Little progress in war on graft

Little progress in war on graft

Corruption is rarely out of the news in Southeast Asia, but the last three weeks have been busier than usual. In Vietnam, two former information ministers were arrested on suspicion of mismanaging public investment. The prosecution order issued on Feb 23 for Nguyen Bac Son and Truong Minh Tuan accuses them of "violations of regulations on management and use of public investment capital that cause serious consequences". The news cast a shadow over Hanoi's preparations fo the Trump-Kim nuclear summit.

On the same day, the global money-laundering watchdog placed Cambodia on its watchlist. Phnom Penh has never prosecuted a money-laundering case and the country is vulnerable to the concealment of illegally acquired money, said the Financial Action Task Force (FATF), an inter-governmental organisation that leads the fight against money laundering and terrorist financing.

Being on the FATF "grey list" could limit Cambodia's access to international financial institutions. And while a "high-level political commitment" has been made to address the problem, the country still had "significant deficiencies", said president Marshall Billingslea.

In Malaysia, meanwhile, authorities have issued an arrest warrant on money laundering charges for Paul Stadlen, a British national who had worked as a media adviser to former prime minister Najib Razak. The move is part of the ongoing investigation into the looting of 1Malaysia Development Berhad (1MDB) of some US$4.5 billion while Mr Najib was in office. Goldman Sachs and two former bankers are also facing criminal charges laid by the new government.

In Communist-ruled Vietnam, a major corruption crackdown has sent a politburo member to prison and many other senior officials to jail or trial in a wide range of sectors. But the get-tough approach to prosecution and punishment in recent years does not appear to be paying off yet.

When Transparency International released its Corruption Perceptions Index (CPI) 2018 in late January, Vietnam fell two points from its 2017 score while Cambodia, Myanmar and Thailand dropped one point. Vietnam now ranks 117th out of 180 countries, down from 107th spot in the previous year.

"Strong enforcement efforts are only part of a comprehensive and effective anti-corruption strategy," the Berlin-based organisation noted. "In addition, weak democratic institutions and few political rights cast serious doubts on the fairness of the arrests and prosecutions in the country."

Asean countries that managed to improve their scores are Brunei, Singapore, the Philippines and Indonesia, though Indonesia and Thailand are being monitored in light of pending elections. Singapore is the third-cleanest country in the world, with its score edging up from 84 to 85.

The CPI 2018 found that more than two-thirds of countries scored below 50 on its scale where 100 is very clean and zero is very corrupt.

In opaque, one-party Laos, the government also appears to have made little progress in tackling widespread corruption despite high-profile actions and promises. It made a modest improvement to 132nd place from 135th in the overall ranking but was below its position of 123rd in 2016, when Prime Minister Thoughloun Sisoulith came into power and pledged to crack down on graft.

While the Vientiane government has been publicising anti-corruption efforts, progress appears to be minimal. The government's latest measures include a cap on spending allowances for state organisations and public officials, including at the highest level of government. This is partly driven by practical motives: state auditors estimate that the government loses large sums of revenue to corrupt practices, working against efforts to rein in the sizeable fiscal deficit, while the issue also deters foreign investors.

While Vietnam, Laos and Thailand certainly hold ample investment opportunities, their slow improvement in tackling corruption could dampen their competitiveness in the eyes of foreign investors. Corruption can negatively affect government efficiency and in return lower economic performance and long-term stability.

Some economists even say clamping down on corruption is a way to improve the economy, while corruption is much more likely to flourish where democratic foundations are weak. In some countries, chronic and widespread corruption has led to public anger and movements to bring the government down.

It's time now for Asean to show the public significant progress in the fight against corruption. Failure to make this happen will only increase short-term political risk and reduce the region's appeal, leading to international pressure in the long run.

Nareerat Wiriyapong

Acting Asia Focus Editor

Acting Asia Focus Editor


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