Asian governments paying a high price for corruption — ADB

Corruption in Asia can cost up to one sixth of a given country’s gross domestic product (GDP), a study made by the Asian Development Bank (ADB) shows.

At a press conference in Seoul, South Korea yesterday, Jak Jabes, director of ADB’s governance and regional cooperation division, said governments in Asia spend up to 100 percent more for goods and services due to corruption.

"Corrupt practices can result in scarce resources being squandered on uneconomical projects because of their potential to generate lucrative payoffs, and priority sectors such as education or health suffer disproportionately," Jabes said. His presentation was based on a study titled "The Asia Pacific Anti-Corruption Initiative."

Most Asian governments including the Philippines pay from a low 20 percent to as high as 100 percent more for goods and services due to corrupt procurement practices. There are also cases where cost levels increase two-fold due to corruption.

Other costs of corruption, he added, include legitimate entrepreneurial activity being hindered or suppressed and public safety being endangered by substandard products and construction.

"Except for Singapore, no Asian country does well on objective or subjective indices," the report stated.

Jabes proposed an anti-corruption action plan prepared by countries of the region, ADB, Organization for Economic Cooperation and Development (OECD), international civil society, the business community and donors.

The plan recommends developing effective and transparent systems for public service, strengthening anti-bribery actions and promoting integrity in business operations, and supporting active public involvement.

The presentation was made during the 11th International Anti-Corruption Conference (IACC) in Seoul, organized by the secretariat of the ADB/OECD Anti-Corruption Initiative, Transparency International headquarters and the Cameroon chapter of Transparency International.

A more extensive report is expected to result from the ADB initiative.

In an earlier interview, ADB Philippine country director Thomas Crouch said figures indicate that a quarter or a third of expenditures on public procurement and services in the Philippines, for example, is leakage in the sense that the government is paying higher than it could be paying if the system was more transparent for those contracts.

"The way much of public procurement is carried out in the Philippines large leakage is experienced," Crouch said. ADB officials said it is not surprising if studies will indicate that majority of the so-called leakage is actually due to corruption.

"If the leaks are plugged, money saved could be redirected to education and poverty reduction."

So far, there are 20 countries that have endorsed the Anti-Corruption Action Plan designed by the ADB and the OECD. The Hong Kong Special Administrative Region (HKSAR) government recently placed its imprimatur through an official communication.

The Philippines has reportedly endorsed the plan and in fact, is being scrutinized by experts contracted by the World Bank and the ADB.

The result of the "scrutiny" is a report on public expenditure and financial management and procurement. It likewise embodies an analysis of the problems in managing public resources, and efficiencies and recommendations for improvement.

The World Bank in fact wants to be involved albeit indirectly in the country’s so-called Medium-Term Philippine Development Plan (MTPDP, 2001-04). The global funding agency wants "to put its fingers" on issues of poverty reduction, good governance, improved service delivery of the state, institutional strengthening, and judicial reform.