Corruption remains the most significant challenge facing Cambodia’s economy, according to a survey of more than 300 employers conducted last year by the International Labor Organization (ILO), the results of which were released Tuesday.
Despite legislation meant to stamp out graft, corruption continues to be perceived as the greatest threat to business in the country, according to the ILO report, titled “Enabling Environment for Sustainable Enterprises (EESE).”
“[F]indings from the EESE survey reveal that employers most often perceive corruption to be the greatest challenge facing the economy,” the report states.
“The World Economic Forum has noted corruption as the single most problematic factor hindering doing business in Cambodia as of 2012, and according to estimates, 10 percent of Cambodia’s annual GDP [gross domestic product] is lost to corruption,” the report continues.
Applying this estimate to the World Bank’s predicted GDP for Cambodia of $17.2 billion in 2014, more than $1.7 billion will be funneled out of the economy by corruption this year.
While the ILO report notes that “incremental improvements in developing democratic institutions and practices” have created a more stable atmosphere for investment, it says “corruption is a major problem.”
“In addition, the existence of organized crime, with close links to the military and police, ensure that extortion is a problem for businesses,” the report says, citing the Economist Intelligence Unit.
“Bribes are typically paid to secure efficiency of services, though a main reason many small companies pay bribes is to maintain good relations with local officials,” the report continues.
According to its survey of employers, about a third of businesses have responded to corrupt officials by doing nothing, with garment and footwear factory owners proving the least responsive to corruption, a finding that the ILO calls “worrying.”
According to the ILO’s survey, 33 percent of businesses took no action to reduce the effect of corruption, 19 percent created specific policies to combat corruption within their enterprise, 16 percent trained workers in how to deal with corruption, and only 5 percent “actively promoted the fact that their enterprise will not pay any ‘extra non-official payments.’”
Efforts to combat corruption were markedly higher among members of the Cambodian Federation of Employers and Business Associations (Camfeba), which came out with its own Pathways to Prosperity report Tuesday, in tandem with the ILO report.
Camfeba said its own survey, which also surveyed representatives of more than 300 firms, showed “that businesses perceive better governance as the most important way to improve [Cambodia’s] economy.”
“Our research into the consequences of refusing to pay facilitation fees resulted in services delays or the failure to receive that service in 70 percent of firms,” the Camfeba report says.
In its policy recommendations, Camfeba says there is an “urgent need” to promote the Anti-Corruption law, passed in 2012, along with efforts to make it easier for companies to file complaints about corruption when it arises.
Camfeba also says that the Anti-Corruption Unit (ACU)—widely criticized for being stacked with officials loyal to the ruling CPP— “needs to admit additional stakeholders to be more representative,” and recommends the creation of a mechanism to evaluate court judgments with “an overarching objective to eliminate corruption.”
Phay Siphan, spokesman for the Council of Ministers, said that the reports failed to account for rising foreign investment in the country, which, he said, proved that corruption was not a significant threat.
“What they say is what they say, but what we see is an increase in the number of dollars being invested,” Mr. Siphan said.
(Additional reporting by Hul Reaksmey)
