Corruption in Southeast Asia: The virtues of vice

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Corruption Perceptions Index 2012 World Map
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With the news that a Singaporean betting cartel has been responsible for fixing football matches in the largest-ever scandal in the sport’s history, the city-state’s squeaky clean image as a corruption-free haven got an unexpected splash of mud across it.

By Justin Calderon

Like some seasonal flu, no country, government or person is completely immune to vice and subterfuge. In Southeast Asia, one of the most corrupt regions in the world according to Transparency International’s Corruption Perception Index 2012, any semblance of transparency is an outlier.

Singapore’s ignominious blow to its image may be disconcerting, but in a region where roiling mud that gums up the bureaucratic peephole is the norm, corruption is not so detrimental to economic growth as it may appear.

The second and third most corrupt countries in ASEAN according to Transparency International are Laos and Cambodia (behind Myanmar at one), who both are experiencing meteoric economic expansion. On the index, they get a score of 21 and 22, respectively, on a scale of 0 to 100.

The whole region – minus hitherto unadulterated Singapore – rates at the bottom of the barrel.

Top ASEAN-5 growth machines the Philippines and Indonesia score just 34 and 32, all this compared to Singapore’s now doubtful 87.

Yes, the noxious backwash of corruption can be tasted throughout society and the economy, more so the former in forthcoming assessments of Singapore’s overall “health,” more so the latter in Thailand’s nebulous policy maker boardrooms.

Yet there are arguments that corruption – stemming from the lack of enforcement of rules and regulations – can be helpful to economic growth, especially in a country where unfavourable politics would otherwise stymie development.

In corrupt societies where economic freedom is limited, entrepreneurs can game the system and bypass inefficient policies to the benefit of their business. Studies, indeed, have found that greasing the palms of police and governmental officials in a content that lacks economic freedom is an inherent growth model of undeveloped countries that is beneficial to the aggregate economy.

However, once economic freedoms increase, these benefits dissipate.

As country’s increasingly develop inclusive growth models and work towards the highest economic payouts, occurrences of corruption does, trends show, tend to fall. This is because once corruption becomes inherently harmful to the system, in the end it gets rejected.

So the next time you have to set up shop in an emerging market that exudes an aura of non-transparency, think of how the societal norm is working as a unique cog in the wheel of early development.

In an immature bureaucracy, you may find, it is much more pleasant to pay.

 

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Reading Time: 2 minutes

Click to enlarge

With the news that a Singaporean betting cartel has been responsible for fixing football matches in the largest-ever scandal in the sport’s history, the city-state’s squeaky clean image as a corruption-free haven got an unexpected splash of mud across it.

Reading Time: 2 minutes

Corruption Perceptions Index 2012 World Map
Click to enlarge

With the news that a Singaporean betting cartel has been responsible for fixing football matches in the largest-ever scandal in the sport’s history, the city-state’s squeaky clean image as a corruption-free haven got an unexpected splash of mud across it.

By Justin Calderon

Like some seasonal flu, no country, government or person is completely immune to vice and subterfuge. In Southeast Asia, one of the most corrupt regions in the world according to Transparency International’s Corruption Perception Index 2012, any semblance of transparency is an outlier.

Singapore’s ignominious blow to its image may be disconcerting, but in a region where roiling mud that gums up the bureaucratic peephole is the norm, corruption is not so detrimental to economic growth as it may appear.

The second and third most corrupt countries in ASEAN according to Transparency International are Laos and Cambodia (behind Myanmar at one), who both are experiencing meteoric economic expansion. On the index, they get a score of 21 and 22, respectively, on a scale of 0 to 100.

The whole region – minus hitherto unadulterated Singapore – rates at the bottom of the barrel.

Top ASEAN-5 growth machines the Philippines and Indonesia score just 34 and 32, all this compared to Singapore’s now doubtful 87.

Yes, the noxious backwash of corruption can be tasted throughout society and the economy, more so the former in forthcoming assessments of Singapore’s overall “health,” more so the latter in Thailand’s nebulous policy maker boardrooms.

Yet there are arguments that corruption – stemming from the lack of enforcement of rules and regulations – can be helpful to economic growth, especially in a country where unfavourable politics would otherwise stymie development.

In corrupt societies where economic freedom is limited, entrepreneurs can game the system and bypass inefficient policies to the benefit of their business. Studies, indeed, have found that greasing the palms of police and governmental officials in a content that lacks economic freedom is an inherent growth model of undeveloped countries that is beneficial to the aggregate economy.

However, once economic freedoms increase, these benefits dissipate.

As country’s increasingly develop inclusive growth models and work towards the highest economic payouts, occurrences of corruption does, trends show, tend to fall. This is because once corruption becomes inherently harmful to the system, in the end it gets rejected.

So the next time you have to set up shop in an emerging market that exudes an aura of non-transparency, think of how the societal norm is working as a unique cog in the wheel of early development.

In an immature bureaucracy, you may find, it is much more pleasant to pay.

 

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