Legislation could improve business environment, analysts say

I don't think any businessperson in Phnom Penh thinks corruption is going to be immediately fixed."

BUSINESS leaders expressed optimism regarding the potential effectiveness of Cambodia’s anticorruption law to stave off graft within the private sector, as the long-awaited legislation was passed Thursday.

Though there was little mention of business regulations in the law, which was 15 years in the making, Article 19 declares that a soon-to-be-formed Anticorruption Committee will have the power to command any public or private figure to disclose personal financial information.

Kith Meng, president of Phnom Penh’s Chamber of Commerce and CEO of the Royal Group, one of Cambodia’s most prominent conglomerates, said Wednesday that passing the bill is a sign that the government is dedicated to combating corruption in the Kingdom, which would produce positive results for the private sector.

“With more transparency, the private sector will become more open for foreign investors from all over the world. It will ultimately be a good thing for the private sector and a good thing for the country,” he said, adding that he was not concerned about the law’s lack of material regarding the business community.

Stephen Higgins, CEO of ANZ Royal bank, added Wednesday: “Anything that improves transparency is a good thing for business.”

The Kingdom’s business leaders share an air of optimism about the new law, which they view as a promising sign of change; however, some believe that other concerns will need to be addressed for Cambodia’s economy to reach its full potential.

Khaou Phallaboth, president of Khaou Chuly Group, a conglomerate with holdings in Cambodia’s agricultural and construction sectors, said Thursday: “It is good news for all of Cambodia, but for businesses, corruption is not the most important point.

“The most important concerns are political stability and investment regulations, so [that] a business climate that provides incentives for all kinds of investors can exist.”

Marc Faber, a Hong Kong-based economic analyst and head of the investment advisory and fund-management firm Marc Faber Group, expressed mixed feelings on the new legislation in an email Thursday.

Faber said that the law is not likely to have an impact on the private sector because it will probably not be rigidly enforced.

However, he agreed that Cambodia is set for further economic development.

“I have no doubt that it will improve. I am very optimistic about the prospects of Cambodia,” he wrote.

Corruption ingrained

Earlier this week, a survey of business executives found that Cambodia was perceived as the second-most corrupt country among 16 nations in the wider Asia-Pacific region. The survey was carried out by the Political and Economical Risk Consultancy (PERC) and examined both domestic political and social risks.

Bob Broadfoot, managing director of the PERC, said Wednesday ahead of the law’s being finalised: Passing the law “is a step in the right direction, but I don’t think any businessperson in Phnom Penh thinks corruption is going to be immediately fixed.”

Transparency International’s annual Corruption Perception Index for 2009, assigned Cambodia a score of two – with one being the most corrupt and 10 being the least – in a survey of 180 countries across the world.