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Logo of Phnom Penh Post newspaper Phnom Penh Post - Corruption's toll explained

Corruption's toll explained

"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

the market.

"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.

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