PRESS STATEMENT, 7 January 2015, KUALA LUMPUR – I refer to the article “Malaysia sets two main agendas as it assumes ASEAN chairmanship” (The Sun, Jan 01) early this week stating that the Director-general of the ASEAN-Malaysia National Secretariat at the Ministry of Foreign Affairs, Datuk Muhammad Shahrul Ikram Yaakob, had mentioned that Malaysia had identified two important priority areas out of eight which is hoped to be achieved during its tenure as chairman which it will assume from Myanmar. The two important priorities are the Declaration on Combating Transnational Crime, ASEAN Agreement on Transfers of Prisoners and the establishment of an ASEAN Peacekeeping Battalion.
Malaysia has responsibility to ensure the implementation of the remaining action plans lines of the blueprints of all the three pillars – political-security, economic and socio-cultural, as well as how best to conclude the Roadmap for an ASEAN Community (2009-2015).
Unfortunately, fighting corruption is not on the agenda in the upcoming 26th ASEAN Summit which will be held at the Kuala Lumpur Convention Centre (KLCC) on April 26 and 27 this year.
There is no ASEAN country (or any country for that matter) which can afford to live with corruption, as it jeopardizes economic development in terms of economic efficiency and growth and creates income inequality across the ASEAN member states. Many ASEAN member countries still suffer from corruption, in some cases it is endemic. Furthermore, empirical evidence suggests that corruption lowers investment and retards economic growth to a significant extent and can destroy a nation.
Surveys have also shown that corruption can affect FDI directly by tarnishing the perception of a country’s stability and quality of an investment potential. Foreign investors perceive corruption as an impediment to investing in the host country.
As Malaysia takes over the Chair of ASEAN, it is appropriate for the Malaysian government to include and lead the anti-corruption programme as top priority in its political and security agenda. Malaysia has a responsibility to ensure the ASEAN’s political, social and economic agendas are on track and to put in place effective strategies to fight against all forms of corruption.
Malaysia has to lead, push and address this urgent issue of corruption facilitated by ASEAN’s financial system today. ASEAN has to take the necessary steps to address the flaws in the regional financial system that allows the corrupt to syphon off funds stolen from the public purse through shell companies and hide the proceeds of their crimes.
Although Singapore, the most developed country in Southeast Asia, is recognized as one of the world’s least corrupt by international rating agencies, the majority of other ASEAN countries are still ranked very low. Transparency International’s Corruption Perceptions Index (CPI) 2014 showed a mixed bag for ASEAN countries, where Singapore was ranked at 7th, which is the least corrupt country in the world, Malaysia was at 50th place, while the Philippines was 85th, Indonesia 107th, Vietnam 119, Cambodia and Myanmar shared 156th place and Laos was 145th out of 155 countries surveyed. Singapore was once top 5 least corrupt country several years ago. Among ASEAN countries, CPI 2014 indicated that Malaysia is ranked second, behind Singapore and the Philippines is the third place.
Even at the G20 Leaders Summit in Brisbane last November, their leaders stated corruption was an issue and they have a brand new two-year anti-corruption action plan. To them fighting corruption is very important to achieve its growth economic targets of its members. In fact there was a consensus of the members to put this anti-corruption issue on the agenda of the G20 summit. Besides that, corruption remains a major obstacle to achieving much needed progress and distort the composition of government expenditure.
G20 intends to achieve its mission of protecting the global financial system and promoting growth. All countries should commit to promote greater transparency through effective implementation of the international standards on the beneficiary ownership of legal persons and arrangements, set by Financial Task Force
Corruption is also seen as a problem for all economies, requiring leading financial centres in the EU and US to act together with fast-growing economies to stop the corrupt from getting away with their unlawful acts.
Curbing corruption including money laundering is very important for ASEAN’s goal to achieve its growth target, resilience and to achieve sound investment environment and stability of the financial system in this region.
Malaysia has to find ways to lead and show leadership through swift action on the establishment of an inclusive multi-stakeholder regional body to tackle corruption and promoting effective region-wide anti-corruption efforts. Besides, setting up the Integrity Community, ASEAN must come out with more formal agreements and long term anti-corruption action plans in order to fight cross border corruption in this region.
By establishing an ASEAN Integrity Community, this region can protect against serious corruption risks more professionally and improve regional economic stability.
Therefore, there is an urgent need of international cooperation to enhance the anti-corruption policies, form regional network and enforcement efforts among ASEAN to achieve a cross border governance.
The ripple effect of government corruption can be far reaching. A government officer stealing millions of dollars affects countless individuals, budgets, programs, and more.
As such, corruption problems and challenges that face one nation often have a rippling impact throughout the region with more than 600 million population. If ASEAN were a single community, it would already be the seventh-largest economy in the world, with a combined GDP of $2.4 trillion in 2013. It is projected to rank as the fourth-largest economy by 2050.
In this regard, the far-reaching consequences of unchecked corruption are significant. For decades, some ASEAN countries have experienced severe poverty, with millions of citizens fleeing the nations to pursue the hope of a better tomorrow in other countries.
Unless collective action against corruption is taken by ASEAN, the massive infrastructure development and increased trade central to achieving the region’s economic potential will be left vulnerable to this evil and will impede cross-border investment, trade, money laundering and human trafficking.
At present certain ASEAN members are doing their individual best to cope with their transparency and corruption issues, but greater efforts may be called for among ASEAN leaders to put transparency and anti-corruption activities in their inter-regional ministerial agenda so that the promotion of greater transparency and the fight against corruption could help ASEAN attain smoother and more sustainable levels of political, economic, and socio-cultural integration.
The World Bank estimates that corruption may cost a country as much as 5 percent of its Gross Domestic Product. Corruption adds up to 10 percent to the total cost of doing business globally, and up to 25 percent to the cost of procurement contracts in developing countries.
Malaysia’s Gross Domestic Product is estimated to be valued at RM1.075 trillion so if the estimates made by the World Bank are correct, the cost of corruption in Malaysia would be a staggering RM54 billion. The loss may well be more in other ASEAN member countries. To reduce such losses all countries need strong political will, effectiveness of anti-corruption agencies across the region and the establishment of an ASEAN-level anti-corruption network.
As stated earlier ASEAN should take the necessary steps to address the flaws in the global financial system that allows the corrupt to syphon off funds stolen from the public purse and hide the proceeds of their crimes. All anti-corruption agencies in this region can exchange ideas and information and learn from each other’s best practise and experience in fighting corruption. This effort can improve the region’s capability and with more effective international cooperation, find and punish the criminals.
It is therefore imperative that anti-corruption measures form the paramount part of ASEAN’s agenda to ensure future growth and prosperity in this region. In short combating corruption must remain an important priority for ASEAN growth. ASEAN countries must commit to lead by example in combating bribery and corruption. I strongly urge that the Chair of ASEAN to take an active role in fighting corruption.
Corruption is a true enemy to economic development in this region.
Dato’ Akhbar Satar
Transparency International-Malaysia is an independent, non-governmental and non-partisan organisation committed to the fight against corruption.