Companies Seek Ways Around Corruption [... by paying under the table to gov't officials?]

By Ros Sothea, VOA Khmer
Original report from Phnom Penh
24 March 2010

It is not easy to get ahead in Cambodia’s business environment. Just ask Sam Sambath, CEO of the country’s largest manufacturer of construction coating materials.

Cam-Paint Manufacturing, which has seen rapid growth since 2004, is able to compete with local businesses and imports alike, through a number of strategies.

But success was not possible without monthly payments of at least $1,000 to government officials to avoid full taxes and to help each of his outlets run smoothly, Sam Sambath told VOA Khmer last week.

“We pay $3,000 monthly for the tax, and 30 percent of it is unofficial,” Sam Sambath said.

Cam-Paint is not alone. Cambodia ranks among countries perceived as most corrupt, according to Transparency International, a watchdog group. Corruption hurts businesses, but finding a solution to the graft problem is difficult.

Last week, international experts from the US and Australian embassies urged the business community to take a stand.

“The place to start is the top,” said Tim Phillips, worldwide managing partner of forensics and dispute services of Deloitte Touche Tohmatsu International, an international consulting firm.

“Make sure that government ministers, business leaders and all the important people in Cambodia’s business community talk about the importance of not being corrupt and work through each level, even to the lowest level, and remove as much of that corruption as possible,” he said.

The whole country can benefit, he said, “in particular the people at the lower level who need a prosperous economy to support hospitals and schools.”

Sam Sambath said it is not easy and that companies will lose money if they play by the rules.

“If we try to make ourselves so poor, we will lose our basic competition and our benefit,” he said. “For instance, if one makes corruption, they pay only $1.50, instead of $3, on product tax. So if we pay $3 alone, we will lose $1.50. So we need to increase our product’s price in order to make $1.50 profit. That makes the cost of product higher than others.”

Om Yentieng, head of the government’s anti-corruption body, declined to comment on the concerns.

However, Hang Choun Narun, secretary-general of the Ministry of Economy and Finance, said a new anti-corruption law, passed by the Senate last week, will eliminate unofficial payments inside state institutions.

There are other concerns about business fees and licenses.

“They don’t announce in public how much we have to pay and in how many days we will get the license,” said Prum Soun Praseth, an associate with Allens Arthur Robinson, an international law firm.

Corruption must be fought from within state institutions, he said, giving the business community an even playing field.

“We have to pay them three times more than the original price in order to hasten the procedure,” he said. “If we say no, it will get stuck within the ministry. So what should we do?”