Report Calculates Major Drain of Corruption

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PHNOM PENH, March 15, 2014 (Khmer Times) – 58% of businesses operating in Cambodia have paid a bribe, according to the Cambodian Federation of Employers and Business Associations (CAMFEBA).
Meanwhile, the International Labor Organization Cambodia said that losses about 10 percent of GDP, or $1.7 billion annually, to corruption.
Farid Hegazy, a senior economist at the ILO who led the research, said that chronic corruption is threatening the business environment in Cambodia.
“Corruption is the most hindering business constraint,” he said. “It is estimated that 10 percent of GDP is annually lost to it. Despite steady improvements in public financial management since 2002, about 30 percent of firms still believe that policymaking is controlled by individuals with personal connections to leaders in government.”
The report’s findings were based on information from 355 different companies and interviews with 257 workers. Companies claimed they spent nearly 9 percent of sales to bribery in 2008, a 3.5 percent increase from 2003.  At least a third of these companies took no action.
Corruption and bribery were associated with low government salaries, as well as poor accountability and law enforcement, the report says.
A second report released by the Cambodian Federation of Employers and Business Associations, found similar results in corruption, which led to delayed or failed services. The Camfeba report cited a lack of transparency in the judicial process that put companies at high risk.
CAMFEBA’s Pathways to Prosperity report, found that 58 percent of the 300 businesses interviewed had never refused to pay a bribe, while one third of firms took no action when encountering corrupt and unethical practices in the regulatory and legal environment.
CAMFEBA said it is clear from the survey; corruption remains a major obstacle to business. 
“Most firms in Cambodia, when dealing with ministries, still feel they need to pay ‘unofficial facilitation fees’ to secure services.”
The statement said seventy percent of firms surveyed that had refused to pay such facilitation fees, reported experiencing a delay in service or failure to receive the service at all.
“That is unacceptable,” CAMFEBA’s president Van Sou Ieng said when stressing on the findings.  “Corruption remains a critical obstacle to business.”
Labor Minister Ith Sam Heng has said that the government policy must move toward transparency in the investment environment.
Eliminating corruption is a top priority for Cambodia in order to ensure a transparent environment for investors and businesses,” he stressed.
Both reports called for a strengthening of legal enforcement of anti-corruption laws, as well as a reformed judicial system and transparency in public bidding.
The respondents in the last 12-month survey came from across industries, including ICT, agro-processing and the garment sector.
A key recommendation emanating from the report is the need to raise national awareness of the anti-corruption law through the media, across all provinces. “Additionally, it needs to be made easier to make a legitimate complaint, particularly for small and medium enterprises,” the report said.
 

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