Clean Business Means Attractive Investment Opportunity

This article is a part of a three-part series adapted from Frank Booker’s piece for Arbeitskreis Deutsche Wirtschaft (German Business Group Cambodia). Next week, we take a look at sectoral efforts to create a clean business environment in Cambodia.

Creating a clean business environment is a priority for the Royal Government of Cambodia. Since the Anti-Corruption Law was ratified by the government in 2009, it serves as one of the attractive factors luring new business to the Kingdom. Major regional decision makers completely agree. Takehiko Nakao, president of the Asia Develoment Bank (ADB) has even lauded these efforts to tackle corruption, ““We are very happy that the government of Cambodia enacted the anti-corruption law,” he said. Since being passed, Cambodia’s Anti-Corruption Unit has made some high-level arrests of police and court officials over bribe taking and misappropriation of funds.

Jean-Francois Cautain, the outgoing EU Ambassador to Cambodia, is also upbeat about the path Cambodia is taking. “I believe that the government is starting to feel the hindrances stemming from corruption. Key ministers are publicly criticising corruption as an obstacle to reforms, development and poverty reduction,” he told the Southeast Asia Globe.

“Increasing FDI from countries with strong compliance policies can only materialise significantly in a context of rule of law,”Cautain continued. “The government has to combat corruption if it seeks strong, enduring economic growth and wants to secure long-term FDI.”

Back in November, the ADB noted that, in order to attract the FDI it needs, the Kingdom needed to concentrate on eliminating “informal payments often needed to obtain government licenses, permits and access to basic services.” This is an area the government, particularly the Ministry of Commerce, has been working on. Having clearly defined and publicly viewable fees, for citizens paying administrative fees at the new One Window Service, or visitors paying for Tourist Visas at the airport, are clearly examples of the Kingdom’s priority for eliminating informal fees and ensuring transparency. This will absolutely extend to new businesses, both international and local, seeking to engage and invest in Cambodia.

Under the supervision of Sun Chanthol, the minister of commerce – a man with a high-level education at one of the US’s top business schools and plenty of experience in the corporate world there – much has changed. Nowadays, all around offices where payments are made, you can see walls covered with anti-corruption posters and tables of official rates for services.

“We’ve eliminated promotions through connections,” he told the Globe. “We’re continuing to reduce unnecessary paperwork, are speeding up approval processes, staying open longer hours to service our clientele and are developing digital-service platforms.”
In coming months, the government will implement a number of e-government initiatives that will go a long way to improve efficiency, transparency of processes and consistency of transactions. An e-filing system will enable companies or individual taxpayers to submit their tax returns electronically, while a national single-window system will integrate all public agencies into one web portal for ease and efficiency. The process to register a company that previously required applicants to be physically present will be making an online transition, where information such as company names, registration and tax IDs will be available within an hour to the applicant as well as all relevant ministries.

According to Sun Chanthol, Cambodia’s ranking on the World Bank’s Ease of Doing Business Index is expected to rise from 135 currently to 21 when these plans are fully implemented.

“Aside from bolstering the business environment, the speed, ease, and transparency of administration will also go a long way in boosting investor confidence,” said Andre de Jong, Managing Director of Robert Bosch Cambodia.


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