EDITORIAL - An agreement against corruption

After the bombings in Bali, Indonesia and persistent reports that Osama bin Laden’s al-Qaeda network is relocating to Southeast Asia, the region will need to put in extra effort to keep investors and lure new ones. The security problem may just be a matter of perception, as some Southeast Asian governments have started pointing out. After all, some of the worst terrorist attacks in recent years have been perpetrated in the United States, and al-Qaeda operatives have lived in Britain, Germany and other parts of Western Europe. But it would be understandable if current security concerns make countries such as China more attractive to investors.

As long as governments show resolve and efficiency in fighting terrorism, however, investors’ concerns about security can be relegated to the sidelines. To attract investors, Southeast Asian nations will have to continue undertaking reforms and tackle problems that were highlighted during the financial crisis that started in 1997.

Among these problems is corruption, which has raised the cost of doing business in the region. Southeast Asia was again reminded of the problem last Friday, when US businessmen urged the region to forge an agreement to fight corruption. The American Chambers of Commerce in Southeast Asia issued the statement in the Cambodian capital of Phnom Penh, ahead of the annual leaders’ summit of the Association of Southeast Asian Nations. The American chambers account for approximately $50 billion in investments in the Philippines, Cambodia, Indonesia, Singapore and Thailand.

One suggestion of the American businessmen is for ASEAN to approve a binding agreement that will make bribery of public officials by business entities an illegal act. There have been reports of American businessmen, who could be penalized under US laws if caught engaging in bribery, complaining that investors in other countries particularly in Western Europe factor in bribe money as part of their expenses when doing business in Asia. Reports said governments are reluctant to discourage the practice because it is one way for their businessmen to overcome stiff competition posed by the Americans.

On the part of ASEAN there is another problem. The Philippines, for example, already has some of the toughest laws against graft and corrupt practices. One former president has been detained for over a year and could face capital punishment for plunder. But enforcement of the law is spotty, and some of the most corrupt officials are in the judiciary. In many parts of Asia, corruption goes all the way to the highest levels of government. ASEAN members are likely to go along with an anti-corruption agreement. The problem is whether there is enough political will in the region to enforce the pact.