By Arno Maierbrugger
Malaysia and Thailand are the Southeast Asian countries with the largest amount of illicit money outflows due to corruption, kickbacks, money laundering and false trade documentation, according to a new report released by US-based anti-graft organisation Global Financial Integrity (GFI). Both nations are also among the top 10 countries worldwide that suffer from this problem - with Malaysia fifth and Thailand seventh - respectively.
China is topping the list, followed by Russia and India.
The report puts the value of illicit money that left the two Southeast Asian countries at nearly $49bn for Malaysia and $35.6bn for Thailand in the evaluation period 2012. Most of the black money is shifted outside by “mis-invoicing in trade transactions, which can allow exporters and importers to keep money out of the country,” says GFI researcher Joseph Spanjers.
The outcome of the report comes as a heavy blow for Malaysian Prime Minister Najib Razak, who regularly declares the fight against corruption as top priority of his ambitious Government Transformation Programme. However, since the launch of the Malaysian Anti-Corruption Commission under the Prime Minister’s Department in 2009, the public perception of corruption in Malaysia hasn’t really changed much.
A survey carried out by independent Malaysian research firm Merdeka Center in early December this year has found that perception towards corruption in Malaysia has remained unchanged since 2005, with 77% of Malaysian voters saying it is either “very serious” or “somewhat serious”. The poll also found that more Malaysians believe that corruption has increased since last year. A majority of 56% said that the government is “not doing well” in tackling corruption in Malaysia.
In another survey, the World Economic Forum’s Global Competitiveness Report 2013-2014, business executives said that “unethical behaviour” of companies brings with it a “disadvantage for doing business” in Malaysia.
Corruption and black money flows are also a big problem in Thailand. According to a young Thai-American businessman in Bangkok who talked to Gulf Times under the condition of staying anonymous due to the sensitivity of the issue, corruption has been prevalent ever since he set up his real estate company in the Thai capital in 2012. Land and property deals are especially vulnerable to kickbacks and money laundering, he stated, but “it occurs on all levels, at larger businesses, in export-import trade, in government offices, at police stations, even at schools and universities. People are just used to it as it is perceived as ‘how things are being done’.”
The ruling military junta in Thailand has vowed to tackle the problem, to some extent with success. In November, the government busted a gang of corrupt policemen involved in smuggling and money laundering that included the arrest of some of the country’s highest ranking police officers, as well as family members of the wife of Thailand’s Crown Prince. The princess subsequently relinquished her royal status.
Overall, the GFI report noted that the total illegal capital movements out of developing and emerging economies in 2012 of $991bn was greater than the combined incoming foreign investment and foreign aid for those countries in the period, adding that the black money could have been sustainably invested in local businesses, healthcare, education or infrastructure and thus have contributed to economic growth, private-sector job creation and stronger public budgets.
