Are Dodgy Business Practices Holding Cambodia Back?

Widespread corruption and a complicated bureaucracy are keeping foreign investors out of Cam­bodia, National Assembly Pres­ident Prince Norodom Rana­riddh said Monday.

On the first day of a weeklong anti-corruption conference, Prince Ran­a­riddh also blamed rising labor costs for driving away overseas businesses, and specifically targeted the Council for the Devel­op­ment of Cambodia for losing potential investment money. The CDC is the arm of government meant to coordinate foreign investment and has been working to create “one-stop service,” which allows investors to deal only with the CDC when setting up shop in Cambodia.

But Prince Ranariddh said during a speech Monday the CDC has failed to streamline the investment process, forcing investors to deal with several ministries and perpetuating the practice of demanding bribes for investment approval.

“There is a lot of corruption… like the CDC, it doesn’t have any one-stop service, but several-stop service that costs a lot of money,” the prince told reporters at a press conference after the opening ceremonies.

A CDC senior official said Monday he was not aware of corruption within his organization though he acknowledged that his office has yet to make the approval process easier for investors.

CDC Secretary-General Sok Chenda said the implementation of one-stop service has been hindered by the involvement of several government agencies which were involved in the investment approval process before the CDC’s creation in 1994.

“We had existing ministries, and then CDC was created,” Sok Chenda said. “It’s difficult to say that [the ministries] had all these responsibilities and now CDC will do it.”

Though investment in Cam­bodia soared after the UN-supervised elections in 1993, factional fighting in 1997 slowed the stream of foreign money coming into the country, and it isn’t necessarily corruption that is keeping overseas business out of Cam­bodia, according to Caltex Gen­eral Manager Kit Heffner.

“Trying to attribute [the investment downturn] to anything specific is hard,” said Heffner, who is also a member of the Inter­national Business Club, an informal group of foreign investors.

The prince also told reporters that investing in Cambodia is becoming less lucrative as labor and material costs rise.

“Cambodia is not a very interesting place any more to invest. Of this, I am sorry for Cam­bodia,” the prince said.

Government officials will meet all week to go over the recommendations of international experts, local activists and legislators on drafting a strong anti-corruption law.

The prince warned the approximately 100 conference participants that clear legislation is necessary to “build a transparent society free from corruption.”

“We have to have a law but the law must be equally implemented,” he said. “Otherwise it will be useless and more dangerous.”

A draft of the anti-corruption act was released Monday to conference participants.

The legislation still must be approved by the Council of Ministers and the parliament.                                    Last year the Center for Social Development—which is helping organize this week’s conference—released a survey that found nearly 85 percent of 1,000 Cambodians surveyed between December 1997 and July 1998 considered corruption a normal part of this lives.

Those surveyed complained about corruption on all levels of society.

The government’s inability to control corruption, largely by senior government officials, led the International Monetary Fund to cancel $60 million in loans in 1996 and 1997.

While an IMF delegation has tentatively given the green light to another $80 million in loans that could be approved this fall, Cambodia must continue an aggressive reform process to be eligible for the money.

“There is a lot of corruption…like the CDC, it doesn’t have any one-stop service, but several-stop service that costs a lot of money,” the prince told reporters at a press conference after the opening ceremonies.

A CDC senior official said Monday he was not aware of corruption within his organization though he acknowledged that his office has yet to make the approval process easier for investors.

According to CDC Secretary-General Sok Chenda, the implementation of one-stop service has been hindered by the involvement of several government agencies which were involved in the investment approval process before the CDC’s creation in 1994.

“We had existing ministries, and then CDC was created,” Sok Chenda said. “It’s difficult to say that [the ministries] had all these responsibilities and now CDC will do it.”

Though investment in Cambodia soared following the UN-supervised elections in 1993, factional fighting in 1997 slowed the steam of foreign money coming into the country and it isn’t necessarily corruption that is keeping overseas business out of Cambodia, according to Caltex General Manager Kit Heffner.

“Trying to attribute [the investment downturn] to anything specific is hard,” said Heffner, who is also a member of the International Business Club, an informal group of foreign investors.

The prince also told reporters that investing in Cambodia is becoming less lucrative as labor and material costs rise.

“Cambodia is not a very interesting place any more to invest. Of this, I am sorry for Cambodia,” the prince said.

Government officials will meet all week to go over the recommendations of international experts, local activists and legislators on drafting a strong anti-corruption law.

The prince warned the approximately 100 conference participants that clear legislation is necessary to “build a transparent society free from corruption.”

“We have to have a law but the law must be equally implemented,” the prince said. “Otherwise it will be useless and more dangerous.”

A draft of the anti-corruption act was released Monday to conference participants. The legislation still must be approved by the Council of Ministers and the parliament.            Last year the Center for Social Development—which is helping organize this week’s conference—released a survey that found nearly 85 percent of 1,000 Cambodians surveyed between December 1997 and July 1998 considered corruption a normal part of this lives.

Those surveyed complained about corruption on all levels of society.

The government’s inability to control corruption, largely by senior government officials, led the International Monetary Fund to cancel $60 million in loans in 1996 and 1997.

While an IMF delegation has tentatively given the green light to another $80 million in loans that could be approved this fall, Cambodia must continue an aggressive reform process to be eligible for the money.

(additional reporting by Gina Chon and Seth Meixner)

 

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