How Asean countries can turn the tide on corruption
We’ll send you a myFT Daily Digest email rounding up the latest Bribery and corruption news every morning.
One cannot but be impressed by how south-east Asian countries are coping with coronavirus.
While we should be cautious about the data, which can be unreliable, the number of infections in Asean — the 10-member Association of Southeast Asian Nations — accounts for just 1.3 per cent of the global total, and the number of deaths for just 0.7 per cent. That’s for a population of 661m, or 8.7 per cent of the world total.
Much less impressive is Asean’s record dealing with corruption, that other “invisible enemy”. With the exception of Singapore, Brunei and Malaysia — whose 1MDB scandal has still cast a cloud — member countries languish around the middle (Indonesia, Vietnam, Thailand) or in the bottom half (the Philippines, Laos, Myanmar, Cambodia) of Transparency International’s Corruption Perception Index.
Yet it does not have to be that way. Even before the pandemic, moves were afoot to make the bloc raise its game. As economies start to look towards the future again, they have an opportunity to tackle corruption at the same time: if Asean countries can mobilise to defeat coronavirus, they can do the same for corruption.
True, the analogy only goes so far. The reason these countries are managing the coronavirus crisis successfully is that they learnt their lessons the hard way during the 2002-04 Sars epidemic and are better prepared this time.
Corruption, by contrast, has deeper roots. In countries where civil rights are tenuous, the rule of law weak, public officials underpaid, and bureaucracies concentrated in the hands of powerful elites, there is a consensus that coronavirus will give corruption a new lease of life.
A new social contract
Yet my recent experience on the UN Development Programme’s “Promoting a Fair Business Environment in Asean” project leads me to wonder whether an alternative trajectory isn’t possible.
For one thing, it has long been clear that there are plenty of good reasons for governments and elites in the Asean countries to turn the tide on corruption. The bloc has significantly benefited from US-China trade tensions. With better governance and enforcement of rules, it could become the preferred destination for the new generation of international investors with environmental, social and governance (ESG) concerns.
Governments’ failure meanwhile to tackle corruption is becoming unsustainable at home.
After the pandemic, depending on how countries have handled the social and economic consequences of the crisis, there is likely to be a major reassessment of the social contract, including how to deal with corruption.
The same weapons — surveillance technologies, social control, legal enforcement — that have proved most successful in the fight against coronavirus could be deployed to bring corruption under control.
Transparency through technology
Some of the work that my UNDP colleagues and I have been doing to bring the public and private sectors together to fight corruption illustrates how these tools can be applied to rebuild the economy and society.
For example, advanced data analytics could be applied to large infrastructure investments or aid and financial support packages, to ensure that these critical resources are reaching the right destination. Today, few public procurement authorities in the region have access to this kind of system.
A fund could be set up to make technology available to all Asean’s public procurement authorities which would enable the disclosure of data before, during and after the contracting process.
Bolstered by the latest AI-enabled forensic technology under development in the private sector, such a scheme could increase transparency in public tenders and revolutionise governments’ ability not only to prevent, but also to detect criminal or fraudulent activity.
Such technology-generated transparency could be combined with a streamlining of bureaucracy. A “regulatory guillotine” such as the one Thailand’s government proposed in 2017 (but has not yet fully implemented) would go a long way to reducing corruption and to jump-starting the post-crisis economic recovery.
The priority would be to eliminate obstacles that depress countries’ ranking in the World Bank’s Ease of Doing Business Index. An important reference point for investors, the index provides an early warning of conditions in which corruption is likely to thrive. The World Bank estimates that it takes 33 person-days to incorporate a business in the Philippines and 200 days to obtain a construction permit in Indonesia (presumably without paying a bribe, that is) — hardly an inducement to pour money in.
The fight against red tape could also include the co-ordinated elimination of non-tariff trade barriers between Asean members. That would not only reduce delays and corruption at customs, but also strengthen the bloc’s regional and global competitive advantage.
Support for small businesses
To rebuild the economy after the pandemic, governments and investors can work together to remove the barriers stunting the growth of SMEs that drive the region’s economy.
To play their part, businesses and investors can contribute to an array of practical tools including: effective whistleblower lines to report bribery, abuse of power and other unethical behaviour; easy-to-use guidance for smaller businesses on their rights and obligations; training programmes for companies wanting to attract ESG investors by building sound governance, resilience, diversity and ethical management into their processes; and business integrity courses for young entrepreneurs and start-ups “to catch them early”. Vietnam, which introduced new anti-corruption legislation last year, is moving forward with training and guidance for SMEs to help them comply with the new law.
Multinational companies, keen to expand their supply chains, and ESG investors, looking for new investment prospects, would have a vested interest in supporting such programmes: poor governance and corruption present serious risks both to doing business and to meeting ESG goals.
As countries pick themselves up after coronavirus, the social contract between government, business and civil society can be redefined to combat corruption — a chronic disease which, by tearing apart the fabric of society, laying waste to small business, and relegating millions to poverty, is just as destructive and deadly as coronavirus.
Brook Horowitz is chief executive of IBLF Global, a UK-based NGO promoting responsible business practices, and senior consultant to the UNDP’s ‘Promoting a Fair Business Environment in Asean’ project.