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Corruption ‘is driving away good investors’

Corruption ‘is driving away good investors’

THAILAND: Bribery, red tape and corruption have to be reduced before Thailand becomes non-competitive and unsuitable for many corporations which would seek to invest elsewhere, a roundtable on corporate good governance concluded last week.

Saturday 9 July 2011, 08:18AM

Dr Deunden Nikomborirak: There can be no level playing field if competitors do not stick to integrity.

Dr Deunden Nikomborirak: There can be no level playing field if competitors do not stick to integrity.

Building a climate of good governance will take years and will also require the government to be less corrupt than it is, said the panellists at the seminar organised by Krungthep Turakij newspaper.

Big multinational corporations with their own codes of conduct may claim they no longer bribe politicians or bureaucrats. But if the climate is such that it demands bribes or bribes are offered by their competitors, these corporations may lose out given the lack of a level playing field, warned Deunden Nikomborirak, a specialist in economic governance at the Thailand Development Research Institute.

“If the demand [for bribes] continues, it’s either you leave or you comply,” Ms Deunden said. “There can be no level playing field if competitors do not stick to integrity.”

Ms Deunden’s recent research revealed that out of the more than 200 cases of illegal practises by firms listed on the Stock Exchange of Thailand from 1999-2010, those punished were just slightly over five per cent.

Many of these cases involved fraud worth B3 billion-B4 billion, and given the low rate of punishment and fines, which on average amounts to B500,000 to B1 million, the low risk of being caught or punished – and the relatively low fines – makes it worthwhile, she said.

If offenders are not punished, the economy will find it hard to thrive, as laws and regulations fail to stem the violations, fraud and corruption.

On the other hand, in many instances governments tend to pass regulations for bidding on contracts or concessions that clearly favour a certain well-connected corporation.

“It means in this country, there is no genuine free competition,” she said.

Such a situation ensures that more firms will have to seek illegal shortcuts to win contracts with the state or lose out on work.

“This is troubling because it undermines the overall economic outlook,” she said.

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As long as there is no political will among politicians and the country as a whole, the problem will fester. Just having a prime minister with a good image is not good enough. Participation is also needed.

Corrupt politicians would naturally resist reform but many more preventive measures can first be introduced, especially related to conflict of interest.

Another key measure would be to strengthen access to news and information by the population. In South Korea, where fighting corruption and instilling good governance practices have made impressive inroads, the broadband internet penetration rate is 90 per cent. This combined with affluence among most people ensures that corruption and bad governance is becoming more of an exception rather than the norm in South Korea, she said.

Hilde Tonne, deputy head of Telenor Group, which runs the DTAC cellular company, said broadband penetration here is a dismal 10 per cent.

Ready and speedy access to news and information is crucial for the anti-corruption drive, she said.

Pisawan Achanapornkul, president of Shell Thailand, was more optimistic.

Business leaders and all Thais should think about how to move forward effectively by asking themselves a few questions, she said.

But if the situation continues, Ms Deunden said, Thailand runs a real risk of seeing foreign investors leave due to the lack of a level playing field.

“We have to compete with other nations,” she said.

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