Corruption 'stalls progress'

Corruption 'stalls progress'

Corruption is among the biggest barriers to Thailand's economic progress, says expert Prof Robert Klitgaard, who urged businesses and non-governmental organisations (NGOs) to work with the government to monitor key projects.

Klitgaard: Graft is an economic crime

Among obstacles to investment and fighting poverty, bad government and corruption are Thailand's major problems.

The World Economic Forum's 2013-14 global competitiveness report said Thailand is very competitive in terms of human resources, location and policies such as foreign direct investment rules.

"But in terms of the quality of government and corruption, it's not good. So this is the number one obstacle," said Prof Klitgaard of Claremont Graduate University in California.

Thailand ranked 88th among 176 countries surveyed by Transparency International for its 2012 Corruption Perceptions Index. Denmark, Finland and New Zealand were the least corrupt.

Other than social and political costs, the economic cost of corruption is even more than the size of a bribe, Prof Klitgaard said.

In public procurement projects, the kickback that goes to people in government may be 10-30% of the contract value. This is the cost to the nation when ministers change a whole policy to twist it away from people's interests, he said.

Meanwhile, countries that improve their governance can expect increases in investment, plus the multiplier effects of each dollar of investment in terms of jobs and growth.

"It's an economic crime. Many crimes are a crime of passion out of outrage. But corruption is a crime where the persons giving and receiving bribes are doing very careful calculations of the benefits and costs. There is supply and demand for bribery," said Prof Klitgaard.

He suggested NGOs and businesses help the government to monitor the performance of key projects. For instance, businesses can do so as part of corporate social responsibility.

He was speaking yesterday at Thailand's 4th National Conference on Collective Action against Corruption.

Pramon Sutivong, chairman of the Anti-Corruption Organisation of Thailand, said the group is trying to establish a transparent procurement process by proposing an integrity pact for third-party involvement.

But if the private sector disagrees that observers of procurement processes should be appointed by the government, the process might be stalled.

Paiboon Nalinthrangkurn, chairman of the Federation of Thai Capital Market Organizations, urged businesses, especially state-led enterprises, to list on the Stock Exchange of Thailand.

"PTT Plc, for instance, has seen significant change before and after listing. It might not be 100% transparent, but it's better than before where people had no chance to see financial statements," he said.

Data from the Department of Special Investigation show 69% of corporate fraud cases from 2004-08 were related to tax evasion and 11% to bid rigging, showing that corruption is systematic rather than random, said said Deunden Nikomborirak, research director at the Thailand Development Research Institute.

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