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Thailand's corruption abates slightly, but not nearly enough

Publication Date : 24-07-2014

 

Investors from Japan, from which the largest amount of Thailand's direct foreign investment comes, have called for reduced corruption and improved transparency in order to help restore confidence in the Thailand.

Setsuo Iuchi, chief representative of the Japan External Trade Organisation (Jetro) for Asean and South Asia, last week called on the ruling National Council for Peace and Order to kick-start good governance that includes combating corruption and ensuring transparency, particularly about doing business in Thailand. "Now it’s a good time for Thailand to bring about good governance for the new era," he said.

Such concern by the Japanese investors should not be ignored, because they have brought the largest amount of direct foreign investment into Thailand. The Japanese invested over 290 billion baht in projects approved by the Board of Investment last year. That was nearly 30 per cent of the total foreign investment of 1.1 trillion baht, according to BoI data.

Thailand has generally remained attractive to foreign investors due to positive factors, such as the availability of skilled labour, efficient infrastructure and transportation systems, location and the considerable size of the domestic market. But our chronic corruption is scaring away existing and prospective foreign investors. Countless foreign firms and investors have complained about the "extra costs" of doing business in Thailand, by which they mean kickbacks and under-the-table money that must be to bureaucrats and politicians. Often they have to pay in exchange for procurement deals with state agencies and public projects. People who refuse to pay are routinely left behind by their bribe-paying competitors. University of the Thai Chamber of Commerce (UTCC) rector Saowanee Thairungroj has estimated that corruption adds 30 per cent to costs for businesses. That, she says, translates into reduced competitiveness for Thai-made products and reduced credibility for Thailand among foreign investors.

General Prayuth Chan-ocha has made tackling corruption a top priority for the ruling military junta. He says the fight will be part of sweeping national reform, together with good governance, transparency and an efficient and effective system of checks-and-balances. Thailand's corruption index in the first half of this year improved for the first time in five years, according to a UTCC survey. The index in June was registered at 46 out of a possible 100, compared to 39 last December, says Thanavath Phonvichai, UTCC vice rector of research and director of its Economic and Business Forecasting Centre. He surmises that the improvement could be due to positive public sentiment following the junta's campaign against corruption and organised crime. The survey also showed that bribes paid to officials and politicians by the private sector had declined to 15-25 per cent of project costs, from an average 25-35 per cent previously.

Despite the seemingly slight improvement in the situation, corruption remains a major problem for Thailand.

In addition to the weakened competitiveness and reduced credibility, the public as a whole is affected by corruption. Contractors who pay corrupt officials and politicians have to cut costs at the building site, and that means poorer quality in their public projects and thus a risk to life and limb.

Businesses who pay bribes also offset their higher costs by charging the consumers more.

Since corrupt authorities and politicians make money and bribe-paying businesses make profits, it is the consumers and the public in general who suffer.

They end up paying more unnecessarily for products and public projects, the quality of which is poorer. Corruption should be eliminated, or at least minimised, for the sake of the country and its people.

 

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