Corruption an Inescapable Reality for SMEs

For Chit Uys Stevexo, the CEO of property valuation firm Vtrust Appraisals, there is no way companies in Cambodia can avoid corrupt practices and still remain competitive.

“Starting a business is not a problem, but doing business is a problem,” Mr. Stevexo said.

“For example…the price of the services and the price of the products for a company paying full tax will be higher than those not paying full tax” by bribing officials, he said.

Mr. Stevexo is not alone in the assessment.

According to Transparency International’s 2013 Corruption Perception Index, Cambodia is seen as one of the most corrupt countries in both the world and the region.

At a seminar to promote corporate integrity among small and medium-sized enterprises, hosted by Transparency International Cambodia (TIC) in Phnom Penh, local businesspeople overwhelmingly echoed that sentiment.

Nuon Kanha, assistant director of Dynamic Network Logistics, said pervasive corruption in the public sector was a constant hurdle for private firms.

“If we want to do something, we have to give the money under the table all the time. If we need the documents from the government, some they say, ‘Give me the money and I can do it for you,’” Ms. Kanha said.

The World Economic Forum has pinpointed corruption as the greatest hindrance to doing business in Cambodia.

According to the International Labor Organization, 10 percent of the country’s annual GDP is lost to corruption each year, amounting to roughly $1.7 billion in 2014 alone.

Preap Kol, executive director of TIC, said by telephone Tuesday that smaller firms are more likely to fall prey to corrupt practices because they have less leverage than large corporations.

“As a small or medium enterprise, they are more vulnerable to corruption, to becoming victims of corruption, because the system doesn’t give them much option to escape,” he said.

But Mr. Kol noted that there have been some positive changes on the government’s part, including efforts to increase revenue from taxation and customs, more frequent arrests of corrupt officials in recent months and an initiative to pay civil servant salaries directly into bank accounts.

Contacted by telephone Tuesday, Anti-Corruption Unit chief Om Yentieng declined to comment.

At a press conference on August 15, Mr. Yentieng said he believed the private sector was a “victim” of the corruption marring Cambodian society. “We know that the private sector wants justice [in this area] as it is basic to fair competition,” he said at the time.

Still, Soun Solinh, the executive director of the Cambodian Valuers and Estate Agents Association, expressed skepticism about how quickly the government could address a deeply entrenched practice.

“Right now, the government is working to do it, but I don’t know how strong or fast…the government can change the corruption aspect,” he said at the seminar.

And although businesspeople seem eager to speak out about corruption in general terms, few are ready to point fingers at others.

Vtrust’s Mr. Stevexo equated the act of publicly exposing others for corruption to committing suicide. He said whistleblowers must be guaranteed anonymity.

“If there is no guarantee, then there will be revenge from the other party who commits corruption and…they can take revenge in many forms, mostly revenge in the form of damaging your reputation, so [it is] better not to say anything,” he said.

But not everyone shared the seminar attendees’ enthusiasm for stamping out corruption.

May Dara, of Heng Samaky Construction in Kratie province, said by telephone that paying out an extra $5 or $10 to an official did not truly qualify as bribery.

“It is normal, and a habit, for Cambodian people to help each other,” he said. “When you scratch my back, I will scratch yours, and we cannot eliminate this habit.”,

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