CAMBODIA Country Profile

Licences, Infrastructure and Public Utilities

Business Corruption

When operating in Cambodia, companies should expect to deal with extensive red tape in order to obtain the proper licences and business permits. According to Global Integrity 2008, despite significant reductions in costs of obtaining a licence and in official fees, illicit payments and unofficial fees are still in place. Furthermore, regulatory requirements for basic health, environmental and safety standards for businesses are meant to be transparent in laws and publicly available; there are nevertheless cases where corruption and other illegal practices have led to enforcement inconsistencies despite of such regulation. 

According to the Economic Institute of Cambodia 2006, the majority of small and medium sized companies experience unofficial inspections where public officials come to collect unofficial fees.

Political Corruption

High level officials are suspected of issuing illegal permits to conceal unlawful activities, such as illegal logging operations. Global Witness 2007 reports examples of the illegal issuing of harvesting permits to cover up illegal logging, as well as issuing permits to build roads through forest areas. This has given easy access to all sorts of illegal activities in the forests, such as logging, poaching and expropriation of land.

According to Corruption Monitor, several examples have appeared in the media regarding corruption within the public works and construction with the result that work is both expensive and sub-standard. For instance it was revealed that a public official in a provincial transport department gave a road construction contract to a company which was owned by his relatives. The company not only built low quality roads but was even allowed to utilise state-owned equipment to perform the job.

Frequency

The World Bank & IFC: Doing Business 2010:
- In order to construct a warehouse, a company must go through 23 procedures and spend 709 days to obtain the needed licences and permits; the costs amount to 53.6% of the per capita income.

World Economic Forum: The Global Competitiveness Report 2009-2010:
Business executives give government administrative requirements (permits, regulations, reporting in Cambodia a score of 3.1 on a 7-point scale (1 being 'extremely burdensome' and 7 'not burdensome at all').

Transparency International: Global Corruption Barometer 2009:
- 40% of households who had contact with registry and permit services in 2008 report to have paid a bribe.

- 29% of households who had contact with medical services in 2008 report to have paid a bribe.

The World Bank & IFC: Enterprise Surveys 2007:
- 8% of companies surveyed view business licensing and permits as a major constraint for doing business.

- Senior management can expect to spend an average of 5.6% of its time dealing with the requirements of government regulations.

- 61.2% of companies surveyed report that they expect to make informal payments to public officials to get things done.

- No companies surveyed expect to give gifts to get an operating licence.

- 91.6% of companies surveyed expect to give gifts to get a construction permit.

- 58% of companies surveyed expect to give gifts to obtain an electrical connection, 49% for a telephone connection and 33% for a water connection.