Corruption tops the list of obstacles for doing business in Cambodia. According to estimates, 10% of Cambodia's annual GDP is lost to corruption, signifying pervasive and large scale corruption. Cambodia is a cash-based economy, facilitating corruption as many business transactions are made in cash. Bribes are paid to secure efficiency of services. In Cambodia, however, there does not seem to be any correlation between the size of the bribe and the speed of the administrative procedure. The primary reason for many small companies to pay bribes is to maintain good relationships with local officials. This indicates that the gift giving tradition to honour and strengthen relationships still has an impact on business conduct in Cambodia. In March 2010, the government passed a controversial Anti-Corruption Law (in Khmer), which was drafted over 15 years. Several observers have expressed concerns about the new law as it leaves loopholes for corruption, such as no provision of protection for whistleblowers.

Positive developments in relation to corruption and investment:

• The revised Land Law, passed in 2001, provides the legal basis for real property security and a system for recording titles and ownership. Although the Constitution prohibits foreigners from owning land, the new law allows them to sign 15-year leases or more.
• The National Assembly passed an Archives Law which grants public access to documents that are deemed harmless to national security. Nevertheless, the government still imposes restrictions when the public (i.e. NGOs) request information.
• The Cambodian government passed the Anti-Corruption Law in March 2010. Under the new law, any official found guilty of corruption can face up to 15 years in prison.

Risks of corruption:

• Examples of areas where Cambodians encounter corrupt practices in their everyday lives include obtaining medical services, dealing with alleged traffic violations, and pursuing fair court verdicts.
• Companies should be aware that they have to deal with extensive red tape when obtaining licences and permits, especially construction related permits and that the demand for and supply of bribes are commonplace in this process.
• The newly passed Anti-Corruption Law provides no protection to whistleblowers. Furthermore, whistleblowers can be jailed for up to 6 months if they allege corruption that cannot be proven.