Juliette Berguedieu Final Press Release Topic 4 .pdf

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1 - General introduction to the business environment and its particularities in
South East Asia.

Business and money run the world. By business environment, we want to talk about the
“combination of internal and external factors that influence a company's operating
situation1”. This is the condition where production and exchanges take place.
Worldwide, the components of a business environment are the regulations, the culture, the
state and government, the norms and the institutional environment. However, if we go into
details, we can see that every country as its own particularities to take into account within
their business environment. Regarding developing countries we can often add one
component to the business environment that is corruption. Corruption is described by
Gallup as “The world’s number one problem”. Corruption interacts in many areas. Corruption
is a key issues in elections around the world, an economic crime of calculation. It’s Influence,
extortion… Everybody can be corrupted. One of the main aspects of corruption is bribe and
South East Asian’s countries are very highly concerned by bribes and corruption.

Corruption is considered as a break to the economic development of a country. However,
some studies have shown that corruption can also have positives impacts on the growth of a
country. We’ll see throughout this press release, the good and bad sides of corruption and
answer to the following questions.
What are the harmful effects of corruption and to what extend corruption can have a
positive impact on the growth of country? What can we do about it?

2 – Review and description of corruption in South East Asia

A global problem for ASEAN:
Firstly, corruption as many aspects and one of them is bribe. This is when you need to pay to
get what you want while you shouldn’t or when you have to pay more compared to the
normal cost of a service. For poor population, it reduces access to services. Also, financial
system and credit are undermined by a system of corruption... peoples are then afraid to
take credit to launch businesses, as they don’t know how many taxes they will have to pay in
advance. With corruption, rates can increase overnight with no reason... at the end rich can
get loan but not poor. Corruption also concerns human rights and poor people are the one
who suffer the most of it while rich peoples take benefit. As long as corruption will remain,
poverty will stay.

Corruption is everywhere in ASEAN and it’s very difficult to not be part of it. For instance,
when someone is conflicted between what he thinks and wants to do, he knows and thinks
that it’s bad but still chooses to participate to the bribes in order to get what he wants or

1 http://www.businessdictionary.com/definition/business-environment.html
2 TRANSPARENCY INTERNATIONAL : Why ASEAN needs to confront corruption in

need. People choose the easy way to better think that there is nothing to do about it instead
of wondering them-self how they can fight corruption individually. Corruption is a worldwide
issue and an internal enemy to every economy.
Robert Klitgaard, an academic anticorruption researcher summed up the corruption with an
equation stating that Corruption = Monopoly power + Discretion – Accountability

“Public institutions in many ASEAN countries lack transparency and accountability, key anticorruption laws are absent, and civil society engagement is restricted. Just Indonesia and
Thailand have passed a freedom of information law”2

How to measure corruption:
In order to measure the corruption in each country and the global improvement over the
years, the worldwide agency Transparency International3 founded in 1995, publish an
annual report which rank 176 countries and territories and mark them over a scale from 0
(highly corrupt country) to 100 (very clean country). The aim was to raise awareness of
international corruption and to create a coalition of interests from both the public and the
private sectors to combat it. In 2016, the average score was 43.

We will study the case of three countries, which are to a different state of corruption. Firstly,
Singapore, which is one of the world’s less corrupted countries. Secondly, Indonesia, which
took benefit of corruption to increase its wealth and is now handling a very strong anticorruption policy. And Vietnam, which still have a lot of work to achieve on the anticorruption road.

Fighting against corruption is always a work in progress! It will never be perfect! However,
some countries are in advanced compared to others. Indeed, Singapore is part of the top 10
least corrupted countries.
According to the Transparency International 2016 report, Singapore was ranked 7th with a
score of 84/100. In 2006, Singapore ranked 5th, with a score of 9.4/10 (They changed their
way to grade countries in 2012)
In an essay4 for the inaugural Anti-Corruption Summit, the Prime Minister Lee Hsien Loong,
identifies four key factors to their current score. Mr Lee Hsien Loong explained that
Singapore inherited a clean and working system from the British colonial government and
when the British left, the pioneer leaders were determined to keep the system clean. Also,
even if the country faced lot of problems like poverty, the founded Prime Minister and his
team wanted to prevent the public service from being corrupt. They established a strong
political will, they institutionalised a robust, comprehensive anti-corruption framework that
spans laws, enforcement, public service and public social services.

2 TRANSPARENCY INTERNATIONAL : Why ASEAN needs to confront corruption in
southeast asia?
3 TRANSPARENCY INTERNATIONAL: The global coalition against corruption
4 http://www.straitstimes.com/opinion/fight-against-corruption-singaporesexperience

However, as anti-corruption system will always be a work in progress and Singapore still
need its CPIB, an autonomy agency, which make sure that corruption will not enter into the
government. When corruption appears, they punish and advertise about it. This is the case
of a former member of the government who was in charge of buying gift for foreign
diplomats. He used to buy bottles and boxes of gifts and got catch when the accountant
found out that he was charging more than the real amount of gifts purchased. The total
amount of stolen money was over 1 millions of Singapore’s dollars and he’s now serving a
very long prison sentence.

The case of Indonesia is very interesting as this country took benefit of corruption to
increase its wealth. Kaufmann and Wei introduced what they called the Asian paradox of
corruption in 1999 to talk about the corruption being part of the Asian culture and to explain
that when peoples are used to live in a corrupt system, they participate and to some extend,
take advantages of it.
In 2006, Indonesia ranked 130 with a grade of 2.4/10 and in the 2016 report, they ranked
90th out of 176 while they got a grade of 37/100.

In Indonesia, little plants started to take part of corruption by paying bribes. However the
aim of theses bribes was to help them to pay less tax or to access to a market. At the end,
they were making profit of it. Rock and Bonnet introduced in 2004 the positive relationship
between growth and corruption for newly industrialized large country like China and
Vial and Hanoteau also find in 2010, that corruption, measured as bribes and indirect tax,
has a positive effect on individual growth.

It becomes very interesting when Indonesia, started to fight against corruption even if it had
helped the country to grow. A new government came in and established very strong policies.
However, as corruption was mainly active to a micro-level, the Indonesian government
needed to act local to have global results. We need to think local to go global. Indonesian
needed to act local. A thorough work that has born fruit as proved by its improvement over
the Transparency International scale.

Overall, Vietnam is characterised by corruption with a weak legal infrastructure, financial
unpredictability and conflicting and negative bureaucratic decision-making.
In 2006 Vietnam ranked 111 with a grade of 2.6/10. They were ranked before Indonesia
(which were 130th). In 2016 they ranked 113th out of 176 while they got a grade of 33/100.
Over 10 years, Vietnam didn’t progressed.

A Vietnam Corruption Report from the Business Anti-Corruption Portal explained very clearly
the current Vietnamese situation. Indeed corruption is present in every area. For instance,
they report a lack of transparency in the judicial system that can often demand bribes to
lawyers and is therefore illegal. Regarding the police and the Tax Administration, companies
reported during a survey that the Officials often expect a gift during the meeting with
companies. Indeed, facilitation of payments is illegal but common in practice.

Vietnam do have an anti-corruption legal framework in place but the main issue is that its
lack of enforcement remain problematic.

3. Similarities and differences

We saw the case of three countries, which are, all to a different level on the anti corruption
level: Singapore, one of the cleanest country in the world. Indonesia, with a past linked to
corruption and is now becoming a clean country and Vietnam that is still facing difficulties to
fight corruption.

These 3 countries summarize the case of all the SEA countries. They are mostly corrupted
except Singapore and Malaysia who are the only two countries to grade above 50/100. Some
country like Indonesia already gets some results to their anti-corruption framework as they
won 40 places over 10 years. Some other country like Vietnam still have a lot of work to
achieve to clean their system.
We will never have a clean and perfect system and fighting against corruption will always
be a work in progress and there are similarities and differences between the corrupted and
clean countries.
Indeed, the lower-ranked countries (the highly corrupted one) in the International
Transparency scale are often determined by an untrustworthy and badly public institutions,
like the police and judicial system. These countries, are characterized by a lack of
transparency and information. Small company often get difficulties to find the right
information and are reduced to pay bribes to get what they want. This is also due to a lack of
education from de the population.

The higher-ranked countries tend to have strong institutions and policies, are more openminded with a higher degree of press freedom and a good access to information. People are
aware of rules and laws and the educational system is way better than the law-ranked
country. These countries also have a leader like in Singapore who used its power of the will
to install a clean-hand system. These countries know that we need to think local to get a
global impact.

While undertaking cleaning a system, one issue often comes out from peoples who think
that, whatever they do, it will never have an impact. The main challenge is to know how to
act at a local level.

4. Conclusion: What can we do to reduce corruption?

According to Robert Klitgaard there is no future to corruption. It won’t be just through
speeches and codes of conduct and not through new laws alone, the morality is difficult to
Simply declaring something does not guaranty the reduction of corruption. Leadership is
urgently needed. Sharing success stories to inspire the other is also important.

Transparency International calls on ASEAN governments to recognise the need for an ASEAN
Integrity Community, to endorse the concept and the importance of anti-corruption, and

establish a regional-level body to strategically tackle corruption in the region. Acting local for
a global impact.

Robert Klitgaard shared 5 ingredients of success:
- Structures and leadership: You need strong structure and strong leadership to fight
corruption as people might choose the facility of corruption to get what the want
- A whole-government approach: importance of agencies like the CPIB in Singapore to
recognize the challenge of corruption.
- Involving business and the people: preventing from corruption
- The role of morality continue to condemn corruption as immoral
- Finally, you need to think local to go global, act local to have global impact.

5. Question for the class

What could be done for countries like Vietnam, which face difficulties to banish

What do you think of the Asian paradox?

6. Annexe: The 2016 Map of Corruption – Transparency International

7. Bibliography

- Corruption Trends in 2016: Southeast Asia’s Governance Plight, Bridget Welsh




- Fight against corruption: Singapore's experience, Lee Hsien Loong, The Straits Time

- Transparency International: Corruption Perceptions Index: 2006

- Transparency International: Corruption Perceptions Index: 2016


- Indonesia’s Anti-Corruption Fight, Nithin Coca, The Diplomat

- Vietnam’s Corruption Problem, Dien Luong, The Diplomat


- Vietnam Corruption Report Snaphsop



- Asian Trends Monitoring LKYSPP : Corruption in the tendering process, Interview with
Robert Klitgaard - 17 août 2011

- Asian Trends Monitoring LKYSPP : Corruption and poverty, Interview with Robert Klitgaard
Part I - 17 août 2011

- Asian Trends Monitoring LKYSPP : Corruption and Poverty, Interview with Robert Klitgaard
Part II - 23 août 2011

- Lee Kuan Yew School of Public Policy : "The Private Sector against Corruption: Lessons of
Success" - Robert Klitgaard - 2 avr. 2015

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