Article

South East Asia

Maurice Burke and Chalid Heyder


It is a well-founded reality that corruption is a significant problem in South East Asia.

It is not uncommon for us to investigate a regulatory or compliance issue and find employees in the company demonstrate a complete lack of concern that regulators might take action. In such cases, unfortunately, it is (corrupt) business as usual.

The good news is that the anticorruption landscape in South East Asia is improving, albeit slowly. With increasing regulatory, commercial, and political pressures across the region, you’ve got increasingly effective anticorruption legislation and enforcement. This essentially means on the one hand there’s a growing chance of getting caught, investigated, and prosecuted, but on the other hand an increasing acknowledgment on the part of regulators of the complex compliance issues that face multinationals operating in the region.

Vietnam

As indicated by its 112th place in the Corruption Perceptions Index (CPI), corruption in Vietnam is seen as being a major issue — from daily, low-level facilitation payments to high-level corruption scandals surrounding the rigging of tender bids. To date, little domestic enforcement action has been taken against government officials and none against companies.

But it is only a matter of time before the Vietnam anticorruption authorities wake up to the significant credibility and revenue deficit they face compared with their counterparts in the United States, the UK, and Singapore by not strongly imposing fines and other sanctions for corrupt practices.

What’s the forecast with/without the TPP?

Until recently, much anticipation surrounded the Trans-Pacific Partnership (TPP) trade deal. It would tighten economic ties between its 12 signatory states, including Vietnam. According to the World Bank, TPP has the potential to lift GDP in Vietnam by as much as 10% by 2030.18 Current forecasts predict it will continue to hover around 6% in 2017–18.

Because the standards of regulation vary within the signatory states, the TPP contains provisions that would look to harmonize certain regulations, including Article 26, which requires the signatories to implement comprehensive anti-bribery laws. But Donald Trump’s election win sparks the prospect that the United States may pull out of the agreement, and in effect assign the TPP to the ashes of history as a trade deal that never quite made it off the ground. What is certain is that if the TPP does fail, a question mark will hang over whether Vietnam follows through on Article 26 and enacts tougher anti-bribery legislation.

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