"The basis of enterprises set up in a corrupt society is to pursue corrupt business
decisions. They are not trying to compete fairly in the market; the business is structured
to maximise the corruption effect rather than economic efficiency."
This was a parting remark from Torush Lather, a former Australian Department of Foreign
Affairs and Trade economic analyst, who left Phnom Penh on Wednesday (June 29), where
he has been teaching English for 12 months.
He said for well intentioned entrepreneurs corruption was a disincentive from entering
"They can see that unless they are connected to a corruption agent chances are
they will only get a very small piece of the pie, and any business decisions will
have to factor in the cost of servicing their corruption agent.
"If someone starts an enterprise they very quickly find out there is little
incentive to pursue productivity improvements. Profit then arises out of improvements
in your position in the corruption chain."
Lather, who did his honors degree thesis on financial flows from Japan to Southeast
Asia, said there was little incentive in Cambodia for creating business, compared
with developed countries, which had low corruption.
"At any time a new corrupt player can enter a market which may have been a legitimate
enterprise, and simply cruel the market. All your investment, your energy is finished.
"Small-to-medium enterprises are the largest employers; if they are not pursuing
economic efficiency they will not have rational hiring strategies and individuals
will not have career paths or incentives to succeed. There are many people trapped
in these situations, most without knowing it.
"The impact of this is to degenerate the value system in society. It diminishes
the relative financial value of productive labor. In other words, someone who is
prepared to work hard, take risks, is not rewarded as they would be in a free uncorrupt
market system. The rewards go to those who make and then cement their corrupt contacts.
"The incentive to work hard and invest in productive skills is decreased. Very
quickly people see the financial benefit of an opportunistic outlook rather than
the established path of going through the process of increasing efficiency and expanding
your market position."
Lather says he has "Asia burnout" after 14 years living and working in
the region, and has gone back to Cairns.