Logo of Phnom Penh Post newspaper Phnom Penh Post - Comment: Clean business improves us

Comment: Clean business improves us

Comment: Clean business improves us

Content image - Phnom Penh Post

Post-conflict society must move away from 'hit and run'

HENG CHIVOAN

Key Kak attends the the launch of the Clean Business Initiative (CBI) in Phnom Penh on Monday.

Long and painful civil conflicts in Cambodia have engendered the lost of trust and belief among Cambodians in an organised society functioning within laws and a framework of regulations.

With the return of peace and reconciliation, conflict's legacy, characterised by clan mentality and cronyism, has got the upper hand to take over benefits resulting from the "natural" economic development of the country.

Successful businesses are built on "hit and run" system or model without any long-term perspective of development. In the long run, this groundless and deplorable system will end up leaving cracks in the very fabric of society which will lead to the inevitable destruction of harmony and happiness of all Cambodians.

This factual assessment is not a prophecy but a simple equation based on logic and evidence.

To avoid the situation in which economic process is characterized by anarchy, chaos and social conflicts, it is time now to promote an opposite approach called "Clean Business Initiative" (CBI).

 In launching CBI, the organisers have had no intention to be "a publicity campaign that will play business off against each other" but rather to convince the business community of the validity of the clean business principle.

By definition and in free society, doing business is to be engaged in a competition between people using skill and competence to deal with partners and other economic actors organised within the economic activities arena.

Therefore the basic rule is to offer equal opportunity to every economic actor without any invisible intervention, be it from political sphere of influence or pressure groups. The equal opportunity leads ipso facto to the transparency and integrity of the deal.

As a member of the WTO, Cambodia is doing businesses with all partners in the region and in the world.

Nowadays businesses deal with each other globally by following the same rules. International Accounting Standards require a consolidation of financial statements between related companies and the International Standards on Auditing impose the terms "in all material respect" and "true and fair view" of companies' activities when it comes to external auditors to expressing the unqualified opinion.

To comply with this global rule, the requirement of integrity and transparency of businesses should not be a question. For the Cambodian Stock Market to be opened in 2009, it will be imperative to apply the global rule of integrity and transparency to all future listed companies and there will be no rooms for businesses built on cronyism to be listed.

As a matter of fact and to start the process, the Ministerial Prakas of the Ministry of Economy and Finance dated 26 July 2007 requires that some sizeable companies (600 to 700 companies in Cambodia according to the last assessment) should submit their financial statements to be audited by independent auditors.

This is a major step undertaken by Cambodian government to send signal to business leaders that doing business in Cambodia, clean corporate governance and integrity and transparency of financial statements should prevail. 

In business, integrity and transparency are the ingredients of trust. Trust of shareholders and investors engenders mobilisation of huge capital to do business, trust of workers would enhance work productivity and trust of consumers would ensure profitability of businesses. The cycle should be normally renewed in harmony and in a sustainable way to create the spirit of "in business we trust".

In launching the CBI project, and for the sake of Cambodian economic development, we are promoting challenges between:

  • Sustainable approach in doing business in Cambodia versus  the standard "hit and run" approach;
  • Equal opportunity based on integrity and transparency for all in doing business in Cambodia versus favoritism and cronyism;
  • Happiness for all due to good repartition of business profits versus selfishness and greed of the clan and family.

The CBI's struggle to reverse the course of the "hit and run" model in doing business in current situation of Cambodia may be a dream and could be seen as a struggle between David and Goliath with huge difficulties ahead.

However it can be achieved if the CBI succeeds in gathering momentum to:

  • get back trust among Cambodians in the rule of laws and regulations,
  • convince business community that the "hit and run" model in doing business has no future in Cambodia with more appropriate educated citizens,
  • create and promote a network of clean business community all over the Kingdom.

As a Cambodian and in my capacity of independent auditor, I think that it is unfortunate and quite negative for the future of business development in Cambodia to write that "belonging to a clean business club not does not solve the challenges that businesses face or exclude you from having to pay fees or corruption".

Together we can build a bright future for Cambodian people and Cambodia's next generation to come, and we can reverse the course of bad practice in doing business if each of us is willing to accept the principle of clean business.

 

________________________________________________

Key Kak is an independent auditor and the chair

man of Morison Kak and Associates in Cambodia.

He is a member of the CBI steering committee.

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