 20
1.3. Main recommendations from the ASEAN Competition Assessment Project 21
1.4. Benefits of lifting barriers in logistics 27
2 Economic overview 29
2.1. ASEAN key economic features 29
2.2. Overview of the logistics sector 35
3 Road freight transport 47

3.1. Restrictions on cross-border transport by road 47
3.2. Licensing requirements on road freight transport 50
3.3. Operational constraints 53
4 Water freight transport 57

4.1. ASEAN single shipping market and cabotage policy 57
4.2. Licensing requirements for maritime freight transport 60
4.3. Tenders in selection of port operators or port services providers 61
4.4. Overlaps in the regulatory and operational functions of port authorities 64
4.5. Provision of pilotage services by port authorities 66
4.6. Price regulation 70
5 Other logistics sectors 73

5.1. Freight transport by rail 73
5.2. Freight forwarding and multimodal transport 77
5.3. Warehousing 79
6 Horizontal findings on the logistics sector 81

6.1. FDI restrictions 81
6.2. Minimum capital requirements 87
6.3. Pricing guidelines and power to set prices 90
6.4. Differential treatment of SOEs 94
6.5. Compulsory association membership 96

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7 Regulatory quality 99
7.1. Administrative burdens 101
7.2. Access to legislation 104
7.3. Initiatives to improve regulatory quality 107
8 Benefits of lifting regulatory barriers to competition 111

8.1. Introduction 111
8.2. Benefits at sub-sector level in ASEAN 112
8.3. Benefits for foreign direct investment in logistics 116
8.4. Benefits for cross-border trade 117
8.5. Economy-wide benefits 117
Annex 8.A. Methodology to estimate consumer benefits 119
References 121
Notes 131
Annex A. Methodology 143
FIGURES
Figure 2.1. ASEAN key economic figures 29
Figure 2.2. ASEAN GDP and average growth rate, 2010-19 30
Figure 2.3. Percentage shares of main economic sectors of total GDP and percentage point contribution to
growth by component, 2019 31
Figure 2.4. Trade balance for goods (billions, USD) and main trading partners, 2014-19 31
Figure 2.5. Trade balance for services (billion, USD) and shares by category, 2014-19 32
Figure 2.6. FDI inflows (billions, USD), 2014-19, and their main sources, 2019 33
Figure 2.7. ASEAN Doing Business 2020 and Global Competitiveness Index 2019 rankings 34
Figure 2.8. Expected percentage real GDP growth, 2020 34
Figure 2.9. Logistics sector contribution to the economies of ASEAN member states 35
Figure 2.10. Projected COVID-19 impact on freight transport revenues 36
Figure 2.11. ASEAN freight and logistics market revenue (billions, USD), 2016-25 36
Figure 2.12. Market revenue by sector, 2019 37
Figure 2.13. Market revenue by country (billions, USD), 2016 and 2019 38
Figure 2.14. Foreign direct investment inflows in logistics (millions, USD), 2012-19 38
Figure 2.15. Infrastructure quality indicators 39
Figure 2.16. ASEAN LPI scores compared to global leader Germany and other regions 40
Figure 2.17. ASEAN road infrastructure 41
Figure 2.18. Number of registered motor vehicles 42
Figure 2.19. Railways network and freight transport 42
Figure 2.20. Carrying capacity and port calls in ASEAN 43
Figure 2.21. International sea cargo throughput in ASEAN region 44
Figure 2.22. Annual Liner Shipping Connectivity Index, 2006-19 44
Figure 2.23. Liner Shipping Bilateral Connectivity Index (LSBCI), 2019 45
Figure 3.1. Number of registered trucks in ASEAN countries (thousands), 2008-17 49
Figure 3.2. Share of total freight transport for own-account and hire-or-reward in Greece, 2013-19 52
Figure 4.1. Services trade restrictions on foreign entry in maritime freight transport services, 2019 59
Figure 4.2. Pilotage outside and inside the port area 69
Figure 6.1. ASEAN share of FDI stock as percentage of developing country total, 1980-2019 81
Figure 6.2. Shares of FDI distribution within ASEAN, 1996 and 2019 82
Figure 6.3. FDI as a percentage of GDP in ASEAN, 2001 and 2019 82
Figure 6.4. Flows of inward FDI to ASEAN, by economic sector, 2014-19 83
Figure 6.5. OECD FDI Regulatory Restrictiveness Index in the ASEAN transport sector, 2019 84
Figure 6.6. FDI regulatory restrictiveness index in the transport sector, 2019 86
Figure 7.1. Regulatory quality estimates for ASEAN and selected OECD countries, 2016-19 101
Annex Figure 8.A.1. Changes in consumer surplus 119

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INFOGRAPHICS
Infographic 1. Fostering Competition in ASEAN 17
TABLES
Table 2.1. Logistics Performance Index overall ranking, 2018 39
Table 2.2. ASEAN ports, fleet and carrying capacity, 2020 43
Table 4.1. Main differences between the basic port management models 62
Table 4.2. Overview of models for the provision of pilotage services 67
Table 4.3. Logistics professionals and port charges in their own countries, 2018 68
Table 5.1. Registration of MTOs under the Multimodal Transport Act 78
Table 8.1. Summary of estimated benefits, USD million 112
BOXES
Box 2.1. World Bank Logistics Performance Index 40
Box 3.1. Quota increases in bilateral cross-border transport agreements between Cambodia and Viet Nam 48
Box 3.2. Professional competence for market entry in road haulage services in the European Union 50
Box 3.3. Limited number of goods transport licences in Greece 51
Box 4.1. Port management models 61
Box 4.2. OECD best practices in public procurement, concessions and fighting bid rigging 63
Box 4.3. The importance of independent regulation 66
Box 4.4. Pilotage service providers in certain EU countries 69
Box 4.5. Price regulation in ports 72
Box 5.1. Separation models in OECD countries 74
Box 5.2. Third-party access in the railway sector in the EU 77
Box 5.3. Thailand’s Multimodal Transport Act 78
Box 5.4. Economic benefits of effective land registration and efficient administration systems 79
Box 6.1. Foreign-equity limitations in OECD Asia-Pacific countries 85
Box 6.2. Lao PDR’s abolition of minimum capital requirements for certain foreign investors 88
Box 6.3. International comparison on capital requirements 89
Box 6.4. Below-cost pricing 91
Box 6.5. Minimum prices in the Italian road freight transport sector 94
Box 6.6. Mandatory membership in trade associations 97
Box 7.1. What is regulatory quality? 99
Box 7.2. Administrative simplification and systematic regulation reviews 103
Box 7.3. OECD recommendations on open government 105
Box 7.4 Legal databases in Singapore, Australia and the United Kingdom 106
Box 7.5. Best practices in national regulatory assessments 108
Box 8.1. Cabotage reform in New Zealand and in the United States 114
Annex Box 8.A.1. Measuring changes in consumer surplus 119

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Abbreviations and acronyms

ABRP Administrative Burden Reduction Programme (United Kingdom)
ACRF ASEAN Comprehensive Recovery Framework
AEC ASEAN Economic Community Blueprint
AEGC ASEAN Experts Group on Competition
AFAFGIT ASEAN Framework Agreement on the Facilitation of Goods in Transit
AFAFIST ASEAN Framework Agreement on the Facilitation of Inter-State Transport
AFAMT ASEAN Framework Agreement on Multimodal Transport
AFAS ASEAN Framework Agreement on Services
AGCM Italian Competition Authority
APAD Land Public Transport Agency (Malaysia)
ARTA Anti-Red Tape Authority (Philippines)
ASEC ASEAN Secretariat
ASSIST ASEAN Solutions for Investments, Services and Trade
ATISA ASEAN Trade in Services Agreement
ASSM ASEAN Single Shipping Market
AVE Ad valorem equivalents
BBA Break-bulk agents
BOI Board of Investment (Thailand)
CAGR Compound annual growth rate
CBTA Cross-Border Transport Agreement
CC Cargo consolidators
COAG Council of Australian Governments
CPC Certificate of public convenience
CPTPP Comprehensive and Progressive Trans-Pacific Partnership
DOTr Department of Transportation (Philippines)
DWT Deadweight tonnage
ECJ European Court of Justice
FCDO Foreign, Commonwealth & Development Office
FDI Foreign Direct Investment
FOI Freedom of Information (Philippines)
FS Ferrovie dello Stato Italiane
GCI Global Competitiveness Index
GOCC Government-owned and controlled corporation
KAI Kereta Api Indonesia (Indonesian state railways)
KFTC Korea Fair Trade Commission
KLTSP ASEAN Transport Strategic Plan, 2016-2025
KFTC Korea Fair Trade Commission
ICC Indonesia Competition Commission

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IFF International freight-forwarders

IPR Intellectual property rights
ITF International Transport Forum
LAK Lao Kip
LPI Logistics Performance Index
LSBCI Liner Shipping Bilateral Connectivity Index
LTO Land Transport Office (Philippines)
MARINA Maritime Industry Authority (Philippines)
MC Memorandum Circular (Philippines)
MFP Multifactor productivity
MOFE Ministry of Finance and Economy (Brunei Darussalam)
MPABD Marine and Port Authority (Brunei Darussalam)
MTO Multimodal transport operator
MYR Malaysian Ringgit
NCP National Competition Policy
NVOCC Non-vessel operating common carriers
OSS Online Single Submission licensing system, Indonesia
PAT Port Authority of Thailand
PBRIS Philippine Business Regulation Information System
PEMUDAH Pasukan Petugas Khas Pemudahcara Perniagaan
(Special Taskforce to Facilitate Business, Malaysia)
PHP Philippine peso
PMR Product Market Regulation
PSC Point of Single Contact e-portal (European Union)
PPA Philippine Ports Authority
RCEP Regional Comprehensive Economic Partnership
RIA Regulatory Impact Assessment
RRC Regulatory Reform Committee (Korea)
SME Small and medium enterprises
SOE State-owned enterprises
SRT State Railway of Thailand
STRI OECD Services Trade Restrictiveness Index
SSO Singapore Statutes Online
TFWG ASEAN Transport Facilitation Working Group
TTCB ASEAN Transit Transport Coordinating Board
UNCTAD United Nations Conference on Trade and Development
UNECE United Nations Economic Commission for Europe
VINAMARINE Vietnam Maritime Administration
VIWA Vietnam Inland Waterway Administration
VND Vietnamese dong
VRC Vietnam Railways Corporation
WGI Worldwide Governance Indicators

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Executive summary
Main economic characteristics of the logistics sector in ASEAN
The logistics sector constitutes a cornerstone for the development of an integrated internal market in
ASEAN and its further opening up and integration into the world economy. In 2019, the sector’s contribution
to GDP averaged 5% across ASEAN member states, employing on average around 5% of the working
population.
ASEAN total freight and logistics market revenues were estimated at USD 357.78 billion in 2019; they are
expected to have dropped by 12% in 2020 to USD 316.54 billion as a consequence of restrictions on
mobility and activity caused by the COVID-19 pandemic. Across member states, the freight transport and
warehousing segments are set to be most affected with an estimated drop of more than 10%. However,
freight transport within cities, such as courier, express and parcel-delivery services, is expected to have
grown by about 20% in 2020 as a result of the changing consumer behaviours during the lockdown.
Key recommendations
Sector-specific recommendations
 Remove restrictive provisions setting quotas on the number of permits for cross-border road freight
transport and replace with a licence system. Licensing criteria should be clearly defined in the
international agreement or implementing laws or regulations. Alternatively, assess market need
and demand every one to three years, and consider increasing the number of licences that can be
issued. Both these recommendations would require negotiations between signing countries.
 Avoid limitations on the number of authorised road freight transport carriers. Market-access
requirements – such as professional competency or technical conditions for vehicles – should be
clearly laid down in the law. Asset requirements for market entry should not result in excessive
burden for operators or limit market entry beyond what is necessary to achieve specific legitimate
policy objectives.
 Review regulations or provisions that limit the areas in which road freight transport licensees can
operate, so that they can provide their services without any geographic restrictions. Furthermore,
review regulations or provisions that limit firms’ fleet size, by restricting new-vehicle registrations
or imposing a minimum or maximum number of vehicles, while maintaining provisions that pursue
a legitimate policy objective (such as safety or environmental protection).
 Ensure that regulations imposing safety requirements and roadworthiness inspections on road
freight transport licensees are clear and proportionate to the pursued policy goal and do not
generate excessive costs.
 Open the domestic shipping market to ASEAN competition by lifting the ban on ASEAN vessels
carrying domestic cargo. This report provides alternative policy options that go towards lifting the
ban on cabotage for ASEAN vessels.
 Remove excessive licensing requirements for domestic shipping, such as vessel ownership,
economic-needs tests and the submission of business plans.
 When selecting port or terminal operators and port service providers, use open tender processes
rather than direct negotiation. Adopt best practices for tender processes and concessions.

16 
 Ensure clear separation between the regulatory and operational functions of port authorities to
avoid real or perceived conflicts of interest.
 Limit direct provision of pilotage services by port authorities to cases where the private sector
shows no manifest interest in providing the service due to lack of economic viability or when the
authority does not have the capacity to run tenders.
 Only allow the regulation of maximum prices, not minimum prices, in cases where competition is
limited. Maximum prices should be regularly revised to ensure they are in line with market dynamics
and provide the necessary incentives for innovation and investment.
 Implement planned railway sector reform and initiate regulatory reforms that can foster competition
in freight transport services by railway. This could involve some form of separation between
infrastructure management and rail freight transport service operations.
 Legislate the requirement to grant third-party access to railway infrastructure to ensure access for
new entrants on transparent and non-discriminatory terms. In order to make this requirement
effective, ensure that the regulator or the relevant ministerial department has broad powers to
intervene in the market, for example, allow it to set and enforce access charges and conditions.
 Ratify and fully implement the ASEAN Framework Agreement on Multimodal Transport into
national legal orders.
Recommendations affecting the whole logistics sector
 Enhance liberalisation efforts in logistics sub-sectors, which remain partly off limits to foreign
investors, holding back potential economy-wide productivity gains. In the report, the OECD
recommends three options to gradually relax foreign-ownership limitations.
 Remove guidelines setting out specific rates for logistics services. In the case of broad and
informative guidelines, remove any attached penalty provisions so that they are simply advisory.
 Adjust the scope of any advantages enjoyed by SOEs to ensure that SOEs and private firms
providing similar services are subject to the same regulatory requirements.
 Ensure that public-procurement rules treat all potential suppliers equitably, without discrimination
and irrespective of ownership; this means that SOEs are subject to requirements comparable to
those demanded from private bidders. Reconsider the practice of direct assignments between
SOEs or between SOEs and government entities and encourage open tenders, clearly defining the
circumstances when alternative procedures can be applied.

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Infographic 1. Fostering Competition in ASEAN

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 19
1 Introduction
Laws and regulations are key instruments in achieving public policy objectives, such as consumer
protection, public health and environmental protection. When they are overly restrictive or onerous,
however, a comprehensive review can help identify problematic areas and develop alternative policies that
achieve government objectives without harming competition.
Competition Assessment Projects evaluate market regulations to identify regulatory barriers to competition.
These include regulations that restrict entry into a market; constrain firms’ ability to compete (for example,
by regulating prices); treat competitors differently (for instance, by favouring incumbents); facilitate
co-ordination among competitors; or restrict consumers’ ability to change suppliers. The methodology
followed in this systematic exercise is summarised in Annex A, which also describes the stages of the
project and provides full references to the OECD Competition Assessment methodology.
This chapter provides some background on the ASEAN Competition Assessment Project, before
summarising the main findings of the literature on the benefits of competition and providing a snapshot of
the recommendations that are most relevant across ASEAN. Detailed country-specific recommendations
can be found in the individual country reports.
1.1. Introduction to the ASEAN Competition Assessment Project
Logistics plays a significant role in increasing a country’s economic development. The Association of
Southeast Asian Nations (ASEAN) made the logistics sector 1 of 12 priority sectors in its ASEAN Economic
Community Blueprint 2025 (AEC Blueprint). As part of the initiatives of the ASEAN Competition Action
Plan 2016-2025 (ACAP), the ASEAN Secretariat asked the OECD to carry out an independent competition
assessment of legislation in the logistics sector and to prepare a regional report assessing the impact on
competition of state-owned enterprises (SOE) and government-linked monopolies in selected ASEAN
markets. The AEC Blueprint charts the broad trajectories of ASEAN economic integration from 2016 to
2025, following the formal establishment of the ASEAN Economic Community on 31 December 2015.
In 2018, the OECD team began conducting competition assessments of laws and regulations in each of
the ten ASEAN member states (AMS). It worked in close co-ordination with the ASEAN Secretariat (ASEC),
the ASEAN Experts Group on Competition (AEGC), as well as with the responsible authorities within each
member state, in particular the respective competition authorities. The analysis was funded by the ASEAN
Economic Reform Programme under the UK Foreign, Commonwealth & Development Office (UK
Government).
The following report brings together the findings in all the 10 member states for the project’s first
component, a competition assessment of laws and regulation in the logistics sector in ASEAN. The second
component of the project is addressed in OECD Competitive Neutrality Reviews: Small-Package Delivery
Services in ASEAN.

20 
1.2. The benefits of competition
The Competition Assessment Project aims to identify regulations that may unduly restrict market forces
and which by doing so, may harm a country’s growth prospects. In particular, the project identifies
regulatory provisions that:
 are unclear, vague and imprecise, or lack transparency and so may be applied in an arbitrary
fashion
 prevent new firms, including small- and medium-sized businesses from accessing markets
 allow a limited number of firms to earn greater profits than they otherwise would, for reasons
unrelated to their underlying productivity or the quality of their products
 cause consumers to pay more than they otherwise would.
Each restriction is likely to have an impact well beyond individual consumers in the sectors assessed.
When consumers can choose and shop around for products and services, firms are forced to compete with
each other, innovate more and be more productive (Nickell, 1996[1]) (Blundell, 1999[2]) (Griffith, 2006[3]).
Industries in which there is greater competition experience faster productivity growth. These conclusions
have been demonstrated by a wide variety of empirical studies and summarised in the OECD’s “Factsheet
on how competition policy affects macro-economic outcomes” (OECD, 2014[4]). Competition stimulates
productivity primarily because it provides the opportunity for more efficient firms to enter and gain market
share at the expense of less efficient firms.
In addition to evidence of competition fostering productivity and economic growth, studies have shown the
positive effects of more flexible product market regulation (PMR), the area most relevant to this project. 1
These studies analyse the impact of regulation on productivity, employment, research and development,
and investment, among other variables. Differences in regulation also matter and can reduce significantly
both trade and foreign direct investment (FDI) (Fournier et al., 2015[5]) (Fournier, 2015[6]).2
A particularly large body of evidence points to the productivity gains of more flexible PMR. At company
and industry level, restrictive PMR is associated with lower multifactor productivity (MFP) (Nicoletti and
Scarpetta, 2003[7]) (Arnold, Nicoletti and Scarpetta, 2011[8]).3 The result also holds at an aggregate level
(Égert, 2017[9]).4 Anti-competitive regulations have an impact on productivity that goes beyond the sector
in which they are applied and this effect is more important for those sectors closer to the productivity frontier
(Bourlès et al., 2013[10]).5 Specifically, a large part of the impact on productivity is due to investment in
research and development (Cette, Lopez and Mairesse, 2013[11]). Moreover, lowering regulatory barriers
in network industries can have a significant impact on exports (Daude and de la Maisonneuve, 2018[12]).
Innovation and investment in knowledge-based capital, such as computerised information and intellectual
property rights (IPRs), are also negatively affected by stricter PMR. A number of studies show that
competitive pressure, as measured by lower regulatory barriers (for example, lower market-entry costs),
encourages firms in services sectors, such as retail and road transport, to adopt digital technologies,
including cloud computing (Andrews and Criscuolo, 2013[13]) (Andrews and Westmore, 2014[14]) (Andrews,
Nicoletti and Timiliotis, 2018[15]). Pro-competition reforms to PMR are also associated with an increase in
the number of patents, while more stringent PMR are shown to be associated with reduced investment
and to amplify the negative effects of a more stringent labour market (Égert, 2018[16]).6
Greater flexibility can also lead to higher employment. Cahuc and Karmarz found that after road-transport
deregulation in France, employment levels in the sector increased at a faster rate than before deregulation
(Cahuc and Kamarz, 2004[17]).7 A 10-year, 18-country OECD study concluded that small firms five years
old or less on average contribute about 42% of job creation (Criscuolo, Gal and Menon, 2014[18]). As noted
by the OECD, “such a disproportionately large role by young firms in job creation suggests that reducing
barriers to entrepreneurship can contribute significantly to income equality via employment effects” (OECD,
2015[19]).

 21
There is also some evidence on the benefits of lifting anti-competitive regulations in terms of reducing
income inequality. One study published in 2015 found that less restrictive PMR improved household
incomes and reduced income inequality (Causa, 2016[20]).8
Finally, a 2018 study looked at the impact of PMR on the persistence of profits over the long term (Eklund
and Lappi, 2018[21]). Regulations that raise barriers to entry can protect incumbents’ above-average profits.
The authors found that more stringent PMR, as measured by the OECD PMR indicator, is associated with
persistent profits.
The results described above hold in a variety of settings, but specific estimates may differ depending on
the country. For instance, Égert quantified the impact of structural reforms, including PMR and labour
reform, in a large sample including both OECD and non-OECD countries, and found that “stringent product
market regulations will have a three-time larger negative impact on MFP in countries with per capita income
lower than about USD 8 000 (in PPP terms)” (Égert, 2017[22]).9
Recent research suggests that increased market competition can have a positive effect on gender
discrimination and gender equality (Pike, 2018[23]) (Cooke, 2018[24]). Further, as mentioned in the paper
given at the OECD Global Forum on Competition: Competition Policy and Gender in 2018, restrictive or
discriminatory laws or policies against women’s economic participation may be interpreted as anti-
competitive regulations. Consequently, pro-competitive regulations following from a pro-competition policy
that takes gender into account can help to address issues of gender equality. For this reason, this project
also took into account laws that specifically hinder the involvement of women in the logistics business,
resulting in the creation of anti-competitive barriers. Such laws could restrict competition by limiting the
ability of some suppliers (women) to provide a good or service or by significantly raising the cost of entry
or exit by a supplier.
In summary, anti-competitive regulations that hinder market entry and expansion may be particularly
damaging for a country’s economy as they reduce productivity growth, limit investment and innovation,
harm employment creation, and may favour certain firms over other firms and consumers, with
consequences for income inequality.
1.3. Main recommendations from the ASEAN Competition Assessment Project
As part of the ASEAN Competition Assessment Project, the OECD has made about 470 country-level
recommendations to mitigate harm to competition from regulatory barriers in the logistics sector. These
are set out in detail in the ASEAN country reports that are being published by the OECD and on which this
regional report is based. This chapter summarises some of the most common issues that the OECD review
has identified across ASEAN member states and that are analysed in Chapters 3 to 7 of this report.
1.3.1. Sector-specific recommendations
Road freight transport
Member states have bilateral or multilateral agreements in the road freight sector that often include
quantitative limitations to the number of cross-border permits for transport between ASEAN countries.
While there has been some progress in increasing the number of permits that each signing party can issue,
these quotas still limit the potential of further trade and integration in the ASEAN region, especially when
considering the significant and constant increase of intra-ASEAN trade since the 1990s, with the
subsequent increase in demand for cross-border freight transport services.

22 
The OECD recommends two options:

 Remove the restrictive provisions setting quotas and replace with a licence system. The licensing
criteria should be clearly defined in the international agreement or implementing laws or
regulations.
 Assess market needs and demand every one to three years, and consider increasing the number
of licences that can be issued.
All member states have certain regulations in place regarding access to the market of road freight transport.
In certain instances, regulations are broad and do not provide clear guidance or set out clear requirements
for all market players. In other cases, the assessment has identified regulations that are often aimed at
promoting quality and safety, but which in trying to achieve these objectives, result in burdensome
requirements and complex procedures and risk hindering business activity. Examples of such licensing
requirements include professional-competence requirements and the requirement for delivery companies
to own a garage. There are also limited cases where authorities have the power to set and enforce quotas
on operator licences. Examples of operational constraints include determining ex ante the routes that
operators can take, limiting the validity of a licence within a certain region, or regulating the number of
trailers that can be registered for each prime mover. In addition, some countries require frequent technical
checks, which are important to ensure safety but could generate excessive costs, for instance, if the vehicle
is off the road for a significant amount of time, limiting the number of trips it can take.
The OECD recommends:
 Avoid limitations on the number of licences to operate as a carrier. Market-access requirements –
such as professional competency or technical conditions for vehicles – should be clearly set out in
the law. Asset requirements for market entry should not result in excessive burden for operators or
limit market entry beyond what is necessary to achieve specific legitimate policy objectives.
 Review regulations or provisions that limit the areas in which commercial vehicle licensees can
operate, so that they can provide their freight transport services without any geographic restrictions.
 Review regulations or provisions that limit firms’ fleet size, by restricting new-vehicle registrations
a legitimate policy objective (such as safety or the protection of the environment).
 Ensure that regulations imposing safety requirements and roadworthiness inspections are clear
and proportionate to the pursued policy goal and do not generate excessive costs. For instance,
vehicles should be kept off the road for inspection no longer than necessary and safety
requirements take into account factors such as a vehicle’s age and the number of kilometres
travelled.
Water freight transport
All member states regulate market access in the water freight transport sector (inland waterway and
maritime). National regulations usually require operators to hold a licence, but certain impose burdensome
requirements that result in barriers to entry in pursuit of a policy objective. Moreover, member states
typically have provisions on cabotage in place, restricting the ability of foreign suppliers to offer domestic
services within a given country.
The OECD recommends to:
 Remove excessive licensing requirements, such as vessel ownership, economics needs tests, and
the submission of business plans.
 If an economic-needs test is maintained, clear and transparent guidelines should be established to
detail the criteria used to judge economic needs and to limit how discretion may be exercised.

 23
In relation to cabotage, the OECD recommends one of the following options:

 Open up the domestic-shipping market to ASEAN competition by lifting the ban on ASEAN vessels
carrying domestic cargo.
 Amend cabotage rules to allow foreign ships to carry their own cargo (and other foreign cargo)
domestically; for example, allow ships to travel domestically to the port of final call after arriving at
a first port of entry, subject to ex post analysis of the impact of the amendments. A further step
would be to allow foreign ships to carry other domestic cargo from the port of entry to the port of
final call, if the foreign vessel has capacity after unloading goods at the port of entry.
 Allow international ships to operate in the domestic shipping market on specific routes where there
is demand and conduct an evaluation on demand every one to three years to consider whether to
liberalise additional routes.
In the ports sector, the legislation allows for the operation of ports or terminals or the provision of port
services by the port authority or by other entities, be they private companies or SOEs. The review has
found that tenders are not always used to select providers of port services or terminal and port operators.
The OECD makes three complementary recommendations:
 Use open tender processes rather than direct negotiation in the selection of terminal operators and
service providers. Concessions should not be extended automatically and incumbents should not
be granted preferential treatment when renewing concessions.
 Issue clear and publicly accessible tender guidelines for the selection of port operators or service
providers. Tender processes should be open, transparent and based on fair and non-discriminatory
criteria. Technical requirements should ensure a level playing field and so allow new entrants.
 Issue guidelines on concessions, including the duration, renewal and investment requirements, to
provide sufficient incentives to the chosen company, while allowing re-tendering and making the
market contestable.
In some member states, the port authority offers port services, while also being responsible for regulating
and monitoring those same services. This situation may not provide sufficient incentives for the delivery of
efficient and innovative services to port users. The OECD recommends:
 A clear separation between the regulatory and operational functions of port authorities to avoid real
or perceived conflicts of interest.
For pilotage services, the OECD has found that the private sector has either no involvement at any stage
and the service is directly provided by a public entity, or a monopolist other than the public authority has
been tasked with providing pilotage services without any prior competitive process. In practice, the OECD
found that in many instances no assessment has been made of potential interest by private operators in
providing pilotage services.
The OECD recommends to:
 Separate regulatory and service-delivery functions.
 Limit direct provision by port authorities to cases when the private sector shows no manifest interest
in providing a service due to lack of economic viability or when the authority does not have the
capacity to run tenders. The private sector’s perceived lack of interest should be re-evaluated on
a regular basis, in order to make sure that direct provision is not unduly restricting entry. If there is
private sector interest, member states should create an appropriate legal framework so that piloting
services are tendered based on fair, transparent and non-discriminatory terms that guarantee
competition for the market.

24 
While price regulation is in place in several sectors of OECD countries, best practice suggests that it should
be limited to natural monopolies or other exceptional situations. In the case of port services, incumbent
providers often face limited competitive pressure and, if left unregulated, may charge excessive prices.
The OECD recommends to limit price regulation to:
 The regulation of maximum prices, not minimum prices for commercial services, in cases where
competition is limited. Maximum prices should be regularly revised to ensure they are in line with
market dynamics and provide the necessary incentives for innovation and investment.
Rail freight transport
In the rail freight transport sector, a small number of member states have made steps to allow new entrants
to provide freight transport services. Nevertheless, in several cases, the regulatory framework has not
been adapted to enable competition. For example, in many countries, a single entity both operates the
network and provides freight transport services, sometimes in competition with other providers. These
vertically integrated companies may have an incentive either to foreclose competitors by denying them
access to an essential input or to favour their own freight transport arm.
The OECD encourages member states to:
 Implement plans for reform of the railway sector and initiate regulatory reforms that can foster
competition in freight transport services by railway. This could involve some form of separation
between infrastructure management and rail freight transport service operations. This separation
could take the form of accounting separation through separate accounts for the infrastructure and
the freight businesses; functional separation by creating separate entities under the same
ownership; or ownership separation.
 Legislate the requirement to grant third-party access to railway infrastructure to ensure access for
new entrants on transparent and non-discriminatory terms. In order to make this requirement
effective, ensure that the regulator or the relevant ministerial department has broad powers to
intervene in the market, for example, allow it to set and enforce access charges and conditions.
Multimodal transport and freight-forwarding
The OECD welcomes ASEAN-wide initiatives to favour market integration. In 2005, ASEAN signed the
ASEAN Framework Agreement on Multimodal Transport (AFAMT) to promote the integration of different
modes of transport and facilitate the region-wide development of goods transportation by at least
two different means of transport. Despite its expected benefits, such as more efficient procedures at
transhipment points, simplified administrative procedures, and cost savings, certain member states are still
to ratify and implement the agreement. The OECD recommends:
 All member states ratify and fully implement the AFAMT into their national legislation.
1.3.2. Recommendations affecting the whole logistics sector
ASEAN member states have historically been successful in attracting FDI. To promote intra-ASEAN
investments in the services sector, they set ambitious goals for services integration, which were also set
out in the 1995 ASEAN Framework Agreement on Services (AFAS). On 7 October 2020, they signed the
ASEAN Trade in Services Agreement (ATISA), which affirms ASEAN’s commitment to free and open trade
and regional economic integration and will eventually fully supersede AFAS. 10 This agreement deepens
the integration of the services sector by building upon achievements made under AFAS. Despite this and
member states’ liberalisation commitments in the logistics sector, ASEAN still shows lower levels of
openness than OECD economies.

 25
The OECD recommends enhancing liberalisation efforts in the logistics sector, which remains partially off
limits to foreign investors, a situation that may be holding back potential productivity gains. The OECD
therefore recommends one of the following options:
 Relax foreign-equity limits progressively and moving towards authorising 100% foreign ownership
in the long term. If not already implemented, a first step may be to implement the AFAS target of
allowing 70% ASEAN foreign-ownership in entities providing logistics services and subsequently
extending it to non-ASEAN nationals.
 Relax foreign-equity limits in logistics on a reciprocal basis for nationals of those countries that
allow ASEAN nationals to hold 100% shares in a company.
 Allow 100% ownership in entities providing logistics services with a screening system for FDI over
a certain value threshold. The screening system should be appropriately structured with clear
upfront criteria and a right of appeal against the final decision. Furthermore, the screening system
should be applied in limited situations, for instance to address certain public policy goals.
During its country-specific competition assessment reviews, the OECD has identified several provisions
that impose minimum-capital requirements that businesses must meet when registering or applying for a
licence. These requirements are essentially a condition for market entry and so may discourage potential
competitors. Depending on the minimum capital requirements identified in each member state, the OECD
recommends to either:
 Lift sector-specific minimum capital requirements as currently laid down in the law and require
operators to comply only with existing horizontal requirements under commercial law (if any).
Alternatively, bank guarantees or insurance contracts could replace cash deposits to comply with
these capital requirements.
 Ensure that any horizontal minimum capital requirements are the same for all businesses,
irrespective of whether they are domestic or foreign entities. Bank guarantees or insurance
contracts could replace cash deposits to comply with these capital requirements.
The competition assessment reviews in member states identified pricing guidelines or provisions granting
authorities the power to set prices. These occur throughout the logistics sector in road freight transport,
maritime freight transport, ports, small-package delivery services, and freight forwarding. The OECD has
two recommendations:
 Remove guidelines setting out specific rates. In the case of broad and informative guidelines,
remove any attached penalty provisions so that they are simply advisory.
 Remove the obligation that prices should be above costs for any non-dominant firm.
The OECD has identified a number of examples in the logistics sector where state-owned enterprises
(SOEs) and private players do not compete on a level playing field.11 These include, for example,
exempting SOEs from certain regulatory requirements, such as obtaining a licence in order to provide
services. These differences can result in SOEs receiving more favourable treatment than their private-
sector competitors and so distorts competition in relevant sectors. The OECD recommends member
states:
 Ensure that SOEs’ commercial activities are subject to the same regulatory requirements, including
on licensing, as competing private firms.
 Alternatively, member states could consider lowering the burden on licensees by simplifying
licensing procedures for all players.

26 
Moreover, in some member states, public-procurement regimes do not apply to transactions between
SOEs or between SOEs and other government entities. The OECD has three recommendations:
 Ensure that public-procurement rules treat all potential suppliers equitably, without discrimination
those demanded from private bidders.
 Reconsider the practice of direct assignments from one SOE to another or from government
entities to SOEs, and encourage open tenders, clearly defining the circumstances when
alternatives procedures can be applied.
 Establish internal guidelines and provide training to officials to ensure that non-discriminatory
public-procurement rules are followed and enforced and that SOEs are not granted preferential
access to the provision of services to government agencies.
1.3.3. Regulatory quality
The ASEAN Competition Assessment project focuses on the logistics sector in ASEAN and does not
specifically address the general business environment. ASEAN member states have already implemented
several initiatives that seek to improve the general business environment, such as one-stop shops for
business registration and online databases of legislation. A number of member states have introduced
competition-assessment initiatives, while ASEAN has also developed regional guidelines on good
regulatory practices to improve the design and implementation of regulations. To support these ongoing
initiatives, the report makes suggestions in relation to removing or reducing the administrative burden on
market participants and improving access to legislation.
Regulations that result in high administrative burdens and costs reduce competition by discouraging
market entry and favouring larger players, and result in higher prices and lower-quality services for
consumers. To streamline procedures and licence requirements in the logistics sector, the OECD makes
three policy suggestions:
 Introduce single application processes for each logistics business; for example, a single licence
application for goods vehicles, which includes all relevant permits.
 Remove inconsistencies between regulations issued by different authorities that regulate the same
issue, such as technical requirements.
 Increase the use of technology and one-stop shops for licences, permits and procedural
requirements.
Difficulties in accessing legislation and unclear legal frameworks can also be a barrier to competition by
creating legal uncertainty and increasing costs for actual and potential market participants. The OECD
notes instances in which logistics legislation and guidelines are not published; legislation is available, but
not easily accessible or understandable; and repealed laws continue to appear as if they are in force. To
improve access to logistics legislation, the OECD makes the following policy suggestions:
 Publish all primary and secondary logistics legislation on a single database. Alternatively, or until
this is implemented, each logistics authority should publish a complete list of legislation it
administers on its website, including each legislative act’s current status, with any obsolete
legislation clearly marked.
 Update all logistics legislation in the database to include new amendments, so that stakeholders
can access a consolidated version of the relevant legislation. Alternatively, or until this is
implemented, authorities should list the original version of legislation with a link to any
amendments.
 Make databases and legal texts electronically searchable.

 27
1.4. Benefits of lifting barriers in logistics
The OECD’s recommendations address specific restrictions identified in the legislation. Their impact is
directly linked to removing those restrictions and the consequent positive effect on competition in relevant
sectors. Expected benefits from implementing recommendations include increasing consumer welfare –
for instance, through lower prices – and increasing FDI in the sector. In addition to these benefits, full
implementation of the OECD’s recommendations can be expected to deliver positive long-term effects for
small- and medium-sized enterprises (SMEs) and employment. Given the importance of logistics for the
performance of many other sectors of the economy, lifting barriers to competition in this sector could have
a significant economic impact across the economy and could facilitate cross-border trade.
This report contains approximate estimates of the benefits from implementing selected recommendations
(see Chapter 8). The estimates range between USD 4 billion to USD 4.1 billion a year for the impacted
ASEAN member states. The main recommendations driving the benefits are those focused on improving
licensing requirements in road freight transport; easing cabotage restrictions in water freight transport; and
pro-competitive reform in rail freight transport. In order to calculate these estimates, the OECD has relied
on the framework for evaluating changes in consumer welfare described in the Annex to Chapter 8.
These figures are likely to underestimate the actual impact of fully implementing the ASEAN Competition
Assessment Project recommendations for a variety of reasons. First, it was impossible to quantify the
effects of all the individual recommendations in all ASEAN member states, due to insufficient data or
because of the nature of the regulatory change. Second, the Competition Assessment project is
concentrated on laws and regulations in the logistics sector, with a focus on legislation rather than
enforcement. Changes in regulation can only have an impact if regulations are enforced, however; as this
is not always the case, the direct benefits of lifting regulatory restrictions can be limited. Third, the estimates
do not account for benefits to the business environment arising from improving the quality of the legislation;
for instance, by implementing recommendations to streamline the body of legislation and to provide more
guidance and clarity to businesses. Fourth, the estimation framework focuses on the impact on consumer
welfare, which is the standard approach followed by most competition authorities and embedded in the
OECD Competition Assessment Toolkit (OECD, 2019[25]). Also, other benefits, such as increases in
employment and improved cross-border trade are not included in this estimate.
In addition to benefits in consumer welfare and increased FDI in logistics, the OECD envisages the
following potential benefits from lifting regulatory barriers to competition, i.e. benefits to cross-border trade,
SMEs and employment, and gender equality.
An OECD study provides an indication of the potential benefits for transport services: the average costs of
regulatory barriers to cross-border trade, expressed as percentages of total trade value, range from 80%
to 150% for two ASEAN member states (Benz and Jaax, 2020[26]). The OECD has not, however, been able
to quantify precisely the anticipated benefits in cross-border trade for all ten member states.
The OECD recommendations are expected to benefit SMEs by ensuring that all enterprises have equal
access to markets and lowering barriers to entry and administrative burdens (which tend to disadvantage
SMEs relatively more than larger competitors). According to ASEAN data, SMEs account for more than
89% of establishments in member states and more than 52% of total employment.
Competition policy can also be a way to address gender equality. For example, lowering regulatory barriers
to competition and improving the business environment will benefit entrepreneurship, including women’s
entrepreneurship. In addition to its social benefits, improvements in women’s entrepreneurship and
participation in the labour force increase economic growth, income equality and productivity. In East and
Southern Asia (excluding the People’s Republic of China), one study suggests that gains would be
particularly significant and the removal of gender bias could increase GDP by 30% compared with a
business-as-usual scenario (McKinsey Global Institute, 2015[27]).

28 

 29
2 Economic overview
2.1. ASEAN key economic features
Located in the heart of the Asia-Pacific region, the member states of the Association of Southeast Asian
Nations (ASEAN) span an area of approximately 4.49 million km2 (3% of the planet’s total land area) and
have a combined population of 671 million people (8.5% of the world’s population), the world’s third largest
population block after the People’s Republic of China (“China”) and India (Worldometer, 2020[28]). ASEAN’s
high share of working-age population provides a large productive workforce serving a market with a fast-
growing middle-class of potential consumers that is bigger than North America and the European Union.
Over the past 20 years, the region’s labour-force participation rate has been stable at levels that compare
favourably with the OECD average. During that period, unemployment rates were relatively low in most
countries and, before the COVID-19 pandemic, were even below 2% in certain ASEAN member states.
Figure 2.1. ASEAN key economic figures
Source: (ASEAN Macro-economic Database, 2020[29]) https://data.aseanstats.org/.

30 
In 2019, the total combined GDP of the ten member states was USD 3.1 trillion, making ASEAN the
fifth largest economy in the world. GDP has almost doubled since 2005, when it was USD 1.54 trillion.
Figure 2.2 shows the increase in GDP since 2010. Member states registered an average GDP growth of
5.4% over the period 2010-2019 with the highest growth recorded in Cambodia, Lao PDR, Myanmar and
Viet Nam, with an average growth rate of 6.8%. GDP per capita has followed a similar trend reaching
USD 4 818 in 2019 compared to USD 3 299 in 2010. Particularly significant improvement in GDP per
capita was recorded in Lao PDR and Myanmar over the 2000-2019 period, increasing by over 600%
(ASEAN Secretariat, 2020[30]). While trade has played an important role in ASEAN’s economic
development, domestic demand is also becoming an essential driver of the region’s solid and steady
growth performance.
Figure 2.2. ASEAN GDP and average growth rate, 2010-19
Brunei Darussalam Cambodia Indonesia Lao PDR

Malaysia Myanmar Philippines Singapore
Thailand Viet Nam GDP growth (right axis)
Constant 2010 USD, billion Annual %
3.5 8.0
3 7.0
6.0
2.5
5.0
2
4.0
1.5
3.0
1
2.0
0.5 1.0
0 0.0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: (World Bank, 2020[31]).
Figure 2.3 shows that while economic structures differ across ASEAN, services was both the leading sector
and main driver of growth across member states in 2018. This sector’s share of regional GDP increased
from 46.6% in 2005 to 50.6% in 2019 (ASEAN Secretariat, 2020[30]).
The existence of ASEAN, in addition to the region’s strategic geographic position and its historical role as
a trade hub, has played a key role in spurring international trade and FDI inflows. Total values of trade in
both goods and services have increased significantly over the past ten years in the region and in 2019
reached more than USD 2.8 trillion for goods and USD 844.5 billion for services, while total FDI inflows
were valued at USD 160.5 billion.
ASEAN’s total trade in goods more than doubled in the period 2009 to 2019, with a steady positive trade
balance. Figure 2.4 shows that intra-ASEAN trade accounts for the largest share of the region’s total trade
reaching 22% in 2019. ASEAN’s top three trading partners in 2019 were China (18%), the United States

 31
(10.5%) and the European Union (10%). Manufacturing goods constitute the largest share of both total
exports and imports in ASEAN exceeding 75% in seven countries out of ten.
Figure 2.3. Percentage shares of main economic sectors of total GDP and percentage point
contribution to growth by component, 2019
Agriculture Industry Services Net taxes GDP growth
Shares of main economic sectors of total GDP Contribution to growth by component

9
100
80 6
60
3
40
0
20
0 -3
Note: The sum of these main three economic sectors may not add up to 100% due to differences in how statistical discrepancies are treated by
countries.
Contribution to growth by component: The latest available data on contribution to growth by component for Cambodia, Lao PDR and Myanmar
are from 2018. In the data compilation, the agriculture sector refers to agriculture, fisheries and forestry. Net taxes are equal to gross tax minus
subsidies. Thailand uses chain volume measures, and the sum of contributions to growth is not necessarily equal to GDP growth. Viet Nam has
not to publish the demand-side components of GDP. The data are as of June 2020.
Source: (ASEAN Macro-economic Database, 2020[29]), (OECD, 2020[32]).
Figure 2.4. Trade balance for goods (billions, USD) and main trading partners, 2014-19
Trade balance for goods Main trading partners
Trade balance Export Intra-ASEAN EU China

Import Japan US Others
90 1 600
80 22%
1 400
70 1 200 31%
60
1 000
50
800
40
600 10%
30
20 400
10 200
0 0 11%
2014 2015 2016 2017 2018 2019
18%
8%
Source: (ASEAN Macro-economic Database, 2020[29]).
After a continuous deficit for nearly all the preceding decade, ASEAN’s balance of trade in services has
recorded a surplus since 2016. It reached USD 44.9 billion of a total trade volume of USD 844.5 billion in

32 
2019, while extra-ASEAN services trade increased to 85.2%. Figure 2.5 shows that amongst the services
sub-sectors, travel (27.6%) and transport (24.1%) contributed the most to total services trade in 2019.
Figure 2.5. Trade balance for services (billion, USD) and shares by category, 2014-19
Trade balance for services Shares by category
Trade balance (left axis) Transport Travel

Total exports (right axis) Financial services ICT services
Total imports (right axis) Others
50 500 900
40 450 800
400 700
30
350
600
20 300
500
10 250
400
0 200
150 300
-10
100 200
-20 50 100
-30 0 0
2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019
Alongside international trade, FDI has increasingly become a driving factor in ASEAN’s economic
development. FDI stocks amounted to 76% of ASEAN GDP in 2016, up from 25% in 2006. The share of
FDI attracted by ASEAN, compared with OECD countries, has increased. In 2016, FDI stocks in ASEAN
were 10% of those of OECD countries (OECD-UNIDO, 2019[33]). The United States (15.2%), Japan
(12.7%) and the European Union (10.1%) were the largest extra-ASEAN sources of FDI inflows in 2019
(Figure 2.6). Intra-ASEAN FDI inflows had risen to 14% of total inflows reaching USD 22.36 billion in 2019,
fivefold the 2005 value. The service sector was the largest recipient (61.2%), followed by manufacturing
(35%).
Signed in November 2020, the Regional Comprehensive Economic Partnership (RCEP), a free-trade
agreement between all ASEAN member states, Australia, China, Japan, Korea and New Zealand, aims to
establish a modern and comprehensive economic partnership that will facilitate the expansion of regional
trade and investment. Chapters 2, 8 and 10 are dedicated to trade and investment with provisions targeting
a high level of trade liberalisation and investment facilitation among the signatories, including rules on
market access, national treatment, most-favoured-nation treatment, and local presence.
The Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) is a free-trade agreement signed
in 2016 by 12 countries, including 4 ASEAN member countries: Brunei Darussalam, Malaysia, Singapore
and Viet Nam in addition to Australia, Canada, Chile, Japan, Mexico, New Zealand, Peru and the United
States. The agreement is designed to create a comprehensive trade and investment regulatory framework
that facilitates market access. Chapter 10 on cross-border trade in services applies to measures affecting
the access to and use of distribution, transport or telecommunications networks and includes annexes on
the recognition of professional services and express delivery services. The provisions of the chapter signal
the commitment of signatories to maintain a level-playing field for service suppliers, by providing the same
treatment granted by CPTPP partners to third parties and to domestic service suppliers, and by refraining
from imposing quantitative restrictions or requiring a specific type of legal entity or joint-venture as a
condition for the supply of services.

 33
Figure 2.6. FDI inflows (billions, USD) 2014-19 and their main sources, 2019
FDI inflows Main sources
Brunei Darussalam Cambodia Indonesia Intra-ASEAN EU

Lao PDR Malaysia Myanmar Philippines China & Hong Kong
Singapore Thailand Viet Nam Japan US Others
180 14%
160
140
35%
120 10%
100
80
60
40
13%
20
0
-20
2014 2015 2016 2017 2018 2019 15% 13%
ASEAN’s increasing FDI attractiveness is a reflection of its high quality and fast improving business
environment, as recorded in the World Bank’s Doing Business 2020 report and the World Economic Forum
2019 Global Competitiveness Index (GCI) (Figure 2.7). These latest rankings confirm the quality of the
business environment of certain member states, such as Singapore, Malaysia and Thailand (they are
among the top 50 worldwide in the 2019 GCI and the 2020 Doing Business rankings). Others member
states have recorded great improvements in their business environment, such as the Philippines, which
rose 29 places in Doing Business 2020 compared to 2019, and Viet Nam, which rose 10 places in the most
recent GCI. More generally, Doing Business 2020 notes that most ASEAN member states perform well in
access to credit with an average regional rank of 82, while there were notable reforms in construction
permits and starting a business (World Bank, 2020[34]).
The COVID-19 pandemic that began in early 2020 has interrupted decades of strong and sustained
economic growth. As one of the first regions affected by the virus’s rapid spread, ASEAN has faced supply-
chain disruption and stalled demand, which have limited flows of travel, trade and investment. The
economic downturn caused by domestic containment measures has weighed on private consumption and
investment and the region is now in a severe recession that will have important effects on the job market.
Economic performance is expected to weaken significantly across ASEAN countries in 2020 compared to
2019 (Figure 2.8). The region’s economy as a whole is expected to contract by 4.4% in 2020 before growth
rises to 5.2% in 2021, barring a second wave of infections (Asian Development Bank, 2020[35]).12
The COVID-19 pandemic has highlighted the importance of ASEAN-level co-ordination and co-operation.
On 9 June 2020, the ASEAN Expert Group on Competition (AEGC) released a “Joint Statement in
Response to the Coronavirus Disease (COVID-19) Pandemic”, which noted the continuing importance of
competition law, regional co-operation and enforcement by national competition authorities. 13 On
12 November 2020, the association adopted the ASEAN Comprehensive Recovery Framework (ACRF)
and an implementation plan, which offered a regional policy response for post COVID-19 recovery.14 It set
out five broad strategies that will drive recovery: enhancing health systems; strengthening human security;
maximising the potential of intra-ASEAN market and broader economic integration; accelerating inclusive
digital transformation; and advancing towards a more sustainable and resilient future. Competition policy
and regional co-operation will continue to play a key role in this context.

34 
Figure 2.7. ASEAN Doing Business 2020 and Global Competitiveness Index 2019 rankings
Doing Business 2020
0 100
86.2: Singapore (Rank: 2)
81.5: Malaysia (Rank 12)

80.1: Thailand (Rank: 21)
70.1: Brunei Darussalam (Rank: 66)

69.8: Viet Nam (Rank: 70)
67.96: Indonesia (Rank: 73)
63.3: Regional Average (East Asia & Pacific)
62.8: Philippines (Rank: 95)

53.8: Cambodia (Rank: 144)
50.8: Lao PDR (Rank: 154)
46.8: Myanmar (Rank: 165)
Global Competitiveness Index 2019

0 100
84.8: Singapore (Rank: 1)
74.6: Malaysia (Rank 27)
73.9: Regional Average (East Asia & Pacific)
68.1: Thailand (Rank: 40)
64.6: Indonesia (Rank: 50)
62.8: Brunei Darussalam (Rank: 56)

61.9: Philippines (Rank: 64)
61.5: Viet Nam (Rank: 67)

52.1: Cambodia (Rank: 106)
50.1: Lao PDR (Rank: 113)
Source: (World Bank, 2020[34]) (World Economic Forum, 2019[36]).
Figure 2.8. Expected percentage real GDP growth, 2020

4
2.3
1.8
2 1.4
-2
-2.2 -2.5
-4
-4.0
-6
-6.0 -6.2
-8
-7.8
-8.5
-10
Brunei Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam
Darussalam
Source: (Asian Development Bank, 2020[35]).

 35
2.2. Overview of the logistics sector
2.2.1. Sector’s contribution to the economy
The logistics sector constitutes a cornerstone for the development of an integrated internal market in
ASEAN and its opening up and integration into the world economy. 15 In 2019, the sector’s contribution to
GDP averaged 5.1% across ASEAN member states, with the highest rates in Myanmar (11%), Cambodia
(7.9%) and Singapore (6.3%) (Figure 2.9, Panel A). The sector is also an important contributor to jobs. In
2019 in ASEAN member states, it employed on average around 5% of the working population, with rates
of 8.09% in the Philippines and 6.9% in Singapore (Figure 2.9, Panel B).
Figure 2.9. Logistics sector contribution to the economies of ASEAN member states
A. Contribution to GDP B. Contribution to employment

% %
12 9
8
10
7
8 6
5
6
4
4 3
2
2
1
0 0
Note: * Data for Cambodia and Lao PDR are from 2018. Employment data were not available for Cambodia, Lao PDR and Myanmar.
Source: (Mordor Intelligence, 2020[37]) based on data from national statistics institutes.
ASEAN total freight and logistics market revenues were estimated at USD 357.78 billion in 2019; they are
expected to have dropped by 12% in 2020 to USD 316.54 billion as a consequence of restrictions on
mobility and activity caused by the COVID-19 pandemic (Figure 2.11). Across member states, the freight
transport and warehousing segments are set to be most affected with an estimated drop of more than 10%
(Mordor Intelligence, 2020[37]). For specific modes of transport, the impact is expected to be most significant
for airfreight, with an estimated drop of -31%, and maritime freight revenues (-12%) (Figure 2.10).
However, there are large differences within the different transport sectors; within the shipping sector
container shipping has been witnessing record profits in 2020.
During the COVID-19 pandemic, such restrictions also had an impact on cross-border freight transport
operations. According to an ESCAP Survey on Freight Transport Policy Responses to COVID-19 (July
2020), 86% of respondents from ASEAN member states agreed or strongly agreed that cross-border
freight operations had become more costly or time consuming due to the pandemic. 16
However, freight transport within cities, such as courier, express and parcel-delivery services, is expected
to have grown by about 20% in 2020 as a result of the changing consumer behaviours during the lockdown
with strong online demand for grocery items, home furnishings and medical supplies, among others.

36 
Figure 2.10. Projected COVID-19 impact on freight transport revenues
A. Percentage change by segment B. Percentage change by mode of transport

% %
0 0
-2 -5
-4 -10
-6 -15
-8 -20
-10 -25
-12 -30
-14 -35
Freight transport Warehousing Freight forwarding Others Road Maritime Rail Air
Source: (Mordor Intelligence, 2020[37]).
Total market revenues are projected to return to pre-crisis growth levels by the end of 2021 and reach
USD 481 billion by 2025, with a compound annual growth rate (CAGR) of 5.07% over the 2020-2025 period
(Mordor Intelligence, 2020[37]). Figure 2.11, Panel A, shows that freight transport accounts for the largest
share of the sector’s total revenues – about 72.6% in 2019 – followed by warehousing (14.6%) and freight
forwarding (5.2%). Freight forwarding registered the highest CAGR over the 2016-2019 period with 11.8%
and is still expected to maintain this momentum with the highest CAGR (8.7%) among the different logistics
segments over 2020-2025 period. Warehousing grew by 7% per year over the 2016-2019 period and is
expected to register a moderate 4.3% CAGR over the 2020-2025 period.
Figure 2.11. ASEAN freight and logistics market revenue 2016-25 (billions, USD)
A. Market revenue by segment B. Market revenue by mode of transport
Freight transport Warehousing Road Maritime

Freight forwarding Others Rail Air
600 400
350
500
300
400
250
300 200
150
200
100
100
50
0 0
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

 37
Freight transport will continue to be the main revenue generator in the sector. It had a 7.5% CAGR over
the 2016-2019 period and is projected to have 4.8% CAGR throughout the 2020-2025 period. Road freight
is the primary mode of transportation in domestic markets in ASEAN and is by far the largest contributor
to total freight transport revenues with a share of 64.6% in 2019. It was followed by sea freight transport
(32.6%), which should grow by 4.9% CAGR over the 2020-2025 period (Figure 2.11, Panel B).
End users of freight and logistics services are made up of the manufacturing and automotive sector, oil
and gas sector, and wholesale and retail trade sector, which accounted for about 75% of total market
revenues in 2019. As shown in Section 2.1, manufactured goods constitute a major share of both total
exports and total imports in most member states and the manufacturing sector is expected to remain the
major revenue generator for the freight and logistics sector throughout the 2020-2025 period.
Figure 2.12. Market revenue by sector, 2019
Others, 15%
Manufacturing and
automotive, 27%
Healthcare and
pharmaceutical, 1%
Wholesale and retail trade ,

23%
Construction, 6% Oil, gas and mining, 24%
Agriculture, fishing and

forestry, 4%
In 2019, Indonesia was the largest market for freight and logistics in ASEAN with almost 25% of total
regional sector revenues, followed by Thailand (20.2%) and Singapore (19.8%) (Figure 2.13). According
to estimates by India-based data company Mordor Intelligence, the Indonesian freight and logistics market
is projected to exceed USD 128 billion in revenue by 2025 with 6.6% CAGR over the 2019-2025 period,
the second highest rate across member states after Viet Nam (7.3%) and followed by Myanmar (5.5%)
and the Philippines (5%).
FDI into ASEAN transport and logistics sectors reached USD 1.4 billion in 2019, just 1% of the region’s
total FDI inflows that year. By country, the share of total FDI inflows into the transport and logistics sector
was highest in Indonesia at 16.8%, followed by Myanmar (12%); it did not exceed 3% in the other member
states.
The ASEAN freight and logistics market remains fragmented, with a mix of major international and local
operators. Some member states, such as Indonesia and the Philippines, have a large number of local
players and certain major international players, while others such as Singapore, Viet Nam, and Thailand
have a large number of international players (Mordor Intelligence, 2020[37]). Major freight and logistics
actors across ASEAN include DHL Group, DB Schenker, Kerry Logistics, Nippon Express and CJ
Logistics.

38 
Figure 2.13. Market revenue by country 2016 and 2019 (billions, USD)
2016 2019
100
90
80
70
60
50
40
30
20
10
0
Darussalam
Figure 2.14. Foreign direct investment inflows in logistics 2012-19 (millions, USD)
5 000
4 000
3 000
2 000
1 000
-1 000
2012 2013 2014 2015 2016 2017 2018 2019
2.2.2. Infrastructure quality
Infrastructure quality is a determinant factor for logistics performance. Several international performance
assessments indicate that infrastructure quality across ASEAN is relatively disparate. Figure 2.15, Panel
A, shows the quality of trade and transport-related infrastructure in member states according to the World
Bank’s 2018 Logistics Performance Index (LPI) (see Box 2.1). The regional average score for East Asia
and Pacific was 3.01 and only three member states (Malaysia, Singapore and Thailand) scored higher.
Singapore remains the best performer in the region and higher than the OECD average. According to the
World Economic Forum’s 2019 Global Competitiveness Index (GCI), East Asia and Pacific ranked second
in terms of infrastructure quality after the region defined by the World Economic Forum as including Europe

 39
and North America with a score of 74.8. Only two member states (Singapore and Malaysia) scored above
this average (Figure 2.15, Panel B).
Figure 2.15. Infrastructure quality indicators
A. LPI trade and transport-related infrastructure B. GCI infrastructure performance
2016 2018 Overall infrastructure Transport Infrastructure

Average (2018) Average transport
4.5 100
4 90
3.5 80
3 70
2.5 60
50
2
40
1.5 30
1 20
0.5 10
0 0
Source: (World Bank, 2020[34]) (World Economic Forum, 2019[36]).
Table 2.1 shows member states’ overall LPI performance in 2018. Singapore ranked 7 among
160 countries globally with a score of 4.00. Other ASEAN countries also performed well in the LPI, scoring
more than 3 points. These include Thailand (3.41), Viet Nam (3.27), Malaysia (3.22), and Indonesia (3.15).
The remaining ASEAN countries improved their performances in 2018 compared to previous years; for
example, Lao PDR improved its score by 0.4 points and its rank by 70 positions compared with 2016.
Table 2.1. Logistics Performance Index overall ranking, 2018
Overall ranking Country

1 Germany
[…]
7 Singapore
32 Thailand
39 Viet Nam
41 Malaysia
46 Indonesia
60 Philippines
80 Brunei Darussalam
82 Lao PDR
98 Cambodia
137 Myanmar

40 
Box 2.1. World Bank Logistics Performance Index

The World Bank’s Logistics Performance Index (LPI) benchmarks countries’ logistics performance
using indicators (scored from 1, the lowest, to 5) to create an overall LPI index that allows for worldwide,
regional and income-group country comparisons.
A country’s final LPI is the weighted average of its score based upon six key criteria.
1. Efficiency of the clearance process, including speed, simplicity and predictability of formalities,
by border control agencies, including customs.
2. Quality of trade and transport related infrastructure, such as ports, railroads, roads, and
information technology.
3. Ease of arranging competitively priced shipments.
4. Competence and quality of logistics services, such as transport operators and customs
brokers).
5. Ability to track and trace consignments.
6. Timeliness of shipments in reaching destination within the scheduled or expected delivery time.
Figure 2.16 shows East Asia and Pacific’s LPI sub-indicators scores against the top performer at the global
level (Germany) in 2018 and other regions; as noted, criteria are scored from 1 (lowest) to 5 (highest). The
figure shows that customs procedures appear to be the most challenging area for the majority of ASEAN
member states: eight out of ten scored below three points. On the other hand, only three member states
received below three points on the timeliness sub-indicator, which scores ability to deliver shipments within
the scheduled or expected time frames.
Figure 2.16. ASEAN LPI scores compared to global leader Germany and other regions
Germany Europe & Central Asia

East Asia & Pacific Middle East & North Africa
Latin America & Caribbean South Asia
Customs
5
4
3
Timeliness Infrastructure
2
1
0
Tracking & tracing International shipments
Logistics competence
Note: According to World Bank regions classification, the ten ASEAN member states are part of the East Asia Pacific region, which also includes
China, Korea, Mongolia, Pacific Islands, Papua New Guinea and Timor-Leste.

 41
Road transport plays a crucial role in logistics and overall, the quality of roads and port infrastructure across
member states has significantly improved over in the period 2009 to 2019. Railway infrastructure has
received less attention. Significant improvements in land connectivity were observed across all member
states, with a 55.3% increase in total road length compared to 2010 and a road network that exceeded
2.1 million kilometres in 2019 (Figure 2.17, Panel A). Thailand, Indonesia, Viet Nam, Malaysia, and
Myanmar recorded the highest total road length in the region (over 100 000 kilometres each) whereas
other member states have less than 60 000 km. In 2017, the percentage of paved roads in the total road
network reached 61.4% across ASEAN (up from 59% in 2010) and exceeded 70% in most countries
(Figure 2.17, Panel B).
Figure 2.17. ASEAN road infrastructure
A. Road length B. Paved roads
2010 2019 2010 2017

Km, thousands % of total network
800 100
700 90
80
600
70
500 60
400 50
300 40
30
200
20
100 10
0 0
Note: The latest available data for road length in Brunei Darussalam, Indonesia, Lao PDR, Malaysia, Philippines, Singapore, and Viet Nam are
from 2018.
Source: (ASEANstats, 2020[39]).
The number of motor vehicles increased significantly across member states over the 2005-2019 period.
The total number of registered motor vehicles in ASEAN in 2019 was 243.9 million units, an increase of
193.5% compared to 2005. Taking into account the size of each state’s population, Brunei Darussalam
(962.9), Malaysia (925.1) and Thailand (598.8) recorded the highest number of total registered motor
vehicles per 1 000 population (Figure 2.18). The number of registered trucks also significantly increased
across all member states; in 2017, there were 10.8 million units, an increase of 111.4% compared to 2005.
Of these trucks, more than half were registered in Indonesia: around 6.3 million units or a 121.5% increase
when compared with 2005.
The railway network in ASEAN has not evolved significantly over the past decade. In 2018, the total length
of rail routes across member states reached 22 127 kilometres or about 11.9% longer than 2009. This is
a relatively limited network when compared to more developed regions such as North America and the
European Union, partly reflecting the different size and geography of ASEAN.17 With 6 112 kilometres,
Myanmar has the longest railway network in ASEAN, followed by Indonesia (5 550 kilometres) and
Thailand (4 115 kilometres). A total of 81.2 million tonnes of freight were transported by rail in ASEAN in
2018 (Figure 2.19, Panel B), with over half of this total (49.4 million tonnes) transported in Indonesia;
Thailand (10.2 million tonnes) and Cambodia (8.1 million tonnes) were also among the members state that
used rail most frequently for freight and cargo transport in 2018.

42 
Figure 2.18. Number of registered motor vehicles
A. Number of vehicles per 1 000 population B. Number of registered trucks in thousands
2005 2019 2005 2017
1 200 7 000
1 000 6 000
5 000
800
4 000
600
3 000
400
2 000
200 1 000
0 0
Note: The latest available data for Brunei Darussalam, Indonesia, Lao PDR, Malaysia, Philippines, Singapore, and Viet Nam were 2018.
Figure 2.19. Railways network and freight transport
A. Rail route length B. Freight volumes
2009 2018 2016 2018

Kilometres Tonnes, thousands
7 000 50 000
6 000
40 000
5 000
4 000 30 000
3 000 20 000
2 000
10 000
1 000
0 0
Note: Data for Brunei Darussalam is missing. Latest available data for Singapore is 2012.
Source: (ASEAN, 2019[40]).
Due to its geography and the number of island states, shipping has long been the major form of transport
between the various countries in Southeast Asia and the main trade channel connecting the region and
the rest of the world. ASEAN member states contain an extensive network of 475 international ports and
1 355 domestic ports (ASEANstats, 2018[41]), most of which are located in the archipelagos of the
Philippines and Indonesia, as well as in Viet Nam. ASEAN’s total merchant fleet by flag of registration
reached 19 741 vessels in 2020 (Table 2.2).

 43
Table 2.2. ASEAN ports, fleet and carrying capacity, 2020
Carrying capacity
Country International ports Ships
(DWT, thousands)
Brunei Darussalam 1 102 466
Cambodia 3 257 465
Indonesia 85 10 137 26 900
Lao PDR n.a 1 2
Malaysia 15 1 772 10 379
Myanmar 9 93 178
Philippines 189 1 747 6 482
Singapore 1 3 420 140 393
Thailand 8 840 6 688
Viet Nam 163 1 909 9 177
Source: (UNCTADStat, 2020[42]).
Of ASEAN’s merchant fleet, 50% is registered under the Indonesian flag, while Singapore has 16.8%,
Viet Nam 9.4%, Malaysia 8.7%, and the Philippines 8.6%. Total carrying capacity in the region exceeds
200 million deadweight tonnage (DWT). Bulk carriers (33.6%), oil tankers (29.3%) and container ships
(16.1%) accounted for the majority of this capacity (Figure 2.20, Panel A). Port calls data show that ASEAN
ports are mainly used by container vessels and liquid bulk carriers, in addition to passenger vessels that
accounted for the largest number of port calls in 2019 (Figure 2.20, Panel B).
Figure 2.20. Carrying capacity and port calls in ASEAN
A. Carrying capacity by type of ship, 2020 B. Number of port calls by type of ship, 2018 and 2019
Others, 2018 2019

15%
160 000
Oil tankers,
29%
120 000
80 000
Container
ships, 40 000
16%
0
General
cargo,
6%
Bulk carriers,
34%
A total of 3 billion tonnes of freight was transported through ASEAN ports in 2017 (Figure 2.21, Panel A).
With 1.17 billion tonnes, Indonesia shipped the largest share of sea freight in the region, followed by
Singapore (627.6 million tonnes) and Malaysia (544.7 million tonnes). Total throughput in ASEAN ports
was 84 million TEU in 2017 (Figure 2.21, Panel B); Singapore accounted for the largest share with over
33.6 million TEU, followed by Malaysia (23.7 million) and Viet Nam (11.4 million).

44 
Figure 2.21. International sea cargo throughput in ASEAN region

2010 2017
A. Cargo throughput B. Container throughput

Tonnes, TEUs,
thousands thousands
1 200 35
1 000 30
25
800
20
600
15
400
10
200 5
0 0
2.2.3. International connectivity
ASEAN member states’ liner-shipping connections with other countries have improved since 2006,
although most of this growth seems to be driven by growth in ship size calling AMS’s ports. Figure 2.22
shows ASEAN countries’ ranking in UNCTAD’s annual Liner Shipping Connectivity Index, which reveals
countries’ levels of integration into the global networks of liner shipping.18 As can be seen from the figure
below, since 2006 member states’ connectivity indexes have increased.
Figure 2.22. Annual Liner Shipping Connectivity Index, 2006-19
Brunei Darussalam Singapore Thailand Cambodia Indonesia

Malaysia Myanmar Philippines Viet Nam
120
100
80
60
40
20
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Note: The index for the country with the score of 100 in 2006 (China) is used as the basis and all other indices are in relation to this value.

 45
Figure 2.23 shows the three countries with which each member state had the strongest bilateral
connections – a crucial determinant of bilateral trade – in 2019.19 The literature empirically shows a close
relationship between bilateral maritime liner-shipping connectivity and exports in containerised goods. A
lack of a direct maritime connection with a country results in lower values of exports with that country
(Fugazza and Hoffmann, 2017[43]). In general, Singapore was among the top three bilateral connections
for all member states (with the exception of Cambodia), whereas China, Korea and Hong Kong, China
were the top three non-ASEAN trading partners of the majority of member states in 2019.
Figure 2.23. Liner Shipping Bilateral Connectivity Index (LSBCI), 2019
Singapore Malaysia Hong Kong, China Viet Nam

China Thailand Korea
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
Brunei Cambodia Indonesia Malaysia Myanmar Philippines Singapore Thailand Viet Nam
Darussalam
Note: Leading partners: 0 = minimum; 1 = maximum.

Liner shipping has become increasingly concentrated over the last decade, due to consolidation and
increased co-operation via alliances and consortia. Although liner conferences are no longer automatically
exempted from competition law in the European Union, US and various other countries, they are not
inhibited in certain ASEAN countries.20 This is particularly noteworthy considering that liner companies
have been able to quadruple ocean freight rates in 2020 despite the COVID-crisis, thanks to collective
capacity withdrawal in the first half of 2020.

46 

 47
3 Road freight transport

In several ASEAN countries, road freight transport is the dominant mode of domestic transport. It allows
door-to-door transport, which limits transhipment costs that arise when transferring cargo between different
modes of transport, for example, from rail to road.
Generally, road freight transport can be distinguished between transport for own-account, in which firms
internalise transportation services by using their own vehicles, and third-party transportation or
transportation for hire or reward, in which third-party operators provide services to other firms. The present
review covers both types of freight transport.
Based on analyses of the legislation in each member state, this chapter examines policy measures that
might be restricting competition in the market for road freight transport services. It discusses some of the
most common issues that the OECD reviews have identified across member states. These include:
1. restrictions on the number of permits that countries can issue to authorise cross-border transport
by road, pursuant to bilateral or multilateral international agreements
2. market-access requirements in light of the specific policy objectives
3. restrictions imposed on certain operations, such as requirements on fleet size or restricted areas
of operations.
The individual country reports provide details on country-specific barriers.
3.1. Restrictions on cross-border transport by road
Description of the barrier. To accommodate increasing cross-border transport needs stemming from
growing intra-ASEAN trade, member states have several agreements in place to develop cross-border
transport by road, including:
 Cross-Border Transport Agreement (CBTA) for the free movement of goods throughout the Greater
Mekong sub-region.21
 ASEAN Framework Agreement on the Facilitation of Goods in Transit (AFAFGIT). 22
 ASEAN Framework Agreement on the Facilitation of Inter-State Transport (AFAFIST).23
When companies encounter issues in the area of cross-border services or due to non-tariff measures in
relation to the certain ASEAN economic agreements, they can have recourse to a mechanism for the
expedited and effective solution of such cross-border issues. This non-binding and consultative
mechanism is known as ASEAN Solutions for Investments, Services and Trade (ASSIST).24
Despite these efforts, all the above-mentioned agreements include limits on the number of permits that
countries can issue to authorise cross-border transport by road.
 The CBTA provides that any transport operator properly licensed for cross-border transport
operations in its home country according to the criteria set in the agreement shall be entitled to
undertake cross-border transport operations. Yet, as stated in Article 23: “The National Transport
Facilitation Committee of each Contracting Party … will exchange and issue the agreed number of

48 
permits each year.”25 In 2020, each signatory was permitted to issue up to 500 permits for cargo
transportation and for non-scheduled passenger transportation. This arrangement is subject to
annual review by a joint committee.
 The AFAFGIT and its protocols provide that each contracting party can issue no more than
60 vehicle permits for transit transport by road. 26 This number has been subsequently increased
to 500 vehicles per country in 2009.27
 The AFAFIST provides that the agreed number of transport vehicles allowed for interstate transport
shall be no more than 500 vehicles for each signatory. 28 This number can be discussed from time
to time between the contracting parties.
Box 3.1 provides an example of a bilateral agreement that has been updated over time, with a consequent
increase in the number of quotas.
Box 3.1. Quota increases in bilateral cross-border transport agreements between Cambodia and
Viet Nam
To accommodate the increasing needs of cross-border trade, Cambodia and Viet Nam have signed
several agreements to exchange traffic rights. The quotas set out in these agreements have been
regularly reviewed, passing from 40 truck permits in 1998 to 150 in 2009, 300 in 2010 and 500 in 2012.
The two countries then agreed to introduce annual 100-vehicle permit increases each year.
The legal bases for the exchange of traffic rights between Cambodia and Viet Nam include:
1. the Agreement on Road Transportation, signed in 1998
2. a protocol stipulating an initial quota of 40 vehicles, signed in Hanoi on 10 October 2005
3. a Memorandum of Understanding (MoU) increasing the quota to 150 vehicles, signed in Phnom
Penh on 17 March 2009
4. an amendment to the MoU increasing the quota to 300, signed in Phnom Penh on 15 September
2010
5. an amendment to the MoU raising the quota to 500, signed in Bali on 30 November 2012.
Source: (Sisovanna, 2019[44]).
Harm to competition. Whilst such agreements are to be welcomed and have helped to develop road
transport among ASEAN members, they give rise to a model in which interactions between demand and
supply are replaced by central decision-making with a potential for a high degree of error. This results in a
“highly restrictive” model in which access to the market is strictly controlled (World Bank/IRU, 2016[45]). In
particular, if the number of permits is insufficient to satisfy demand for cross-border services, this is likely
to increase transportation costs and result in delays. For example, if no cross-border transport operators
are available, one operator is required to deliver goods to the border, which are then moved to another
operator to deliver them to the end point within the destination country. In contrast, using one company
that is able to offer cross-border transport and logistics services can reduce costs and delays, for instance,
by shortening the number and duration of contract negotiations or avoiding trans-shipments at the border.
In ASEAN, few companies are currently able to secure a permit and provide these services. These are in
general global players such as DHL, DB Schenker Group, CEVA Logistics, Kerry Logistics/KART and
Nippon Express, which hold 60-70 % of market share in ASEAN (Mordor Intelligence, 2019[46]).

 49
At the same time, data show that intra-ASEAN trade is growing and this could lead to an increase in
demand of cross-border transport services.
In 2018, the ASEAN cross-border road transport market was valued at an estimated USD 2 023 billion
(Mordor Intelligence, 2019[46]). As discussed in Section 2.1, the total values of trade in both goods and
services have increased significantly over the past few years in the region and in 2019 reached more than
USD 2.8 trillion for goods and USD 844.5 billion for services. Intra-ASEAN trade accounts for the largest
share of its total trade, reaching 22% in 2019. This rising intra-ASEAN trade will make cross-border
transport services increasingly important.
Given their geographic situation, certain ASEAN countries at the centre of the region are particularly well-
placed to become hubs for cross-border road transport activities. For instance, more than 30 provinces of
Thailand border other member states, namely Myanmar, Lao PDR, Malaysia and Cambodia. Similarly,
Myanmar is strategically positioned between India and the People’s Republic of China (“China”) to benefit
from trade from and between these two economies. Indeed, China has heavily invested in modernising
transport infrastructure in the provinces of Ruili and Yunnan that border Myanmar to boost connectivity
between the two countries. Furthermore, Myanmar has opened seven trade zones at the border with
Thailand to boost their trade links.29
The increasing demand for transport services by road is confirmed by the growth in the number of
registered trucks in all ASEAN countries. As shown in Figure 3.1, the number of trucks increased by 48.3%
between 2008 and 2017, with peaks of 194.2% in Indonesia and 185.9% in Viet Nam.
Figure 3.1. Number of registered trucks in ASEAN countries (thousands), 2008-17

12 000
10 000
8 000
6 000
4 000
2 000
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Note: The latest data are from 2017, except for Myanmar for which no data are available.
Source: ASEANStatsDataPortal, https://data.aseanstats.org/indicator/ASE.TRP.ROD.B.008.
Recommendation. The OECD recommends one of the following options.

1. Remove these restrictive provisions setting quotas and replace with a licence system. The licensing
criteria should be clearly defined in the international agreement or implementing laws or
regulations.
2. Assess market need and demand every one to three years, and consider increasing the number
of licences that can be issued.
Both these recommendations would require negotiations between signing countries.

50 
3.2. Licensing requirements on road freight transport
Description of obstacle. All ASEAN member states have regulations in place regarding access to the
road freight transport market. In certain instances, regulations are broad and do not provide clear guidance
or set out clear requirements for all market players. For example, in Brunei Darussalam, the Director of
Land Transport may exempt any motor vehicle or trailer from the requirements laid down in the law, a
power not subject to any limitations or conditions. 30
Such regulations usually require operators to hold a licence, subject to certain requirements. They often
limit market entry or impose burdens on operators, including:
 Quantitative limitations may restrict the number of authorised carriers. This means that if the limit
has been reached, new entry is only possible when current players exit the market. For instance,
in Thailand, the Central Land Transport Control Board (for the Bangkok area) or the Provincial
Land Transport Control Boards have the power to issue decisions of general application setting
the maximum number of transport operators. Certain regulations may also limit the size of vehicle
fleets or the number of new truck registrations. 31
 Qualitative requirements can apply conditions that operators need to meet, which may include,
for example, criteria of professional competence for road transport company managers, obligations
for certain on-board devices or certain financial requirements for companies. For instance, in
Lao PDR, the Land Transport Law requires that road transport managers have at least five years
of experience in the management of a business to provide domestic freight transport, while 20% of
employees must be transport experts with two years’ experience and meet specific education
requirements.
 Asset requirements can impose obligations to own certain assets, such as a garage or a parking
lot for trucks. For example, in the Philippines, to obtain a certificate of public convenience (CPC)
to provide trucks-for-hire transport service, applicants must provide a sketch or dimensions of their
garage and the corresponding contract or lease. The legislation provides the “standard garage
requirements” and demands proof of ownership or right of possession, sufficient parking space for
all units, and a designated amount of space for additional requirements – such as areas for
maintenance, clearing bays, restrooms – and maintenance facilities.32
Box 3.2. Professional competence for market entry in road haulage services in the European
Union
Regulation 1071/2009 of the European Parliament and of the Council of 21 October 2009 sets market-
entry criteria for operators in road-haulage services. All EU countries require a road haulage operator
licence for carrying goods for hire or reward in a vehicle or combination of vehicles with an authorised
weight exceeding 3.5 tonnes; operator licences have a maximum duration of five years. National
licences are issued by member states and are valid within their country of issue; international licences
are valid for road haulage in all EU member states. According to Regulation 1071/2009, operators are
required to prove their professional competence in order to be granted market entry. They should have
an effective and stable establishment in a member state, be of good repute, and have appropriate
financial standing. Member states have the discretion to impose additional requirements, which shall
be proportionate and non-discriminatory, for entry as a road-transport operator.
In practice, all EU countries require road transport managers to provide proof of high-quality
professional competence. Authorities certify this after 140 hours of training and an examination covering
the topics laid down in Annex I of Regulation 1071/2009. A successful examination leads to the award
of an open-ended certificate of professional competence. A member state may exempt certain

 51
individuals from sitting the exam, such as the holders of certain higher education or technical-education
qualifications issued in that member state. Member states may also exempt individuals with proven
managerial experience of road-haulage businesses from the certificate of professional competence
exam. Recognised degrees and the length of previous managerial experience vary by country.
Significant differences exist in the extra requirements and exemptions that member states require of
road transport managers. In 2017, the European Commission issued a proposal to amend
Regulation 1071/2009, so that member states would no longer be allowed to impose additional access
requirements to the profession. Regulation 1055/2020 was adopted on 16 July 2020 to abolish this
possibility; it notes that the possibility to make access to the occupation of road transport operator
subject to additional requirements than those applied in Regulation 1071/2009 “has not proven to be
necessary in order to respond to imperative needs and has led to divergences in respect of such
access”.
Source: European Commission, Proposal for a Regulation of the European Parliament and the Council amending Regulation (EC)
No 1071/2009 and Regulation (EC) No 1072/2009 with a view to adapting them to the developments in the sector; Regulation
(EU) 2020/1055 of the European Parliament and of the Council of 15 July 2020 amending Regulations (EC) No 1071/2009, (EC)
No 1072/2009 and (EU) No 1024/2012 with a view to adapting them to developments in the road transport sector.
Harm to competition. While regulations often have legitimate policy objectives, they can impose an
excessive burden on operators or limit market entry beyond that strictly necessary to achieve those policy
objectives.
Setting a maximum number of licences limits market entry and competition with potential detrimental
effects on consumers, for instance in terms of limited supply, lower quality and higher prices. Box 3.3
provides an example of the consequences and that similar provisions had in Greece and the benefits
brought by lifting those restrictions.
Box 3.3. Limited number of goods transport licences in Greece

Certain countries apply a model for national transport restricting both the number of authorised carriers
and the size of their fleet, with new entrants only allowed to compensate the exit of other players from
the market.
As noted by the World Bank and IRU in their 2016 report on Road Freight Transport Services Reform:
Guiding Principles for Practitioners and Policy Makers: “this is a highly restrictive model whereby all
access conditions are under strict control. Market forces are highly subdued and replaced by central
decision making with a high degree of potential error” (World Bank/IRU, 2016, pp. 31-32[45])
In Greece, the government was in charge of issuing licences to hauliers authorising them to carry goods
and in 1970 decided that 33 000 licences were sufficient to satisfy the country’s freight transport
demands; it therefore stopped issuing additional licences. The law then stipulated that the total number
of permits could be increased only if an appropriate study documented a specific need. In practice, until
the deregulation of the sector, only a couple of such studies were conducted and none recommended
the issuance of more for-hire permits (Katsiardis, 2019[47]). As a result, the total number of for-hire truck
permits remained fixed for nearly 40 years and the cost of licences rose, reaching EUR 250 000 a truck
in 2010. This system protected the profession from competition from new entrants, which was in turn
translated into a lack of incentives to innovate. Furthermore, since the same rules did not apply to
transport for own account, there was a shift to internalising such transport services. More than
1.4 million vehicles were supposed to carry only their companies’ products, thus leading to low

52 
economies of scale and low use of capacity. Indeed, given that own-account trucks cannot move other
firms’ products, their share of empty-vehicle kilometres was higher than that of for-hire trucks. In 2010
in Greece, trucks travelled empty 41% of the time, compared to the European average of 25%
(Katsiardis, 2019[47]).
Since 2010, Greece has introduced reforms to liberalise the road freight transport sector. The first piece
of legislation was passed in September 2010. This framework allowed the issuance of new for-hire
permits to all firms that wanted to enter the market and that met certain qualitative and financial
requirements. Prices could be freely set for trucking services. To lessen disruption to the sector, a
three-year transition period was enacted, during which new entrants could obtain a permit subject to a
fee of EUR 75 000 for the heaviest vehicles in 2010, which decreased to zero over the three-year
period. Then, pursuant to Law No. 1/2012, according to the Law No. 3887/2010, Greece has removed
entry barriers and price constraints in order to reduce transport costs, increase competition, create
economies of scale, and improve service quality.
Following these reforms, since 2013, the share of road freight transport by hire or reward has increased
to the detriment of own-account freight transport (see figure below).
Figure 3.2. Share of total freight transport for own-account and hire-or-reward (thousands,
tonnes) in Greece, 2013-19
Own-account Hire or reward
100%
90% 23% 26%

16% 21% 23% 26% 27% 27%
80%
70%
60%
50%
40% 77% 74%

84% 79% 77% 74% 73% 73%
30%
20%
10%
0%
2010 2013 2014 2015 2016 2017 2018 2019
The improvements in the regulatory framework and the increased maturity of firms in the sector led to
a significant increase in the technical efficiency of road freight transport firms. After the reform, the
average share of empty vehicles per kilometre decreased by 1.6 percentage points for own-account
trucks and by 2 percentage points for for-hire trucks (Katsiardis, 2019[47]).
Note: Data for 2011 and 2012 were not available.
Source: Eurostat, https://appsso.eurostat.ec.europa.eu/nui/submitViewTableAction.do (accessed on 19 August 2020); (World Bank/IRU,
2016[45]), and Centre of Planning and Economic Research (KEPE, 2019), Structural Reforms in Greece 2010-2018,
www.dx.doi.org/10.2873/100377; (Katsiardis, 2019[47]).
Requiring ownership of a garage before a licence is granted or setting other minimum requirements as
described above may prevent new players, especially SMEs, from entering the market as it significantly
raises the cost of entry and requires operators to invest before being guaranteed a permanent operating
licence.

 53
Recommendations. Limitations on the number of licences to operate as a carrier should be avoided and
market-access requirements – such as professional competency or technical conditions for vehicles –
should be clearly laid down in the law. Asset requirements for market entry should not result in excessive
burden for operators or limit market entry beyond what is necessary to achieve specific legitimate policy
objectives.
3.3. Operational constraints
Description of obstacle. While liberalisation brings well-known benefits, regulations are still needed to
alleviate risks arising from the operation of vehicles on road infrastructure, such as dangers and nuisances
for other vehicles, pedestrians, and local residents. Safety and environmental regulations aim at minimising
accidents and nuisances to the environment, such as pollution and noise levels.
The OECD has identified various regulations that impose operational constraints upon firms that go beyond
what is necessary to achieve the specific policy objectives and might create barriers to competition. They
include provisions on:
1. restricted areas of operation
2. number of vehicles that a firm can register
3. roadworthiness inspections.
These regulations are not always the least restrictive method of achieving the pursued public policy
objective.
For example, the OECD found that in certain member states regulations impose (or grant authorities the
power to impose) limits on where licensees can provide road transport services, by determining ex ante
permissible routes or by limiting licence validity to a certain region. This is the case, for example, in
Thailand, where the Central Land Transport Control Board (for the Bangkok area) and the Provincial Land
Transport Control Board (for the rest of the country) have the power to issue decisions of general
application that set vehicle routes. Although this provision is currently only applied to passenger transport,
the broad definition of “transport” in the law, encompassing both passenger and freight transport, 33 grants
the two authorities the power also to set routes for freight transport service providers. In Myanmar, licences
for the transport of goods for hire and those for transport of goods for own account can also be restricted
for a specific region or a specific route.
In other member states, the OECD found regulations limiting the size of an operator’s vehicle fleet
throughout the duration of its licence in different ways. Certain regulations impose a minimum number of
vehicles in order to prevent the atomisation of road transport companies, with the aim of achieving
economies of scale and creating stronger firms with larger networks capable of competing with foreign
operators.34 This is the case, for example, in Viet Nam, where operators providing freight transport services
by road further than 300 kilometres must have a minimum number of vehicles, which depends on where
their office is located.35
Other countries limit the number of vehicles that a firm is able to register. In Brunei Darussalam, according
to market participants, only two trailers can be registered for each tractor unit. As a result, if a tractor unit’s
two trailers remain at a customer’s premises while loading and unloading cargo, the tractor cannot be used
with other trailers to transport different goods at the same time. In Malaysia, the number of trailers that can
be registered to each tractor unit is also limited. 36 In addition, certain business entities (for example, sole
proprietorships and partnerships) can apply for a maximum of two sets of licences: these can be used for
two sets of vehicles (two tractor units and two trailers) or two licences for “rigid vehicles” (listed in the
guidelines) or one set of vehicles consisting of one tractor unit and one trailer and one rigid licence. This
limits the size of commercial vehicle operators’ fleets and so limits companies’ use of their resources.

54 
All countries have regulations in place to ensure vehicle safety and driver competence. While suitable
safeguards are necessary, certain provisions are unclear or require excessively burdensome inspections
that, compared to similar provisions in other countries, go beyond what is necessary to achieve a legitimate
policy objective. For example, the Philippines currently has no clear implemented standards and rules for
vehicle roadworthiness, with market participants complaining about the absence of inspection facilities. 37
In Indonesia, commercial vehicles (including trucks and trailers) are subject to periodic testing for
roadworthiness; the first test must be carried out within a year of the issuance of the vehicle’s registration
certificate,38 and then every six months.39
Harm to competition. Rules that restrict operational areas and routing limit the extent to which licensed
operators can compete across an entire country and may have a negative impact on the efficiency of
operations and competition. As noted by the OECD, “restrictions on areas of operation, routing and
backloading had a direct effect, constraining the level of vehicle utilisation” (OECD, 2001[48]).
The limitation on how many trailers can be registered (as opposed to used) for each tractor unit may limit
a company’s transport capacity – by reduced possible use of each tractor unit – and so increase
transportation costs for each freight unit.
Minimum fleet-size requirements may aim to combat industry fragmentation, but they can prevent start-
ups or SMEs to enter the market or more generally reduce firms’ flexibility to respond to changing business
conditions, increase their costs, and deter investments. Faced with limited consumer demand and unable
to scale down their activities below a certain level, companies could be forced to exit the market completely
or maintain the minimum fleet size and so have to absorb excessive and unnecessary costs.
Finally, a lack of clear roadworthiness standards and rules can cause uncertainty and deter market entry,
while overly frequent inspections may increase costs for market participants unnecessarily, through both
administrative burdens and usage time lost while a truck is being inspected.
Based on OECD country analysis, the described provisions go beyond what is necessary and
proportionate to achieve the pursued policy objective. For example, the requirement to have twice yearly
inspections instead of annual inspections might be stricter than what is necessary in order to ensure safety
and consumer protection.
International comparison. Many OECD countries have significantly liberalised freight transport by road.
As noted in the OECD Background Paper “Competition Issues in Road Transport”, the liberalisation of the
trucking sector in OECD countries led to several benefits, including a significant reduction of rates (OECD,
2001[48]).
The 2018 OECD Competition Assessment Reviews: Portugal found that on long-distance bus services for
scheduled direct routes above 100 kilometres (locally called “high-quality services”), the law required
companies to have at least six buses of category III (heavy passenger vehicles with more than nine seats)
and an employee as a crew member of each bus (OECD, 2018, p. 81[49]). Similarly, to be allowed to offer
car-rental services operators had to have a minimum number of seven vehicles for the rental of passenger
cars and three vehicles for the rental of motorcycles, tricycles and quadbikes. Finally, licensing of truck-
rental services required operators to have a minimum number of vehicles licenced in Portugal. To rent
trucks weighing less than 6 tonnes, they had to have 12 vehicles or 6 vehicles if they were also renting
cars; to rent trucks above 6 tonnes, they had to have 6 vehicles, unless the company had a total minimum
fleet tonnage of 50-tonne gross weight.
In the OECD’s view, the imposition of a minimum number of vehicles to start a business limited operators’
ability to enter markets and increased their operational costs, and was liable to lead to higher prices for
consumers. The required initial investment was a particular deterrent to SMEs or entrepreneurs wishing to
enter the market.

 55
Similarly, OECD Competition Assessment Reviews: Tunisia found that regulations on road freight transport
imposed restrictions on fleet size according to the type of entity and market segment (OECD, 2019,
p. 161[50]). In particular, a sole proprietorship could operate using only 1 heavy goods vehicle (HGV, which
could be a truck, an articulated vehicle or a double-articulated vehicle), but road freight companies had to
use or lease a minimum of 18 HGVs, at least 6 of which had to be motor vehicles (the remainder could be
trailers without engines). Furthermore, such companies were also subject to a minimum total tonnage
requirement for their fleet of 300 tonnes.
The OECD found that these regulations created a gap in the road-haulage services sector, making it legally
impossible to establish a road-haulage operator with a fleet of between 2 and 17 HGVs. A sole
proprietorship that wished to expand its business was required to purchase or lease 17 additional HGVs
at the same time rather than through gradual and organic growth. As a result, road-haulage companies
faced limited competition from smaller and more flexible businesses, and consumers that could have been
served by a mid-sized company had only limited options.
Second, these requirements limited the flexibility of companies to respond to changing business conditions
by scaling down their activities. Companies could either fully exit the market or maintain the minimum fleet
size, regardless of consumer demand, which led to substantial costs for participants and potentially
deterred investments, leading to sub-optimal investment and innovation in the sector.
Recommendation. The OECD makes the following recommendations.
1. Review regulations or provisions that limit the areas in which commercial vehicle licensees can
operate, so that they can provide their freight transport services without any geographic restrictions.
2. Review regulations or provisions that limit firms’ fleet size, by restricting new-vehicle registrations
a legitimate policy objective (such as safety or the protection of the environment).
Ensure that regulations imposing safety requirements and roadworthiness inspections are clear
and proportionate to the pursued policy goal and do not generate excessive costs. For instance,
vehicles should be kept off the road for inspections no longer than necessary and requirements
could take into account a vehicle’s age and the number of kilometres travelled.

56 

 57
4 Water freight transport

Maritime and inland water transportation plays a fundamental role in the movement of goods around
ASEAN, while promoting international trade and economic growth. As one of the most fundamental
services available to cargo owners within a complex value chain, it remains one of the cheapest modes of
shipping goods within ASEAN member states and internationally. An efficient maritime transport system
can have significant spillover effects for the whole economy.
The provision of maritime transport services is dependent on ports, which serve to link ships to other modes
of transportation. Most ports have an extensive infrastructure network that typically includes quays, roads,
rail tracks, storage and stacking areas, repair facilities, as well as fences or walls to securely enclose the
port (OECD, 2011[51]). In addition, ports include superstructures constructed above the main infrastructure
comprising terminal buildings, warehouses and cargo-handling equipment, such as lifting cranes and
pumps.
Ports are managed by port authorities, which are charged with co-ordinating port activities, investing in
infrastructure, and operating some or all of the port services. They are also responsible for safety services
and navigational aids, including navigational lights, radar and radio, as well as traffic systems. Port
authorities can be designated by port institutions and port administrations, and should be distinguished
from national port authorities, which are the institutions responsible for sectoral regulation.
Based on an analysis of legislation in each member state, this chapter examines policy measures that
might be restricting competition in the market for water freight transport services and for port services in
ASEAN. It will introduce the most frequent barriers identified by the OECD team in the individual country
competition assessment reviews. Additional member state-specific recommendations are set out in those
country reports. In particular, this chapter discusses:
1. cabotage policy in maritime transport
2. licensing requirements for national water transport
3. the role of tenders in the provision of port operations or port services
4. the regulatory and operational overlap of some port authorities in ASEAN
5. the provision of pilotage services by port authorities
6. price regulation of port services.
4.1. ASEAN single shipping market and cabotage policy
Description of obstacle. ASEAN member states have set the target of achieving an ASEAN Single
Shipping Market (ASSM) in which ASEAN shipping service providers would face no restrictions on their
operations or the establishment of companies across the region, subject to domestic regulations. This
target is in line with the broader vision of the ASEAN Economic Community Blueprint (AEC), which aims
to create a region with free movement of goods, services, investment, capital and skilled labour. 40

58 
Between 2010 and 2019, the throughput of the region’s container ports grew by 53.4%, outpacing the
49.5% growth of global container throughput. These initiatives aim to accompany the continuous growth
of the ASEAN shipping market. Over the same period, certain ASEAN countries registered a spectacular
percentage growth of the container port throughput, with Myanmar growing by 234.5%, Brunei Darussalam
by 202.9% and Cambodia by 172.3%.41
Notwithstanding this rapid growth and the objective of an ASSM with little restriction to the free flow of
services and investment, many ASEAN countries continue to have domestic maritime cabotage restrictions
that prevent foreign or ASEAN companies to carry freight on a route with origin and destination points
within the same country. Neither are these limitations addressed in the recent Regional Comprehensive
Economic Partnership Agreement signed in November 2020 by Asia-Pacific countries (all ASEAN member
states, plus Australia, the People’s Republic of China, Japan, New Zealand and Korea), as in Chapter 8,
Article 8.2 cabotage in maritime transport services is excluded from its scope of application.
Generally, maritime cabotage is practised by ASEAN countries that are either archipelagic or have an
extensive coastline. Brunei Darussalam, Cambodia, Lao PDR and Singapore do not practise maritime
cabotage restrictions, while other ASEAN countries continue to do so. In archipelagic countries like
Indonesia and the Philippines, maritime connectivity is of great importance for domestic commerce and
external trade, while maritime cabotage regulations may constrain the development potential of coastal
shipping which is important to link different areas of the same country.
Figure 4.1 shows that in certain ASEAN countries restrictions on foreign entry in the maritime freight
transport sector are higher than the OECD average. Cabotage policy is one of the most prominent sector-
specific restrictions included in the category of foreign-entry restrictions, alongside restrictions to own and
register vessels under the national flag, limitations on port-related services, and cargo-sharing agreements.
Harm to competition. Prohibitions on foreign vessels transporting domestic cargo between ports within
the same country prevent foreign firms from entering national freight transportation markets. This may in
turn lead to monopolies on certain routes or more broadly favour market concentration, due to restricted
market access (Suffian et al., 2013[52]). Furthermore, cabotage restrictions may increase costs of products
by forcing carriers to use more expensive domestic services and so lead to higher operational costs. This
may negatively affect trade, and limit the quality of logistics services, for instance, in terms of weaker direct
links in global trade lanes.
In certain countries, market participants have stated that cabotage restrictions can contribute to empty
containers accumulating in some ports and shortages in others due to inefficient allocation of resources.

 59
Figure 4.1. Services trade restrictions on foreign entry in maritime freight transport services, 2019
Score OECD average
0.6
0.5
0.4
0.3
0.2
0.1
0
Indonesia Malaysia Thailand
Note: The OECD’s Services Trade Restrictiveness Index (STRI) has a scale between zero and one, with one being the most restrictive. For
ASEAN countries, data is available only for Indonesia, Malaysia and Thailand. Data in this graph only refer to restrictions on foreign entry,
including cabotage.
Source: OECD Services Trade Restrictiveness Index, https://stats.oecd.org/Index.aspx?DataSetCode=STRI#.
Some studies have shown that restrictions on shipping services are costly, particularly in developing
countries. In exporting countries, lowering restrictions such as cabotage may have a greater effect on
margins than reducing restrictions on the commercial presence of foreign suppliers (Kang, 2000[53]).
As certain authors have highlighted, “relaxing cabotage, even partially, would improve maritime
connectivity by opening the market, increasing economies of scale, and raising competitiveness” (Zen
et al., 2019[54]). For instance, the use of larger and more advanced foreign vessels can reduce costs by
taking advantage of economies of scale and cargo optimisation (UNCTAD, 2017[55]). International vessels
with spare capacity would be allowed to pick up extra cargo once arrived at the port of entry and then ship
domestic cargo on the domestic leg of their journey. Also, allowing an international ship to pick up cargo
in several ports within a country may be cheaper than shipping cargo to the main international port on
smaller ships that lack scale and then transferring them to an international ship.
Recommendation. The OECD recommends one of three options.
1. Open the domestic shipping market to ASEAN competition by lifting the ban on ASEAN vessels
carrying domestic cargo.
2. Amend the cabotage rules to allow foreign ships to carry their own cargo (and other foreign cargo)
domestically. For example, allowing ships to travel domestically to the port of final call after arriving
at a first port of entry, subject to ex post analysis of the impact of the amendments. A further step
would then be to allow foreign ships to carry other domestic cargo from the port of entry to the port
of final call if the foreign vessel has capacity after unloading goods at the port of entry.
3. Allow international ships to operate in the domestic shipping market on specific routes where there
is demand and conduct an evaluation on demand every one to three years to consider whether to
liberalise additional routes.

60 
4.2. Licensing requirements for maritime freight transport
Description of obstacle. All ASEAN member states regulate access to their maritime freight
transportation markets. In general, national regulations require operators to hold a licence, but some
impose burdensome requirements that result in unnecessary or excessive barriers to entry in light of the
pursued policy objective. Licensing schemes are often in place for consumer protection or safety
objectives. This report does not consider the need for the relevant licences themselves, but rather identifies
examples of restrictive licensing requirements.
The individual country competition assessment reviews identified examples of excessively restrictive
licensing requirements; these included:
 Economic needs tests: as part of the licensing process, the relevant authority may carry out an
assessment of the applicant’s business and whether its proposed services are needed. In the
Philippines, for example, licensing body MARINA requires applicants to submit a feasibility study.
MARINA has broad discretion to consider the impact of the proposed service on the local area and
evaluates the “economic and beneficial effect” to the port, province or region that the shipper
proposes to serve.42 It can also assess the financial capacity of the operator to: “provide and
sustain a safe, reliable, adequate, efficient and economic service in accordance with the standards
set by the government regulation”.43 In Indonesia, to obtain a sea transportation business licence,
applicants must submit a business plan and shipping business plan.
 Vessel ownership requirements: licence conditions include technical requirements, which may
stipulate, for example, that a vessel be seaworthy, be flagged in the country in question, and be of
a certain size. The OECD identified examples of excessive technical requirements in some
member states. For example, in Indonesia, a licence applicant is required to own the vessel, and
the applicant must submit proof of ownership.44
Harm to competition. While regulations very often have legitimate policy objectives, they can impose an
excessive burden on operators or limit market entry beyond what is strictly necessary to achieve those
policy objectives.
The economic-needs assessment is likely in place to help an authority support the economic development
of ports, the shipping sector and the economy generally. The requirements may also aim to control who
can enter the market and the exact services provided. They aim to protect consumers by ensuring that
new entrants have a viable business model.
In an economic-needs test, the government authority assesses the need for a new entrant’s services. In
many member states, it is not clear from legislation how authorities conduct this assessment in practice;
for example, the methodology behind decisions about unsatisfied demand for maritime transportation or
whether any newly proposed service brings benefits to a region. Moreover, the economic-needs test
involves the government authority judging who should enter the market– such as the Philippine authorities
evaluating feasibility studies provided by applicants or Indonesian evaluations of business and shipping
business plans – even though the authority may not have all the necessary information or skills to assess
new entrants’ viability and reliability. This may lead to worse outcomes than allowing the market to
determine who enters. The authorities’ discretion and lack of objective criteria may result in discrimination
and lead to the selection of new entrants that do not deliver the best value to consumers; for instance,
business plans and feasibility studies are based on forecasts that may not materialise. In addition,
submitting these documents may result in higher costs of entry especially for smaller companies; for
example, if authorities require more information than new entrants would otherwise include in their
business plans, such as estimates of their likely economic impact.

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The requirement to own a vessel prevents service providers who wish to lease rather than purchase
vessels from obtaining a licence and significantly increases the cost of entry for shipping companies. The
purchase of a vessel constitutes a significant financial liability, particularly when compared to chartering or
leasing, and limits the potential number of operators able to compete in the market. In countries where a
significant proportion of the world’s merchant fleet is based – such as the People’s Republic of China and
the United States – shipping companies are not required to own a ship to operate. 45 In fact, the proportion
of global fleet capacity provided by companies leasing ships increased significantly in recent decades, from
16% in 1995 to 54% by the end of 2018, according to one industry source.46 By contrast, ownership
requirements may restrict the number of suppliers, reduce competition between suppliers, and result in higher
prices or less desirable contract terms for customers. This will decrease competitive pressure for established
operators and favour larger potential entrants with the ability to purchase a vessel over smaller firms.
Recommendation. The OECD recommends removing excessive licensing requirements, such as vessel
ownership, economic-needs tests and the submission of business plans. If an economic-needs test is
maintained, the OECD recommends that clear and transparent guidelines be established to detail the
criteria used to judge economic needs and to limit how discretion may be exercised.
4.3. Tenders in selection of port operators or port services providers
Description of obstacle. The participation of the private sector and the degree of competition in the
provision of port services depends mainly on the choice of the port-management model. Although port
management varies substantially across jurisdictions, there are essentially four models, depending on the
different roles attributed to the public and private sectors (see Box 4.1).47
Box 4.1. Port management models

Four basic port management models
1. the public-service port is fully owned and managed by the state, often through a state-owned
port authority, which carries out the roles of investing and providing all the port services
2. the tool port involves the public and private sectors with the (state-owned) port authority
managing the port and making all investments, while providing private operators with the tools
to operate main port activities, such as cargo-handling
3. the landlord port is another hybrid model, in which the port authority is in charge of managing
and investing in the main infrastructure, while private operators invest in superstructure (such
as equipment and terminal buildings) and operate main port activities
4. the fully privatised port is fully managed and operated by a private entity, which either owns
the port land or has the exclusive rights of exploration attributed through a concession.
The landlord port is the predominant model in OECD countries, particularly for large- and medium-size
ports, while models with stronger participation by the public sector are more commonly observed in
developing economies (World Bank, 2007, pp. 82-83[56]). However, non-OECD countries have also
adopted the landlord model; for example, a 2016 survey by UNCTAD found that 65% of the 21 ports in
Angola, Benin, Dominican Republic, Ghana, Indonesia, Namibia, Peru, the Philippines, and Tanzania
follow the landlord model with a mix of participants from the private and public sectors (UNCTAD,
2016[57]). UNCTAD noted “a global trend towards greater private sector participation, especially in port
service delivery” (UNCTAD, 2016, p. 16[57]). Some of the strengths of the landlord port model include
the possibility of introducing competition in the provision of port services and fostering private
investment in the port superstructure. A challenge to the landlord port model is the increased

62 
concentration and co-operation in liner shipping, creating oligopsony that most competition authorities
have not dealt with (ITF, 2018[58]). The consequence of this is increased co-operation and mergers
between terminals in the same port, transforming the intra-port competition of the classical landlord port
model. Another challenge is related to the fact that various shipping companies also operate terminals
in ports, using privileges related to their position as shipping company (e.g. exemptions from taxation
and competition law) that independent terminal operators do not enjoy, resulting in unfair competition
(ITF, 2019[59]). In ASEAN, many different management models are in place, even in different ports within
each member state, with the role of the private sector more or less prominent depending on the country.
In Viet Nam, for example, the public-service port model is observed. There is no port authority and
seaports are managed directly by a government agency, Vietnam Maritime Administration
(VINAMARINE) (World Bank, 2018, p. 40[60]). Some ports that are not located directly on the sea but on
inland waterways that lead to the sea are managed jointly by Vietnam Inland Waterway Administration
(VIWA) and VINAMARINE. In Myanmar, the Port of Yangon has followed a landlord model since a
privatisation programme was launched in the 1990s (Win, Ganbat and Nam, 2015[61]). Many member
states have recently put in place port reform. For some, this has involved new or increased private-
sector involvement in port operations; for example, in Indonesia, after port-sector restructuring in 2018,
the legislative monopoly in commercial ports of state-owned enterprise Pelindo was removed. Private
companies are now able to enter the market and operate these ports. Their participation is however
limited to ports that have opened since the reform.
Table 4.1. Main differences between the basic port management models
Ownership of Ownership of Cargo-handling

Other operations
infrastructure superstructure operations
Public service port Public Public Public Public
Tool port Public Public Private Public or Private
Landlord port Public Private Private Public or private
Fully privatised port Private Private Private Private
Source: OECD Competition Assessment Reviews Portugal: Volume I – Inland and maritime transports and ports (OECD, 2018, p. 188[49]),
adapted from (World Bank, 2007, p. 85[56]).
In certain member states, legislation allows for the operation of ports or terminals or the provision of port
services by the port authority or by other entities, whether private companies or SOEs. Concession
arrangements tend to be used to allow private-sector participation in the operation of a port or terminal or
for the provision of port services, such as cargo handling, pilotage, towage or ancillary services.48 Licensing
can be used as an alternative that allows the participation of (and competition between) multiple operators.
Concessions are particularly useful when competition in-the-market may not be viable; for example, where
demand does not allow for more than one supplier given high fixed costs or where there are space constraints
or safety, security or public interest concerns. As noted by the OECD in 2019, since competition in-the-market
can be inefficient or impossible, competition for-the-market can be a way of addressing the market failure of a
natural monopoly and deliver advantages to consumers (OECD, 2019[62]). In these cases, the selection
process of these operators is of upmost importance to safeguard the aim of enhancing competition.
In many member states there is room for improvement in such selection processes. The OECD’s country
reviews identified several issues, including:
1. Discretion on whether to hold an open tender: port operators can typically be selected by open
tender or direct assignment. In a few member states, including Myanmar and Indonesia, port
authorities have discretion on whether to hold tenders or not, 49 but legislation does not set criteria
about when direct assignments are allowed.

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2. Guidelines on tender processes: while port authorities in member states are often able to issue their
own tender notifications, they do not issue publicly available tender guidelines to inform the process.
3. Guidelines on port concessions: some member states have no regulatory guidance on the
design of concessions, for instance, concerning duration, investment targets or quality of service
requirements. While concession agreements are not all publicly available, the OECD understands
that the duration of a concession is often based upon agreements between the concession provider
(whether government or port authority) and the concessionaire, taking into consideration factors
such as investment, return on investment and port location.
Harm to competition. The objective of these selection processes is to develop ports, terminals and port
services, or to allow private involvement. The use of concessions can allow the development and
expansion of ports, while taking the financial and risk burden off governments, reduce monopoly
shortcomings, and encourage efficiency (World Bank, 2007, p. 114[56]). Where a concession grants an
exclusive right, the concessionaire effectively operates as a monopolist with other (public or private)
operators banned from the market. Under these circumstances, it is even more important to conduct a
competitive tender to select the most suitable supplier, promote investment, innovation and lower prices
for port users (OECD, 2014[63]). Competition concerns arise if selection is made without a tender process
or extended automatically.
If selection criteria are not clear or easily accessible, more efficient market players may be excluded and
prevented from entering the market. The services provided by the concession holder could therefore be of
lower quality. Poor design of a concession process, frequent use of direct assignment and criteria that
favour incumbents may lead the decision maker to discriminate between service providers and discourage
efficient entry.
Further, the design of the concession is critical. Some concession design factors such as long durations
(without appropriate safeguards),50 lack of investment requirements and extension through direct
negotiation can harm the competitive process (see Box 4.2).
Box 4.2. OECD best practices in public procurement, concessions and fighting bid rigging
The operation of ports or terminals and the provision of certain port services often function as
concessions or public-private partnerships governed by similar rules to public procurement. The
OECD’s comprehensive work on public procurement has led the organisation’s council to make a
number of recommendations, including:
 a public-procurement system should be transparent at all stages of the procurement cycle
 the integrity of a public-procurement system should be preserved through general standards
and procurement-specific safeguards, such as internal training, and compliance measures for
relevant stakeholders
 access to procurement opportunities for potential competitors of all sizes should be facilitated
 transparent and effective stakeholder participation should be fostered in the design of public-
procurement systems
 digital technologies should be employed to support appropriate e-procurement innovation
throughout the procurement cycle to the greatest extent possible
 workforces should receive training to develop their public-procurement know-how
 oversight and control mechanisms should be applied to support accountability throughout the
public-procurement cycle, including appropriate complaint and sanctions processes.

64 
The OECD has also worked specifically on concessions and highlighted the importance of concession
design. One crucial factor is the duration of the contract, as this can have a significant effect on
investment. For example, while a longer period encourages the concessionaire to make the necessary
infrastructure investments at the beginning of the period, that incentive diminishes as the concession
near its end.
How a concession is awarded is also critical. Auctions are considered the most effective award method.
Although negotiations are an option, experience has shown that public authorities are sometimes at a
disadvantage to their private-sector counterparts. It is also important that a country’s competition
authority is involved in the concession process, including tender design.
The OECD has also undertaken significant work on the design of pro-competitive tenders and fighting
bid rigging.1 The OECD Guidelines for Fighting Bid Rigging in Public Procurement are part of the OECD
Council Recommendation adopted in 2012, which encourages governments to assess their public-
procurement laws and practices to promote more effective procurement and reduce the risk of bid
rigging in public tenders. The Guidelines for Fighting Bid Rigging help to identify:
 markets in which bid rigging is more likely to occur
 methods to maximise the number of bids
 best practices for tender specifications, requirements and award criteria
 procedures that inhibit communication among bidders
 suspicious pricing patterns, statements, documents and behaviour by firms.
Note: For an overview of the OECD’s work in procurement reform, see
1
www.oecd.org/competition/cartels/fightingbidrigginginpublicprocurement.htm.
Source: The OECD Recommendation on Public Procurement (www.oecd.org/gov/ethics/OECD-Recommendation-on-Public-
Procurement.pdf); the OECD Recommendation on Fighting Bid Rigging in Public Procurement
(www.oecd.org/daf/competition/RecommendationOnFightingBidRigging2012.pdf) and the Guidelines for Fighting Bid Rigging in Public
Procurement (www.oecd.org/daf/competition/guidelinesforfightingbidrigginginpublicprocurement.htm). Adapted from (OECD, 2019[50]) and
(OECD, 2014[63]).
Recommendations. The OECD has three cumulative recommendations.

1. Use open tender processes rather than direct negotiation in the selection of terminal operators and
service providers. Concessions should not be extended automatically and incumbents should not
be granted preferential treatment when renewing concessions.
2. Issue clear and publicly accessible tender guidelines for the selection of port operators or service
providers. Tender processes should be open, transparent and based on fair and non-discriminatory
criteria. Technical requirements should ensure a level playing field and so allow new entrants.
3. Issue guidelines on concessions, including the duration, renewal and investment requirements, to
provide sufficient incentives to the chosen company, while allowing re-tendering and making the
market contestable.
4.4. Overlaps in the regulatory and operational functions of port authorities
Description of obstacle. In ASEAN, as around the world, ports are typically governed by port authorities
or equivalent bodies; these “may be established at all levels of government: national, regional, provincial
and local” (World Bank, 2007, p. 77[56]).Port authorities can have a range of powers and functions, including
implementing investment and financial and labour policy; awarding concessions to use port infrastructure
and provide port services; licensing port services; setting port tariffs; and overseeing safety considerations.

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In several ASEAN member states, the OECD has identified overlaps in the regulatory and operational
functions of port authorities.
 The Philippine Port Authority (PPA) has overlapping regulatory and commercial functions. For
example, it both regulates private-sector service providers and receives a share of their revenues,
while also being able to provide port services itself. As a government-owned and controlled
corporation (GOCC), PPA is required to remit at least 50% of its annual net earnings to the
government as dividends, giving it an incentive to maximise revenues.51 Current government
initiatives are seeking to reform the administration of ports in the Philippines and provide for the
separation of PPA’s regulatory, commercial and development functions.52
 The Port Authority of Thailand (PAT), a state-owned enterprise (SOE) that runs the country’s
five major ports under the supervision of the Ministry of Transport, has regulatory and supervisory
powers, and operational functions.53 In practice, this means that PAT operates as the regulatory
authority for publicly owned ports and, for example, has the power to set tariffs for port services,54
to determine usage charges for its ports, and to issue safety regulations. At the same time, PAT
can provide port services, often in competition with private operators (Rattanakhamfu et al., 2015,
p. 27[64]).
Harm to competition. In some member states, the port authority both offers port services and regulates
and monitors them. This may not provide sufficient incentives for the delivery of efficient and innovative
services to port users. For instance, a port authority is incentivised to set fees for its operational arm higher
than those that an efficient operator would charge.55 Certain member states have no independent regulator
for the port sector. Independent regulators are present worldwide in utility sectors, such as in electricity,
water and telecommunications, in the transportation sector and in the financial sector (see Box 4.3 for a
discussion on independent regulation). They are notably used to “improve market efficiency and tame the
conflict of interest stemming from the dual role of the state as owner and regulator” (Bortolotti, 2012,
p. 823[65]). Another study noted a positive relationship between “the level of regulatory independence and
economic welfare” (Kirkpatrick and Parker, 2012, p. 35[66]), citing literature that has shown regulatory
independence having a positive impact on investment incentives and behaviour (Kirkpatrick and Parker,
2012, p. 35[66])and contributing to “confidence in the consistency and stability of the regulatory
environment”. In particular, the independence of the regulator may provide insulation from political
involvement, which could undermine credibility of price controls and reduce return on investment.
If a port authority competes with other service providers while also setting the rules, it may have an
incentive to discriminate in favour of its own operational arm. For example, it may implement burdensome
licensing requirements on service providers. In the OECD Competition Assessment Reviews: Romania,
the OECD found that while the port authority could provide pilotage services, private pilotage operators
were subject to an authorisation regime and had to employ a minimum number of pilots (OECD, 2016[67]).
A port authority may also have an incentive to set or approve high tariffs for ports services if it is funded
through the generated revenues; for example, in the Philippines the PPA regulates tariffs paid by port users
for services such as cargo handling and benefits directly from any rate increase as it receives a percentage
of service providers’ revenues. This institutional set up may lead to conflicts of interest and possibly to
excessive fees.56
In certain member states, the incentive to raise prices is partially mitigated by regulation. One approach,
used in Cambodia57 and Viet Nam,58 is to designate another authority, such as a ministry, to set rates.
Another approach, which may complement the first one, is to establish a consultation or negotiation
process between the service provider, such as towage services offered by the port or by a third party, and
users. Under this process, the service provider would propose charges to port users and the final charges
would take account of their feedback. This approach is followed, for instance, in Indonesia and Singapore.

66 
Box 4.3. The importance of independent regulation

The OECD report, The Governance of Regulators, explains that independence is of upmost importance
for the quality of regulatory decisions: “Establishing the regulator with a degree of independence (both
from those it regulates and from government) can provide greater confidence and trust that regulatory
decisions are made with integrity” (OECD, 2014, p. 47[68]). It is important to create an independent and
structurally separate body.
The 2012 OECD Recommendation of the Council on Regulatory Policy and Governance explains that
“independent regulatory agencies should be considered in situations where:
 There is a need for the regulatory agency to be independent in order to maintain public
confidence.
 Both the government and private entities are regulated under the same framework and
competitive neutrality is therefore required.
 The decisions of regulatory agencies can have significant economic impacts on regulated
parties and there is a need to protect the agency’s impartiality” (OECD, 2012[69]).
Is there a need to create an independent regulator of ports?

An independent regulator is set up as part of certain port-reform projects with functions including
monitoring pricing and investment, and preventing anticompetitive behaviour (UNCTAD, 2016[57]).
UNCTAD found that seven of the 21 ports in Angola, Benin, Dominican Republic, Ghana, Indonesia,
Namibia, Peru, the Philippines, and Tanzania were “subject to market control by an independent
regulator” (UNCTAD, 2016[57]). The study assumed that the remaining ports were regulated in a similar
way by a government department.
The World Bank explains that a port-sector regulator can be useful where there is little or no interport
competition and port operators are able to use their market power to raise prices. Such situations could
enable anticompetitive conduct: “The establishment of a port sector regulator should only be effected
in the event of serious threats to free competition within the port. It should preferably have the character
of an arbitrator instead of a court of law, and be accepted by the port community as being independent”
(World Bank, 2007, p. 89[56]).
An independent regulator may be useful during the initial stages of liberalisation, during which both
public and private port operators may compete, in order to ensure effective and fair competition (World
Bank, 2007, p. 102[56]). During liberalisation, the government may otherwise own and regulate the
regulated incumbent and new entrants.
Recommendation. The OECD recommends a clear separation between the regulatory and operational
functions of port authorities to avoid real or perceived conflicts of interest.
4.5. Provision of pilotage services by port authorities
Description of obstacle. Pilotage is a service provided by a pilot with local knowledge of the specific port
and skills that enable him or her to conduct the navigation and manoeuvring of the vessel within the harbour
or in the area around it. Generally, pilotage is compulsory in the port area for safety reasons. Unsafe
navigation inside a port poses risks for passengers and other port users, cargo, and port infrastructure
(which can interrupt the functioning of a port) and can result in high environmental costs to the wider
population. This is particularly true for vessels carrying dangerous cargo.

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Around the world, pilotage services are generally offered by:

1. governments (either federal or local)
2. government-controlled entities, such as a port authority or other public entity
3. the private sector.
Each of these models for the provision of pilotage services can be implemented differently and hybrid
models are often in place. For instance, the different responsibilities of a government and the private sector
can be allocated in a variety of ways. Generally, different models depend on which party assumes any
commercial risks (such as those posed by fluctuations in service demand or costs), different models of
day-to-day operations, and the ownership of assets such as ships and docks. More specifically, ten models
can be identified for the provision of pilotage services, as shown in Table 4.2.
Table 4.2. Overview of models for the provision of pilotage services
Description
Model 1 Pilotage service delivered by federal government
Model 2 Pilotage service delivered by state-owned enterprise (SOE)
Model 3 Pilotage service delivered by municipal, regional or provincial government
Model 4 Pilotage service delivered by stand-alone entity
Model 5 Pilotage service delivered by port model
Model 6 Pilotage service delivered by licensed pilots part of a regulated monopoly
Model 7 Pilotage service delivered by licensed pilots joined to regulated competing organisations
Model 8 Pilotage service delivered by corporation part of a regulated monopoly
Model 9 Pilotage service delivered by corporation with regulated competition
Model 10 Pilotage service delivered by shipowners
Source: Study commissioned by the Government of Canada as part of the “Pilotage Act Review” (January 2018), www.tc.gc.ca/en/reviews/inte
rnational-comparisons.html.
Models six and seven are the most common around the world. In model six, governments have no
operating responsibilities and the service is provided through a regulated monopoly by licensed pilots with
incentives to improve their service. In model seven, there is some form of regulated competition within the
market to stimulate innovation, efficiency gains and ultimately lower user costs.
In ASEAN, services are provided either by a state-controlled entity, such as PSA Marine in Singapore, or
directly by the government through a public authority, such as in Indonesia, where the port authority can
delegate pilotage services only if it is not providing the services itself.
In practice, the private sector is not involved at any stage with the service being directly provided by a
public entity, or a monopolist other than the public authority is tasked with providing pilotage services
without a competitive process. The OECD has found that potential private-sector interest in providing
pilotage services has not been assessed.
Harm to competition. Data show that in certain ASEAN countries, service users currently have the
perception that port charges are elevated or extremely elevated (Table 4.3). This may be due to several
reasons, including a lack of competition.
The OECD considers the direct and exclusive provision of pilotage services by port authorities prevents
the entry of any potential competitors, even when there is private sector interest. Without a competitive
process to select the most efficient players, public monopolies may result in cost inefficiencies and lack of

68 
innovation. Furthermore, the provision of pilotage service through such a monopoly without any
competition for the market may result in high prices due to the extraction of monopoly rents.
Table 4.3. Logistics professionals and port charges in their own countries, 2018
Country Percentage who consider port charges high or very high

Brunei Darussalam ..
Cambodia ..
Indonesia 83
Lao PDR ..
Malaysia 25
Myanmar 39
Philippines 25
Singapore 25
Thailand ..
Viet Nam 40
Note: Data are based on a survey of logistics professionals on the logistics environment in their own country. Regarding the level of fees and
charges, surveyed logistics professional answered the question about whether, compared to their experience of international logistics, port
charges were high or very high.
Source: World Bank, https://lpi.worldbank.org/domestic/environment_institutions/2018/C/VNM#chartarea (accessed on 21 October 2020).
In certain member states, even when there is a private monopolist provider of pilotage services, public
authorities maintain the ability to employ pilots and provide the service themselves, for example, when
service providers do not properly discharge their obligation. In practice, this possibility introduces a form
of competitive constraint on the monopolist service provider.
Although this possibility introduces a competitive constraint on the monopolist’s price and service offering,
the OECD considers that such competitive pressure can only alleviates to a limited extent the effects of
monopolist pilotage service provider.59 Indeed, if public authorities have not directly provided any pilotage
service themselves for a long time, the costs at which they could provide the service might be significantly
above those of the incumbent, thus limiting the extent of this competitive pressure.
In contrast, the OECD considers that competitive tendering would have several advantages, including:
1. a level of competition for the market, while addressing safety concerns that could arise from
competition in the market
2. the provision and maintenance of choice to contracting authorities to optimise cost-effective service
delivery
3. absent quality standards and associated enforcement mechanism already set out in regulations, a
competitive tendering process would grant the possibility of imposing penalties for failure to
maintain services or for non-compliance with service quality requirements established beforehand
at the tender stage (which would not be possible in a situation where pilotage services are directly
provided by the port authority).
Even when a market is small and only has room for a single service provider, a tendering model could be
an option to create a viable competition for the market. In a 2012 opinion,60 the Italian Competition Authority
(AGCM) highlighted that the competition principles should generally govern the provision of technical and
nautical services, while legal monopolies should only be limited to situations where they are “absolutely
indispensable.” Safety reasons cannot a priori justify the exclusion of any competition mechanism in the
provision of port services: “the objective of guaranteeing safety is not necessarily in conflict with

 69
competition among firms, nor with certain institutional settings that introduce the same efficiency incentives
as those of a free market.” If there is market failure to justify a legal monopoly regime and exclude
competition, authorities should consider whether competition for the market is possible in order to
maximise efficiency and reduce tariffs, while ensuring safety. In any case, this possibility must be assessed
on a case-by-case basis rather than excluding any form of competition a priori. In the AGCM’s view, if
competition for the market is preferred, open tender procedures should be regularly held.
The OECD acknowledges that the market for the provision of pilotage services has significant barriers to
entry that could potentially limit the interest in any tender process. However, such barriers to entry can be
overcome. For example, if the highly specialised nature of pilotage can result in the lack of any operator
with the necessary capacity to offer these services, the OECD considers that any new operator might need
a significant amount of time before it achieves the necessary capacity to perform pilotage services. Port
authorities can overcome this potential issue by commencing a tender process well before the services
are required.
Box 4.4 shows that the most common method of providing pilotage services in the majority of EU ports is
through private operators.
Box 4.4. Pilotage service providers in certain EU countries

In European Union ports, the operation of the main port services is mostly in private hands. Although
under significant public influence, the charts below show that the provision of pilotage services by
private operators is the most common model in EU ports both inside (47%) and outside (42%) the port
area.
Figure 4.2. Pilotage outside and inside the port area

Port authority Government Private operator Other
Pilotage outside the port area Pilotage inside the port area
9% 11%
14%
19%
35%
22%
42% 47%
Source: European Sea Ports Organisation (ESPO), Trends in EU Ports Governance 2016,
www.espo.be/media/espopublications/Trends_in_EU_ports_gouvernance_2016_FINAL_VERSION.pdf, p. 11.

70 
Recommendation. The OECD has two recommendations.

1. Member states should separate regulatory and service-delivery functions.
2. Direct provision by port authorities should be limited to cases when the private sector shows no
manifest interest in providing a service due to lack of economic viability or when the authority does
not have the capacity to run tenders. The private sector’s lack of interest should be re-evaluated
on a regular basis, in order to make sure that direct provision is not unduly restricting entry. If there
is private sector interest, member states should create appropriate legal framework so that piloting
services are tendered based on fair, transparent and non-discriminatory terms that guarantee
competition for the market, consistently with OECD recommendation under Section 4.3.
4.6. Price regulation
Description of obstacle. Traditional price regulation is often used in the ports sector, for example, for port
services. The various country competition assessment reviews identified several types of price regulation,
including maximum prices; set price ranges (minimum and maximum prices); and specified fixed prices.
Price regulation can be implemented in a number of ways, including through clear procedures set out in
legislation or guidelines; official decisions or price approvals by nominated bodies; informal guidelines at
the discretion of the sector regulator; or as part of the licencing process.
Maximum prices. In some ports, service providers can charge rates up to a maximum amount. These can
be general rates or set specifically by a port operator or service provider. For example, in Thailand,
maximum rates are used for new ports: an operator wishing to run a private port submits a port-pricing
plan to the Marine Department. It is first assessed by the Merchant Marine Supervising Division, a specific
unit within the Marine Department at the Ministry of Transport, then forwarded to the director-general of
the Marine Department before prices are finally approved by the Ministry of Transport. Once approved, the
port operator cannot charge more than the rates declared in its submission and can only propose new
tariffs when applying for a licence renewal.
Minimum and maximum rates. Port operators may also charge rates within a set range. This regime
prevents them from charging less than the minimum amount and more than the maximum, but within this
range, prices are not fixed giving operators a certain flexibility. In Viet Nam, for example, there are
government-set maximum and minimum tariffs for port charges and services such as pilotage and towage
services; charges for using public infrastructure, such as bridges, berths and anchors; and for loading and
unloading services. Port operators can choose to raise or reduce tariffs within this maximum-minimum
range.
Fixed prices or pricing policies and principles. Setting prices involves the imposition of specified tariffs
that a provider cannot change. Specifying pricing policies or principles, however, means that the authority
sets out how the provider calculates its tariffs, and the factors it must consider and those it cannot. W hen
the port authority in Brunei Darussalam, for example, grants a licence for goods handling and storage, it
imposes specific tariffs or sets the pricing policies and principles, “with reference to a general price index,
the cost of production, a rate of return on assets employed or any other specified factors”.61 New tariffs are
recommended by a committee made of different authorities and departments pursuant to Section 11 of the
Marine and Port Authority of Brunei Darussalam Order (MPABD Order), which are then endorsed by the
board of directors of the Marine and Port Authority of Brunei Darussalam, before being submitted to the
Ministry of Finance and Economy (MOFE) for further consideration and approval.
The OECD also highlights the importance of separation of regulatory and operational functions of port
authorities (see Section 4.4) to address possible conflicts of interest and ensure independence and
transparency in the calculation of tariffs.

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Harm to competition. These examples of price regulation in the provision of port charges and port
services may limit operators’ ability to set their prices and prevent them from competing on price. This can
lead to inefficient outcomes as prices do not adjust to supply and demand and can alter the competitive
structure of a given product or market. As such, price regulation should be used only in exceptional
circumstances where there is market failure, for example, when a firm controls an asset that is a natural
monopoly, preventing such operators from taking advantage of their position. In most other circumstances,
minimum or maximum prices may harm consumers, firms, and productivity.
In particular, when minimum prices for commercial services are set above what the market would have
set, consumers pay higher prices while consuming less, and can be worse off than without government
intervention. Moreover, higher prices keep inefficient, high-cost suppliers in the market, which may result
in excess supply (with more output than real demand), preventing a more efficient reallocation of resources.
Finally, minimum prices dampen competition between firms and prevent more efficient firms from
innovating or increasing productivity to offer lower prices and increased quality to consumers in order to
capture market share. However, minimum tariffs for port fees to cover public infrastructure costs could be
justified to make sure that public investment costs are recovered, which is increasingly challenging in the
oligopsony market situation that characterises liner shipping making it possible for liner companies – or
their consortia – to play off ports against each other.
Beyond their distortionary impacts, minimum prices can be challenging for governments to put in place.
They are often set with the objective of ensuring that suppliers cover their costs and achieve a reasonable
rate of return. This process is not straightforward, however, and assumptions regarding costs can be
crucial; for example, if the government assumes that the relevant costs are those of an inefficient supplier,
minimum prices might be set too high. In practice, price control involves complex exercises that model
variables such as future revenues and costs over time. In the absence of a thorough analysis (which is
very difficult and costly to undertake), prices are unlikely to be set at a level encouraging efficiency, and
may result in excessive consumer harm.
Maximum prices can similarly lead to significant problems in market functioning. In practice, a maximum
price can act as a focal point for firms, limiting price competition since firms will seek to charge a price as
close as possible to this price. It may lead to consumer demand outstripping supply, making shortages
more likely. Further, firms that would have been able to compete in an efficient market may be forced to
exit if they are unable to earn a sufficient return to cover their costs. It is therefore important that maximum
prices enable operators to recover their costs, including a reasonable rate of return. However, this form of
regulation does protect consumers from excessive pricing and allows some form of competition as
operators can grant discounts.
While pricing regulation occurs in several sectors in OECD countries, best practice suggests that it should
be limited to natural monopolies or other exceptional situations where there is a lack of competing
alternatives. The OECD identified several examples of price regulation in ASEAN.
1. Fixed or maximum rates that seek to protect port users from excessive prices.
2. Minimum rates are generally introduced to help port operators raise sufficient funds to increase
service quality through investment in advanced technology and infrastructure upgrades. For
example, in Viet Nam, minimum port tariffs were introduced to help providers recoup their
investments, as a response to extremely vigorous price competition. The World Bank confirmed
that: “Vietnam’s Ministry of Transport introduced minimum port tariffs – so-called floor rates – for
services in which competition among terminal operators would be viable. This policy is aimed to
help private and state operators recoup some of their heavy investment in cargo terminal
infrastructure at Cai Mep Port, where overcapacity is putting operator’s [sic] sustainability at risk.
[…] In August 2014, following a steep decline in prices, Vietnam’s Ministry of Transport set a
mandatory two-year minimum handling rate of $46 per 20-foot loaded container to prevent prices
from spiralling even lower, according to Bloomberg News (2014). While this measure limits the

72 
potential fiscal implications of losses incurred by state-run operators, it reduces competitive

pressure among port operators and could harm competitiveness over the long term.” (World Bank,
2018, p. 39[60]).
Box 4.5. Price regulation in ports

The 2018 OECD Competition Assessment Reviews: Portugal found that port tariffs in the country were
subject to multiple forms of price controls, depending on the regime under which the port service was
provided, whether by port authorities or private operators. The report recommended removing the
provisions on fee-setting criteria, discounts and exemptions. The criteria used, for example, were not
considered to be based on transparent, cost-oriented and non-discriminatory principles and so could
have the effect of distorting competition.
The World Bank’s Port Reform Toolkit states that to respond to market competition: “operators should
have the freedom to set their own prices. The operator should be expected to negotiate periodically
with its customers and may provide quantum rebates in return for increased throughput. Only in a
situation when the operator is in a monopoly position might there be a reason for government
interference in tariff setting […] the Operator shall, however, at all times have the right to increase or
decrease such charges and modify the relevant rules and regulations, in accordance with sound
business practices.”
Source: (OECD, 2018[49]) (World Bank, 2007[56]).
Recommendation. In addition to specific recommendations tailored to the relevant legislative provisions

made in the individual country reports, the OECD recommends only allowing the regulation of maximum
prices for commercial services, not minimum prices, in cases where competition is limited. Maximum prices
should be regularly revised to ensure they are in line with market dynamics and provide the necessary
incentives for innovation and investment.

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5 Other logistics sectors

This section discusses some of the common barriers to competition identified across ASEAN member
states in freight transport by rail, freight forwarding and warehousing. In particular, it covers:
1. vertical integration and third-party access in rail
2. uneven implementation of the ASEAN multimodal transport framework
3. surface requirements for warehouses.
Additional recommendations are set out in individual country competition assessment reviews. This
chapter does not cover the issues identified in those reports concerning the small-parcel delivery services
market at ASEAN regional level and the main barriers identified in this sector, namely, the differential
treatment of SOEs and their competitors. That is the focus of a separate report entitled OECD Competitive
Neutrality Reviews: Small-Parcel Delivery Services in ASEAN.
5.1. Freight transport by rail
Historically most ASEAN member states have not focused on promoting and developing rail transport and
many do not have a significant rail network (ERIA Study Team, 2010[70]). The development of the sector
would require more extensive infrastructure to transport goods both domestically and across ASEAN.
However, some regulatory changes could improve the use of existing infrastructure, as well as market
efficiency, by allowing new entrants to compete with incumbent operators. While railway infrastructure is a
natural monopoly, characterised by significant fixed and sunk costs, it is feasible for competing freight
transportation services using that infrastructure to operate in the market.
5.1.1. Vertical integration in rail freight transport
Description of obstacle. Certain member states have taken steps to allow new entrants into rail freight
transport. At the same time, the regulatory framework typically has not been adapted to make competition
effective. For example, the ASEAN Competition Assessment Reviews looked at various country examples
where a single entity was both the operator of the network and the provider of services:
1. Indonesia. Kereta Api Indonesia (KAI) is the sole operator for railroad infrastructure and facilities.
In addition, the operator provides freight services downstream. Other rail freight service providers
may enter the market, if they build their own infrastructure and satisfy legal requirements. As
discussed below, there is no framework requiring KAI to allow third-party access to its
infrastructure.
2. Thailand. State Railway of Thailand (SRT) is the current operator of the railway infrastructure,
running all of Thailand’s national rail lines, as well as the only train-service operator, both for freight
and passengers. This means Thailand has a vertical integration model in which the same company
runs both infrastructure and transport services. The OECD understands that the government is
currently in discussions over a new Rail Transport Act that would open the market to private
operators. Pursuant to the draft act, private operators will be entitled to apply for a rail transport
service licence based on clear, transparent and non-discriminatory conditions.

74 
3. Viet Nam. Pursuant to a 2003 decision by the prime minister,62 a holding company Vietnam
Railways Corporation (VRC) is responsible for managing rail infrastructure and for providing
transport services by rail. This vertical integration remains in place despite the Railway Law of 2017
providing for separation; this law remains unimplemented, but would separate the infrastructure
and transport businesses.
Harm to competition. Vertically integrated companies, which act as both operators of a rail network and
freight transport service providers may have an incentive either to foreclose competitors by denying them
access to an essential input or to favour their own freight transport arm. These companies may do so, for
instance, by preventing potential rail transport service providers from using their railway infrastructure. In
a less evidently restrictive manner, the vertically integrated company may charge higher prices to its
competitors than to its own service provider or degrade service quality provided to competitors through,
for example, track allocation or energy-supply access.
To address these concerns, it is standard practice to require the vertically integrated incumbent to allow
downstream competitors access to its infrastructure at regulated prices and conditions (Box 5.2).63 To
strengthen the effectiveness of these measures, several models exist in OECD countries concerning
separation of infrastructure and cargo transport, spanning from accounting separation to full ownership
separation (Box 5.1).
In ASEAN member states where no sectoral reform has been undertaken, such vertically integrated public
companies are likely a legacy of when management of the rail network and rail transport services were
both carried out by the public authority. In other member states, such as Indonesia, where the regulatory
framework provides for the licensing of new entrants in the railways market, the vertically integrated
incumbent continues to act as both the operator of infrastructure and provider of freight services, as
planned reform has not been implemented. A similar situation exists in Viet Nam, where a new legal
framework, providing for separation exists but has yet to be implemented.
Box 5.1. Separation models in OECD countries

On 26 April 2001, the OECD Council adopted a recommendation concerning Structural Separation in
Regulated Industries. It recommends that members consider the pros and cons of structural separation
– also known as ownership separation – of certain regulated firms,64 balancing the benefits and costs
of structural measures against the benefits and costs of behavioural measures (OECD, 2001[71]).
Accounting and functional separation are considered “forms of partial separation” and are considered
potentially less effective than structural policies, but “play a useful and important role in supporting
certain policies such as access regulation”.
In the European Union, in 26 member states, a single vertically integrated company had historically
been responsible for managing rail infrastructure and providing rail transport services (European Court
of Auditors, 2016, p. 32[72]).
Directive No. 91/440/EEC on the development of railways, is the main measure taken to increase
competitiveness in rail transport. It distinguishes between the provision of transport services and the
operation of infrastructure, identifying the necessity for these two areas to be managed separately in
order to facilitate further railway development and efficiency within the EU. The Directive covers
four areas of policy in particular: 1) independence of railway undertakings in their management,
administration and internal control over administrative, economic and accounting matters, so that
assets, budgets and accounts are separate from those of the state; 2) separation of infrastructure
management and transport operations; 3) reduction of debt and improvement of finances; and 4) access

 75
rights to railway infrastructure. These principles have been implemented through different models
across EU countries.
Privatisation or ownership separation may solve access and discrimination problems, and might
accelerate investment in infrastructure. Several models exist in OECD countries, going from full
ownership separation to functional separation. Some countries such as Sweden, have implemented full
structural separation, while other countries, such as Germany and Italy, have legislated for functional
separation by organising infrastructure and operations into separate subsidiaries with a holding
company structure. For example, in June 2000, Italian state-owned monopoly Ferrovie dello Stato
Italiane (FS) was transformed into a holding company, comprising an infrastructure manager (Rete
Ferroviaria Italiana) and an operator responsible for freight and passenger services (Trenitalia).
In Sweden, railway infrastructure and operations were separated in 1988. A government agency, the
Swedish Rail Administration (now the Swedish Transport Administration) became responsible for
infrastructure and railway transport became the responsibility of a public-service enterprise, Statens
Järnvägar (SJ). In 1996, competition was allowed in freight rail transport operations (OECD, 2006,
p. 42[73]) (OECD, 2012, pp. 102-104[74]).
Evidence on the impact of railway sector reform, including separation, is mixed. Post liberalisation, the
UNECE notes that the EU rail freight market “remains heavily concentrated and characterized by a low
number of newcomers and the persistence of large market shares of incumbent operators” (UNECE,
2018, p. 40[75]). In 2017, in the EU, the market share of competitors in the rail freight transport market
was “higher than 40 percent in Sweden, the UK, Bulgaria, Romania, Italy, and the Netherlands” and in
“all but nine member States (Croatia, Finland, Ireland, Greece, Lithuania, Luxembourg, Portugal,
Slovakia and Slovenia), the market share of competitors is in a range of between 20 per cent and 55 per
cent” (UNECE, 2018, p. 43[75]). As the UNECE report explains, some authors find that increased levels
of separation and privatisation are not associated with lower prices, mainly because state-owned
operators can charge subsidised railway fares. However, other studies conclude that there have been
improvements in efficiency and that customer satisfaction and quality have improved following the
opening of the railway industry (UNECE, 2018, pp. 53,54[75]).
Source: (European Court of Auditors, 2016, p. 32[72]) (UNECE, 2018[75]) (OECD, 2006, p. 42[73]) (OECD, 2012, pp. 102-104[74]).
Recommendations. The OECD has two recommendations.

1. Implement plans for reform of the railway sector.
2. Initiate regulatory reforms that can foster competition in freight transport services by railway. This
could involve some form of separation between infrastructure management and rail freight
transport service operations. This could take the form of accounting separation through separate
accounts for the infrastructure and the freight businesses; functional separation by creating
separate entities under the same ownership; or ownership separation.
In addition, and as discussed in Section 5.1.2, a suitable regulatory framework for third-party access should
be introduced.
5.1.2. Third-party access
Description of obstacle. In certain member states, such as in Indonesia65 and Myanmar, private
companies can enter the rail freight market and operate alongside the vertically integrated incumbent. To
do so, these companies must obtain a licence and either build their own infrastructure or negotiate with
the incumbent to use existing tracks. Subject to meeting stipulated requirements, new entrants have a right
to build infrastructure, but as this requires significant investment that is inefficient to duplicate, potential

76 
entrants might prefer to use existing tracks. The OECD understands, however, that in these member
states, access to existing tracks is difficult for new entrants as the vertically integrated incumbent controls
the infrastructure and there are no clear rules for third-party access.66 Consequently, in these member
states, the vertically integrated incumbent retains an exclusive right to operate and control the existing
railway infrastructure, with no obligation to allow access to infrastructure. This prevents other market
players from accessing the infrastructure and limits market access. According to stakeholders, it can be
difficult to negotiate with incumbents the use of the network on a voluntary basis and this difficulty is
exacerbated by the fact that the incumbent is vertically integrated.
Harm to competition. The difficulties in obtaining access to the existing infrastructure controlled by the
competing incumbent may deter new entry as the alternative option – constructing infrastructure – may not
be viable.
The incumbent firm has an incentive to prevent potential competitors from offering freight transportation
services. Even if it were to negotiate access agreements with its competitors, the charges for access and
for ancillary services may still have the effect of disadvantaging competitors. This incentive to exclude or
apply discriminatory conditions to competitors may prevent other market players from accessing
infrastructure and from providing freight services downstream in competition with vertically integrated firms’
services.
In order to make entry viable, a number of jurisdictions impose a requirement on the infrastructure provider
to allow third-party access on regulated terms (Box 5.2). Third party access goes hand in hand with
separation reforms, as set out in 5.1.1. Typically, in order to make the requirement on third-party access
operational and to mitigate the incumbent’s market power, a sectoral regulator or ministerial department
has broad powers to intervene in the market.
The EU liberalisation reforms required member states to have national regulatory bodies independent of
infrastructure managers, charging bodies, allocation bodies or applicants to ensure fair and non-
discriminatory access to their rail networks (European Court of Auditors, 2016, p. 35[72]). The regulator has
a monitoring function, acts as an appeal body for complaints, and supervises negotiations between parties,
intervening where necessary (European Commission, 2020[76]).
Recommendations. The OECD has two complementary recommendations.
1. Legislate the requirement to grant third-party access to railway infrastructure to ensure access for
new entrants on transparent and non-discriminatory terms.
2. In order to make this requirement effective, ensure that the regulator or the relevant ministerial
department has broad powers to intervene in the market, for example, allow it to set and enforce
access charges and conditions.

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Box 5.2. Third-party access in the railway sector in the EU

Three of the most common models in the railway sector include 1) granting concessions to monopolistic
operators; 2) tender concessions for sub-networks; and 3) open-access models (UNECE, 2018,
p. 39[75]). The second model allows for competition for the market, while the third model allows
competition in the market. The open-access model is present in all EU countries allowing competition
in the market for freight services (UNECE, 2018, p. 39[75]). In addition to the independence of the
infrastructure manager, as noted in Box 5.1, other considerations exist for successful third-party access.
Fair, non-discriminatory and transparent access. The incumbent operator is subject to a
requirement to allow third-party access to infrastructure. This requirement should be made operational
by setting clear conditions to access facilities or services. In the OECD Competition Assessment
Reviews: Romania, the OECD identified unclear access conditions, notably through the use of phrases
such as “alternative options” and “viable alternative” that were ill-defined and left significant discretion
to the infrastructure manager to deny third-party access to the network. The OECD considered this
could lead to discrimination and could favour the incumbent operator (OECD, 2016, pp. 164-165[67])
Infrastructure charges
In the EU, infrastructure managers are required to set charges in accordance with EU Regulation
No. 2015/909, which establishes that charges should reflect the direct costs incurred from operating the
train service.1 The regulation sets out how direct costs should be calculated and cost categories
considered. The infrastructure manager can only include costs that it can “objectively and robustly
demonstrate” are “triggered directly by the operation of the train service”, for example infrastructure
subject to wear and tear by train-service operators (European Commission, 2020[77]).67
Post-liberalisation access barriers

The European Court of Auditors identified several factors that could lead to discriminatory practices and
weaken competition, despite liberalisation, including preferential access for the incumbent freight
operator to terminals and point infrastructure and train path allocation. New entrants could also face
barriers in obtaining rolling stock given its high initial cost and maintenance charges, while incumbent
operators may already have a large fleet and could own or partly own maintenance facilities (European
Court of Auditors, 2016, p. 34[72]).
1
Note: European Commission (12 June 2015), Commission Implementing Regulation (EU) 2015/99 on the modalities for the
calculation of the cost that is directly incurred as a result of operating the train service, https://eur-lex.europa.eu/legal-
content/EN/TXT/PDF/?uri=CELEX:32015R0909&from=EN.
5.2. Freight forwarding and multimodal transport
Freight forwarders organise transportation of items on behalf of their customers, for instance by combining
different modes of transport in order to better respond to customers’ needs. Their activities also include
tracking inland transportation, preparation of shipping and export documents, booking cargo space,
negotiating freight charges, freight consolidation, cargo insurance, and the filing of insurance claims. They
can also provide additional ancillary activities, such as customs clearance or warehousing. Acting as
intermediaries between cargo owners and transport service providers, freight forwarders do not usually
own any transport assets or network and normally hire transportation capacity from third parties.
This section discusses how ASEAN has relatively successfully promoted the integration of different modes
of transport and the current weaknesses of its policy initiatives, which would require further efforts of
implementation at national level.

78 
5.2.1. Implementation of the ASEAN Multimodal Transport Agreement
In November 2015, to encourage international trade among ASEAN countries and with third-party
countries, all ASEAN member states signed the ASEAN Framework Agreement on Multimodal Transport
(AFAMT) in order to develop and facilitate the transportation of goods performed with at least two different
means of transport. AFAMT regulates transport documents (Articles 4-6), the cases (Articles 7-13) and
extent (Articles 14-20) of an operator’s liability, as well as the circumstances in which the consignor will be
held liable (Article 21). Finally, the AFAMT regulates possible claims and jurisdictional issues.
Implementation of AFAMT will minimise time lost at transhipment points and simplify administrative
procedures, leading to cost savings and a more competitive logistics system (Zen et al., 2019[54]).
To support its ratification and implementation, ASEAN developed the Implementation Framework of the
ASEAN Framework Agreement on Multimodal Transport. 68 This framework presents the key activities
essential for AFAMT’s implementation, alongside timelines for each activity and future reviews. It also
identifies the ASEAN Transit Transport Coordinating Board (TTCB) through the ASEAN Transport
Facilitation Working Group (TFWG) as the competent body to co-ordinate and oversee the overall
implementation of the measures.
Description of obstacle. Seven ASEAN member states have ratified the AFAMT, which has entered into
force (Box 5.3 provides an example). However, Brunei Darussalam, Malaysia and Singapore have yet to
ratify, however. Furthermore, although seven member states have ratified the agreement, some of them
still need to enact national laws, regulations or guidelines to implement it.
Box 5.3. Thailand’s Multimodal Transport Act

In 2005, Thailand enacted the Multimodal Transport Act B.E. 2548 (2005) in order to have single law
governing shipments by different means of transport and provide more certainty as to the liability of
multimodal transport operators (MTOs).
The act or MTA applies to all international transport of goods from their place of origin to destination
and regulates many different aspects of multimodal transport.
1. Conditions and registration to operate as an MTO. Thailand provides for three types of
MTOs: 1) Thai-registered companies under Section 39(1) of the MTA; 2) foreign-registered
companies from those countries with which Thailand has an agreement, including ASEAN
(Section 39(2) of the MTA); 3) foreign-registered companies in general under Section 39(3) of
the MTA. All MTOs must register before they can operate, subject to financial penalties;
Table 5.1 shows the most recent statistics on registration of MTOs under the MTA.
2. Limitation periods for multimodal transport proceedings. These must be commenced
within nine months of the day on which an MTO delivered or should have delivered goods.
3. Operator liability. This is limited to the cost of the freight.
Table 5.1. Registration of MTOs under the Multimodal Transport Act

2016 2017 2018 2019 2020
Registration of MTOs under Section 39(1) 46 117 72 28 27
Registration of agents under Section 39(3) 0 0 29 20 18
Note: Statistics are updated as of 31 July 2020.

Source: Marine Department, Multimodal Transport Act, B.E. 2548 (2005), https://asean.org/storage/2012/05/Thailand_Multimodal-
Transport-Act-B-E-2548-Royal-Gazetle.pdf.

 79
Harm to competition. The lack of ratification and/or implementation of the AFAMT results in missed
opportunities and efficiency gains for trade, companies and consumers.
Economic literature has highlighted the importance of multimodal transport connectivity for trade and its
benefits for companies and consumers (Shepherd and Serafica, 2011[78]). The expansion of a
transportation network as a result of enhanced multimodal connectivity improves the efficiency of global
supply chains by providing better links to supplies, inputs and final goods. Multimodal transport can help
achieve these advantages, by combining different modes of transport so that each is used for the suitable
length of the haul for minimising costs. According to some global estimates, each day saved when
transporting goods leads to an average ad valorem tariff reduction of between approximately 0.4% and 1%
for exports, and 0.8% and 1.5% for imports (Hummels et al., 2007[79]). Furthermore, more efficient transport
links can give manufacturers access to cheaper inputs, while international companies can explore potential
complementary businesses in new areas. As highlighted in the World Bank’s World Development Report
2009: Reshaping Economic Geography, in the short term reduced transport costs lead to countries trading
more with distant areas, but in the long term reducing costs favours regional integration through increased
trade with neighbouring countries (World Bank, 2009[80]). The implementation of this agreement can also help
support more resilient and sustainable Covid-19 recovery by facilitating freight transport across the region.69
Recommendation. The OECD recommends that all member states ratify and fully implement the ASEAN
Framework Agreement on Multimodal Transport into their respective national legal orders.
5.3. Warehousing
Warehousing encompasses the storage of goods either in general warehouses or in bonded warehouses
(where dutiable goods may be stored, manipulated, or undergo manufacturing operations without payment
of duties).
Warehousing operators usually need to obtain a licence to provide services to third parties. This section
discusses a specific restrictive requirement laid down in the legislation on warehousing of certain ASEAN
member states. As explained in the OECD Competition Assessment country reports, there are other issues
related to land, however, that affect warehousing and have been noted in some countries in the region as
hampering investment. In particular, in some ASEAN member states registering property can be lengthy
and cumbersome.70 Effective registration systems for land property rights can provide incentives to invest
and as a result contribute to higher productivity and growth of this sector. Box 5.4 provides evidence of the
economic benefits of effective land registration.
Box 5.4. Economic benefits of effective land registration and efficient administration systems
Land registers are used around the world to map, prove, and secure property and use rights. Registered
property rights are necessary to support investment, productivity, and growth. For example, rising
values and more efficient land use are often observed in economies with effective property registration
systems. In Thailand, property values rose by 75% to 197% following a land-titling project that expanded
property registration (Burns, 2002[81]). In addition, formal property markets encourage employment and
increase domestic stability, and owners with registered property titles are more likely to invest in the
local economy.
The benefits of land registration extend beyond the private sector. For a government, having reliable,
up-to-date information of land registries is essential for the correct assessment and collection of taxes.
In Thailand, annual revenue from property and transfer taxes rose from USD 200 million in the 1980s

80 
to USD 1.2 billion by 1995. A land-titling property project that began in the 1980s is credited as being a
driver of this rise in revenue.
Evidence in a 2014 study by the World Bank on the economic impact of 20 years of land registration
projects in Europe and Central Asia points to their high rates of return. The World Bank’s experience in
supporting land registration projects has shown that secure tenure and efficient land and property
registration systems are important for economic growth. Improved income and increased assets for
beneficiaries, as well as reduced costs, are the primary economic benefits accruing from land
registration projects. In due course, these improvements are usually reflected in national accounts as
economic growth. The World Bank estimates the short-term and long-term benefits to the economy of
registering a property to be about USD 16. In other words, registering 1 million properties leads to an
estimated economic benefit of USD 16 million in the target country.
Source: World Bank, “Registering Property: Why does property registration matter?”,
www.doingbusiness.org/en/data/exploretopics/registering-property/why-matters (accessed on 10 January 2021); World Bank (2014),
“Economic Impact of 20 Years of ECA Land Registration Projects”.
5.3.1. Surface requirements for warehouses
Description of obstacle. Certain member states impose specific requirements on warehousing operators
for the location of their warehouses or their minimum surface.
1. In Viet Nam, bonded warehouses must be at least 5 000 m2, including warehousing, storage yard
and auxiliary works, of which the area specifically dedicated to warehousing should be no less than
1 000 m2.71 Different requirements apply to bonded warehouses specialising in the storage of
specific goods, for which the minimum area is 1 000 m2 or the minimum storage volume is
1 000 m3.
2. In Malaysia, depending on the type of goods stored, public bonded warehouses must have a
minimum space of between 1 860 m2 to 4 645 m2.72
Harm to competition. By obliging companies to have a minimum surface irrespective of their actual
business needs, these provisions increase entry and operational costs and may reduce companies’ ability
to enter the market and provide price-competitive services.
First, these minimum requirements may lead to high initial costs for new entrants and discourage entry,
especially by SMEs that may otherwise choose a smaller business scale, and so reduce competitive
pressure as fewer operators enter the market.
Second, the minimum surface requirement may also reduce existing firms’ flexibility to adjust to market
conditions and may increase their operational costs, given that their volumes may not justify such minimum
surface. This may result in unnecessary burden and costs. Such higher costs may eventually lead to less
competitive pressure and increased prices.
Third, certain operators may not have sufficient volumes on their own to justify such big warehouses and
may choose to share warehouses with other operators. The legislation would effectively be setting a
minimum scale for businesses, possibly leading to market concentration in certain areas.
The OECD was not able to identify the official policy objective of those provisions imposing minimum
surface requirements for warehouses.
Recommendation. The OECD recommends removing general minimum surface requirements and leave
the decision to market participants.

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6 Horizontal findings on the logistics

sector
Based on the analysis of legislation conducted in each ASEAN member state, this chapter covers some of
the most frequent barriers applying horizontally across two or more logistics sub-sectors. Additional
specific recommendations are set out in each individual country competition assessment review.
In particular, this chapter covers:
1. foreign direct investment (FDI) restrictions, including limitations on foreign ownership
2. minimum capital requirements
3. provisions limiting freedom to set prices, including guidelines setting out specific rates and price
formulas, and authorities’ powers to set prices
4. differential regulatory treatment benefitting SOEs and affecting a level playing field
5. provisions imposing compulsory membership in associations as a condition for operating in the
market.
6.1. FDI restrictions
ASEAN member states have historically been successful in attracting FDI. As shown in Figure 6.1, since
the Asian financial crisis in 1997, they have managed to maintain and even slightly increase their share of
FDI. This despite increasing competition from emerging economies worldwide, which have started to
embrace a more liberal approach and actively compete to attract FDI (OECD, 2019[82]).
Figure 6.1. ASEAN share of FDI stock as percentage of developing country total, 1980-2019
%
25
20
15
10
Source: UNCTADStat, http://unctadstat.unctad.org/wds/TableViewer/tableView.aspx (accessed on 21 October 2020).

82 
All member states have benefited from the growth of FDI inflows. Generally, their respective share of
inward FDI has been relatively stable, with the exception of Singapore, which has sharply risen, and
Malaysia, which has concomitantly decreased. ASEAN has attracted investments from a diverse number
of countries, with the United States (15.2%), Japan (12.7%) and the EU (10.1%) representing the largest
extra-ASEAN source of FDI inflows in 2019 (see Section 2.1 for more details). This diversification of the
source countries is one of the traditional strengths of the region (OECD, 2019, p. 25[82]).
Figure 6.2. Shares of FDI distribution within ASEAN, 1996 and 2019
1996 2019
Brunei Darussalam, Brunei Darussalam, Cambodia, 3%
2% Cambodia, 1% 0%
Viet Nam, 7% Indonesia,
Indonesia, Viet Nam, 10%
15%
19%
Thailand, 7% Thailand, 3% Lao People's
Dem. Rep.,
0%
Lao People's
Dem. Rep.,
Malaysia, 5%
0%
Myanmar, 2%
Singapore,
35% Malaysia, 22% Philippines,
3%
Singapore,
Philippines, Myanmar, 2% 59%
5%
Source: UNCTADStat, https://unctadstat.unctad.org/wds/ReportFolders/reportFolders.aspx.
The performance over time of each member state relative to the region gives an idea of which countries
are providing a more suitable environment for investors. For individual economies, however, it is also
important to look at the share of FDI relative to the size of the domestic market. This has increased in
almost all member states, registering record levels in many member states in 2019 (Figure 6.3).
Figure 6.3. FDI as a percentage of GDP in ASEAN, 2001 and 2019
2019 2001
500
450
400
350
300
250
200
150
100
50
0
Darussalam
Source: UNCTADStat, https://unctadstat.unctad.org/wds/ReportFolders/reportFolders.aspx.

 83
Another important element is the share of FDI within and from the region. As noted in Section 2.1, in 2019,
the total amount of intra-ASEAN FDI inflows reached USD 22.36 billion and accounted for about 14% of
total inflows to the region (Figure 6.4).
When looking at specific economic sectors, for the period 2014 to 2019, financial and insurance activities
attracted the highest percentage (29.4%) of FDI, followed by manufacturing activities (26.1%).73 The
transportation and storage sector accounted for almost 1.4% over the same period and reached its peak
in 2018 at 2.4% of total inward FDI (for more specific data on FDI in the ASEAN transport and logistics
sector, see Section 2.2).
Figure 6.4. Flows of inward FDI to ASEAN, by economic sector, 2014-19
Agriculture, forestry, and Transportation and storage,

fishing, 3% 1%
Other, 12%
Accommodation and food- Mining and quarrying, 2%
service activities, 0%
Real-estate activities, 8%
Manufacturing, 26%
Construction, 1%
Electricity, gas, steam and

air-conditioning supply, water
supply, waste-management
and remediation activities,
Financial and insurance 2%
activities, 30%
Wholesale and retail trade;

repair of motor vehicles and
Information and motorcycles, 14%
communications technology,
1%
Source: ASEANstatsDataPortal, “Flows of Inward Foreign Direct Investment (FDI) to ASEAN by Source Country and Economic Sectors (in
million US$)”, https://data.aseanstats.org/fdi-by-sources-and-sectors.
To promote intra-ASEAN investments in the services sector, member states have set ambitious goals for
services integration and in 1995 signed the ASEAN Framework Agreement on Services (AFAS). Following
this agreement, the 2007 ASEAN Economic Community (AEC) Blueprint included the goal of a free flow in
services as the first pillar of a single market and production base. The objective of AFAS is 1) to eliminate
“substantially all existing discriminatory measures and market access limitations amongst member States”,
and 2) to prohibit “new or more discriminatory measures and market access limitations”.
In relation to the logistics sector, which is a priority for integration,74 AFAS prescribed 70% ASEAN equity
participation in the sector by 2013, while allowing member states to have a 15% flexibility on these
commitments. All other market-access limitations were required to be removed by 2015.
In October 2020, member states signed the ASEAN Trade in Services Agreement (ATISA), which affirms
ASEAN’s commitment to free and open trade and regional economic integration and will supersede
AFAS.75 The agreement deepens the integration of the services sector by building upon AFAS. It also
introduces a number of changes to the traditional AFAS approach by mandating member states to
transition from existing schedules of commitments for which commitments do not apply unless a sector or

84 
sub-sector is specifically included towards a schedule of non-conforming measures, which assumes that
a sector falls within the liberalisation commitment, unless specifically excluded, and lists measures that run
counter to the liberalisation commitments.
Description of obstacle. Despite liberalisation commitments included in AFAS for the logistics sector,
ASEAN still shows lower levels of openness than OECD economies (Figure 6.5).
Figure 6.5. OECD FDI Regulatory Restrictiveness Index in the ASEAN transport sector, 2019
Transport OECD average transport
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
Darussalam
Note: Restrictions in the OECD FDI Regulatory Restrictiveness Index are evaluated on a 0 (open) to 1 (closed) scale. Data include all types of
restrictions, namely: 1) foreign equity limitations; 2) discriminatory screening or approval mechanisms; 3) restrictions on the employment of
foreigners as key personnel; and 4) other operational restrictions, such as those on capital repatriation or land ownership by foreign-owned
enterprises.
Source: OECD FDI Regulatory Restrictiveness Index, https://stats.oecd.org/Index.aspx?datasetcode=FDIINDEX#.
Many member states have different types of barriers to FDI in place.

 Limitations on foreign ownerships. Typically these are imposed by limiting the share of
companies’ equity capital that non-nationals and residents are allowed to hold; they may also
simply prohibit any foreign ownership. For example, in Indonesia and Lao PDR foreign participation
in the road transport sector is limited to 49%. 76 In Thailand, foreigners can hold up to 49% share
in courier companies, but above this threshold, require a foreign business licence; this can be
difficult to obtain if Thai operators are already providing similar services. In the Philippines, freight
transport and logistics are currently considered as public utilities and, as such, are subject to a
40% foreign-equity restriction. In Viet Nam, foreign investors cannot own more than 49% of a public
company in so-called conditional sectors, such as logistics.
 Constraints on the ability of foreign nationals to work in certain companies. Certain member
states restrict employment of foreign nationals, which investors may consider as a barrier to the
expertise necessary to make their investment viable. For example, in Viet Nam, the total number
of foreign seafarers working on a ship registered in Viet Nam cannot exceed a third of the ship’s
personnel, and the captain or first mate must be a Vietnamese citizen. Similarly, in Thailand,
vessels used for marine commerce in territorial waters can only employ Thai-national crew, while
Thai vessels used for international transport must employ Thai-national crew in certain proportions
prescribed in the law.77 In the Philippines, certain marine professions (such as deck officers and
engine officers) are also reserved for nationals, while all executives and managing directors of a
public utility must be Filipinos.78

 85
Since AFAS was signed in 1995, member states have carried out ten rounds of negotiations and concluded
ten commitment packages submitted by each member state; these include the list of current restrictions to
services liberalisation and future liberalisation efforts. The protocol to implement the tenth package of
commitments was signed in November 2018 in Singapore 79 and includes several annexes with each
member state’s respective commitments in different sectors, including transport. 80
However, AFAS negotiations have often not managed to meet stipulated goals within approved timelines.
They have also not brought about greater transparency and clarification to the liberalisation process, as
demonstrated by the challenge of accessing the latest AFAS schedules and following their implementation
status (OECD, 2019, p. 45[82]).
Harm to competition. FDI is a tool for economic growth, especially in developing countries. It brings not
only financial resources, but also increases in employment, improvements in human capital, and innovative
businesses practices. More generally, it enables the transfer of technology and knowledge.
Empirical studies have shown a positive and strongly significant relationship between FDI net inflows and
poverty reduction in ASEAN; this is especially true in less economically developed and low-income
member states, since it can create jobs, develop local skills and stimulate technological progress (Ahmad
et al., 2019[83]). Another study confirmed a positive and significant, indirect impact of FDI on poverty
reduction and economic growth in Viet Nam (Hung, 2005[84]). Similarly, another study concluded that FDI
has a positive impact on poverty reduction through the growth of exports in Indonesia (Tambunan, 2005[85]).
These restrictions on FDI in the logistics sector may limit market entry, increase consumer prices with spill-
over effects across the economy, reduce economic growth, job creation, transfer of know-how, and
innovation. Given that a significant proportion of FDI in ASEAN is from other ASEAN countries, FDI
restrictions may also run counter to the objective of deeper regional integration.
Box 6.1 discusses the approach of certain neighbouring countries to foreign-equity restrictions in the
transport sector.
Box 6.1. Foreign-equity limitations in OECD Asia-Pacific countries

The OECD FDI Regulatory Restrictiveness Index (FDI Index) measures statutory restrictions on FDI
across 22 economic sectors. It gauges the restrictiveness of a country’s FDI rules by looking at the four
main types of restrictions on FDI:
1. foreign-equity limitations
2. discriminatory screening or approval mechanisms
3. restrictions on the employment of foreigners as key personnel
4. other operational restrictions, such as those on capital repatriation or land ownership by foreign-
owned enterprises.
Restrictions are evaluated using a scale from 0 (open) to 1 (closed).
Figure 6.6 shows the level of restrictiveness for foreign-equity limitations in the transport sector in four
OECD countries (Australia, Japan, Korea and New Zealand) and two non-OECD countries (the
People’s Republic of China and India). Data show that, with the exception of Korea, the countries
included in the OECD database have a lower level of restrictiveness.

86 
Figure 6.6. FDI regulatory restrictiveness index in the transport sector, 2019
Transport ASEAN average
0.6
0.5
0.4
0.3
0.2
0.1
0
Australia Japan Korea New Zealand Brunei Cambodia China India
Darussalam
Note: Data refer only to foreign-equity barriers, not other FDI barriers, such as those on screening and approval of foreign investments or
restrictions on key foreign personnel.
Looking at land transport more specifically, data are even more significant and show that while all the
above-mentioned countries in the graph have no foreign-equity restrictions in place and thus score zero
in surface transport, ASEAN member states show an overall average of 0.188 in the same sector.
In the maritime transport sector, with the exception of Korea, the above-mentioned OECD countries
appear to be more open than ASEAN member states which register an average of 0.241 compared to
zero in Australia, Japan and New Zealand, and 0.225 in the People’s Republic of China.
Recommendation. Member states should enhance liberalisation efforts in the logistics sector, which
remains partly off limits to foreign investors, holding back potential economy-wide productivity gains. The
OECD recommends one of three options to address issues stemming from foreign-ownership limitations.
1. Progressively relax foreign-equity limits towards allowing 100% foreign ownership in the long term.
If not already implemented, a first step may be to implement the AFAS target of 70% ASEAN
ownership in entities providing logistics services, before extending it to non-ASEAN nationals.
2. Relax foreign-equity limits on a reciprocal basis for nationals of those countries that allow ASEAN
nationals to hold 100% shares in a company.
3. Allow 100% ownership and apply the screening system of foreign-direct investments, when the
investment goes beyond a certain value threshold. The screening system should be appropriately
structured with clear upfront criteria and a right of appeal against the final decision. Furthermore,
the screening system should be applied in limited situations, for instance to address certain public
policy goals.

 87
6.2. Minimum capital requirements
A number of countries impose requirements on the minimum amount of capital that businesses must
deposit when they set up a company or apply for a licence. For example, paid-in minimum capital can be
required to obtain an operating licence for specific businesses such as freight transportation services,
postal services, and vehicle and ship registrations. As such, minimum capital requirements are a de facto
condition for market entry. While the amount of minimum capital required is often a fixed amount, it can
also be variable, such as a percentage of the value of a ship to be registered. Legislation in member states
typically specifies how capital should be presented, such as through a bank deposit.
Description of obstacle. In the course of its country-specific competition assessment reviews, the OECD
has identified several provisions imposing minimum capital requirements.
Minimum capital requirement for logistics operators.81 In Malaysia, operators applying for a licence to
provide small-package delivery services need to justify a minimum paid-up capital ranging from about
USD 24 140 (MYR 100 000) to USD 24 140 000 (MYR 100 million) depending on the type of licence. A
similar restriction was also identified in Viet Nam, where a licence for domestic delivery services requires
a minimum paid-up capital of about USD 86 770 (VND 2 billion) and USD 217 000 (VND 5 billion) for
international delivery services. In the Philippines, all freight forwarders are subject to a minimum capital
requirement according to the scope of their activities. International freight forwarders face a higher
requirement of about USD 38 600 (PHP 2 million) than domestic freight forwarders (about USD 4 800 -
PHP 250 000). In Thailand, multimodal transport operators (MTOs) need a minimum capital of XDR 80 000
(Special drawing rights), an amount set in the ASEAN Framework Agreement on Multimodal Transport.
Minimum capital requirement for foreign businesses. This is a minimum capital requirement imposed
only upon foreign businesses, irrespective of their sector, and so including transport service providers. For
instance, foreign investors in the Philippines face a minimum capital requirement of approximately
USD 200 000,82 while in Thailand it is set at USD 64 400 (THB 2 million).83 Domestic businesses providing
transport services are not subject to this requirement.
Minimum capital requirement for ship registration. For instance, companies willing to register a ship in
Brunei Darussalam are required to have a minimum paid-up capital equal to 10% of the ship’s value or
USD 366 510, i.e. BND 500 000, whichever is the lesser amount, with a minimum amount of USD 36 650
(i.e. BND 50 000). A similar requirement exists in Malaysia where minimum paid-up capital equal to 10%
of the ship’s value or about USD 241 400, i.e. MYR 1 million (whichever is higher) is required to register a
ship with the Malaysia International Ship Registry. Ships registered with the domestic Malaysian registry
(Traditional Ship Registry, TSR) do not have this capital requirement.

88 
Box 6.2. Lao PDR’s abolition of minimum capital requirements for certain foreign investors
In November 2017, the Lao Ministry of Industry and Commerce issued Notification
No. 2633/Cabinet/MOIC to abolish minimum registered capital requirements for certain foreign
investors seeking to register a company in Lao PDR. Previously, the 2009 Law on Investment
Promotion (No 2/NA) had required foreign investors to produce a minimum capital of USD 115 000
(LAK 1 billion). These minimum capital requirements were more likely to affect less capital-intensive
industries and particularly SMEs, which are common in many service sectors (OECD, 2017, p. 35[86]).
The 2016 Law on Investment Promotion (No. 14/NA) had introduced some amendments to facilitate
foreign investment, but did not amend directly the minimum capital requirements for foreign investors.
The 2017 notification abolished minimum registered capital requirements for foreign investors, with the
exception of business activities governed by other existing laws or regulations that may still require
minimum registered capital.
This policy change is in line with the overall international trends mentioned in Box 6.3 on reducing
minimum capital requirements and, combined with broader efforts on easing FDI restrictions, could
deliver economy-wide benefits such as job creation, transfer of know-how and innovation, increasing
productivity, and economic growth.
Source: Ministry of Industry and Commerce, Notification No. 2633/cabinet/MOIC, 7 November 2017,
http://laoservicesportal.org.la/images/download/Announcement_2017121509125252.pdf.
The objective of minimum capital requirements is to ensure a firm’s ability to fulfil its obligations and so
protect consumers and creditors from risky and potentially insolvent businesses, and to ensure reliable
and efficient services. Certain identified measures also aim to protect domestic operators against
international competition.
Harm to competition. The restrictive minimum capital requirements identified by the OECD could harm
competition in two main ways. First, where the required amount is excessive or disproportionate to the
envisaged policy objective, it results in undue costs of entry for new business and discourages investment
and market entry. This is particularly relevant for small- and medium-sized enterprises (SMEs) with
relatively limited financial capabilities. Second, some minimum capital requirements identified are only
applicable to foreign operators, yet the OECD has identified no policy objectives other than the protection
of domestic operators against international competition. When domestic operators are not subject to the
same requirements, this constitutes a higher barrier to entry for foreign operators, which reinforces the
effect of any FDI restrictions (Section 6.1 on FDI restrictions).
Furthermore, studies have observed that capital requirements are not necessarily the best way to achieve
a policy maker’s objective of ensuring a firm can fulfil its obligations (Box 6.3). This may explain recent
World Bank data that, since 2003, 58 countries have eliminated minimum capital requirements as a pre-
condition to starting a business, while 48 have reduced the amount of capital required (World Bank,
2020[34]). Several ASEAN countries have also eased, if not eliminated, their minimum capital requirements.
For example, operators in Lao PDR wishing to provide multimodal transport services can provide a bank
guarantee as an alternative to a cash deposit to comply with the relevant minimum capital requirement.84

 89
Box 6.3. International comparison on capital requirements

Many countries have general minimum paid-up capital requirements for specific types of company
structure – say, limited liability companies or public limited-liability companies – rather than capital
requirements specific to the company’s business sector.
In Doing Business 2014, in a chapter entitled “Why are minimum capital requirements a concern for
entrepreneurs?, the World Bank observed that, in general, minimum share capital is not an effective
measure of a firm’s ability to fulfil its debt and client service obligations. In particular, share capital is
a measure of the investment of a firm’s owners, not the assets available to cover debts and operating
costs. In the report, the World Bank concluded that minimum capital requirements protect neither
consumers nor investors and that they are associated with less access to financing for SMEs and a
lower number of new companies in the formal sector. Creditors prefer to rely on objective assessments
of companies’ commercial risks based on analysis of financial statements, business plans and
references, as many other factors can affect a firm’s chances of facing insolvency. Moreover, such
capital requirements are particularly inefficient if firms are allowed to withdraw deposited funds soon
after incorporation.
Contrary to initial expectations, the World Bank report cites evidence that minimum capital
requirements do not help the recovery of investments; indeed, they are negatively associated with
creditor recovery rates. Credit recovery rates tend to be higher in economies without minimum capital
requirements, which suggest that other alternative measures – such as efficient credit and collateral
registries and enhanced corporate governance standards – are potentially more efficient in addressing
such concerns. Moreover, capital requirements tend to diminish firms’ growth potential.
Minimum capital requirements have been found to be associated with higher levels of informality, and
with firms operating without formal registrations for a longer period. In turn, informality results in an
unlevel playing field in the market, increased difficulty in enforcing necessary regulations, and lost tax
revenue for the state.
Commercial bank guarantees and insurance contracts are a better instrument for managing
counterparty risks, and should therefore be the focus of any regulation seeking to promote a set
minimum level of business certainty for users of road freight services.
In addition to being largely ineffective in achieving policy makers’ objectives, higher minimum capital
requirements are associated with lower business entry, as shown in the World Bank’s report, Doing
Business 2020:Comparing Business Regulation in 190 Economies report.
International experience shows that an increasing number of countries have eliminated or lowered
minimum capital requirements. In 2003, 124 countries had minimum capital requirements to create a
company. Since then, 58 countries have eliminated these capital requirements altogether. The World
Bank finds that the most significant changes have occurred in the Middle East and North Africa, where
average minimum capital requirements amounted to 466% of income per capita when the 2003 Doing
Business report was published, but had dropped to 5% of income per capita in the 2020 report.
Source: (World Bank, 2013[87]); (World Bank, 2020[34]).
Recommendation. Depending on the minimum capital requirements identified in each member state, the
OECD recommends one of two options.

90 
1. Lift sector-specific minimum capital requirements and require operators to comply only with any
horizontal requirements under the commercial law. Alternatively, bank guarantees or insurance
contracts rather than cash deposits should be accepted to comply with these capital requirements.
2. Ensure that any horizontal minimum capital requirements are the same for all businesses,
irrespective of whether they are domestic or foreign entities. Bank guarantees or insurance
contracts rather than cash deposits should be accepted to comply with these capital requirements.
6.3. Pricing guidelines and power to set prices
While pricing regulation occurs in several sectors in OECD countries, best practice suggests that it should
be limited to market failures, such as natural monopolies. For example, this may be the case in the port
sector covered in Section 4.6. In non-monopoly sectors, such as road freight transport and freight
forwarding, market entry is typically freer, which leads to a larger number of market players and
consequently, less price regulation.
In addition to earlier examples of price regulation, the competition assessment reviews in member states
identified pricing guidelines or provisions granting authorities the power to set prices. These occur
throughout the logistics sector in road freight transport, maritime freight transport, ports, small-package
delivery services, and freight forwarding.
6.3.1. Pricing guidelines
Description of obstacle. The OECD has identified instances of guidelines setting out specific rates or
formulas for market participants to use when calculating their prices. Such guidelines may be binding or
simply recommendations.
Guideline prescribing indicative rates. In the Philippines, a regulation prescribes non-binding indicative
rates for freight-forwarding services to guide accredited non-vessel operating common carriers (NVOCC),
cargo consolidators (CC), international freight forwarders (IFF), and break-bulk agents (BBA).
Guidelines prescribing the methodology for setting rates. In Indonesia, the government has issued
guidelines on how road transport companies should calculate their prices, and subjects businesses to an
administrative penalty for failing to follow them. According to these rules, factors to consider in determining
price include the weight and volume of cargo; the type of cargo carried; and the duration and distance of
any cargo’s transport. The freight rate is calculated by considering fixed costs – including licensing and
administration, employee salaries; and vehicle insurance – and variable costs, such as fuel consumption,
oil and lubricant use, tyre wear, vehicle maintenance and miscellaneous expenses. The OECD
understands that freight transportation companies are permitted to set their own prices, but that these must
be based on these guidelines. The presence of the penalty provision in the legislation suggest guidelines
are binding.
In certain cases, guidelines may also include additional requirements not to set below-cost prices
applicable to both dominant and non-dominant players. For instance, in the Indonesian commercial postal
and courier sub-sector, the OECD identified price-regulation guidelines, which contain an additional
general prohibition on below-cost pricing as part of the tariff formula. The legislation provides that the tariffs
of commercial post services cannot be lower than the operating costs. There is a penalty provision for
failing to follow the tariff formula, which suggests that it is binding.
Harm to competition. Guidelines that list specific rates, even when non-binding, may encourage
companies to orient themselves accordingly and so act as a focal point; this could lead to price
co-ordination and result in higher prices for consumers. Binding guidelines that stipulate a formula, which
must be followed when calculating prices, limit companies’ ability to set their own prices and to compete

 91
on price; for example, they are unable to undercut rivals’ prices in order to gain market share. Moreover,
the requirement to price above cost may lead to inefficient outcomes and harm consumers in the end, by
limiting the entry of new players (see Box 6.4).
According to Indonesian government authorities, the pricing guidance is in place to help businesses,
especially SMEs, understand how to set prices or to help guide their pricing decisions. The above-cost-
pricing requirement is in place to avoid unfair business practices and anticompetitive behaviour.85
Recommendation. The OECD has two recommendations.
1. Remove guidelines setting out specific rates. In the case of broad and informative guidelines,
remove any attached penalty provisions so that they are simply advisory.
2. Remove the obligation that prices should be above costs for any non-dominant firm.
Box 6.4. Below-cost pricing

Selling certain products below cost is a common strategy used to attract consumers, for example, to
encourage them to try a new product or retailer. In these circumstances, pricing below cost may well
be less expensive than running large advertising campaigns (OECD, 2018[49]). In addition, it can be
used to grant discounts to repeat customers, to compensate a consumer switching from one product to
another when switching costs are high, or to clear out obsolete or dead stock that would be costly to
store or discard. Further, when a firm has multiple products, it can price one product below cost (a “loss
leader”) in order to attract consumers to other more profitable products. These strategies can therefore
be both pro-competitive and beneficial for consumers.
OECD Competition Assessment Reviews: Portugal noted that empirical studies have investigated the
effects of the regulation of below-cost pricing in a number of countries (OECD, 2018[49]). One study
found that restrictions on below-cost sales led to price increases in Ireland (Allain and Chambolle,
2011[88]). Another study reached similar conclusions in France and found that “the transparency of the
invoiced price fosters retailer price alignment and reduction in intra-brand/inter-store competition” (Colla
and Lapoule, 2008[89]). In addition, the authors found that French rules prohibiting below-cost pricing
caused retailers to focus less on negotiating the lowest possible prices from their suppliers, which would
benefit consumers. Instead, they would place more effort on obtaining promotional fees and other
manufacturer incentives that improve retailer profitability without benefitting consumers (since
promotional fees and other manufacturer incentives are not considered elements of the “purchase price”
for the purposes of the below-cost pricing rule). This contributed to keeping prices higher for consumers.
The majority of OECD countries have no below-cost pricing restrictions, including Australia, Canada,
Denmark, Finland, Greece, Hungary, Iceland, Ireland, Korea, Luxembourg, Mexico, the Netherlands,
New Zealand, Norway, Poland, Sweden, and the United Kingdom. 1 Below-cost pricing restrictions are
found in countries including Portugal, Spain and Italy. Other countries, such as Greece and
Luxembourg, have removed restrictions
There are cases, however, in which below-cost pricing does impair market functioning and so requires
action. These concerns can generally be addressed using competition law on a case-by-case basis, in
which pro-competitive below-cost pricing can be distinguished from anticompetitive strategies. In
particular, below-cost pricing becomes problematic from a competition perspective when it is put in
place by a dominant firm – one whose position of economic strength in a market allows it to behave
independently of its competitors, customers and consumers – with the intention of driving its rivals, such
as small businesses, out of the market and then raising prices to above-market levels, for instance to
recover any initial losses.2 This predatory-pricing strategy is an abuse of dominance, for example, under

92 
Indonesian competition law, in line with the competition-law frameworks of the majority of other ASEAN
jurisdictions.3
Similar distinctions in competition law exist globally. European case law has underlined that below-cost
pricing strategies by dominant firms are not intrinsically abusive, but in specific circumstances can be
illegitimate. 4 In the United States, below-cost pricing strategies are considered abusive solely if there
is evidence that losses have been recouped. 5
Notes:
1 See OECD (2021), “Sectoral Product Market Regulation Indicators”, www.oecd.org/economy/reform/OECD-PMR-Sector-Indicator-
%20values-2018.xlsx.
2 Case 27/76, United Brands Company and United Brands Continentaal BV v Commission (1978), ECR 207, paragraph 65; Case 85/76,
Hoffmann-La Roche & Co. AG v Commission (1979), ECR 461, paragraph 38.
3 See Article 20 (predatory pricing), Law No. 5/1999 on the Prohibition of Monopolistic Practices and Unfair Business Competition,
http://eng.kppu.go.id/wp-content/uploads/2016/11/law_5_year_1999_.pdf
4 The European Court of Justice (ECJ) in Akzo Chemie BV v Commission (Case C-62/86, ECLI:EU:C:1991:286) distinguished between:
1) average total costs (ATC), and 2) average variable costs (AVC). ATC reflects the total cost of production of one unit of output, while AVC
indicates the variable cost of production of one unit of output, and is calculated by dividing the variable costs (excluding the fixed costs) by
the number of units produced. The ECJ held that predation can be presumed when firms price products below AVC since in this case the
undertaking is losing money by producing the product. When prices are above AVC, but below ATC, the conduct may be considered abusive
only if the undertaking is intended to eliminate a competitor.
5 See US Supreme Court decisions in Brooke Group Ltd v Brown & Williamson Tobacco Corp, 509, US 209 (1993) and Weyerhaeuser Co
v Ross-Simmons Hardwood Lumber Co Inc., 549 US 312 (2007).
Source: (OECD, 2018[49]) (OECD, 2019[50]) (OECD, 2021[90]).
6.3.2. Discretion to regulate prices
In non-monopoly sectors, price regulation is often at the discretion of the sectoral regulator, which has the
ability to intervene in certain circumstances or can impose pricing conditions including maximum or
minimum prices as part of the licensing process. The OECD identified several examples.
Broad powers to intervene in price setting. The OECD identified examples in legislation that provided
regulatory bodies with broad discretion to regulate prices in the road freight, maritime freight and freight-
forwarding sectors, and may give them the power to issue regulations or set prices during the licensing
process.
In Lao PDR, for example, the National Transport Committee has the power to set a price structure that the
Division of Public Works and Transport in each province or city must then implement. The Law on Land
Transport also provides incentives for those that “make outstanding achievements […] to strictly follow the
specified transport price structure”.86 The OECD understands that despite this legal basis, no price-
structure regulation has actually been issued.
In Malaysia, the Land Public Transport Agency (APAD) has the power to determine freight rates for cargo
while, in the maritime freight market, the Domestic Shipping Licensing Board has broad powers to
“prescribe the rates which may be charged for the carriage of passengers or cargo by any ship engaged
in domestic shipping”.87
A similar power exists in the Philippines, where the maritime sectoral regulator MARINA has the power to
intervene in the setting of domestic shipping rates when deemed necessary to protect the public interest.
MARINA also has the power to create specialised rules for monopolised routes, which can include price
regulation. Regulators can also intervene in the licensing process.
In Thailand, the authority in charge of issuing licences for freight forwarding by road has the power to set
freight rates as part of the licensing process. 88 The provision suggests that the Central Registrar, with the

 93
approval of the Central Land Transport Control Board, has the power to prescribe conditions in the licence
including tariffs or fees. The wording of this provision suggests that fixed, minimum or maximum tariffs
could be introduced.
Inclusion of freight transport in price regulation of passenger transport. The OECD found that powers
aimed at the regulation of passenger transport might unintentionally include freight transport. In Thailand,
the Central Land Transport Control Board (for the Bangkok area) and Provincial Land Transport Control
Board (for the rest of the country) have the power to issue decisions of general application that set transport
rates and other transport-service charges. In theory, this power applies to both passenger and freight
transport; however, in practice the regulatory body only sets rates for passenger services.
Harm to competition. The power to intervene to regulate prices may be used to set minimum prices with
the objective of protecting consumers from lower-cost and (presumably) lower-quality alternatives. There
is no guarantee, however, that a higher-priced option is indeed of higher quality (see Box 6.5). In addition,
as set out in Section 4.6, setting minimum prices can be detrimental to consumers by depriving them of
lower-cost services and so reducing consumption, while keeping higher-cost service providers in the
market and providing insufficient incentives to seek efficiency.
In contrast, the power to regulate freight rates can be justified in monopoly sectors, where the control of
maximum prices may serve as a counterweight to a lack of alternatives. In these cases, the policy maker
aims to protect consumers from high prices. However, this is not usually the case in sectors such as road
freight transport and freight-forwarding, where market entry is typically freer, which leads to a large number
of market players.
More broadly, imposing prices may limit firms’ flexibility to adjust their prices to market conditions, for
instance when introducing new products or services in the market or in times of low demand.
Finally, if the cases in which the authority can intervene are not clearly specified in the legislation, this
creates uncertainty for operators. Especially in sectors requiring significant investments, firms may choose
to enter a sector based upon their expectation that they will be able to set prices to recoup their
investments. After the investment has been made, the authorities could have an incentive to intervene in
the market to guarantee consumers lower prices, which may not be high enough to allow firms to recoup
the investment. Potential investors may anticipate this risk and consequently invest less, potentially
depriving consumers of better-value products and more innovation.

94 
Box 6.5. Minimum prices in the Italian road freight transport sector
In 2012, the Italian Competition Authority (AGCM) issued an opinion on decisions taken by the
Observatory on Road Transport and of the Ministry of Infrastructure and Transport. Specifically, the
Observatory adopted certain provisions establishing the minimum operating costs of road freight
transport that ensure compliance with the safety parameters provided for by legislation. The latter then
issued a decree implementing the observatory’s recommendations.
According to the AGCM, the ministerial decree and related decisions by the Observatory broke
competition law, both at a national and European level, as they artificially fixed minimum prices for road-
transport activities. Those decisions were not based on any well-founded safety requirements specific
to road transport and effectively introduced compulsory tariffs across Italian territory, with significant
effects on trade between EU member states.
Since the Ministry of Infrastructure and Transport and the Observatory contested the AGCM’s
judgement, the competition authority appealed, and the appeal court issued a non-definitive decision
and requested a ruling from the European Court of Justice (ECJ).
The ECJ concluded that “although it cannot be ruled out that the protection of road safety may constitute
a legitimate objective, the fixing of minimum operating costs does not appear appropriate, either directly
or indirectly, for ensuring that that objective is attained” (paragraph 51). This, the court ruled, was for
two reasons: 1) such an approach did not allow “carriers to prove that, although they offer prices lower
than the minimum tariffs fixed, they comply fully with the safety provisions in force” (paragraph 55); and
2) “there are a number of rules, including the rules of EU law […] relating specifically to road safety,
which constitute more effective and less restrictive measures, such as the EU rules on the maximum
weekly working time, breaks, rest, night work and roadworthiness tests for vehicles” (paragraph 56).
Source: Italian Competition Authority (2012), Opinion AS913 of 5 March 2012; European Court of Justice, C-208/13 of 4 September 2014.
Recommendation. The OECD recommends removing the ability to intervene in price regulation for freight
transport (other than those cases covered in Section 4.6). If these powers are maintained, the OECD
recommends setting clear guidelines and limiting interventions to exceptional circumstances, for example,
in the case of monopoly routes, where entry is not likely.
6.4. Differential treatment of SOEs
The OECD has identified a number of provisions in various logistics sub-sectors that grant special
regulatory treatment to state-owned enterprises (SOEs).89 Such treatment may give SOEs a competitive
advantage compared to private players. For instance, discriminatory measures may significantly raise
costs of entry and doing business for private suppliers relative to SOE suppliers and limit the ability of
some suppliers to provide their services.
6.4.1. Competitive neutrality
The principle of competitive neutrality – whereby state-owned and private businesses compete on a level
playing field – ensures that all enterprises, public or private, domestic or foreign, face the same sets of
rules. In order to ensure optimal economic outcomes, SOEs should compete against private entities on
fair terms, while recognising and taking into account their contribution to socio-economic and policy
objectives.

 95
SOEs may enjoy rights or privileges unavailable to private competitors, which give them undue competitive
advantage over their rivals, including selective subsidies, explicit or implicit loan guarantees, preferential
purchasing, preferential standards, and regulatory or tax favouritism. This may make market entry more
difficult for private companies (both domestic and foreign) and can therefore also constitute a competitive
obstacle. However, SOEs may also be subject to certain duties, such as requirements to operate
(underfinanced) public services or to comply with civil-service labour rules, which raise their costs and
affect their ability to compete effectively with privately owned competitors.
A level playing field between public and private market participants allows both to compete on fair terms,
leading to more choice, higher quality and lower prices for consumers, which ultimately, benefits economic
growth and development. A level playing field also benefits taxpayers as (often limited) public resources
can be better allocated to other public services, including pensions, healthcare and social benefits rather
than to SOEs.
At ASEAN level, the ASEAN Economic Community Blueprint 2025 affirms that one of the elements
necessary to increase the region’s productivity is to ensure “a level playing [field] for all firms, regardless
of ownership”; this is also identified as the fundamental goal of competition policy and law (ASEAN,
2015[91]).90 These principles are also noted in the 2010 ASEAN Regional Guidelines on Competition Policy,
in which the ASEAN Experts Group on Competition (AEGC) stated that: “Competition policy should be an
instrument of general application, i.e., applying to all economic sectors and to all businesses engaged in
commercial economic activities (production and supply of goods and services), including State-owned
enterprises” (ASEAN, 2010[92]). This results in no ASEAN competition law giving SOEs a general
exemption.
Governments may deliberately depart from competitive neutrality when SOEs may be necessary to correct
market failures or to achieve other policy objectives (OECD, 2012[93]) (Capobianco and Christiansen,
2011[94]). While the majority of markets may be best served by suppliers pursuing commercial objectives,
certain markets have special characteristics that can lead to “market failures”, in which the ordinary
interaction of supply and demand does not lead to the most economically efficient outcome. In such
identifiable circumstances, an SOE whose operating principles depart from ordinary profit maximisation
may achieve the most efficient attainable outcome. When analysing the level playing field between public
and private entities, the socio-economic and developmental role and policy objective of an SOE should
always be considered.
6.4.2. Differential treatment of SOEs in the ASEAN logistics sector
The OECD has identified a number of examples in the logistics sector in which SOEs receive different
treatment to private players. This report will not, however, address any such barriers in the small-package
delivery services sector as these are covered in OECD Competitive Neutrality Reviews: Small-Package
Delivery Services in ASEAN.
SOEs subject to different regulatory requirements
Description of obstacle. In several ASEAN member states, SOEs are exempt from certain regulatory
requirements with which private operators are required to comply, such as the requirement to have an
operating licence, asset requirements or specialised staffing requirements. The OECD identified examples
in the Myanmar maritime sector. For example, government ships benefit from an exemption from the
Merchant Shipping Act, including the requirement to obtain an operating permit. 91 In the shipyard sector,
Myanmar Shipyards, like other SOEs in Myanmar, can obtain privileges from the Ministry of Commerce,
including exemptions from the requirement to obtain an import/export licence and the general operational
licence; these licences are required for private-sector operators. In Lao PDR, SOEs in the freight
transportation sector, including road, waterway and railway, are not required to obtain a business operator
licence that private operators must obtain in order to operate.

96 
Harm to competition. Provisions granting SOEs exemptions from various regulatory requirements that
apply to privately owned companies may reduce SOEs’ entry costs, operating costs or administrative
burdens (such as operational licence requirements), compared to other market participants. These
provisions have the potential to distort competition in the relevant sectors.
Recommendations. The OECD has two complementary recommendations.
1. Ensure that SOEs’ commercial activities are subject to the same regulatory requirements, including
on licensing, as competing private firms.
2. Alternatively, member states could consider lowering the burden on licensees by simplifying
licensing procedures for all players.
Exemption from public-procurement rules of transactions between SOEs and government

entities
The majority of member states have a public-procurement regime, which plays an important role in
encouraging public-sector efficiency and fostering citizen trust. The background to the OECD
Recommendation of the Council on Public Procurement states that: “Well-designed public procurement
systems also contribute to achieving pressing policy goals such as environmental protection, innovation,
job creation and the development of small and medium enterprises” (OECD, 2015[95]). OECD Guidelines
on Corporate Governance of State-Owned Enterprises explains that “when SOEs engage in public
procurement, whether as bidder or procurer, the procedures involved should be competitive, non-
discriminatory and safeguarded by appropriate standards of transparency” (OECD, 2015, p. 50[96]).
Description of obstacle. Certain member states’ public procurement regimes do not apply to transactions
between SOEs or between SOEs and other government entities. For example, a SOE or other government
entity that wishes to contract for services with a private company must usually hold a tender process; yet
if it contracts with a SOE, no tender process is required. Such exemptions exist, for example, in Lao PDR,
Myanmar, Indonesia and the Philippines. 92
Harm to competition. This exemption increases the likelihood that an SOE or government entity will
choose to contract with an SOE, as conducting a tender process can be burdensome. This eliminates
competition and potentially lower-cost and better quality offers from private firms.
Recommendations. The OECD has three recommendations.
1. Ensure that public-procurement rules treat all potential suppliers equitably, without discrimination
those demanded from private bidders.
2. Reconsider the practice of direct assignments from one SOE to another or from government
entities to SOEs, and encourage open tenders, clearly defining the circumstances when
alternatives procedures can be applied.
3. Establish internal guidelines and provide training to officials to ensure that non-discriminatory
public-procurement rules are followed and enforced and that SOEs are not granted preferential
access to the provision of services to government agencies.
6.5. Compulsory association membership
Description of obstacle. In several member states, the OECD found that the membership of an
association was a prerequisite for market entry. These rules oblige service providers to join an industry
association or professional association in order to operate. The different laws typically specify which
association prospective service providers are required to join.

 97
For instance, in Indonesia and Myanmar, potential freight forwarders must become members of the
national freight-forwarding association in order to operate. In the Philippines, a shipbuilding entity must
become a member of a shipyard association recognised by the Maritime Industry Authority (MARINA) prior
to the issuance of a new or renewed MARINA licence. In Lao PDR, while companies do not need to be
members of an industry association, individuals must be part of the Land Transporters Association, a group
for all business operators engaged in land transport activities.
The objective of these measures appears to be ensuring a certain degree of control over the industry and
facilitating interactions between government and businesses. In some cases, compulsory membership is
viewed by the authorities as a substitute for registration or licensing by public authorities, particularly when
a country’s regulatory framework does not provide for these mechanisms. Associations can also keep their
members informed of the latest sectoral developments, such as market trends or changes in legislation,
which can save costs for members.
Harm to competition. Compulsory membership requirements identified by the OECD may harm
competition in two main ways. First, if the current association members can deny registration to a new
member, they would effectively prevent potential competitors from entering the market. In addition, such a
requirement may increase the cost of doing business and restrict market entry as membership in industry
associations generally require certain dues, such as registration and annual fees. Second, an industry
association with some responsibility for regulating its members’ conduct without government supervision
can potentially have a significant anti-competitive impact. International experience reveals that industry
associations can be platforms that facilitate anti-competitive practices, for example, by co-ordinating their
members’ prices and business practices. Compulsory membership has also been found to be problematic,
for example, when the association imposes restrictive conditions that limit market entry (Box 6.6).
Box 6.6. Mandatory membership in trade associations

In Mexico, a 1936 law made membership in a business chamber a compulsory requirement for an
industry or business to operate. To ensure compliance, public offices were prohibited by law from
authorising business and industrial activities of applicants that did not present proof of membership in
a business chamber. Mexico’s Supreme Court of the Justice of the Nation struck this requirement down
in 1995, holding that mandatory membership in a chamber of commerce or business association is
unconstitutional as it violated the right not to associate.
In Greece, individual wine-makers on the island of Samos were required to become members of local
co-operatives. These co-operatives, in turn, had to deliver all their grape production to the Union of
Vinicultural Co-operatives of Samos, the exclusive producer and marketer of Samian wine. In 2016, the
EU Commission asked Greece to amend Compulsory Law No. 6985/1934 which prevented the wine
growers from producing and marketing their wines independently.
Source: (OECD, 2007[97]); European Commission (22 July 2016), European Commission Memo No. 16-2490, Infringement No. 20084585,
https://ec.europa.eu/commission/presscorner/detail/EN/MEMO_16_2490.
Recommendation. The OECD recommends removing the identified compulsory membership

requirements.

98 

 99
7 Regulatory quality
The OECD’s analysis in the ASEAN Competition Assessment Project has focused on laws and regulations
that may reduce competition in the logistics sector. In addition to the specific regulatory framework of the
logistics sector in ASEAN member states, the wider business environment, including factors such as the
ability to enforce contracts or to obtain credit to fund investment, also has an impact on suppliers’ ability to
compete.93 While these factors are outside the scope of the OECD project, during the competition
assessment, the OECD has made some observations as to the quality of regulations and of regulatory
practices in member states. These are summarised in the present chapter, which offers some suggestions
for consideration, based on principles of good regulation and on the OECD work on regulatory policy. 94
Regulatory quality matters for competition. For example, a clear and easily accessible regulatory
framework is essential for new entrants that are not necessarily familiar with the national legal framework,
and for small competitors, for which compliance costs and administrative burdens are relatively more
important than for larger companies. Most OECD countries have made efforts to lower regulatory burdens,
particularly in the interest of improving economic activity and the ease of doing business (OECD, 2018[98]).
ASEAN has developed regional guidelines for good regulatory practices to improve the quality of
regulations. Last revised in 2018, the ASEAN Guidelines on Good Regulatory Practices include
recommendations for the design and implementation of regulations based on six core principles. According
to these guidelines, regulations should:
1. have a clear policy rationale, objectives, and institutional framework
2. produce benefits that justify costs and be the least distortive to markets
3. be consistent, transparent, and practical
4. support regional regulatory co-operation
5. promote stakeholder engagement and participation
6. be subject to regular review for continued relevance, efficiency, and effectiveness.
Box 7.1 summarises the corresponding principles encapsulated by the OECD 2012 Recommendation of
the Council on Regulatory Policy and Governance and the 1995 Recommendation on Improving the
Quality of Government Regulation.
Box 7.1. What is regulatory quality?

Regulations are the rules that govern the everyday life of businesses and citizens. They are essential
for economic growth, social welfare and environmental protection, but can also be costly in both
economic and social terms. In that context, “regulatory quality” is about enhancing the performance,
cost effectiveness, and legal quality of regulation and administrative formalities. The notion of regulatory
quality covers the process or the way regulations are developed and enforced, which should follow the
key principles of consultation, transparency, accountability and evidence. Beyond process, the notion
of regulatory quality also covers good outcomes (regulations that are effective at achieving their
objectives); efficient (do not impose unnecessary costs); coherent (when considered within the full

100 
regulatory regime); and simple (regulations and the rules for their implementation are clear and easy to
understand for users).
Building and expanding on the OECD’s 2012 Recommendation of the Council on Regulatory Policy and
Governance and the 1995 Recommendation of the Council on Improving the Quality of Government
Regulation, regulatory quality can be defined by regulations that:
1. serve clearly identified policy goals, and are effective in achieving those goals
2. are clear, simple and practical for users
3. have a sound legal and empirical basis
4. are consistent with other regulations and policies
5. produce benefits that justify costs, considering the distribution of effects across society and
taking into account economic, environmental and social effects
6. are implemented in a fair, transparent and proportionate way
7. minimise costs and market distortions
8. promote innovation through market incentives and goal-based approaches
9. are compatible as far as possible with competition and trade- and investment-facilitating
principles at domestic and international levels.
In addition, the 2012 Recommendation on Regulatory Policy and Governance provides guidance to
ensure the quality and transparency of government regulations, in particular through the OECD
Reference Checklist for Regulatory Decision-making.
Source: Text partly reproduced from Box 1.1 in (OECD, 2015[99]); (OECD, 1995[100]); (OECD, 2012[69]),
As shown in Figure 7.1, the World Bank’s regulatory quality scores – which capture perceptions of a
government’s ability to formulate and implement sound policies and regulations that permit and promote
private-sector development – show the Philippines, Cambodia, Indonesia, Lao PDR, Myanmar, and
Viet Nam have room for convergence with both other ASEAN member states (such as Brunei Darussalam,
Singapore, Malaysia and Thailand) and OECD countries (such as Australia, Germany and Japan).
To help narrow differences in the region, ASEAN has issued the Principles for Good Business Registration
Practices, which include recommendations such as establishing “one-stop” or “single-roof” service centres
to simplify business registration processes and investing in technology to create a comprehensive online
business registration system (ASEAN, 2017[101]).
Based on the analysis of legislation conducted in each member state and information collected from
stakeholders, this chapter covers some of the most frequent barriers relating to the general business
environment. Additional member state-specific recommendations are set out in the individual country
competition assessment reviews.
In particular, this chapter covers issues related to: 1) administrative burdens, and 2) access to legislation.
While it does not provide a comprehensive review of regulatory quality in ASEAN member states nor does
it make suggestions in this sense, it also mentions some of the initiatives undertaken by member states to
improve their overall regulatory quality.

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Figure 7.1. Regulatory quality estimates for ASEAN and selected OECD countries, 2016-19
2016 2017 2018 2019 ASEAN average 2019
2.5
1.5
0.5
-0.5
-1
-1.5
Note: Lowest = -2.5; highest = 2.5. The regulatory quality estimate indicator captures the perception of a government’s ability to formulate and
implement sound policies and regulations that permit and promote private-sector development.
Source: World Bank’s Worldwide Governance Indicators, http://info.worldbank.org/governance/wgi.
7.1. Administrative burdens
The OECD has long-recognised administrative simplification as an important means of improving the
regulatory environment.95 In many countries, assessing regulatory burden and cutting identified
administrative red tape are some of the first steps of regulatory reform. Burden reduction programmes
attempt to make government administration more streamlined, transparent and efficient, while aiming to
provide services more quickly and more effectively – all while considering economic, social, and
environmental objectives (OECD, 2018[98]). Following the 2012 Recommendation of the Council on
Regulatory Policy and Governance and the 2005 OECD Guiding Principles for Regulatory Quality and
Performance, efforts to address these burdens have adopted certain key principles.
1. Processes should be clear, in terms of timelines, required information, fees to be paid, and key
contacts. The criteria used to grant approvals or review applications should be transparent and
objective. The scope and duration of stakeholder consultations should be clear (OECD, 2005[102]).96
2. Processes should be simplified, as far as possible. When multiple authorities are involved, market
participants can be provided with a “one-stop shop”, so that they deal with only a single point of
contact. Duplication should be avoided, both in terms of the information requested from participants
and the different steps of a process (OECD, 2012[69]).
3. Processes should be timely, since overly long processes can create disincentives for entry, and
impose undue costs on market participants, with consequences for competition more broadly
(OECD, 2012[69]).97
4. Processes should be justified by a well-defined policy goal, and should not exceed what is required
to achieve the goal (OECD, 2012[69]).98
All ten ASEAN member states have now introduced one-stop shops as a single-entry point for registering
businesses and obtaining related information, certification, and permits (OECD, 2018[103]). While these
initiatives can go a long way in improving regulatory frameworks, their implementation is complex and
requires significant reforms. The OECD’s 2020 Best Practice Principles on One-Stop Shops offer guidance
in this regard (OECD, 2020[104]).

102 
Description of the obstacle. In the course of its review, the OECD has identified various regulations that,
while not directly restricting competition, are unclear and impractical for businesses, are inconsistent with
other regulations and policies, or impose administrative burdens and costs on market participants. These
costs can include the costs of producing paper-based applications in the absence of electronic application
systems; non-monetary costs that can have significant financial implications, such as time spent
completing applications with different government offices or delays to business processes while awaiting
approval.
Some examples of these administrative barriers are listed below.
 Indonesia. The country has made significant improvements to its business licensing regime with
the introduction of its Online Single Submission (OSS) system and regional one-stop shop centres.
For example, the Ministry of Communications and Informatics (MCI) now accepts applications for
a postal license through the OSS, eliminating the need for physical documents to be submitted to
the MCI and reducing the time to complete the application process. The OECD understands,
however, that there are still issues with the implementation of these initiatives. In addition, logistics
providers do not currently have full access to online application processes when applying for
sector-specific licences and accreditations, and are often required to submit hard-copy applications
with the relevant agency for each authorisation.
 Malaysia. Similarly, logistics providers do not currently have full access to online application
processes when applying for licences and accreditations and often need to submit hard-copy
applications to different agencies for each authorisation. From stakeholder interviews, the OECD
understands that most agencies in Malaysia are in the process of introducing electronic application
systems.
 Philippines. Different standards are applied and implemented by different agencies; for example,
national and local bodies in the Philippines have different standards for overweight and overloading
regulations for trucks. Trucks for hire are required to obtain licences and authorisations from more
than six national and local agencies, such as the Land Transportation Office (vehicle registration);
Land Transportation Franchising and Regulatory Board (Certificate of Public Convenience); local
government units (mayoral permits); Bureau of Customs; Philippine Ports Authority; and if relevant,
the Philippine Economic Zone Authority. Logistics providers do not currently have full access to
online application procedures for licences and accreditations, and not all licences, permits or
authorisations can be applied for online. Market participants are often required to submit hard-copy
applications with the relevant agency for each authorisation.
 Thailand. Logistics providers cannot currently apply online for all licences and accreditations.
Certain authorisations, such as road freight transport licences, require applicants to submit hard-
copy applications with the relevant agency.
Harm to competition. Beyond their impact on individual businesses, administrative burdens can have
broader impacts on consumers, and economic productivity more generally. Where they impose costs on
potential entrants they may reduce competition, discouraging smaller operators from entering the market.
Heavy or unclear administrative procedures can indirectly favour larger players with the resources to obtain
professional compliance assistance, operate more sophisticated record-keeping operations and cover
compliance costs. This could particularly discourage enterprises operated by individuals from vulnerable
groups or disadvantaged regions who may not have sufficient financing to cover additional compliance
costs. Added costs incurred by businesses may be passed on to consumers, who may also be harmed by
more limited innovation and less market contestability.

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Box 7.2. Administrative simplification and systematic regulation reviews

The OECD recommends that governments schedule reviews “to assess all significant regulation
systematically over time, enhance consistency and coherence of the regulatory stock, reduce
unnecessary regulatory burdens and ensure that significant potential unintended consequences of
regulation are identified” (OECD, 2012[69]).
Administrative burden-reduction programmes seek to make administrative processes more responsive,
transparent, and efficient, while making services and access to services quicker and more effective. As
efforts to reduce administrative burden tend to require reviewing and consolidating laws and regulations,
a “whole-of-government” approach is usually taken.
Simplex + and e.Portugal.gov.pt, Portugal

Simplex, Portugal’s successful simplification programme was first launched in 2006. In 2016, the
government launched Simplex+, which aimed to reduce administrative burdens and improve the quality
of regulations (OECD, 2019, p. 15[105]).
ePortugal.gov.pt is an online public-services portal for over 1 000 essential government services,
providing information, guidance and services for citizens and businesses, as well as detailed guidance
for professionals and specific groups such as employees, migrants and others, as well as information
on government and policy. Using a life-event approach, services are offered by 590 entities, from the
central government (17 ministries), local government, and private entities.
Administrative Burden Reduction Programme, United Kingdom

In 2005, the United Kingdom launched a five-year Administrative Burden Reduction Programme
(ABRP), co-ordinated by the Better Regulation Executive, to reduce administrative burdens, remove
out-of-date regulations, and make transactions easier for businesses and the third sector, such as
charities, voluntary-sector organisations and social enterprises. Using the Standard Cost Model to
measure the costs of the administrative burdens imposed by each department, 304 “simplification
measures” – which included changes to legislation, publication of guidance or the creation of web-based
tools – were introduced. These measures resulted in annual net savings to businesses and the third
sector of more than GBP 3.5 billion (United Kingdom Department for Business, Innovation, and Skills,
2010[106]).
Points of Single Contact, European Union

Following good administrative practice at the European Community and national level, Directive
No. 2006/123/EC pursued administrative simplification to eliminate delays and costs arising from
unnecessary or excessively complex and burdensome procedures, duplication of procedures, “red
tape” in submitting documents, authorities’ arbitrary use of powers, authorisations’ limited duration of
validity, and disproportionate fees and penalties. The Directive also mandated the creation of
e-government portals called Points of Single Contact (PSC), which provide: “information on procedures
and formalities, contact details of the competent authorities, conditions for access to public registers
and databases and information concerning available remedies and the contact details of associations
and organisations from which providers or recipients can obtain practical assistance” (Article 51). PSCs
have been required in all EU member states since 2009.
Source: (OECD, 2018[103]) (OECD, 2012[69]) (OECD, 2020[104]) (European Parliament and of the Council, 2006[107]).

104 
For logistics providers, specifically, the lack of digitalisation increases costs as they are required to submit
a different hard-copy application to the relevant agency for each authorisation. It may also slow down the
processing of applications, resulting in delayed entry by new market players. In some member states,
however, limited Internet access may limit the positive impact of digitalisation and online applications on
market entry and competition.
Policy suggestions. The OECD offers three principles for consideration, based on its country-level
reviews.
1. Licences and permits required for a single logistics operation should be grouped into a single
application to a single point of contact. If available, take advantage of the opportunities offered by
information technology and one-stop shops for licences, permits, and other procedural
requirements to streamline logistics licence applications. Allow online applications and the
continuation of digitalisation of all application procedures for logistics-related authorisations, noting
that non-online options for filing applications should be maintained for those who cannot access
the internet.
2. Remove any inconsistencies between regulations on the same subject, such as technical
regulations, issued by different authorities.
3. Use robust analytical tools to measure the impact of regulatory decisions on citizens and
businesses, including undertaking ex ante impact assessments of regulatory proposals to gauge
their impact on the market entry, especially for SMEs, and use ex post review to evaluate and
amend the regulatory decisions as needed.
7.2. Access to legislation
In general, a basic requirement for improving the quality of a regulatory framework is legislation that is
accessible and organised in a user-friendly manner so that all rules and regulations enforced by agencies
are clear and publicly available (see Box 7.3). Market participants need to have full transparency of those
rules and regulations that apply to them. Government authorities should ensure that there is an up-to-date
version of the legislation and guidelines they administer on their website and on the official government
legal database. Importantly, this means that any amendments to a piece of legislation should be included
in a new consolidated version (or alternatively be provided as a link) and obsolete legislation should be
marked as such. While amending public legal databases can be costly and time-consuming, it should be
a long-term goal for all ASEAN member states.
ASEAN has made efforts in facilitating access to legislation through single points of contacts. For example,
it has created an ASEAN Trade Repository acting as a single point of access to all trade-related information
of AMS.99 This repository is connected to a series of interoperable national trade repositories providing
and maintaining up-to-date information. Despite these efforts, when conducting its competition assessment
review, the OECD has found a number of issues analysed more in detail below.

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Box 7.3. OECD recommendations on open government

The 2012 OECD Recommendation of the Council on Regulatory Policy and Governance includes a
recommendation to adhere to principles of open government. This includes transparency and
participation in the regulatory process to ensure that regulation serves the public interest and is informed
by the legitimate needs of those it interests and affects. It also involves providing meaningful
opportunities (including online) for the public to contribute to the process of preparing draft regulatory
proposals and gathering high-quality supporting analysis. Governments should ensure that regulations
are comprehensible and clear and that parties can easily understand their rights and obligations.
One key component of open government is that regulations should be easily accessible to the public.
A complete and up-to-date legislative and regulatory online database should be freely available to the
public in a searchable format and with a user-friendly interface.
Source: (OECD, 2012[69]).
Description of the obstacle. In the course of its review, the OECD has identified several examples where
logistics legislation is not easily accessible or where it is not organised in a user-friendly manner. Key
issues include: 1) some logistics legislation is not published, so market participants are obliged to contact
authorities to access legislation or to verify its content; 2) copies of some logistics legislation is only
available after a request to authorities; 3) implementing guidelines for general logistics legislation not being
publicly available; 4) repealed or obsolete laws not removed from legislation or databases and so appear
to be in force; 5) legislation is scattered across different websites or sources, and is not available in a single
database; and 6) some legislation is not accessible in a machine-readable or searchable electronic format,
or available to copy or download.
 Brunei Darussalam. The Attorney General’s Chambers’ website is the main location for finding
Brunei Darussalam legislation. On the site, amendments to legislation are not always incorporated
into the original piece of legislation, while many pieces of legislation are in an unsearchable format.
 Cambodia. There is no comprehensive database for all legislation (notably secondary legislation
or “Prakas”) currently in force. In addition, specifically for the logistics sector, there is no primary
legislation for sea, inland waterways, and ports and these sectors are currently governed by other
legal instruments such as decrees, sub-decrees, regulations and guidelines. Draft laws covering
these sectors are being drafted in a process has been ongoing in some cases for more than
ten years (World Bank, 2018[108]); these draft laws are not publicly available.
 Lao PDR. The 2012 Law on Making Legislation requires all national and local regulations to be
made available on the official gazette website (www.laoofficialgazette.gov.la). However, the law is
yet to be fully implemented and some laws remain inaccessible. Certain regulations are vague or
contradictory, with provisions often diverging, overlapping or contradicting one another (US
Department of State, 2020[109]).
 Myanmar. The Gazette of the Republic of the Union of Myanmar is mandated to publish weekly
compilations of issued rules, laws, notifications, procedures, acts, and directives; this does not
appear to happen consistently. Amendments to legislation are not always incorporated into the
original piece of legislation. The OECD also found a number of old and possibly obsolete
regulations and rules including the Post Office Act and the Ports Act. Not removing (or labelling)
these obsolete regulations from the online government legal databases creates legal uncertainty
and ambiguity, which could have a negative impact on potential entry and investment in the sector.
 Philippines. The Official Government Gazette website contains certain pieces of legislation no
longer in force, but not marked as such. Also, as amendments to legislation are not incorporated

106 
into the original piece of legislation, market participants must already know about a particular
amendment before searching for it. Further, some legislation is simply not published. For example,
certain logistics-related rules and regulations are unavailable because they are currently “under
review” by the relevant agency, even if the legislation itself is still in force and being applied by the
agency in question.
 Thailand. Online legal databases, such as the Office of the Council of State’s legislative database,
are not easily accessible. Certain legislation appearing in the databases are not amended despite
being modified by subsequent pieces of legislation For example, the Land Transport Act has been
amended several times, but the OECD has been unable to locate an updated, consolidated
version.
Harm to competition. Difficulties in accessing logistics legislation creates legal uncertainty and increases
costs for actual and potential market participants. Having conflicting, outdated or ineffective regulations in
the body of legislation creates legal uncertainty that could have a negative impact on entry and investment
in the sector. Legal uncertainty raises costs as logistics providers and consumers are required to undertake
additional work to understand the applicable legal framework at a specific point in time.
International experience provides examples of good practices in this respect (see Box 7.4).
Box 7.4 Legal databases in Singapore, Australia and the United Kingdom
Singapore Statutes Online
In Singapore, the Attorney-General’s Chambers provides a free service called Singapore Statutes
Online (SSO; https://sso.agc.gov.sg), which consists of a complete list of current and historical versions
of legislation, including revised editions.
Federal Register of Legislation, Australia

In Australia, all federal laws are published on the Federal Register of Legislation website
(www.legislations.gov.au). The latest consolidated version of the legislation is clearly marked as “In
force – Latest version”. Users are able to “View Series” to see all versions of the legislation in question
and can easily find any amending acts. Users can easily can see previous versions to understand which
law was applicable at which time, and see any amendments and their date. The website also links to
related bills.
Legislation.gov.uk, United Kingdom

The website www.legislation.gov.uk lists changes to legislation, including repeals, amendments and
other effects, such as modifications and commencement information, made by subsequent legislation.
The lists are updated generally within two weeks of new legislation being published.
Source: Singapore Statutes Online; Federal Register of Legislation, www.legislation.gov.au; legislation.gov.uk, www.legislation.gov.uk.
Policy suggestions. The OECD offers three principles for consideration, based on its country-level
reviews.
1. Publish all primary and secondary legislation in a single database. Alternatively, or until this is
implemented, each logistics authority should publish a complete list of legislation it administers on
its website along with its status. Obsolete legislation should be marked as such.
2. Update all logistics legislation in the database to include new amendments allowing stakeholders
to access consolidated versions of relevant legislation. Alternatively, or until this is implemented,
publish the original version of legislation with links to any amendments.
3. Ensure that databases and legal texts are electronically searchable.

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7.3. Initiatives to improve regulatory quality
To improve regulatory quality, the OECD recognises the need for governments to undertake a
comprehensive programme that includes systematically reviewing the stock of regulations, to ensure their
efficiency and effectiveness, and to lower the regulatory costs for citizens and businesses, integrating
Regulatory Impact Assessment (RIA) into the process for the formulation of new regulatory proposals, and
employing opportunities of information technology and one-stop shops for licences, permits, and other
procedural requirements (OECD, 2012[69]).
The OECD takes note of ongoing initiatives undertaken by ASEAN member states to reduce administrative
burdens, lower compliance costs, simplify regulations, and improve the regulatory quality of logistics
legislation in the region.
 All ten member states have introduced one-stop shops as a single-entry point for registering
businesses and obtaining information, certification, and permits (OECD, 2018[103]).
 Cambodia. Cambodia has developed and installed ICT systems to allow certain administrative
processes, such as registration and fee payments, to be carried out online. The maintenance of
these systems does remain a challenge, however.100 The country has also introduced several
databases containing laws, decrees, and sub-decrees (OECD, 2018[103]).
 Indonesia has implemented reforms to improve the ease of doing business in the country. For
example, the establishment of regional one-stop integrated service centres and the Online Single
Submission (OSS) licensing system, an online platform centralising applications for business
licences and permits (World Bank, 2019[110]). While not yet fully operational throughout Indonesia,
the OSS is well positioned to increase efficiency in business operations (OECD, 2020[111]).
 Lao PDR. The country established the Lao Services Portal, an official government website that
“provides the necessary regulatory information relating to Trade in Services and Investment in Lao
PDR”.101 The website, managed by the Ministry of Industry and Commerce and the Department of
Foreign Trade Policy, summarises primary and secondary regulations, and administrative
requirements for different business operations. However, much information is missing and the full
texts of certain regulations remain unavailable to the public.
 Malaysia. A special task force called Pasukan Petugas Khas Pemudahcara Perniagaan
(PEMUDAH) aims to support businesses by driving the implementation of good regulatory
practices and helping strengthen discussions with the public sector. In addition to taking an active
role in the regulatory process, PEMUDAH also holds monthly meetings with the public to discuss
initiatives to enhance the country’s business environment (OECD, 2018[103]).
 Philippines. In 2016, the Presidential Communications Operations Office launched the Freedom
of Information (FOI) program, which allowed citizens to request information from different
government agencies about government transactions and operations using the FOI portal. 102 The
Anti-Red Tape Authority (ARTA) is developing the online Philippine Business Regulations
Information System (PBRIS) with a view to improving access to legislation. The system will store
online all business-related regulations from all government agencies, and is expected to eliminate
the need to access each agency’s website for sector-specific regulations. The site is theoretically
online,103 yet it remains inaccessible to the public due to the ongoing development of additional
features.104 Moreover, Senate Bill No. 1751 proposes the creation of an online repository of
different Philippine laws, rules, and regulations with versions translated into the country’s
vernacular languages and dialects (Philippines, 2020[112]).
 Singapore. Singapore’s Pro-Enterprise Panel is a public-private body whose aim is to promote a
pro-enterprise culture in the public sector and facilitate greater co-operation between different
authorities, and between the authorities and private entities. The panel also provides companies

108 
with a one-stop portal to submit their suggestions on how to create a more pro-business
environment.105
 Viet Nam. The country has undertaken several waves of regulatory reforms involving the
stocktaking and publishing of regulations, reducing and simplifying business requirements, and
creating the National Public Service Portal for public-service delivery (Phan, 2020[113]). The
National Service Portal offers 2 700 administrative services (Vietnamnet Global, 2020[114]).
Viet Nam maintains a searchable online legal database, Legal Normative Documents, which
contains national laws and local legal documents for the capital city and all provinces.
7.3.1. Competition assessment of laws and regulations
Following OECD’s 2009 Recommendation on Competition Assessment (OECD, 2019[115]), a number of

countries have adopted some form of competition assessment to identify unnecessary restraints on market
activities and develop alternative, less restrictive measures that still achieve government policy objectives.
This can form part of a country’s wider regulatory assessment within their general regulatory review
framework (see Box 7.5).106 Several ASEAN member states have likewise undertaken initiatives
concerning the competition assessment of laws and regulations:
 Indonesia. As provided in the Indonesian competition authority’s Guidance on Competition Policy
Assessment Checklist,107 the authority has an advocacy role in relation to the “law and regulatory
policy” of the central government and the local government “from the perspective of competition”
and can “provide advice in the form of revision, annulment and/or revocation” of policies that conflict
with competition principles (Indonesia Competition Commission, 2016, p. 6[116]). The authority
likewise has the right to review proposed and existing regulations for anticompetitive provisions
(Indonesia Competition Commission, 2016[116]). The methodology used draws on the OECD
Competition Assessment Toolkit.
 Philippines. In July 2020, the National Economic and Development Authority and the Philippine
Competition Commission issued Joint Memorandum Circular No. 01-2020 that prescribed
guidelines on the adoption and implementation of a National Competition Policy (NCP). This would
require all government agencies to review regulations to determine if they restrict competition or
render undue advantage to some firms (National Economic and Development Authority and PCC,
2020[117]).
 Malaysia. The National Policy for the Development and Implementation of Regulations requires
ministries drafting a new law or regulation to perform a regulatory impact assessment (RIA) that
includes an assessment of the impact on various policy variables, such as competition policy
(Government of Malaysia, 2013[118]).
Box 7.5. Best practices in national regulatory assessments

National Competition Policy and National Reform Agenda, Australia
During the National Competition Policy, Australia’s ten-year “landmark microeconomic reform program”,
the federal government and all state and territorial governments were required to identify, review, and
if necessary, amend existing legislation that restricted competition. In addition to reviewing existing
legislation, the federal government also undertook to provide evidence that new legislation restricting
competition was consistent with the guiding review and reform principle.
The initiative was set up following an independent inquiry into a national competition policy, commonly
referred to as the Hilmer Report. The National Competition Council issued six assessment reports
during the programme, which ran from 1995 to 2005, monitoring the policy’s achievement of key

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objectives; these included structural reform of public monopolies; implementation of early reforms to
standardise transport regulations across all states and territories; adoption of legislation review
programs to reduce costs to business through the repeal of obsolete or unjustified legislation; and
application of reforms to local government businesses.
In 2005, the Council of Australian Governments (COAG) noted that the measures implemented through
the National Competition Policy had been “pivotal in boosting the competitiveness and growth of the
Australian economy”.108 During the reforms, Australian per capita income rose from 16th in the OECD
to 8th.
In February 2006, COAG agreed to continue competition and regulatory reform through the National
Reform Agenda.
Competition assessment in Korea’s Regulatory Impact Assessment

In 2008, Korea made competition assessments a requirement in the preparation of new regulations and
ordered agencies to comply with the following process.
1. A government body submits a draft regulation to the Regulatory Reform Committee (RRC) for
regulatory impact analysis.
2. RRC sends it to the Korea Fair Trade Commission (KFTC) for competition assessment.
3. KFTC conducts a competition assessment on the draft regulation through a two-step,
preliminary and in-depth assessment process and reports the result back to RRC.
4. RRC takes into consideration KTFC’s final competition assessment when reviewing the
concerned regulation and, if the regulation is anticompetitive, makes a decision to revise or
withdraw it. After the RRC’s decision, the original government body submits the modified draft
regulation to the National Assembly (OECD, 2019[119]).
Source: (National Competition Council, 1997[120]) (Council of Australian Governments, 2005[121]) (OECD, 2019[119]).

110 

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8 Benefits of lifting regulatory barriers

to competition
8.1. Introduction
The OECD’s recommendations address specific restrictions identified in ASEAN legislation. Their impact
is directly linked to lifting the identified restrictions and to the consequent positive effect on competition in
the relevant ASEAN logistics sub-sector or in the logistics sector as a whole.
In order to illustrate the benefits arising from lowering regulatory barriers to competition, the OECD has
attempted to quantify their impact. Whenever revenue figures for a logistics sub-sector were available, the
OECD adopted the following steps for each ASEAN member state.
1. The OECD assessed whether its recommendations in the relevant sub-sector concerned
provisions being enforced by the authorities and that thus were likely to have an impact, based on
information collected during the project.
2. For those recommendations satisfying the above criterion, the OECD considered whether the
recommendations would have been expected to have an impact on either consumers through lower
prices or economic activity in terms of greater efficiency and additional revenue. The majority of
the recommendations are expected to increase consumer benefits through lower prices.109
3. The methodology described in Annex 1 was applied with estimates calculated using assumptions
described in the sections below.
If a number of restrictions identified in the project were lifted, the OECD estimates a conservative benefit
for the ASEAN economy of between USD 4 billion to USD 4.1 billion per year or 0.004% combined GDP
for impacted ASEAN member states. This amount is the sum of the estimated positive effects on consumer
surplus in the ASEAN logistic sector as a result of removing current regulatory barriers to competition.
For a variety of reasons, these figures are likely to underestimate the actual impact of fully implementing
all the recommendations made in the ASEAN Competition Assessment Project. First, it was not possible
to quantify the effects of all individual recommendations in all member states, due to insufficient data or
because of the nature of the regulatory change. Second, the estimates do not account for the benefits to
the business environment arising from improving the quality of legislation, for instance, by implementing
recommendations to streamline the body of legislation and to provide businesses more guidance and
clarity. Third, the estimation framework focuses on the impact on consumer welfare, which is the standard
approach followed by most competition authorities and which is embedded in the OECD Competition
Assessment Toolkit.110 Other benefits, such as increased employment, lower barriers to entry for SMEs,
and improved cross-border trade are not included in this estimate.

112 
In addition to these sector-specific impacts, full implementation of the OECD’s recommendations is

expected to deliver positive long-term effects on FDI stock in the logistics sector (see Section 8.5.1); cross-
border trade (see Section 8.3.2); SMEs and employment (see Section 8.5.3); and gender equality (see
Section 8.5.4).
Table 8.1. Summary of estimated benefits, USD million
Sub-sector level Benefits – higher range Benefits – lower range Key recommendations driving the quantified benefits
Road 747 756 Ease of entry requirements
Maritime 2 595 2 678 Cabotage deregulation and opening pilotage services to
competitive tender
Rail 101 102 Separation of vertically integrated incumbent
Warehouses Removal of minimum-size requirements
All logistics 564 564 FDI liberalisation
Total 4 007 4 102
Note: The estimate of the impact on FDI rely on a point estimate from (Mistura and Roulet, 2019[122]), so no interval is provided.
Source: OECD analysis.
The cumulative and long-term impact of lifting the restrictions identified in the ASEAN logistic sector should
not be underestimated. However, this Competition Assessment Project focuses on laws and regulations in
the logistics sector, not enforcement. Changes in regulation can only have an impact if that regulation is
then enforced. The direct benefits of lifting regulatory restrictions are limited when regulation is not
enforced.
An indirect benefit of streamlining the body of legislation in this sector by fully implementing the OECD
recommendations is that it will positively affect the ability of businesses, including SMEs, to compete and
grow in the longer term.
8.2. Benefits at sub-sector level in ASEAN
8.2.1. Benefits in road freight transport
The OECD’s series of recommendations to make licensing requirements and operational constraints in
road freight transport less burdensome (see Chapter 3) 111 will have the following expected economic
benefits.
 A potential increase in market entry by reducing the barriers to entry and administrative burdens
associated with licensing requirements.112 For instance, recommendations include the removal of
an economic-needs test in the licensing application process and the requirement to own, rather
than simply lease, a parking lot.
 An increase in efficiency through a reduction in operational constraints, which will cut transport
costs per freight unit. For instance, recommendations for clarifying road-worthiness criteria.
 A reduction in potential market exits by healthy competitors through increases in the flexibility of
operators to adjust their fleet size to market conditions. For instance, recommendations include the
removal of minimum fleet size requirements.
As a result, the sub-sector is expected to become more competitive and efficient, leading to lower prices
for road freight transport users.

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Information on revenues in this logistics sub-sector and the expected impact on prices can be used to
estimate the likely impact on users. More specifically, following the methodology in the OECD Competition
Assessment Toolkit 3: Operational Manual (see, Annex 8.A), the benefits for road freight transport users
from lower prices can be calculated as follows:
1
𝐵𝑒𝑛𝑒𝑓𝑖𝑡 = (𝜌 + |𝜀|𝜌2 ) ∗ 𝑅
2
Where ρ is the percentage change in average prices, IɛI is the absolute value of the elasticity of demand,
and R is the revenue from road freight transport
In 2019, the total revenue from the provision of road freight transport was USD 46.44 billion for the
three ASEAN member states in which the recommendations are expected to have a noticeable impact and
data are available.113 To consider the likely impact of increased competition and efficiency in each of the
three countries, the OECD relies on its knowledge of the sector to make a conservative assumption that
the impact on prices will be 5% (high) or 1% (low), depending on the country.
Two assumptions on the elasticity of demand for road freight transport are adopted. First, a low elasticity
of demand (-0.5) and a medium elasticity of demand (-1.5). Such assumptions are based on the OECD
knowledge of the sector and empirical studies on freight transport price elasticity (Oum, Waters and Yong,
1990[123]), (Beuthe, Jourquin and Rietveld, 2014[124]), (Kremers, Nijkamp and Piet, 2020[125]). These studies
show different price elasticities in freight transport ranging from -0.4 to -1.6. Such variation is mainly due
to the different data and methodologies used, which influence the price demand elasticity in transport. The
OECD uses -0.5 and -1.5 as its demand elasticity assumptions, both of which are within the range reported
in empirical studies.
The annual benefit to road freight users from a decrease in freight rates following increased competition
between providers (potential or active) is estimated to be between USD 747 million and USD 756 million
a year for the three ASEAN member states for which benefits were quantified, depending on whether
demand is assumed to be less or more elastic.
8.2.2. Benefits in maritime freight transport
Cabotage
The OECD has recommended lifting cabotage restrictions to allow foreign vessels to transport domestic
cargo between ports within the same country. This recommendation represents a significant change.
Allowing foreign maritime service providers to enter the domestic shipping market by lifting cabotage
restrictions is expected to increase competition between foreign and domestic freight transport providers
and to bring the following benefits.
 Decreased costs for users who would no longer be limited to using domestic transport services,
possibly reducing the operational cost for shippers, freight rates and so positively affecting trade.
 Potentially improved quality of logistics services and stronger links to global trade lanes (UNCTAD,
2017[55]); this, in turn, can have a positive impact on efficiency in supply chains and connectivity.
Box 8.1 provides estimates of the benefits that arose after cabotage restrictions were lifted in New Zealand
and the possible economic benefits in the US if cabotage laws were to be removed. It aims to illustrate the
possible economic benefits that can arise from lifting cabotage restrictions, in particular reduced maritime
freight rates.
Information on maritime-sector revenues and expected impact on prices can be used to estimate the likely
impact on users. More specifically, the benefits for maritime freight transport users from lower rates can
be calculated using formula set out in Annex 8.A.

114 
Box 8.1. Cabotage reform in New Zealand and in the United States
Economic effects of cabotage deregulation in New Zealand
New Zealand also introduced cabotage liberalisation in 1994 in order to increase competition. Following
the reform, international vessels visiting New Zealand were allowed to deliver imports or pick up exports.
As a result, prices dropped by 20-25% between 1994 and 2000. National carriers were however able
to retain control of the vast majority of the market, although they were forced to reduce rates. In 2000,
upon review of this reform, the government decided not to re-introduce cabotage restrictions (UNCTAD,
2017, p. 23[55]).
Possible economic effects of removing cabotage laws in the United States

First passed in 1920, the United State Merchant Marine Act (Jones Act) remains one of the most
restrictive examples of cabotage laws in the world. The most comprehensive economic study of the
possible economic effects of removing the Jones Act was published by the US International Trade
Commission in 2002. It estimated that the economy-wide effect of removing the Jones Act would be a
welfare gain of approximately USD 1.32 billion, which might also be understood as the annual reduction
in real national income imposed by the Jones Act. A primary reason for the large gain in welfare is the
estimated 22% cost reduction of currently restricted cabotage services. A 2013 study found coastal
water transport in the US would be about 60% cheaper, and that cabotage users would stand to gain
over USD 500 million per year if the Jones Act was reformed.
Source: (UNCTAD, 2017[55]) (US International Trade Commission, 2002[126]) (Lewis, 2013[127]).
In 2019, the total revenue from the provision of maritime freight transport was approximately
USD 49.84 billion for the five ASEAN member states in which the recommendations are expected to have
a noticeable impact and where data are available.114 To consider the likely impact of increased international
competition in each of the countries, the OECD relies on its knowledge of the sector and previous studies
on the impact of cabotage deregulation on freight rates (see Box 8.1) to make a conservative assumption
of the positive impact of cabotage deregulation on maritime freight rates of 5%.
In the absence of empirical elasticity estimates for the five relevant countries, two different assumptions
on the elasticity of demand for maritime freight transport are adopted: 1) a low elasticity of demand (-0.5);
and 2) a medium elasticity of demand (-1.5). Such assumptions are based on the OECD knowledge of the
sector and empirical studies on freight transport price elasticity (Oum, Waters and Yong, 1990[123]),
(Beuthe, Jourquin and Rietveld, 2014[124]), (Kremers, Nijkamp and Piet, 2020[125]).
The annual benefit to maritime freight users from a decrease in freight rates following increased
competition between international and domestic providers – potential or active – is estimated to be between
USD 2.6 billion and USD 2.7 billion a year for the countries for which benefits were quantified, depending
on whether demand is assumed to be less or more elastic.
Pilotage services
The OECD recommends limiting direct provision of pilotage services by port authorities to when the private
sector shows no manifest interest in providing the services or when an authority does not have the capacity
to run tenders. The private sector’s lack of interest should be re-evaluated on a regular basis, in order to
make sure that direct provision is not unduly restricting entry. In doing so, competition between (potential)
providers will be introduced at the tender stage, which should enable the selection of the most suitable
supplier, and therefore promote investment, innovation and lower prices for port users (OECD, 2014[63]).

 115
Making pilotage contestable is expected to have the effect of lowering fees for users and potentially
increasing the attractiveness of the ports to cargo shipping companies. Implementing competitive tenders
may also improve the quality of the service offered, for example, by reducing waiting times.
While the potential quality and improvements in services is difficult to measure, 115 information on the
revenues of the sub-sector and the anticipated impact on pilotage fees can be used to estimate the likely
benefits to users. More specifically, the benefits for cargo shippers from lower fees can be calculated using
the formula in Annex 8.A where ρ is the percentage in average pilotage fees as a result of opening up the
market to entry by other operators; IɛI is the absolute value of the elasticity of demand; and R is the revenue
from pilotage.
In 2018, total revenue from the provision of pilotage services in ASEAN member states impacted by this
recommendation116 is estimated at about USD 10 million.117 To consider the impact of competitive
tendering for the market on pilotage fees, the OECD relies on studies on the impact of competitive
tendering on prices and the project team’s analysis of the extent to which the recommendation would be
expected to create user benefits through lower prices.
A 2007 study by the European Conference of Ministers of Transport on competitive tendering of rail
services found that the special regional authorities responsible for planning, managing, and procuring
regional rail transport in Germany realised savings of 20% after following tender procedures.118 Similarly,
a review of pilotage services in Portuguese ports in 2018, which were being provided solely by the port
authority, also revealed a price differential of between 20% and 50% higher when compared to the cost of
pilotage in other European countries.119 Given the differences between piloting services in European ports
and piloting services in some ASEAN ports, the project team made a conservative assumption of the
impact on prices from opening the ASEAN market to competitive tendering of 5%.
The annual benefits to port pilotage users in ASEAN countries impacted (and where data is available) by
the OECD recommendation is estimated between USD 505 000 and USD 530 000 depending on whether
demand is assumed to be less or more elastic. The estimated benefits result from a reduction in piloting
fees following increased competition between providers (potential or active).
8.2.3. Benefits in rail freight transport
The OECD has made recommendations to separate vertically integrated companies that act as both
operators of the rail network and freight transport service providers, and to improve the legal conditions for
third-party access to existing rail infrastructure controlled by the competing incumbent. As explained in
Section 5.1.1, the OECD recommends one of the following options: 1) accounting separation with separate
accounts for the infrastructure and the freight businesses; 2) functional separation with separate entities
under the same ownership; or 3) ownership separation. These recommendations aim to encourage entry
(or the threat of potential entry) to increase effective competition and potentially lead to lower prices and
better service quality.
Information about rail-sector revenues and the expected impact on prices can be used to estimate the
likely impact on users. More specifically, the benefits for rail freight transport users from lower rates can
be calculated using formula set out in Annex to this chapter.
In 2019, total revenue from the provision of rail freight transport was approximately USD 3.33 billion in the
two ASEAN member states120 in which the recommendations are expected to have a noticeable impact
and where revenue data are available. To consider the likely impact of increased international competition,
the OECD relied on its knowledge of the sector and previous studies on the impact of separating vertically
integrated companies.

116 
Evidence on the impact of railway sector reform, including separation, is mixed (see, Chapter 5 for
examples of different railway reforms). In 2018, UNECE noted that post-liberalisation the EU rail freight
market “remains heavily concentrated and characterized by a low number of newcomers and the
persistence of large market shares of incumbent operators” (UNECE, 2018, p. 40[75]). Certain studies have
found that increased levels of separation and privatisation are not associated with lower prices, mainly
because state-owned operators can charge subsidised railway fares. However, other studies conclude that
there have been improvements in efficiency and that customer satisfaction and quality have improved
following the opening of the railway industry (UNECE, 2018, pp. 53,54[75]).
In view of these studies, the project team has made a conservative assumption of 3% for the impact on
rail freight rates of all types of separation of vertically integrated companies.
Two different assumptions about the elasticity of demand for rail freight transport are used: 1) a low
elasticity of demand (-0.5); and 2) a medium elasticity of demand (-1.5). Such assumptions are based on
OECD knowledge of the sector and empirical studies on freight transport price elasticity (Oum, Waters and
Yong, 1990[123]), (Beuthe, Jourquin and Rietveld, 2014[124]), (Kremers, Nijkamp and Piet, 2020[125]).
The separation of rail operators from freight transport service providers, and increased third-party access
to existing rail infrastructure and the resulting decrease in freight rates following increased competition is
estimated to bring an annual benefit to rail freight users of between USD 100 million and USD 102 million
for the countries for which benefits were quantified, depending on whether demand is assumed to be less
elastic or more elastic respectively.
8.3. Benefits for foreign direct investment in logistics
The OECD has made a recommendation to enhance liberalisation efforts in the transport sector (see
Chapter 6), which remains partly off limits to foreign investors, holding back potential economy-wide
productivity gains. It is anticipated to benefit ASEAN countries by increasing inward foreign direct
investment (FDI) stocks. This is expected to lead to job creation, transfer of know-how and innovation,
increasing productivity, and economic growth.
While the benefits of increased employment, innovation, productivity and growth are difficult to measure
given data limitations, an OECD study has helped estimate the benefits of increased FDI from liberalisation
in the transport sector (Mistura and Roulet, 2019[122]). Shedding light on the potential costs in terms of
forgone investment of maintaining statutory barriers to FDI and suggesting significant and sizeable effects
of FDI liberalisation, it estimates that introducing reforms that lead to a 10% reduction in the level of FDI
restrictiveness – as measured by the OECD FDI Regulatory Restrictiveness Index – could increase
bilateral FDI inward stocks by an average of 2.1% annually. The strongest effect comes from reducing
foreign-equity limitations, denoting its relatively greater importance as a statutory barrier to investors.
Foreign investment screening policies are also found to significantly curb FDI, albeit to a much lesser
extent. The effect of FDI restrictions is also estimated to be greater for foreign investment in the service
sector (which includes transport services).
In 2019, the logistical sector’s FDI inward investment stock in ASEAN was USD 27 billion (UNCTAD,
2019[128]).121 Based on the assumption that the OECD recommendation will reduce the OECD FDI
Restrictiveness Index by 10%, the estimates by (Mistura and Roulet, 2019[122]) would translate into
USD 564 million in increased FDI inward stock.
Moreover, the effect of FDI restrictions is likely to extend beyond its targeted sector-scope. Restrictions on
FDI in service sectors play an important role in the competitiveness of both services and manufacturing
sectors. OECD work in this area shows that the value created by services as intermediate inputs represents
over 30% of the value added of manufactured goods (Nordes and Kim, 2013[129]). Improving performance
in services therefore becomes even more important for developing an internationally competitive economy.

 117
Limited competition in services sectors, including limits on foreign participation, negatively affect the
productivity of manufacturing firms (OECD, 2018[130]).
Finally, the gain in real GDP of reducing barriers to trade and FDI restrictions to the global average has
been estimated at 17% of GDP or more in the medium-to-long term, of which nearly five or more
percentage points is attributable to FDI liberalisation (IMF, 2018[131]).
8.4. Benefits for cross-border trade
The OECD’s recommendations are aimed at making markets more competitive, reducing non-tariff barriers
to trade and, when applicable, harmonising regulations across countries to facilitate trade.
Although the OECD has not been able to quantify in monetary terms the anticipated benefits in cross-
border trade due to data limitations, an OECD study from July 2020 provides an indication of the potential
benefits in terms of reduction in trade for transport services (Benz and Jaax, 2020[26]).122
The study, which covers 46 countries, including Malaysia and Thailand, shows that transport barriers, as
measured by the OECD Services Trade Restrictiveness Index (STRI), are strongly associated with lower
service trade. The results are that trade costs remain high. Expressed as percentages of total trade value
or ad valorem equivalents (AVE), average costs of regulatory barriers to cross-border trade stand at around
60% for transport services. In the case of Malaysia and Thailand, the costs of regulatory barriers to
transport cross-border trade stand at 79.1% and 151.7% respectively for transport services. AVEs must
be interpreted as the percentage point reduction of trade costs corresponding to a reduction of the OECD
STRI from its current level to zero (Benz and Jaax, 2020[26]).123
8.5. Economy-wide benefits
8.5.1. Benefits for small- and medium-sized enterprises, start-ups and employment
The OECD’s recommendations are expected to benefit small- and medium-sized enterprises (SMEs) by
ensuring that all SMEs have equal access to markets and by promoting dynamic competition. The
recommendations aim to remove unnecessary administrative barriers that may distort competition, reduce
information asymmetries, and promote easy entry procedures.
While the OECD is unable to quantify such benefits, SMEs, including micro enterprises are integral to the
economic development and growth of all ASEAN member states as they constitute the largest number of
businesses in the region and contribute significantly to its labour force. According to ASEAN data, SMEs
account for the vast majority of total enterprises in ASEAN member states and between 52% and 98% of
total employment. The contribution of these enterprises to each member states’ GDP is between 30% and
53% and the contribution of SMEs to exports is between 10% and 30%.124 SMEs are important in terms of
income and employment generation and their development is fundamental to achieving long-term
sustainable economic growth and to narrowing the development gap.
In addition, start-ups have emerged as key drivers of economic growth and job creation, and are often a
catalyst for radical innovation. In 2016, young firms accounted for about 20% of employment, but created
almost half of new jobs on average across OECD countries (Calvino, Criscuolo and Menon, 2016[132]) and
innovation by young firms contributes significantly to aggregate productivity growth, accounting for half of
it in the US (Klenov and Li, 2020[133]). Although the OECD has no specific estimates for ASEAN member
states, the average impact across OECD economies helps to illustrate that the impact of start-ups on an
economy is not to be underestimated.

118 
Lifting regulatory barriers to competition is expected to contribute to unlocking the potential of SMEs and
start-ups and to generate economic growth in member states.
8.5.2. Benefits for gender equality
The ASEAN legislation review has identified a few examples of regulations restricting women’s economic
activity in logistics, such as the exclusion of women from employment in the transport sector. Such
discriminatory restrictions can be interpreted as anti-competitive regulations under the OECD’s
Competition Assessment Toolkit.
While female labour participation is high in the ASEAN region compared to the OECD average, the jobs
women perform tend to be low value-added, informal and significantly less well-paid. Female labour
participation in the region tends to be driven by economic necessity rather than opportunity (OECD, 2017,
p. 16[134]). Similarly, female entrepreneurship in ASEAN tends to be concentrated in less profitable sectors,
such as agriculture and specialised services, such as beauty and catering. The OECD has highlighted the
difference in businesses owned by females and males, in terms of size, productivity and profit. Customs
and social norms that reinforce gender stereotypes are major limiting factors for female entrepreneurship
in the region (OECD, 2017, p. 17[134]).
Competition policy can be a way to address gender equality.125 For example, lowering regulatory barriers
to competition and improving the business environment will benefit entrepreneurship, including for female
entrepreneurs. In addition to its social benefits, improvements in women’s entrepreneurship and
participation in the labour force increase economic growth, income equality and productivity. Studies have
shown that the gender gap causes an average loss of 15% to GDP across the world (Cuberes and Teignier,
2016[135]). In East and Southern Asia (excluding People’s Republic of China), gains would be particularly
significant and the removal of gender bias could increase GDP by 30% compared with a business-as-usual
scenario (McKinsey Global Institute, 2015[27]).

 119
Annex 8.A. Methodology to estimate consumer

benefits
Annex Box 8.A.1. Measuring changes in consumer surplus
The effects of changing regulations can be examined as movements from one point on the demand curve
to another. For regulations that have the effect of limiting supply or raising price, an estimate of consumer
benefit or harm from the change from one equilibrium to another can be calculated. Graphically, the change
is illustrated for a constant elasticity demand curve. Er shows the equilibrium with the restrictive regulation,
Ec shows the equilibrium point with the competitive regulation. The competitive equilibrium is different from
the restrictive regulation equilibrium in two important ways: lower price and higher quantity. These
properties are a well-known result from many models of competition.
Annex Figure 8.A.1. Changes in consumer surplus

P
Er
Pr
C D Ec
Pc D
A B
Qr Qc Q
Under the assumption of constant elasticity of demand the equation for consumer benefit is:
1
𝐶𝐵 = 𝐶 + 𝐷 ≈ (𝑃𝑟 − 𝑃𝑐 )𝑄𝑟 + (𝑃 − 𝑃𝑐 )(𝑄𝑐 − 𝑄𝑟 )
2 𝑟
Where price changes are expected, a basic formula for a standard measure of consumer benefit from
eliminating the restriction is:
1
𝐶𝐵 = (𝜌 + 𝜖𝜌2 ) 𝑅𝑟
2
Where CB: standard measure of consumer harm; ρ: percentage change in price related to restriction;
R: sector revenue; and 𝜖: demand elasticity. When elasticity is not known, a relatively standard
assumption is that | ϵ |=2. This value corresponds to more elastic demand than in a monopoly market,
but less than the perfectly elastic demand in a competitive market. Under this assumption, the
expression above simplifies to:
𝐶𝐵 = (𝜌 + 𝜌2 )𝑅𝑟
Source: (OECD, 2019[119]).

120 

 121
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130 

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Notes
1
The methodology followed in this project is consistent with the product market regulations (PMR) index
developed by the OECD. To measure a country’s regulatory stance and track progress of reforms over
time, the OECD developed an economy-wide indicator set of PMR in 1998 (Nicoletti and Scarpetta,
2003[7]); this indicator was updated in 2003, 2008 and 2013.
2
Fournier et al. (2015[5]) find that national regulations, as measured by the economy-wide PMR index,
have a negative impact on exports and reduce trade intensity (defined as trade divided by GDP).
Differences in regulations between countries also reduce trade intensity. For example, convergence of
PMR among EU member states would increase trade intensity within the European Union by more than
10%. Fournier (2015[6]) studied the impact of heterogeneous PMR in OECD countries and concluded that
lowering regulatory divergence by 20% would increase FDI by about 15% on average across OECD
countries. He investigated specific components of the PMR index and found that command-and-control
regulations and measures protecting incumbents (such as antitrust exemptions, entry barriers for networks
and services) are especially harmful in reducing cross-border investments.
3
Arnold, Nicoletti and Scarpetta (2011[8]) analysed firm-level data in 10 countries from 1998 to 2004 using
the OECD’s PMR index at industry level, and found that more stringent PMR reduces firms’ multi-factor
productivity (MFP).
4
Égert (2017[9]) investigated the drivers of aggregate MFP in a sample of 30 OECD countries over a 30-
year period.
5
The study of 15 countries and 20 sectors from 1985 to 2007 estimated the effect of regulation of upstream
service sectors on downstream productivity growth. The productivity frontier refers to the most productive
countries and sectors in the sample. The farther a sector is from the frontier, the less productive it is.
6
Égert (2018[16]) investigated the link between product and labour-market regulations with investment
(capital stock) using a panel of 32 OECD countries from 1985 to 2013.
7
Employment growth in the road transport sector in France increased from 1.2% a year between 1981
and 1985 to 5.2% a year between 1986 and 1990. Between 1976 and 2001, total employment in the sector
doubled, from 170 000 to 340 000.
8
Using the OECD’s summary index of PMR in seven non-manufacturing industries in the energy, telecoms
and transport sectors, Causa et al. (2016[20]) found stringent PMR had a negative impact on household
disposable income. This result held both on average and across the income distribution, and led to greater
inequality. The authors noted that lower regulatory barriers to competition would “tend to boost household
incomes and reduce income inequality, pointing to potential policy synergies between efficiency and equity
objectives”.
9
Multi-factor productivity (MFP) is a measure of the “efficiency with which labour and capital inputs are
used together in the production process” (https://data.oecd.org/lprdty/multifactor-productivity.htm).

132 
10
ATISA was signed by ASEAN economic ministers in Jakarta on 7 October 2020. The agreement will
supersede AFAS after 5 years for all member states, except Viet Nam (7 years) and Cambodia, Lao PDR
and Myanmar (13 years).
11
This report will however not address any such barriers in the small-package delivery services sector as
these are covered in the companion report, OECD Competitive Neutrality Reviews: Small Package
Delivery Services in ASEAN.
12
The forecast refers to Southeast Asia, which includes Timor-Leste in addition to the ten ASEAN member
states.
13
ASEAN Expert Group on Competition (AEGC) released a “Joint Statement in Response to the
Coronavirus Disease (COVID-19) Pandemic”; see https://asean.org/storage/2020/06/AEGC-Joint-
Statement-in-Response-to-COVID-19-9June20-FINAL.pdf.
14
ASEAN (12 November 2020), “ASEAN Comprehensive Recovery and Its Implementation Plan”,
https://asean.org/asean-comprehensive-recovery-framework-implementation-plan.
15
In 2004, member states signed the ASEAN Framework Agreement of the Integration of Priority Sectors.
The framework identified 11 priority sectors, namely agro-based products, air travel, automotive, e-ASEAN,
electronics, fisheries, healthcare, rubber-based products, textiles and apparels, tourism, and wood-based
products. In 2006, noting the expansion of the ASEAN logistics market, ASEAN economic ministers
decided to include logistics as the twelfth priority sector for economic integration.
16
ESCAP Survey on Freight Transport Policy Responses to COVID-19 (July 2020), https://www.unescap
.org/covid19/policy-responses.
17
World Bank database and United Nations Economic Commission for Europe Statistical Database
https://w3.unece.org/PXWeb/en.
18
UNCTAD explains that the current version of the Liner Shipping Connectivity Index is based on
six components: 1) the number of scheduled ship calls a week in a country; 2) total deployed annual
capacity in TEUs in a country; 3) the number of regular liner-shipping services from and to a country; 4) the
number of liner-shipping companies that provide services from and to a country; 5) the average size in
TEUs of the ships deployed by the scheduled service with the largest average vessel size; and 6) the
number of other countries that are connected to a country through direct liner-shipping services.
19
The Liner Shipping Bilateral Connectivity Index (LSBCI) has five components: 1) the number of
transhipments required to get from country A to country B; 2) the number of direct connections common to
both country A and B; 3) the geometric mean of the number of direct connections of country A and of
country B; 4) the level of competition in services that connect country A to country B; 5) the size of the
largest ships on the weakest route connecting country A to country B. For a more detailed methodology,
see https://unctadstat.unctad.org/wds/TableViewer/summary.aspx?ReportId=96618.
20
For more information on currently applicable liner shipping block exemptions in the world, see OECD
Competition Assessment Reviews: Logistics Sector in Singapore (2021).
21
See www.adb.org/sites/default/files/publication/29294/gms-cbta-instruments-history.pdf.
22
See http://agreement.asean.org/.
23
See http://agreement.asean.org/.
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24
See https://assist.asean.org/en/home.
25
Article 22 states the general principle, while Article 23 refers to the quotas and Protocol 3 provides further
specifications. The criteria for cross-border licences are listed in Annex 9.
26
Article 9(2) provides that the type and quantity of road vehicles to be used for transit transport is specified
in Protocol 3 and shall be discussed from time to time between the contracting parties. For the full text of
Protocol 3, see https://acts.asean.org/Publication/Legal-Framework/afafgit-protocol-3-types-and-quantity-
road-vehicles.
27
This was agreed in the 15th ASEAN Transport Minister Meeting on 10 December 2009 in Hanoi,
Viet Nam.
28
Article 9, AFAFIST.
29
The trade zones are Tachilek, Myawady, Kawthoung, Myeik, Htikhee, Mawtaung, and Maesai.
30
Article 8, Road Traffic (Licensing of Motor Vehicles and Trailers) Regulations (2013) and Article 96,
Road Traffic Act (Chapter 68).
31
See Section 3.3 on Operational constraints.
32
Article 2, Memorandum Circular No. 2017-027.
33
Article 4(1), Land Transport Act B.E. 2522 (1979).
34
See OECD (2001[48]). Generally, several factors combine to reduce the presence of economies of scale.
First, the maximum size of road vehicles is often limited by regulation (given the status of the infrastructure,
or based on considerations of safety, noise and emissions). This maximum size is not large relative to the
flows of goods on most routes. Second, road freight services are primarily purchased by firms and
corporations. The flows of goods between firms are much more concentrated than the flows of goods
between individuals or between firms and individuals. Third, the flows of goods between firms are often
less time-sensitive than the transportation of passengers (depending upon the products, delays of 24 hours
or more may be tolerated without incurring high costs). Since the scales of flows over a typical route and
timeframe are large relative to the efficient vehicle size, the economies of scale on most routes are minimal.
35
In Viet Nam, pursuant to Decree No. 86/2014/ND-CP, in order to provide goods transport services in
containers, or services using vehicles, trailers or semi-trailers to transport goods beyond a 300-kilometre
distance, operators need to own a minimum number of vehicles as specified in their licence application,
as follows: 1) 10 or more if the head office is in one of the “centrally run cities”; 2) 5 or more if the head
office is located in other localities; 3) 3 or more if the head office is located in poor districts.
36
See SPAD’s (now APAD) Licensing Policy Guidelines. See https://www.apad.gov.my/index.php/en/sou
rce-of-information/guideline/garis-panduan-kenderaan-barangan.
37
The Implementing Rules and Regulations of Republic Act No. 8749 or the 1998 Philippine Clean Air Act
required the DOTC (now DOTr) and the LTO to conduct vehicle tests “utilizing the Motor Vehicle Inspection
Station (MVIS) or its duly authorized and accredited inspection centers consistent with the R.A. 7394
otherwise known as the Consumer Act of the Philippines within sixty (60) days prior to date of registration”.
While these tests are limited to emission standards, the resulting certificate is nevertheless proof of a
vehicle’s roadworthiness and therefore its ability to operate in the Philippines. According to stakeholders,
the Department of Transportation (DOTr) and the Land Transportation Office (LTO) are currently
134 
authorizing Private Motor Vehicle Inspection Centers (PMVICs) to conduct motor vehicle roadworthiness
and emission inspection, which is one of the requirements for the renewal of motor vehicle registration.
Recently, the LTO issued Memorandum Circular No. 2020-225 and 2020-2030 declaring opening of
additional PMVICs in different locations in the country, in addition to the previously awarded sites, including
111 sites to cater heavy duty motor vehicle inspection, as contained in the LTO MC 2020-2030.
38
See Minister of Transportation Regulation No. 133/2015 concerning Periodical Testing of Motorised
Vehicles, Article 4(3), https://jdih.dephub.go.id/assets/uudocs/permen/2015/PM_133_Tahun_2015.pdf.
39
See Minister of Transportation Regulation No. 133/2015, Article 4(5).
40
Co-operation on the ASSM began in the 1990s, with ASEAN Plan of Action in Transport and
Communications and successor plans of action in 1996-1998. They were followed by a similar agenda for
1999-2004 and then several sectoral plans of action: the ASEAN Transport Action Plan (2005-2010),
ASEAN Strategic Transport Plan (2011-2015); and ASEAN Transport Strategic Plan (KLTSP, 2016-2025).
In 2007, member states adopted the Roadmap Towards an Integrated and Competitive Maritime Transport
in ASEAN. It featured strategic actions and measures to boost the capacity, capability and competitiveness
of the maritime sector in the region. Its objectives included the promotion of competition in all shipping
markets and the creation of an integrated ASSM with little restriction on the movement of vessels and the
provision of shipping services in the region. This objective was to be achieved through a progressive
integration and harmonisation of regulatory requirements and commercial practices “to ensure that
competition takes place on equitable terms and conditions”. The ASSM was also one of the objectives of
the Master Plan on ASEAN Connectivity 2010-2015 and an implementation framework that was endorsed
at the 2014 ASEAN Transport Meeting in Myanmar. The current KLTSP includes several specific
objectives, including the development of an efficient and integrated inland waterway transport network, the
enhancement of navigation systems and security measures, and the formulation of specific policy initiatives
and recommendations to develop strategic maritime transport logistics. These objectives are in line with
the broader target set in the ASEAN Economic Community Blueprint of ensuring the free flow of trade in
services with no restrictions on ASEAN services suppliers’ provision of services and the establishment of
companies in other member states. In particular, it allowed ASEAN equity participation of 70% by 2010 for
the four priority services sectors, including logistics. So far, no member state has met the target of allowing
70% ASEAN ownership in all maritime services.
41
UNCTADstat, “Container port throughput”, https://unctadstat.unctad.org/wds/TableViewer/tableView.as
px?ReportId=13321.
42
These concepts are not defined in any rules or guidelines giving MARINA broad discretion in its
assessments.
43
See Republic Act No. 9295, An Act Promoting the Development of Philippine Domestic Shipping,
Shipbuilding, Ship Repair and Ship Breaking, Ordaining Reforms in Government Policies Towards
Shipping in The Philippines, and for Other Purposes. In the Philippines, this requirement stems from the
classification of maritime freight services as a “public service”, which requires a specific licence called a
certificate of public convenience (CPC).
44
In Indonesia, in order to obtain a maritime transportation business licence, a company is required to own
an Indonesian-flagged vessel of a minimum 175 gross tonnage (GT). Individual Indonesian citizens or
business entities can create joint-venture sea transportation companies with foreign sea transportation
companies or foreign legal entities or foreign nationals. Such companies must have at least one vessel of
a minimum 5 000 GT with an Indonesian citizen as captain.

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45
This includes China, United States and European Union countries. There is no such requirement for
vessel ownership in, for example, France (Code des transports, article L5411-1 and article L5411-2) or
Greece (Law No. 959/1979 on Shipping Companies).
46
Global Ship Lease (2019), “Our Industry”, www.globalshiplease.com/industry-overview (accessed
20 August 2020).
47
These port models are set out in the OECD Competition Assessment Reviews Portugal: Volume I –
Inland and maritime transports and ports (OECD, 2018, p. 188[49]) using information from World Bank
(2007, p. 85[56]).
48
The most common port services include cargo-handling, towage, pilotage and ancillary services. Cargo-
handling involves both cargo-loading operations (known as stevedoring) and marshalling services, such
as storage, assembly and sorting of cargo. Towage is the service of moving vessels in the port area using
tugboats. Piloting is a specialised service provided by pilots with local knowledge, who assist ship
commanders navigating and manoeuvring the vessels inside the port area. Ancillary services include a
wide range of services, such as the provision of water and electricity, bunkering (supply of fuel), waste
reception and security.
49
The Myanmar Port Authority (MPA) has discretion to hold a tender or to accept unsolicited proposals to
develop international port terminals. In Indonesia, Article 37 of Ministry of Transportation Regulation
No. 15/2015 states that in non-commercial ports, the terminal and other port facilities are operated by the
port operator unit but may be carried out by port business entities (PBE) – business entities with “business
activities specifically in the field of terminal business and other port facilities” – upon agreement.
50
Long concession contracts are common worldwide in the port sector; according to the ITF, port of
container-terminals concessions, for example, have an average duration of 32.5 years. Moreover, data
collected by Notteboom in 2008 showed that around 90% of the biggest terminal projects in Europe were
awarded for a period of 30 to 65 years (OECD, 2018, p. 199[49]).
51
This requirement is set out in Republic Act No. 7656, An Act Requiring Government-Owned or -
Controlled Corporations to Declare Dividends Under Certain Conditions to the National Government, and
for Other Purposes.
52
See House Bill 4317, which proposes an “Act separating the regulatory and commercial functions of the
Philippine Ports Authority (PPA) by converting it into Philippine Ports Corporation for development,
management and operation of public ports within its system and transferring the regulatory functions to the
Maritime Industry Authority (MARINA)”. The bill aims to “avoid the conflict of interest arising from regulatory
agencies vested with both regulatory and development or commercial functions”. It explains that: “under
no circumstance should a regulatory agency benefit from its own regulation and/or use its regulatory
powers to protect itself from competition at the expense of public interest” (Section 2, HB 4317). See
https://congress.gov.ph/legisdocs/basic_18/HB04317.pdf For its operational functions, Article 6 of the Port
Authority of Thailand Act, B.E. 2494 provides that Port Authority of Thailand (PAT) can carry out business
in each of its ports “relating or incidental to port undertakings” and conduct “port undertakings in the interest
of the state and the public”, while Article 9 provides that it can operate port services directly.
53
For its operational functions, Article 6 of the Port Authority of Thailand Act, B.E. 2494 provides that Port
Authority of Thailand (PAT) can carry out business in each of its ports “relating or incidental to port
undertakings” and conduct “port undertakings in the interest of the state and the public”, while Article 9
provides that it can operate port services directly.

136 
54
In Thailand, the Council of Ministers sets a framework of minimum and maximum charges for port
services, which applies to the five ports in Thailand, which are under the PAT (Bangkok Port, Laem
Chabang Port, Regional Ports are Chiang Saen Commercial Port Chiang Khong Port and Ranong Port).
As noted above, PAT could, in theory, set the tariffs for all service providers “within the Authority Area”.
However, the Marine Department clarified that, notwithstanding the wording of the law, private operators
within PAT’s ports set their own rates, provided they are also within the minimum-maximum framework.
55
As port authorities can often regulate the prices of other service providers, this incentive to set higher
charges for port users could hold also when there is competition between the port authority and other
service providers.
56
The World Bank made a more general point about the power to set fees in a 2018 report, Promoting
Open and Competitive Markets in Road Freight and Logistics Services: “Regulators typically charge a fixed
or percentage fee for their regulatory role, which is meant to cover the costs derived from monitoring the
market and regulating it. A conflict of interest may arise, however, if the regulator depends significantly on
the collection of fees in order to operate” (World Bank, 2018, p. 40[60]).
57
In Cambodia, the Ministry of Economy and Finance has the power to set port tariffs. In Sihanoukville
Port, for example, the port authority, which is an SOE, can change these tariffs with permission from its
board of directors, which contains representatives of Cambodian ministries.
58
In Viet Nam, the government provides a framework and a port operator can choose to raise or reduce
tariffs within this maximum-minimum range. The operator must still obtain approval of its port tariffs from
the Ministry of Transport, however, with VINAMARINE providing final approval. This approval process is
carried out for charges for containers, pilots, port services and tugboats.
59
For an example assessment of the impact of an exclusivity arrangement for pilotage services, see
ACCC’s determination on the application for authorisation No. A91235 lodged by Brisbane Marine Pilots
Pty Ltd in respect of an exclusive pilotage services agreement at the Port of Brisbane, 3 December 2010.
60
Italian Antitrust Authority, AS905 – Technical-and-nautical services and setting of the relevant tariffs in
Italian ports, Report dated 14 December 2011, in Bull. No. 1/2012, p. 30-onwards.
61
Brunei Darussalam Maritime and Port Authority Order, Section 81(5).
62
Decision No. 34/2003/QD-TTg of the Prime Minister on the establishment of Vietnam Railways
Corporation, articles 1 and 2.
63
More generally, there would be a case for wholesale regulation if the upstream firm has market power,
even if it is not vertically integrated.
64
These are regulated firms that are or may in the future be operating simultaneously in a non-competitive
activity and a potentially competitive complementary activity.
65
Under Law No. 23/2007 on Rail Transportation, a new entrant may use existing tracks by co-operating
with the infrastructure operator or by building its own track(s) that connect with, intersect with or separate
existing tracks. Although not stated in the legislation, stakeholders have confirmed that a business entity
is able to apply for a licence from the Director-General of Railways to operate rail freight transport services.
66
In Myanmar, railway companies can enter into agreements with other railway organisations to use their
railway infrastructure, with the approval of the Central Supervisory Board. See Sections 53 and 54 of the

 137
Railway Transport Service Law. In Indonesia, while there is no rule guiding access, Ministry of Transport
Regulation No. 62/2013 on Cost Calculation Guidelines on Use of the State Railway Infrastructure does
provides guidelines for calculating costs for the use of railway infrastructure.
67
The regulation takes into account a judgement by the Court of Justice of the European Union on the
calculation of direct costs incurred when operating the train service; see European Commission v Republic
of Poland, C-512/10, ECLI:EU:C:2013:338, paragraphs 82, 83 and 84.
68
See https://asean.org/storage/2019/11/Implementation-Framework-AFAMT_FINAL.pdf.
69
See Covid-19 recover guidelines for resilient and sustainable international freight transport connectivity
in ASEAN, ASEAN Secretariat, February 2021.
70
According to the World Bank Doing Business indicator, some ASEAN member states do not rank very
favourably based on the quality of their land administration systems. This is the case for instance for Brunei
Darussalam (144), Cambodia (129) and Myanmar (125).
71
Article 62, Law No. 54/2014/QH13.
72
See MIDA, Malaysia: Investment in the Services Sector, Booklet 4: Logistics Services, p. 3. The
dimensions are measured in feet: 50 000 feet and 20 000 feet. An internal customs standing order
(Order 53) regulates these minimum space requirements for public bonded warehouses.
73
ASEANStatsDataPortal, https://data.aseanstats.org/fdi-by-sources-and-sectors.
74
See Chapter 1 of this report.
75
ATISA was signed by ASEAN economic ministers in Jakarta on 7 October 2020. For the final, signed
agreement, see https://asean.org/storage/2012/05/ATISA-signed-scanned.pdf.
76
In Indonesia, the Negative Investment List is provided in Regulation No. 44/2016 on the List of Business
Fields that are closed to and open with Conditions to Investment. The negative list of investments is divided
into three categories: 1) businesses closed to investments; 2) businesses only open to Indonesian SMEs;
and 3) businesses open with conditions, such as maximum percentage of foreign ownership. The Negative
Investment List limits foreign equity to 49% for cargo land transportation, special cargo land transportation
and multimodal transportation.
77
In Thailand, the Ministerial Regulation No. 8, B.E. 2540 states that a crew must be to 50% Thai.
78
In the Philippines, “public utility” is defined neither in the constitution nor in the Public Service Act 1936
(PSA). The Supreme Court of the Philippines has considered that “public utilities” are “public services” and
the terms are used interchangeably. Road transportation is considered a “public utility” and a “public
service”. Market participants have explained that road transportation includes road freight transportation
and therefore includes commercial hauliers or trucks for hire.
79
Protocol to Implement the Tenth Package of Commitments Under the ASEAN Framework Agreement
on Services, https://asean.org/storage/2012/05/AFAS-10.pdf.
80
For the full list of annexes, see https://cil.nus.edu.sg/databasecil/2018-protocol-to-implement-the-tenth-
package-of-commitments-under-the-asean-framework-agreement-on-services/.

138 
81
The exchange rates used are the official exchange rates for the year 2019 from the World Bank, available
at https://data.worldbank.org/indicator/PA.NUS.FCRF (USD 1 = BND 1.4, LAK 8 679, MYR 4.1, PHP 51.8,
THB 31 and VND 23 050).
82
The legal basis for this requirement provides the amount in US dollars, not in Philippine pesos; see
Article 2, Section 8, Republic Act No. 7042/1991 (Foreign Investments Act), https://boi.gov.ph/r-a-7042-
foreign-investments-act-of-1991.
83
Thailand’s Foreign Business Act B.E. 2542/1999 includes three annexes containing lists of business
activities that are subject to specific requirements only applying to foreigners. One of these is a minimum
capital requirement of THB 3 million for foreigners.
84
Article 26, Law on Multimodal Transport 28/NA/2012.
85
The pricing guidance implements Article 18(2) of the 2009 Postal Law, which explains that the tariff shall
be determined by postal operators using a cost-based calculation formula.
86
Article 82 of the Law on Land Transport (No.24/NA) dated 12 December 2012.
87
Section 65D (d) of the Merchant Shipping Ordinance 1952.
88
Pursuant to Section 66 of the Land Transport Act B.E. 2518, the licence needed to operate as a road
freight forwarder contains restrictions on the rates of freight-forwarding charges.
89
An SOE is an enterprise entirely or partly owned by the state; it can be organised in different forms and
serve a wide range of functions. Certain countries, including ASEAN member states, use different terms
including state-owned companies, state-owned entities, state enterprises, publicly owned corporations,
government-linked monopolies (GLMs), or government-linked companies (GLCs). The OECD’s definition
of an SOE, as defined in the OECD Guidelines on Corporate Governance of State-Owned Enterprises,
recognises such diversity and focuses on entities’ corporate forms, commercial orientation, and degree of
state ownership and control: “any corporate entity recognised by national law as an enterprise, and in
which the state exercises ownership, should be considered as an SOE. This includes joint stock
companies, limited liability companies and partnerships limited by shares. Moreover, statutory
corporations, with their legal personality established through specific legislation, should be considered as
SOEs if their purpose and activities, or parts of their activities, are of a largely economic nature.” (OECD,
2015, p. 14[137]).
90
See also ASEAN (2018), ASEAN Economic Community 2025 Consolidated Strategic Action Plan, http
s://asean.org/storage/2012/05/Updated-AEC-2025-CSAP-14-Aug-2018-final.pdf.
91
Article 4, Part 1, Myanmar Merchant Shipping Act (India Act XXI, 1923) does not, “except where explicitly
provided, apply to ships belonging to the Government or to ships belonging to any foreign Prince or State
and employed otherwise than for profit in the public service of that foreign Prince or State”
(www.asianlii.org/mm/legis/code/bmsa1923235.pdf). The OECD does not have additional information on
the specific cases in which the Act applies to such vessels. The act was amended by Law Amending the
Myanmar Merchant Shipping Act (2007), but does not appear to alter this article.
92
See Presidential Notification 1/2017, for the exemption in Myanmar. The Presidential Guidelines (of April
2017) sets out the public-procurement procedures and the OECD understands that the Myanmar
government is currently drafting the public procurement law. In the Philippines, the government and a
GOCC can simply enter into a simplified “agency-to-agency” contract under the flexibility granted by the

 139
Republic Act No. 9184/2003 (Government Procurement Reform Act, https://hudcc.gov.ph/sites/default/fil

es/styles/large/public/document/RA%209184.pdf), and so avoid the general requirement for a public
tender; see, Section 53.5 of the 2016 Revised Implementing Rules and Regulations of the Government
Procurement Reform Act, www.gppb.gov.ph/laws/laws/RevisedIRR.RA9184.pdf, p. 94.
93
For instance, the OECD Indicators of Product Market Regulation and the World Bank’s Ease of Doing
Business Rankings capture broader business-environment considerations.
94
See www.oecd.org/regreform/regulatory-policy.
95
OECD Best Practice Principles for Regulatory Policy: One Stop Shops for Citizens and Business (2020)
see https://doi.org/10.1787/b0b0924e-en); OECD Overcoming Barriers to Administrative Simplification
Strategies: Guidance for Policy Makers (2009), see http://www.oecd.org/regreform/regulatory-
policy/42306414.pdf); OECD Cutting Red Tape: Why is Administrative Simplification So Complicated?
Looking Beyond 2010 (2010), see https://www.oecd.org/gov/regulatory-policy/cutting-red-tape-why-is-
administrative-simplification-so-complicated.htm.
96
Recommendation 3 states: “Ensure that administrative procedures for applying regulations and
regulatory decisions are transparent, non-discriminatory, contain an appeal process against individual
actions, and do not unduly delay business decisions; ensure that efficient procedures are in place. Ensure
that regulatory institutions are accountable and transparent, and include measures to promote integrity”.
See www.oecd.org/fr/reformereg/34976533.pdf, p. 5.
97
Under Recommendation 8 of the 2012 Recommendation of the Council on Regulatory Policy and
Governance, the OECD recommends that governments: “Ensure the effectiveness of systems for the
review of the legality and procedural fairness of regulations and of decisions made by bodies empowered
to issue regulatory sanctions. Ensure that citizens and businesses have access to these systems of review
at reasonable cost and receive decisions in a timely manner” (see www.oecd.org/governance/regulatory-
policy/49990817.pdf, p. 5).
98
Under Recommendation 4 of the 2012 Recommendation of the Council on Regulatory Policy and
Governance, the OECD recommends that governments: “Clearly identify policy goals, and evaluate if
regulation is necessary and how it can be most effective and efficient in achieving those goals.” (See
www.oecd.org/governance/regulatory-policy/49990817.pdf, p. 4).
99
See https://atr.asean.org/.
100
The 2018 OECD report on Good Regulatory Practices to Support Small and Medium Enterprises in
Southeast Asia noted that while development partners support the creation of ICT systems, they eventually
become outdated as there is no capacity to maintain them after the development project ends. See (OECD,
2018[103]).
101
Lao Services Portal, www.laoservicesportal.net.
102
The Freedom of Information program was established pursuant to Executive Order No. 2, series of
2016 dated 23 July 2016. See https://www.foi.gov.ph/.
103
When it becomes operational, PBRIS’s address will be: www.pbris.arta.gov.ph.
104
Presentation of Deputy Director General Ernesto Perez during the launch of the OECD Competition
Assessment Reviews: Logistics Sector in the Philippines on 29 January 2021. The new version of PBRIS
– PBRIS 2.0 – will include an option to subscribe to agencies or sectors based on the interest of users,
140 
public consultation, and access to regulatory impact statements. ARTA plans to launch PBRIS 2.0 in the
fourth quarter of 2021.
105
Pro-Enterprise Panel (PEP), Ministry of Trade and Industry, Singapore, www.mti.gov.sg/PEP/About.
106
For example, the United Kingdom’s Better Regulation Framework for the conduct of RIAs contains a
reference to a competition assessment checklist developed by the Competition and Market Authority. See
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/91691
8/better-regulation-guidance.pdf.
107
Based on the Regulation of the Commission for the Supervision of Business Competition Number 4
Year 2015.
108
“Council of Australian Governments Communiqué 3 June 2005”, http://ncp.ncc.gov.au/docs/Council%
20of%20Australian%20Governments%20Meeting%20-%203%20June%202005.pdf, p. 4.
109
The impact of some recommendations could not be easily classified under either prices or efficiency,
or quantification required additional information, which proved impossible to obtain during the project.
110
See www.oecd.org/daf/competition/COMP_Toolkit_Vol.3_ENG_2019.pdf.
111
Recommendation on restrictions on cross-border road transport and their benefits are analysed in
Section 3.1.
112
The OECD has defined administrative burdens as: “The costs involved in obtaining, reading and
understanding regulations, developing compliance strategies and meeting mandated reporting
requirements, including data collection, processing, reporting, storage, but NOT including the capital costs
of measures taken to comply with the regulation, nor the costs to the public sector of administering the
regulations” (OECD, 2015, p. 219[19]).
113
The ASEAN member states where the recommendations on road freight transport are expected to have
a noticeable impact and data were available to estimate the benefits are Malaysia, Philippines and
Viet Nam.
114
These five ASEAN member states are Indonesia, Malaysia, Philippines, Thailand and Viet Nam.
115
Such improvements can have a monetary value, for example, reducing extra costs of delays as a result
of inefficient service provision.
116
Malaysia and Myanmar.
117
In the absence of pilotage revenue data, revenues have been estimated for Malaysia and Myanmar by
applying pilotage fees to an average size vessel and then multiplying by the total number of vessels. The
OECD uses data on total volume transported, average size of vessels, medium time spent in port (days),
and average container capacity from UNCTAD Maritime Data, https://unctadstat.unctad.org/wds/ReportF
olders/reportFolders.aspx. The estimated total number of vessels is calculated as total volume divided by
the average container carrying capacity per container vessel.
118
This estimation mirrors the analysis in Annex 3.A4, (OECD, 2016[67]) and Annex 5.A, (OECD, 2018[49]).
119
See Annex 5.A, (OECD, 2018[49]).

 141
120
The two countries that could benefit are Indonesia and Viet Nam.
121
Total FDI inward stock was about USD 2 687 888 million in 2019. The share of the FDI inward stock of
the logistical sector is assumed to be the same as the average share of FDI inward flows (1%). See
(ASEAN, 2019, p. 21[138]).
122
The study relies on information from the OECD Services Trade Restrictiveness Index (STRI) to estimate
ad valorem equivalents of service trade barriers for 46 countries using a structural gravity model.
123
The ad valorem equivalents for cross-border trade costs have to be paid for a cross-border service
transaction. Consequently, the analysis does not reveal whether services trade liberalisation contributed
to a reduction on the prices of imported goods.
124
See https://asean.org/asean-economic-community/sectoral-bodies-under-the-purview-of-aem/micro-
small-and-medium-enterprises/overview/.
125
See C. Pike (2 March 2018), “What’s gender got to do with competition policy?”, OECD: On the level,
https://oecdonthelevel.com/2018/03/02/whats-gender-got-to-do-with-competition-policy.

142 

 143
Annex A. Methodology
The ASEAN Competition Assessment Project began in the second half of 2018 and is expected to be
completed in 2021. The regional report concludes a series of ten prioritised competition assessments,
which were carried out in all ASEAN member states, using the OECD Competition Assessment Toolkit.
The country assessments were carried out in batches and followed the stages set out below.
Stage 1: Mapping the sectors
The objective of Stage 1 of the individual country competition assessments was to identify and collect
sector-relevant laws and regulations. The main tools used to identify the applicable legislation were online
databases, the websites of the relevant authorities and sector specific reports by private or government
bodies. Over the course of the project, the lists of legislation were refined, as additional pieces were
discovered by the team or issued by the authorities, while other pieces initially identified were found not to
be relevant to the sectors or no longer in force. In total, approximately 500 pieces of legislation were
identified in the 10 country assessments.
Another important objective of the first stage was the establishment of contact with the market through the
main authorities, industry associations and private stakeholders active in the sectors. The OECD team
conducted fact-finding missions and met with government and private stakeholders. Interviews with market
participants contributed to a better understanding of how the sub-sectors under investigation actually work
in practice and helped in the discussion of potential barriers deriving from the legislation. In total over
160 public and private stakeholders contributed to the reports.
Based on those meetings and the discussion on practical problems stakeholders face, and backed up by
further research, the OECD team identified the legislation to be prioritised for areas in which prima facie
barriers to competition existed and an impact on competition could therefore be expected.
Stage 2: Screening of the legislation and selection of provisions for further

analysis
The second stage of the individual country competition assessments mainly entailed the screening of the
legislation to identify potentially restrictive provisions, as well as providing an economic overview of the
relevant sectors.
The legislation collected in Stage 1 was analysed using the framework provided by the OECD Competition
Assessment Toolkit. This toolkit, developed by the OECD, provides a general methodology for identifying
unnecessary obstacles in laws and regulations and developing alternative, less restrictive policies that still
achieve government objectives. One of the main elements of the toolkit is a competition-assessment
checklist that asks a series of simple questions to screen laws and regulations with the potential to restrain
competition unnecessarily.
Following the toolkit’s methodology, the OECD compiled a list of all the provisions that answered any of
the questions in the checklist positively. The final list consisted of almost 600 provisions across the logistics
sector.

144 
The OECD also prepared an extensive economic overview of the logistics sector (and refined it during later
stages), covering industry trends and main indicators, such as output, employment and prices, including
comparisons with other ASEAN and OECD member countries where relevant. Where possible, these
statistics were broken down by sub-sector. The analysis conducted during this stage aimed to furnish
background information to better understand the mechanisms of the sector, providing an overall
assessment of competition, as well as explaining the important players and authorities.
Box A.1. OECD Competition Assessment checklist

Further competition assessment should be conducted if a piece of legislation answers “yes” to any of
the following questions:
A) Limits the number or range of suppliers

This is likely to be the case if the piece of legislation:
1. grants a supplier exclusive rights to provide goods or services
2. establishes a licence, permit or authorisation process as a requirement of operation
3. limits the ability of some types of suppliers to provide a good or service
4. significantly raises the cost of entry or exit by a supplier
5. creates a geographical barrier to the ability of companies to supply goods, services or labour,
or invest capital.
B) Limits the ability of suppliers to compete

This is likely to be the case if the piece of legislation:
1. limits sellers’ ability to set the prices of goods or services
2. limits the freedom of suppliers to advertise or market their goods or services
3. sets standards for product quality that provide an advantage to some suppliers over others or
that are above the level that certain well-informed customers would choose
4. significantly raises the costs of production for some suppliers relative to others, especially by
treating incumbents differently from new entrants.
C) Reduces the incentive of suppliers to compete

This may be the case if the piece of legislation:
1. creates a self-regulatory or co-regulatory regime
2. requires or encourages information on supplier outputs, prices, sales or costs to be published
3. exempts the activity of a particular industry or group of suppliers from the operation of general
competition law.
D) Limits the choices and information available to customers

This may be the case if the piece of legislation:
1. limits the ability of consumers to decide from whom they purchase
2. reduces the mobility of customers between suppliers of goods or services by increasing the
explicit or implicit costs of changing suppliers
3. fundamentally changes the information required by buyers to shop effectively.
Source: (OECD, 2019[119]).

 145
Stage 3: In-depth assessment of the harm to competition
The provisions carried forward to Stage 3 were investigated in order to assess whether they could result
in harm to competition. In parallel, the team researched the policy objectives of the selected provisions, so
as to better understand the regulation. An additional purpose in identifying the objectives was to prepare
alternatives to existing regulations, taking account of the objective of the specific provisions when required,
in Stage 4. The objective of policymakers was identified in the recitals of the legislation, when applicable,
or through discussions with the relevant public authorities.
The in-depth analysis of harm to competition was carried out qualitatively and involved a variety of tools,
including economic analysis and research into the regulations applied in other OECD countries. All
provisions were analysed, relying on guidance provided by the OECD’s Competition Assessment Toolkit.
Exchanges with government experts complemented the analysis by providing crucial information on
lawmakers’ objectives and the real-life implementation process and effects of the provisions.
Stage 4: Formulation of recommendations
Building on the results of Stage 3, the OECD team developed recommendations for those provisions that
were found to restrict competition. It tried to find alternatives that were less restrictive for suppliers, while
still aiming to fulfil the policymakers’ initial objective. For this process, the team relied on international
experience– from the ASEAN region, and European and OECD countries – whenever available. The report
was also shared with the OECD International Transport Forum (which also contributed with international
experience in the transport sector). In total, the OECD made over 470 recommendations across the
10 ASEAN country reports.

OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN
ASEAN
Efficient logistics can play a significant role in increasing a country’s

economic development by facilitating international trade and improving
its competitiveness. This report provides an overview of the logistics
sector in ASEAN and offers recommendations to lower regulatory barriers
to competition. It covers freight transport by land and by water, freight
forwarding, warehousing, small parcel delivery and value-added logistics
services.
This report and the accompanying “OECD Competitive Neutrality Reviews:

Small-Package Delivery Services in ASEAN” are contributions to an ASEAN-
wide project that implements part of the ASEAN Competition Action Plan
2016-2025 and is funded by the ASEAN Economic Reform Programme under
the UK Foreign, Commonwealth & Development Office (UK Government).
Designed to foster competition in ASEAN, the project involves conducting
assessments of regulatory constraints on competition in the logistics services
sector in all 10 ASEAN countries to identify regulations that hinder the efficient
functioning of markets and create an unlevel playing field for business.
Access all reports and read more about the project at oe.cd/comp-asean.
www.oecd.org/competition

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FOSTERING COMPETITION IN ASEAN

OECD Competition Assessment Reviews

Please cite this publication as:

OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN ASEAN © OECD 2021

Director, OECD Directorate for Financial and Enterprise Affairs

OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN ASEAN © OECD 2021

OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN ASEAN © OECD 2021

OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN ASEAN © OECD 2021

4. Indonesia: Indonesia Competition Commission (ICC); Ministry of Trade; Ministry of Finance;

OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN ASEAN © OECD 2021

OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN ASEAN © OECD 2021

Fostering competition in ASEAN

OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN ASEAN © OECD 2021

3 Road freight transport 47

4 Water freight transport 57

5 Other logistics sectors 73

6 Horizontal findings on the logistics sector 81

OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN ASEAN © OECD 2021

8 Benefits of lifting regulatory barriers to competition 111

OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN ASEAN © OECD 2021

OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN ASEAN © OECD 2021

OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN ASEAN © OECD 2021

Abbreviations and acronyms

OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN ASEAN © OECD 2021

IFF International freight-forwarders

OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN ASEAN © OECD 2021

OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN ASEAN © OECD 2021

Recommendations affecting the whole logistics sector

OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN ASEAN © OECD 2021

Infographic 1. Fostering Competition in ASEAN

OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN ASEAN © OECD 2021

OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN ASEAN © OECD 2021

1.1. Introduction to the ASEAN Competition Assessment Project

OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN ASEAN © OECD 2021

1.2. The benefits of competition

OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN ASEAN © OECD 2021

1.3. Main recommendations from the ASEAN Competition Assessment Project

1.3.1. Sector-specific recommendations

Road freight transport

OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN ASEAN © OECD 2021

The OECD recommends two options:

Water freight transport

OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN ASEAN © OECD 2021

In relation to cabotage, the OECD recommends one of the following options:

OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN ASEAN © OECD 2021

Rail freight transport

Multimodal transport and freight-forwarding

1.3.2. Recommendations affecting the whole logistics sector

OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN ASEAN © OECD 2021

OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN ASEAN © OECD 2021

1.3.3. Regulatory quality

OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN ASEAN © OECD 2021

1.4. Benefits of lifting barriers in logistics

OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN ASEAN © OECD 2021

OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN ASEAN © OECD 2021

Figure 2.1. ASEAN key economic figures

Source: (ASEAN Macro-economic Database, 2020[29]) https://data.aseanstats.org/.

OECD COMPETITION ASSESSMENT REVIEWS: LOGISTICS SECTOR IN ASEAN © OECD 2021

Figure 2.2. ASEAN GDP and average growth rate, 2010-19