US Investors Cite Corruption as Major Issue

Though U.S.-owned businesses in Cambodia are optimistic of the country’s economy, its appeal as an investment destination lags behind most of its neighbors due to the perception of endemic corruption, a new survey of 475 senior U.S. business executives in Asean shows.

The 2013-14 ASEAN Business Outlook Survey, jointly conducted by the American Chamber of Commerce in Singapore and the U.S. Chamber of Commerce, cited several benefits of doing business in Cambodia, such as low-cost labor, personal security and a positive attitude toward the U.S.

For companies already operating in Cambodia, the profit outlook was overwhelmingly positive—75 percent of respondents said they expected profits to increase in 2013, and forecasting for 2014, 90 percent anticipated an increase.

Expatriate employees based in Cambodia also expressed satisfaction with life, with 90 percent attempting to extend their stay—the highest percentage in the entire region.

Yet foreign companies not based in the country were less excited about making the move to Cam­bodia, which placed 8th out of the 10 Asean countries, behind Laos and Brunei. Reasons cited by companies were a shortage of skilled workers, unfavorable laws and regulations and underdeveloped infrastructure.             But the major worry for U.S. investors is corruption, with 81 percent of respondents raising the concern.

“There are two groups of in­vestors turned off by Cambodia, those who cannot afford to pay bribes and those who do not know how to think within a corrupt environment,” said Preap Kol, executive director of Transparency International (T.I).

Mr. Kol said countries such as Cambodia were unconcerned about corruption—according to T.I.’s Bribe Payers Index, China, the top investor in Cambodia, pays more bribes to other governments than any other nation.

“It is important for Cambodian people that we have a variety of investors, not just from a few countries, to create better competition and even faster growth. And big companies from Western countries like the U.S. tend to have more corporate responsibilities than countries like China, which will help the country toward becoming corruption-free.”

Mr. Kol said the government needs to create new laws and regulations to promote a level playing field among all businesses.

A statement accompanying the report says that the survey is intended to provide governments with a unique window into the sentiments of business leaders, and offer them a chance to address their concerns.

Ministry of Commerce Secretary of State Mao Thora said the government does have plans to address Cambodia’s corruption issue.

“We have an entire corruption law by the Anti-Corruption Unit that already exists, but the Ministry of Commerce has prepared a plan to better implement that law to fight corruption in business and encourage more foreign investors.”

He added that this will include putting investment policies online for foreign companies to study, which will better explain what documents are required and the costs involved in setting up a company.

The survey also stated that the 2015 target set by the Asean block for creating a single regional economic market known as the Asean Economic Community was unlikely to be met, with almost 60 percent of respondents believing 2020 to be a more realistic date.

(Additional reporting by Eang Mengleng)

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