Vannith Uy is the owner of what translates from Khmer as a "mobile nail salon", although the word salon is a stretch. It's a bicycle with a plastic crate on the back filled with hand lotions and nail polishes. Uy, 42, rides it around her Phnom Penh neighbourhood – a tangle of alleys near the river where the residents' domestic lives spill out of their open front doors – until a customer flags her down. She performs a manicure or pedicure on the spot, sitting on a plastic stool by the side of the street.

Three years ago, when she arrived from the countryside, Uy had a different plan. She wanted to open a hair and beauty salon on proper premises in the Cambodian capital. "But my family could find only dirty jobs," she says. "I wanted a place where my daughter and I could work together." So Uy did something she describes as her "only choice": she sold her 18-year-old daughter Chamnan's virginity to a wealthy local man for £900.

The man was a police general who frequented the beer garden where Uy worked as a kitchen help, she says. He bought Chamnan for six days and nights. He installed her in a hotel room on Phnom Penh's outskirts and visited her many times to have sex. She was allowed to call her mother once a day. By the third day, Uy recalls, Chamnan was so weak and distressed that the man summoned a doctor on his payroll to give her painkillers and a vitamin shot "so she had the strength to keep going until the end of the week".

Uy received cash payment in full, but her planned salon never materialised. The money that had represented a life-changing sum – equivalent to around five years' salary in her home village in Kandal province – soon trickled away. After she'd paid her sick husband's medical bills, given cash to her ageing parents and bought Chamnan a gold necklace to "raise her spirits", there wasn't much left. Uy had greatly underestimated the task of clawing her way out of hardship; her stricken expression as she talks suggests she also miscalculated the personal costs of selling her daughter's body to try.

Where to begin unravelling the shadowy, painful layers of Uy and Chamnan's story? It is not straightforward. Often overlooked by more dramatic tales of enslavement in brothels, the trade in virgins is one of the most endemic forms of sexual exploitation in Cambodia. It is a market sustained by severe poverty and ingrained gender inequality. Its clients are influential Cambodian men and other members of Asia's elite who enjoy total impunity from a corrupt justice system. Most misunderstood of all, many of those involved in the transactions are not hardcore criminals. They are mothers, fathers, friends and neighbours.

Cambodia is far FROM the only place where women and girls are treated as commodities. But in this country of 15 million people, the demand for virgins is big business that thrives due to cultural myth and other local factors. "Many Asian men, especially those over 50, believe sex with virgins gives them magical powers to stay young and ward off illness," says Chhiv Kek Pung, president of Cambodia's leading human rights organisation, Licadho. "There's a steady supply of destitute families for the trade to prey on here, and the rule of law is very weak."

The belief that sex with virgins increases male vigour has long held sway among powerful men in Asia, including Chairman Mao and North Korea's Kim dynasty. "Unlike sex- tourist paedophiles who seek out children under 10 years old, local men don't care so much about a virgin's age – only her beauty and the fact she's pure," says Pung. Parents who sell their daughters' virginity have little concept of child rights. "They regard their offspring as their property."

Based on Licadho's work inside communities, Pung estimates that "many thousands" of virgins aged between 13 and 18 are sold every year. As well as rich Cambodians, men from countries such as China, Singapore and Thailand are regular buyers, too. "They travel here on business and have everything prearranged by brokers: a five-star hotel, a few rounds of golf and a night or two with a virgin," says Eric Meldrum, a former police detective from the UK who now works as an anti-exploitation consultant in Phnom Penh.

The lack of hard figures is partly due to the trade's secrecy, Meldrum adds. Brokers operate underground, changing tactics and locations often. Plus the fact that close relatives are often involved means it rarely fits into strict definitions of sex trafficking – when people are tricked or abducted and sold into open-ended slavery – so it doesn't show up in those statistics either.

But there's another reason the trade is virtually invisible. Says Licadho's Pung: "In terms of activism, few organisations highlight virgin buying even though it's a devastating abuse of young women." It's seen as difficult to generate sympathy for the issue among foreign aid donors, she explains, so many NGOs sidestep the issue. (Licadho is one of the exceptions.) "The fear is that, while people might feel sorry for the girls, they'd be too outraged about parents selling their daughters to open their wallets."

That moral complexities are sometimes ignored by those purporting to help was sensationally underscored in late May. Somaly Mam, a self-styled former sex slave and Cambodia's most famous anti-trafficking campaigner, was forced to resign in disgrace from the US-based foundation that bears her name. The glamorous Mam boasted Hollywood actor Susan Sarandon and Facebook dynamo Sheryl Sandberg among her top supporters. She was feted widely in the media. On the back of heartbreaking stories about herself and Cambodian women under her wing, she raised millions of dollars at glitzy New York galas. Her downfall came after an investigation by a Cambodia Daily reporter revealed that significant parts of the stories she told were untrue.

One young woman whom Mam claimed to have rescued from a brothel after a vicious pimp gouged out her right eye had actually lost the eye, it emerged, as the result of a facial tumour. Mam's own story of woe – that she was orphaned and sold to a brothel at the age of 12 – was also dismantled.

The awful irony of Mam's rapid fall is that she didn't need to lie. Sex trafficking and exploitation exist in Cambodia, just often in less made-for-TV ways than her tragic tales suggested. (Brothels in red-light areas housing enslaved child prostitutes, for example, have been almost wiped out over the past decade.) Dishonesty aside, the greatest pitfall of her fraudulence was not so much that it misrepresented the scale of the problem. It was that it misrepresented the solutions. In promoting herself – and allowing others to do it for her – as a survivor single-handedly rescuing girls from evil predators, she made finding answers seem all too easy.

"People respond to emotional stories and they hand over their money without understanding underlying causes or long-term solutions," says Sébastien Marot, the director of Friends International, an NGO based in Phnom Penh that works with vulnerable children. But in the case of the virgin trade, he says, progress is hard. Pung agrees. "When you talk to people about this, there's a view that there are plenty of poor people in the world who don't sell their daughters, so it can't be blamed on poverty or desperation. But there are many interwoven social factors. You have to look at the whole picture."

At Vannith Uy's HOME, a dark, wide room that she rents for £10 a week at the back of a grander house, she tells me about her struggle to find work when she first arrived in Phnom Penh. Her husband had a back injury and she had two children, Chamnan and a younger son, to support. The capital overflows with rural migrants, all competing for the same menial jobs. "The only work I could find was as a kitchen help in a beer garden. I found Chamnan a job serving ice at the same place."

Hostesses at a Phnom Penh beer garden. The beer gardens are popular with men looking for virgins. There is no suggestion that these women have been sold Photograph: Will Baxter

Beer gardens are fairy-lit outdoor pubs where local men go to relax after work. In the evenings all over Phnom Penh, the sound of plaintive Khmer love songs leaks into the darkness, feedback and all, from their giant speakers. The gardens employ miniskirted young women to sell competing brands of Cambodian beer or to work as hostesses and sing karaoke. The décor at one popular place is a disconcerting mix of beer posters and Pooh Bear murals.

Uy hated the atmosphere, which she says became more drunken and predatory as the night wore on. "Chamnan is pretty and all the men loved her. They made comments about her body." While prostitution isn't openly advertised, many of the hostesses and beer girls supplement their income by selling sex to customers after hours. Brokers also frequent the gardens, touting for men who want to buy virgins or have other "special requests", which they arrange to take place at discreet locations.

Uy says the thought of selling Chamnan's virginity hadn't occurred to her until the opportunity arose. "A tall customer in his 50s noticed Chamnan. He came alone and asked her to sit beside him. One evening he asked me if she was a virgin, and said he wanted to buy her." She found out before the sale took place that he was an off-duty police general. Uy eventually agreed because, in her mind, she saw it as a chance to save Chamnan from becoming drawn into regular sex work. "It was only a matter of time if we stayed at the beer garden. All the girls who worked there seemed to do it eventually."

Economic opportunities are lacking for everyone in Cambodia, where three-quarters of the population lives below or just above the poverty line. But they are especially dire for women, who earn an average of only 27 cents for every dollar earned by a man, according to the Asian Development Bank. Apart from working in the fields, the vast garment industry is the biggest source of female employment. But wages are so pitiful at around £60 per month that workers are currently risking their lives in protests to fight for more. Working in a beer garden or karaoke bar and doing sex work on the side can bring in double that, and some women see it as their best option.

But sex work is not only criminalised under the law, leaving those who do it by choice (or lack of it) vulnerable to official abuse, it also brings deep social shame. Expectations of female chastity in Cambodia are enshrined in a code of duty and obedience known as chbab srey, or "women's law". "There's a national saying that men are like gold and women are like cloth," says Tong Soprach, an academic researcher into the sexual practices of Cambodia's youth. "If you drop gold in the dirt, it washes clean and still shines. If you drop cloth, the stain never comes out."

This absurd double standard is another reason virginity is so valued, of course. Men typically pay between £600 and £3,000 to buy a virgin for up to a week, depending on their budget and the girl's beauty. Uy didn't know the going rates, but she believed the offer of £900 for Chamnan would be enough to change their fate. "I explained my idea to Chamnan. She wasn't happy about going with the man, but she told me she understood."

In fact, chbab srey also dictates that women must obey and help their parents, a rule that is almost universally followed. It would have been difficult for Chamnan to refuse. "When she came home afterwards, I knew she was sad, but we didn't speak about it. We both felt it was better to forget it ever happened." Uy took a better-not-to-know approach with her husband, too. To preserve Chamnan's virtue in his eyes, she told him she had saved up the money from beer garden tips.

I asked Uy if I could meet Chamnan, who is now 22, but it wasn't possible. With the little money left over from her ordeal, she had returned to Kandal province and found a job in a government garment factory making underwear. Does she resent that Uy's grand plan didn't materialise? "I don't think so. She has a steady boyfriend now and hopes to marry him. She has a better life." But then, as a mother, Uy probably would think that.

Cambodian parents love their children as much as anyone, says Nget Thy, director of the Cambodian Center for the Protection of Children's Rights. But it's difficult to overstate how many problems exist in some communities. "Any misfortune, from losing a family member to losing a game of cards, can push people below the level they need to eat," he says. "Attitudes that children exist for their parents' benefit, and that women exist for men's benefit, are very, very wrong and need addressing urgently. But it's the men who buy virgins who are the criminals."

At a Phnom Penh riverside slum I meet Dara Keo. Dara's mother Rotana sold her virginity when she just 12 years old, after her father died leaving gambling debts. The slum's stilted shacks are home to around 1,000 people, many of whom recycle rubbish as their only source of income. Addiction to drugs, alcohol and gambling is part of daily life. Dara, who is now 18, says almost every teenage girl there is sold for her virginity, usually in deals made with their parents by female neighbours who work as brokers. "Everyone knows it happens but nobody talks about it openly."

Dara's account, and those of other young women I speak to in the slum, reveal the trade's dehumanising efficiency. "After my mother sold me for $500 (£300), the broker took me to a doctor to have my virginity checked and a blood test for HIV," says Dara. "There were other girls there. We were made to take off our clothes and stand in a line until it was our turn to be examined." (Buyers insist on proof of virginity to make sure they are not being tricked.)

Then she was taken to meet her buyer in an exclusive hotel room. The man, who was wearing "a dark suit and a gold watch", didn't speak or look at her at all, Dara says. "He pinned me down on the bed, unzipped his trousers and forced himself into me. The pain was very great." Over the next seven days, he came to the hotel to have sex with her two or three times a day. He didn't use a condom. "A few times he asked if he was hurting me. When I told him yes, he used even more force."

I ask about the man's identity. Dara gives me the name of a Cambodian politician who is still in office. It is impossible for her to reveal his name publicly.

By the time she was allowed to return home her vagina was torn and bruised. Her mother took her to a local doctor, who gave her painkillers and told her that her injuries would "heal on their own".

A senior police officer who agrees to speak anonymously says prominent men like politicians do not fear being caught because they know the police won't act. "If you try to enforce the law with these men, you will have a big problem," the officer says, dressed in civilian clothes in a Phnom Penh coffee shop. "I have been threatened, and some of my colleagues working on this issue have had their jobs threatened."

He relates how he has been warned by "people high up" not to pursue cases of virgin buying (and also rape) because "having sex is human nature" and such issues were "not serious".

He mentions a case last year of a senior military officer who was diagnosed with cancer and given one year to live. His wife agreed to let the man use more than £1m of their family money to "enjoy himself" before he died. "We knew he was buying a new virgin every week, but there was nothing we could do," says the policeman. (The man died recently.)

Men in power or big business "who have a good relationship with each other" are the only people who can afford to buy virgins, he adds, so arresting perpetrators is blocked by corruption at the very top. Although all forms of buying and selling sex are illegal in Cambodia, not one Khmer man has ever been convicted of purchasing virgins.

During her year working at the beer garden, Uy saw firsthand how the country's male elite bought virgins with entitled ease. She saw more than 50 young women being purchased, "like they were delicious food". As well as the police general who bought Chamnan, she came to know some of the other buyers well. One was an ageing politician from the ruling Cambodian People's Party (CPP). "Everybody loved him because he gave big tips."

She mentions the politician's name. He is someone whose name crops up repeatedly in relation to the virgin trade among journalists and activists in Cambodia. (It is not the same politician who bought Dara.) Uy said the man went further than purchasing virgins for his immediate pleasure – he "reserved" younger girls for the future. "He asked mothers to bring their underage daughters to the beer garden after-hours," she explains. "Then he chose the ones he liked, and gave their mothers some money every week to buy rice until the girls grew up." A mutual arrangement was made, she adds, that he would buy their virginity when they reached adolescence.

A slum area in Phnom Penh. Severe poverty and ingrained gender inequality fuel Cambodia's virgin trade Photograph: Heng Sinith/AP

I spoke to Mu Sochua, a former Minister of Women's Affairs and now a leading light in the main opposition Cambodia National Rescue Party (CNRP). She has campaigned for years on the need to address corruption and poverty, and advance women's status. In recent months she has been braving the front line of garment workers' protests to support their demand for a livable wage. While "the rule of law is not on the agenda of the current government", she says bluntly, addressing sexual exploitation such as the virgin trade needs to be part of efforts to tackle gender inequality on all fronts. "We have to increase education about women's rights to change attitudes," she says. "We need to win public support for an effective rule of law that punishes those who buy sex, not those who sell it."

The old men of the CPP have been in power continuously for 30 years. Mu Sochua, along with many others, believes the most recent general election last year was rigged. "The Cambodian people have already voted for change, so that is hopeful," she says. When the regime finally dies, she hopes that iniquities such as the virgin trade will die with it.

But will it? Take the politician who gave big tips that Uy mentioned. It's such an open secret in Phnom Penh that he is a prolific buyer of virgins that a Cambodian journalist who knows him well offered to introduce me to him. He was sure the politician would talk if I agreed to quote him anonymously.

The journalist quickly decided not to get involved. Even so, the moment suggested the lack of shame surrounding the practice and how much men like the politician must take their impunity for granted.

To protect the safety of the women cited in the article, some names have been changed.

Follow Abigail Haworth on Twitter at @AbiHaworth

• This article was amended on 11 July 2014. It originally described Mu Sochua as a former minister of women's affairs in the Cambodian People's Party. Mu Sochua has never been a member of the CPP.