News and Events

Synergy needed to fight corruption

Posted: 2012-02-29
Category: In the News

BUSINESS WORLD
February 29, 2012

 

CORRUPTION hampers economic growth, an expert said yesterday, as he highlighted the need to engage private sector participation in the government’s anti-corruption efforts.

In a forum on Monday, Robert Klitgaard, a former faculty member of the World Economic Forum (WEF), said that aside from directly diminishing public funds, corruption also affects the economy by distorting incentives for business, increasing transaction costs and deterring investment and innovation.

"To steal a thousand, corrupt public officials waste a million," Mr. Klitgaard said, noting how public resources are often misallocated in order to derive profit.

Mr. Klitgaard cited the WEF’s latest Global Competitiveness Report, which assessed the Philippines as the third worst among 142 countries in terms of procedures to start a business.

The Philippines also performed poorly in terms of diversion of public funds (127), irregular payments and bribes (119), favoritism by public officials (118) and burden of customs procedures (128).

Although the country placed 75th in the 2011-2012 list, rising from rank 85 in previous report, Mr. Klitgaard said the Philippines could have been ranked higher, given that it fared better than some developed economies in terms of availability of finance (50), and its affordability (42), local equity market (44), banks (46) and staff training (34).

Mr. Klitgaard also cited a 2007 study, which said that about 60% of the countries’s gross domestic product is lost due to corruption.

"Sustainable anti-corruption efforts require strong actions from government, business, civil society organizations and the press," he said.

Mr. Klitgaard added that anti-corruption campaigns can also be opportunities for public-private partnerships, citing as an example the campaign jointly implemented by the private and youth sector and the Justice and Education departments in Indonesia.

"Schoolchildren run the small stores and canteens without a cash register and only a box where they put the money, which they then remit to their teachers," Mr. Klitgaard said.

He also urged the use of social media in anti-corruption efforts, citing ipaidabribe.com, a Web site that has been used as a complaint mechanism for bribery, extortion and other corrupt practices in India.

Mr. Klitgaard, however, noted that administrative reforms need to be put in place in order to prevent corruption, highlighting the need to avoid "capitulation wages," or income thresholds which make government employees and officials vulnerable to corruption.

"If the chances of getting caught and the penalties are low, watch out [for corruption]," he said.

Mr. Klitgaard’s lecture was the fourth in the Haydee Yorac lecture series sponsored by the Presidential Commission on Good Government (PCGG) with the United States Agency for International Development (USAID), the Asian Institute of Management (AIM) and the Management Hills Program on Governance and Systems International Integrity Project. -- Kim Arveen M. Patria

 

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