One evening in 2008, while navigating my motorbike through Ho Chi Minh City’s thick traffic, I was overtaken by a car quickly approaching from behind: a black Bentley, horn blazing, lights flashing, and sporting red “ngoai giao” diplomatic plates.
I didn’t, and still don’t, know any diplomats with the means to purchase a Bentley, but as Vietnam’s Youth Newspaper reported in 2010, there seemed to be a prevalent underground market for diplomatic license plates that, for about $20,000, would allow the purchaser to avoid tens, even hundreds, of thousands of dollars in duties on the vehicle. Diplomats in Vietnam were using their tax free status to import vehicles on behalf of wealthy Vietnamese buyers, or alternatively, selling their license plate at the end of their posting.
While this year’s Asian Development Outlook 2012, published by the Asian Development Bank (ADB), recognizes “swelling income disparities” in the region, there is almost no mention of persistent corruption, particularly in Southeast Asia. Six of the 10 members of the Association of Southeast Asian Nations are ranked in the bottom half of Transparency International’s annually published Corruption Perceptions index.
Corruption is more of a factor in rising economic inequality than the ADB gives it credit for and corrupt practices of government officials in the region are detrimental to programs aimed at closing gaps between the wealthiest and the poor. Emphasizing increased spending on social programs, as suggested in the ADB report, may have some success, but not if a select few government officials are syphoning state funds for personal gain.
Evidence shows, as was published in a 2011 International Monetary Fund report, that “high and rising corruption increases inequality and poverty, including by reducing the progressivity of the tax system, the level and effectiveness of social spending, and the formation of human capital.” Governments, with the support of the international community and multilateral institutions, would benefit from increased stability, and increased investment, by cleaning up their acts.
In a region where official salaries tend to be very low, government employees at all levels have been found to leverage positions of authority for personal gain. In Cambodia, for example, a U.N. agency found in 2004 that salaries of public officers, just $28 per month, were “below subsistence levels,” thus creating “incentives for corruption” amongst low-ranking officials, as well as in the judiciary and at the highest levels of the political hierarchy.
In the current internet age the risks to political stability as a result of corruption are considerable when government actions are unlikely to escape the prying eyes of citizen journalists. The Chinese website Boxun, as the Financial Times reported this week, was setup to publish reports critical of the government that are largely banned in the Chinese media. Similar websites are flourishing in Southeast Asia and threaten to raise awareness toward the corrupt practices of government.
The ADB recognizes in its report “the importance of the middle class for stability and growth.” But in an unstable global economic environment, the failure of a few Southeast Asian states to take meaningful action toward cleaning up graft could be a trigger for larger political unrest.
The U.N. Development Program warned in 2008 that, “Many democratic regimes have been overthrown because elected governments failed not only to deliver results; they abused their offices for securing private gains.”
Southeast Asia in recent decades has shown, and continues to show, remarkably steady growth and achievement. Not all officials are corrupt, in fact far from it.
But it is unfortunate that the region’s achievements will not be sustained if states fail to create institutions capable of holding government employees accountable when official roles are leveraged for personal gain. When all levels of government are complicit, it’s a much more challenging phenomenon to combat.
It is therefore important that multilateral institutions like the ADB don’t shy away from this prickly topic which is detrimental to regional equality.
When governments fail to role model responsible behavior a malaise permeates all aspects of society. Why should I pay my taxes when these fees are only supporting corrupt officials, and furthermore, there is a legal system incapable of prosecuting me? A little money to the tax collector could get him off my back.
The opulence of illegally imported luxury cars in Vietnam, whether Bentleys, Rolls Royce’s, or Lamborghinis, may only be a small piece of the challenge faced regionally in combatting the corruption scourge. Nevertheless, its blatancy, in a country where per capita gross national income is around $1,100 per year, may very well sow the seeds of larger instability and unrest.
Anti-corruption efforts, whether directed at officials turning a blind eye to customs violations or local traffic cops accepting a few dollars to ignore an infraction, should figure centrally in the region’s strategy for mitigating inequality.
This story originally appeared in The Straits Times.