Here’s What World Leaders Think Is the Greatest Risk for 2017

January 16, 2017

DAVOS 2017

Here’s What World Leaders Think Is the Greatest Risk for 2017

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Some of the world’s most powerful leaders are growing more concerned, it seems, about the world’s most powerful leaders. More so, in fact, than climate change and financial panics, like a collapse of the euro.

Weapons of mass destruction now ranks as the No. 1 concern of global leaders, according to a new survey from the World Economic Forum. And that was before Trump tweeted about the possibility of a new arms race. It’s the 12th year that the World Economic Forum has published the survey, which polls 750 of the group’s members, including CEOs and leaders and experts in various fields. The organization publishes the survey on the eve of its annual confab in Davos, which kicks off next week.

The survey was conducted in September and early October.

In a report that accompanied the survey results, the World Economic Forum wrote that a rise of nationalism and less cooperation among world powers was raising the risks of global conflicts.

Weapons of mass destruction have come up as a concern before on the survey. But they have never ranked as the biggest perceived risk in terms of potential impact in the immediate year about which the world leaders were surveyed. Last year, WMDs were the second biggest concern of world leaders behind climate change. Nonetheless, climate change remains a major worry. Of the top five worries of global leaders, the other four are related to climate change. Among those, extreme weather conditions was the No. 1 concern, followed by water crisis, major natural disasters, and the failure of climate change efforts to make a difference.

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Another big difference than in past years: The lack of concern about some sort of financial shock to the global economy. For the first eight years of the survey, from 2007 to 2014, “asset price collapse” or financial crisis ranked as the No. 1 concern on the survey. The WEF crowd is more focused on economic issues. Nonetheless, in this year’s survey, concerns about markets have largely disappeared. Not a single economic issue made it in to either the top 5 concerns of world leaders for 2017 in either the potential biggest impact category or likeliest to happen. It was the first year in the survey’s existence that an economic issue didn’t show up in either list. In both 2009 and 2010, world leaders put down economic issues as four of their five biggest risks that could have the largest impacts on the world in that year.

The lack of concern about economic issues could reflect that fact that banks and financial markets do seem more resilient following reforms that were made after the financial crisis. It could also signal complacency about world markets following a year in which major world surprises failed to jolt markets.

Instead, this year, it appears world leaders are concerned that the rise to power of a growing number of politicians that seemed to be more focused on domestic issues than in recent years. Indeed, the theme of this years annual conference in Davos is responsible leadership.

“As technological, demographic and climate pressures intensify the danger of systems failure, competition among world powers and fragmentation of security efforts makes the international system more fragile, placing collective prosperity and survival at risk,” the WEF wrote in its annual risk report.

Donald Trump could be the best thing that’s happened to China in a long time

January 15, 2017

Donald Trump could be the best thing that’s happened to China in a long time

by Fareed Zakaria*

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Donald Trump has perhaps attacked no country as consistently as China. During his campaign, he thundered that China was “raping” the United States, “killing” us on trade and artificially depressing its currency to make its goods cheap. Since being elected, he has spoken to the leader of Taiwan and continued the bellicosity toward Beijing. So it was a surprise to me, on a recent trip to Beijing, to find Chinese elites relatively sanguine about Trump. It says something about their view of Trump, but perhaps more about how they see their own country.

“Trump is a negotiator, and the rhetoric is all part of his opening bid,” said a Chinese scholar, who would not agree to be named (as was true of most policymakers and experts I spoke with). “He likes to make deals,” the scholar continued, “and we are good dealmakers as well. There are several agreements we could make on trade.” As one official noted to me, Beijing could simply agree with Trump that it is indeed a “currency manipulator” — although it has actually been trying to prop up the yuan over the past two years. After such an admission, market forces would likely make the currency drop in value, lowering the price of Chinese goods.

Chinese officials point out that they have economic weapons as well. China is a huge market for U.S. goods, and last year the country invested $46 billion in the U.S. economy (according to the Rhodium Group). But the officials’ calm derives from the reality that China is becoming far less dependent on foreign markets for its growth. Ten years ago, exports made up a staggering 37 percent of China’s gross domestic product. Today they make up just 22 percent and are falling.

China has changed

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China has changed. Western brands there are rare, and the country’s own companies now dominate almost every aspect of the huge and growing domestic economy. Few businesses take their cues from U.S. firms anymore. Technology companies are innovating, and many young Chinese boasted to me that their local versions of Google, Amazon and Facebook were better, faster and more sophisticated than the originals. The country has become its own, internally focused universe.

This situation is partly the product of government policy. Jeffrey Immelt , the Chief Executive of General Electric, noted in 2010 that China was becoming hostile to foreign firms. U.S. tech giants have struggled in China because of formal or informal rules against them.

The next stage in China’s strategy is apparently to exploit the leadership vacuum being created by the United States’ retreat on trade. As Trump was promising protectionism and threatening literally to wall off the United States from its southern neighbor, Chinese President Xi Jinping made a trip through Latin America in November, his third in four years. He signed more than 40 deals, Bloomberg reported, and committed billions of dollars of investments in the region.

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Chinese global leadership on trade gaining support from ASEAN, Australia and New Zealand

The centerpiece of China’s strategy takes advantage of Trump’s declaration that the Trans-Pacific Partnership is dead. The trade deal, negotiated between the United States and 11 other countries, lowered barriers to trade and investment, pushing large Asian economies such as Japan and Vietnam in a more open and rule-based direction. Now China has offered up its own version of the pact, one that excludes the United States and favors China’s more mercantilist approach.

Australia, once a key backer of the TPP, has announced that it supports China’s alternative. Other Asian countries will follow suit soon.

At the Asia-Pacific Economic Cooperation summit in Peru in November, John Key, who was then New Zealand’s prime minister, put it simply: “[The TPP] was all about the United States showing leadership in the Asia region. . . . We really like the U.S. being in the region. . . . But in the end if the U.S. is not there, that void has to be filled. And it will be filled by China.”

Xi’s speech at the summit was remarkable, sounding more like an address traditionally made by an American President. It praised trade, integration and openness and promised to help ensure that countries don’t close themselves off to global commerce and cooperation.

Next week, Xi will become the first Chinese President to attend the World Economic Forum at Davos, surely aiming to reinforce the message of Chinese global leadership on trade. Meanwhile, Western leaders are forfeiting their traditional roles. Angela Merkel and Justin Trudeau announced last-minute cancellations of their plans to speak at the Swiss summit. Trump has only made sneering references to globalism and globalization, and no senior member of his team currently plans to attend.

Looking beyond Trump’s tweets, Beijing seems to have concluded that his presidency might well prove to be the best thing that’s happened to China in a long time.

*Fareed Zakaria writes a foreign affairs column for The Post. He is also the host of CNN’s Fareed Zakaria GPS and a contributing editor for The Atlantic. Follow @FareedZakaria

ASEAN turns 50 this year

January 11, 2017

ASEAN turns 50 this year

by Chheang Vannarith

This year will be a milestone for ASEAN as it celebrates its 50th anniversary in August.

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While some remarkable achievements have been made over the last 50 years, some doubts have been cast on the future relevance and resilience of this regional organization, within the context of rising global and regional uncertainty and geopolitical pressure.

Based on its track record, ASEAN will likely remain a key driver in maintaining regional peace and stability, promoting an inclusive and open regionalism, and ideally, being a role model in building a truly people-centered regional community.

ASEAN, which was created in 1967, managed to survive the Cold War, navigated through the Asian Financial Crisis in 1997, gradually enlarged its membership, cultivated trust and built dialogue partnerships will all the major powers and shaped international relations norms based on the ASEAN Way, which is consultation, consensus, peaceful coexistence, sovereign equality and non-interference in domestic affairs.

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However, 2017 will be a critical year for ASEAN to prove itself as a relevant institution as the global wave of populist nationalism, protectionism and extremism wobbles liberal international systems from Europe to America.

Brexit and Donald Trump’s America are threatening the very foundations of the liberal economic order created after the end of World War II.

ASEAN leaders must reassure their people and the world that inclusive and open regionalism is the way forward.

ASEAN needs to work harder to narrow the development gaps between and within the member states, strengthen a people-oriented and people-centered ASEAN and improve regional governance. “To further address the social ills confronting our society, inclusive economic growth must be ensured,” wrote Ambassador Enrique Manalo, the Undersecretary for Policy at the Department of Foreign Affairs of the Philippines, in ASEAN Focus in December.

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As the rotating chair of ASEAN this year, Ambassador Manalo added that the Philippines aims to achieve the betterment of the lives of the ASEAN citizens through “initiatives that significantly impact on their lives; and envisions ASEAN’s greater international engagement to advance common interests.”

ASEAN needs continuous reforms to adapt and stay ahead of the curve of rising global uncertainty and unpredictability and the fast-changing geopolitics, geoeconomics, social transformation and technological revolution.

The dilemma for ASEAN lies in its non-interference principle. On the one hand, a certain agenda by its members is needed to deepen regional integration, but on the other hand ASEAN member states firmly adhere to the principles of national sovereignty and non-interference.

It is necessary for ASEAN to find a middle ground to forge regional consensus and deepen regional integration. ASEAN should not aim to become a supra-national institution, but a functioning inter-governmental organization with greater flexibility in decision-making processes.

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One of the expected outputs this year is the completion of the framework of the Code of Conduct (COC) in the South China Sea, which is critical to fostering ASEAN’s unity and centrality and deepening relations between ASEAN and China.

The realization of the COC will prove that ASEAN and China can work together in the spirit of friendship and partnership to manage and resolve their differences on a bilateral and multilateral basis. The ASEAN Charter adopted in 2007 is a benchmark of envisaging a rules-based ASEAN. But it needs to be reviewed to reflect the new realities of ASEAN and the region.

ASEAN needs to emphasize “putting ASEAN people first.” Some principles of the charter have not been effectively implemented or neglected by some ASEAN member states, particularly with regards to human rights, democracy, fundamental freedoms, good governance and the rule of law.

So ASEAN needs to have a more effective enforcement or compliance mechanism. Some elements that need revision are the reduction of the annual ASEAN summit meetings from twice to once, the endorsement of an ASEAN human rights body with specific tasks and responsibilities, adding “people-centered” to “people-oriented” and consensus-based decision-making.

The failure of ASEAN to reach a consensus in dealing with the Cambodia-Thailand border conflict in 2008 and 2011 and the failure of the 45th ASEAN Foreign Ministers Meeting in Phnom Penh to issue a joint statement in 2012, due to differences over the South China Sea issue, present an urgency for ASEAN leaders to revise ASEAN’s decision-making mechanism.

The ASEAN Minus X formula needs to be adopted where consensus cannot be reached, particularly with regards to complex and sensitive issues.

Flexible decision-making mechanisms will provide room for ASEAN to react and respond more effectively and efficiently to emerging regional issues and challenges of common concern.

Dr. Munir looks back at 2016

January 7, 2017

Dr. Munir looks back at 2016

COMMENT by Dr. Munir

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Not a single Western political leader has had the guts to tell their people they had to accept a lower standard of living, that it was time for a great reset. Build up productivity and capacity again. Meanwhile, if you go to the pub, go only once a month. If you shampoo your hair once a week, do it fortnightly. Taking holidays abroad in countries whose people you come to hate when you get home will have to take a rest. If you work only 35 hours a week, as in France, what do you expect?–Dr. Munir Majid

The descent from globalism to nativism is the defining story of 2016, but the analysis of its cause and projection of the world into 2017 by intellectual custodians of the liberal order are flawed and offer no guide on how to break the fall.

The Brexit vote in Britain in June, the election of Donald Trump in November and the threatening reactionary outcome of elections in France and Germany next year all point to the end of a certain system by which the world has operated, even if what exactly would replace it is less than clear. If the great Western nations of the world change direction, then the rest must.

A broader perspective, however, would recognise the troubles and decisions of 2016 and what might come in 2017 had a gestation period that began at least from the Western financial crisis of 2008, too often called and accepted as the global financial crisis.

What the West continues to grapple with is how to live beyond its means. There was the criminal excess of the banks leading to the 2008 crisis, of course, but underlying it was the ethic of expectation of a certain standard of living, whether or not one worked for it or was productive enough to deserve it.

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Marie Le Pen, Donald J. Trump and Vladimir Putin–The End of Liberal Global Order

If you do not have the means to get what you want you have to borrow to get it, unless of course you stole and pillaged. So Western states and individuals kept on borrowing, or the central banks printed money to keep the economy going, which it always did not as the money kept going out where it could be more productively used.

Not a single Western political leader has had the guts to tell their people they had to accept a lower standard of living, that it was time for a great reset. Build up productivity and capacity again. Meanwhile, if you go to the pub, go only once a month. If you shampoo your hair once a week, do it fortnightly. Taking holidays abroad in countries whose people you come to hate when you get home will have to take a rest. If you work only 35 hours a week, as in France, what do you expect?

Did any of this happen? People may lose jobs as they could not compete, but they get state support and they blame others like the migrant European workers who could work, who took jobs they did not want to do.

Immigration becomes the issue. And when refugees pour in who also bring with them the threat, and execution, of terror, an inflection point is reached. Sociologists now analyse this as a threat to identity, which certainly is used in rousing emotions during political campaigns, but there was at least equally a revolt against the economic and social condition those not doing so well in life were in.

They are now so widely called the under-served. In the case of Brexit, there was no doubt the uprising of the Little Englander, but there was also the let-us-just-bloody-well-get-out-and-see-what-happens attitude.

While some in the shires thought like this, I also know of a few non-white working class Brits who voted to get out just on this basis. When I asked one such person in London, who is a chauffeur to an unbearable boss, why he did such an irresponsible act, he tried to justify it by associating himself with the workers in Sunderland of whom he knows absolutely nothing.

The thing is, who speaks to such people? The academics and intellectuals only talk among themselves in an idiom only they can understand. Even after Trump, when they pronounced there has been a great failure to address the under-served – which the President-elect on the other hand did so well – they are still talking to and being clever with one another.

My friend Francois Heisbourg, Chairman of the International Institute for Strategic Studies, beautifully describes Marine Le Pen’s appeal to the French: “Donald Trump makes Marine Le Pen sound reasonable…..Everyone knows she’s not Trump – she knows how to use a noun and a verb and is intellectually coherent about what she wants and doesn’t want.”

What, for God’s sake, are the arguments that can be used effectively with the ordinary Frenchman that they can understand and appreciate in favour of the liberal order? Paul Krugman likens what is happening to America to how the Roman Republic was destroyed by individuals disloyal to it serving only their own selfish cause. Pray, how many among the Americans who voted for Trump know, or care, anything about the history of Rome?

The Economist, that great citadel of the liberal order, makes a clarion call for its defence and for liberals not to lose heart. How and what to do? Certainly not by talking to one another. Or by communicating in a language and idiom a lower order would not understand.

With perfect Euro-centrism an English commentator fears the Syrian conflict may turn out to be like the Thirty Years’ War (1618-1648). Has he not heard of the Palestinian struggle which has spawned much of the bloodshed in the Middle East and beyond?

There are three gaping holes in the defence of the “global” liberal order. First there is a blind spot about having to have a lower standard of living unless you earn a higher one. Second, an inability among liberal intellectuals to communicate except among themselves. Third, a reflection on the threat through western eyes only.

The second weakness is endemic. It is a truly global malady. Intellectuals, whether in the West or Malaysia or anywhere else, should not disdain populism, which is the bad word now in all the commentary on the threat to the global liberal order. They will not stoop so low – as Trump did – to gain support. Well, stoop less low or in a different way. Dirty your hands. Reach out.

We don’t communicate simply, when there are simple terms that convey meaning. We think we are so high and mighty.

Actually if you think about it – and this is especially for the blinkered Western intellectuals – the exemplar of populism, and darned effective with it, is UMNO. You may wince at the kris-wielding antics and other forms of political theatre, and you may not agree with some or most of the policies propounded, but you have to admit they rabble rouse their way to considerable support.

Yucks… but that was the yucks that caused Donald Trump to win. You have to get popular support. You do not do so talking to one another from university pulpits, in the parlours of Georgetown in Washington DC, in Hampstead or indeed at the Royal Selangor Golf Club in Kuala Lumpur.

Now, why do Western intellectuals particularly not talk about having to accept a lower standard of living? Well, they too will have to do so. The levels of income of the journalists and professors and consultants actually are very high, and they do a lot of talking outside their paid job for which they are paid more. Can they look the lowly worker in the eye and say you have to be paid less?

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Farewell and Thank You Mr. President for keeping the world  safe, despite setbacks . We in Asia will miss you for your engagement with us.

There has been a historic transfer of savings from countries with a lower standard of living to those higher so they stay there. As these poorer countries need and want rich country currency – particularly the dollar – for their economic life in their global liberal order, the rich not only get the savings from the poor to sustain their economic life in that global liberal order. They also are able to print money for the extras they might want.

They would be risking their own interest if they began to start talking to under served workers in their domestic economy about income levels that can be sustained by actual production – which is what developing countries have to live by, global liberal order or not.

Now the most important main benefit poorer countries obtain from that order is being threatened – their ability and success in producing goods and services which can reach any consumer in open global competition.

Donald Trump is breaking the rules for America because the US cannot otherwise compete. So he wants to protect the American market against better able, more efficient and cheaper producers – the developing countries.

While enjoyment – and denial – of these goods and services is one thing, and while undoubtedly there will in the immediate-term be a rebound of the US economy, who in the medium and long-term is going to hold Western debt so that the high standard of living in rich countries can continue? They do not save to finance the economy. They do not efficiently produce many of the goods and services they enjoy. They need also to take advantage, through trade and investment, of the real growth in developing regions such as in East and South-East Asia.

Therefore on this score alone – the need for an open and competitive global trading system – there is true convergence of interest in the world. The poorer countries will have to take it, warts and all. And the rich Western nations, with their proponents of the global liberal order, will certainly want to keep it all.

The skewered balance in the global liberal order is sustained by an intellectual convention which is Euro-centric but commanding across the globe. Leaders in politics and thought in non-Western countries only have themselves to blame for this.

They accept almost carte blanche what Western liberals submit. Don’t get me wrong. There are so many good things about western liberals and the liberal order.

I don’t think there has ever been in history such a constituency of liberals as there are in the West who would fight for the rights of the victimized and the downtrodden, like refugees, non-whites and Muslims, as there is in the western world today. Even as extreme and violent Muslims blow them up. The adherence to the value of love against hate, and of tolerance against incitement, is of the highest human order.

The other thing developing countries could imbibe from the Western liberal order is the rule of law. This is the strongest defence and guarantee of individual rights there has ever been in human history.

Image result for Lee Kuan YewSuccessful leader: Lee Kuan Yew made Singapore economically successful as a result of the purely utilitarian benefit of the rule of the law

When the laws are applied and enforced without fear or favour, there is faith in the social contract that underlies the polity. This is the main failing of most developing countries, which they would do well to learn from the West, beyond the purely utilitarian benefit of the rule of law that drove Lee Kuan Yew to make Singapore economically successful.

But, despite all this truly profound contribution of liberals and the liberal order of the West, it does not mean we must accept everything from them hook, line and sinker, especially every bit of the analysis of what has gone or is going wrong with the world.

Or the selling of expertise on how to get things right. Their record on that score is poor. We have too many such offerings, in Malaysia for instance, of how to develop our financial system and to train our financial practitioners. We must not be stupid to give money for old rope.

As we go into the new year, we should not be overwhelmed by analyses of what happened in 2016 and why. We must have a clarity and sense of perspective of the causes leading to it. And we must look forward to 2017 without the colonial mentality which makes us slaves to Western thought.


A History of U.S. Foreign Affairs in Which Grandiose Ambitions Trump Realism

January 2, 2017

A History of U.S. Foreign Affairs in Which Grandiose Ambitions Trump Realism

Southeast Asia’s Governance Plight

January 1, 2017

Corruption Trends in 2016: Southeast Asia’s Governance Plight

by Dr. Bridget Welsh

Bridget Welsh highlights persistent corruption trend in Southeast Asia through revealing data, including the Asia Barometer Survey. Indeed, 2016 reveals that corruption remains a major challenge for the region emerging economies. (This article is published in Thinking ASEAN 2016 Kaleidoscope special issue)

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The 2016 Most Corrupt Southeast Asian Leader –Malaysia’s Prime Minister Najib Razak

Serious corruption scandals continued to plague Southeast Asia as the monies involve reach record levels. In December 2015 Indonesians were riveted by the US$4 billion extortion attempt of Freeport McMoRan involving the Speaker of the House of Representatives Setya Novanto. He later resigned amidst ethics concerns. Next door in Malaysia, the multi-billion 1MDB scandal has made headlines since July 2015. At issue are kleptocracy allegations against Prime Minister Najib Tun Razak involving the deposit of nearly USUS$700 million deposited into his personal bank account, through an investment vehicle that has been tied to money-laundering and embezzlement being investigated in six international jurisdictions. The actual losses involved extend beyond US$3 billion. Najib clings to power to avoid international prosecution. In mainland Southeast Asia an assessment this year by Global Witness alleges that Prime Minister Hun Sen of Cambodia has taken at least US$200 million for his own personal use and claims that the actual amount pilfered may extend to above US$1 billion. He too appears to be using his office for protection and wealth. The amounts in the abuse of office for personal gain is just one of the many worrying trends involving corruption across the region.

This year, the International Monetary Fund estimated that USUS$1.5 to 2 trillion is being lost to corruption globally, equivalent to 2% of the world’s GDP. In Southeast Asia, the costs of corruption are debilitating to economic growth. An estimated 1% of economic growth annually is lost to corruption in ASEAN, as most Southeast Asian countries rank high for corruption practices. Billions of funds that would have fueled the region’s prosperity have gone into the hands of greedy politicians and bureaucrats, facilitated by unscrupulous businessmen. The 2015 Transparency International assessments that measures bribery perceptions of businessmen puts four Southeast Asian countries in the lowest tier worldwide– Cambodia, Myanmar, Laos, and Vietnam. The others largely fall in the shameful middle with only Singapore ranking near the top in performance. Singapore’s supposed non-corruption is challenged in other assessments, however. The Economist’s 2016 Crony Index, which measures the level of political embeddedness in business ranks Singapore 3rd in the world They join other top contenders for cronyism in the region, including Indonesia, Malaysia, Thailand and the Philippines.

TI Corruption

Perception Ranking 2015

Economist Crony

Index 2016

Cambodia 150
Indonesia 88 7
Laos 139
Malaysia 54 2
Philippines 95 3
Myanmar 147
Singapore 8 4
Timor Leste 123
Thailand 76 12
Vietnam 112

The close nexus between political elites and business is exacerbated by large roles of the public sector in Southeast Asian economies. Politicians play decisive roles in the allocation of funds/contracts and granting of permissions to engage in business. This is especially the case in leading sectors of the economy, namely infrastructure, natural resources, land administration and defense – all areas were corruption practices are rife. According to Transparency International in 2015, East Asia’s US$8 trillion spending for infrastructure, a sector without strict anti-corruption standards, will provide greater opportunities for further turpitude. China’s deepening role in Southeast Asian economies is also seen to enhance corruption, as they are perceived to be less demanding of good governance. China is even seen to endorse corruption, as exemplified in their bailout of Najib in the 1MDB debacle.

It is not a coincidence that Southeast Asian countries featured prominently in the April 2016 release of the Panama Papers, leaked documents that show efforts to hide funds in tax havens. Indonesia led the count with 6500 citizens, followed by Malaysia at 1784, but no Southeast Asian country was spared.  Prominent among the list were Najib’s own son Mohd Nazifuddin Najib, Cambodia’s Minister of Justice Ang Vomg Vathana and Thailand’s Chirathivats, the family that operates the powerful Central Group of Companies worth an estimated US$11.7 billion. Singapore was showcased as the region’s epicenter of cloaked investments with 5,869 offshore entities linked to the island nation, and listed by the International Consortium of Investigative Journalism (ICIJ) that leaked the documents as one of 21 global tax havens.

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Mohd Nazifuddin Najib

Varied Public Perceptions: Acceptance and Acquiescence

The use of public office for personal wealth – the standard definition of corruption – has been a long standing serious problem in Southeast Asia. In surveys year after year, corruption is the most important governance issue identified by the public. It has served as rallying call for protests and voters. Historically, corruption contributed to the fall of Suharto in 1998-1999. This year anti-corruption promises helped put ‘punisher’ Rodrigo Duterte into office in the Philippines’ May election. Ironically, Duterte gave a hero’s burial to the country’s most corrupt politician, former president and strongman Fernando Marcos this November, six months after assuming office. In the same month anger with corruption also brought people out to the streets in the thousands in Malaysia, as part of the repeated calls for clean government in the Bersih movement.  While the levels involved have reached record heights and the scandals exposed broadening, broad public concern with corruption remains consistent.

What is not appreciated, however, is the variation in the region in public perceptions of corruption. Drawing from the 4th wave of the Asian Barometer Survey (ABS) conducted in eight Southeast Asian countries from 2013-16, there is considerable variation in how corruption is seen.  Significant majorities perceive “most” or “all” officials as corrupt in Cambodia and the Philippines, with only a slim majority holding this view in Indonesia. In the rest of the region’s countries surveyed, significant pluralities believe their officials are corrupt, expect in Singapore and Vietnam. Corruption perceptions are higher at local levels than in the national center, with specific institutions such as the police and judiciary seen to be particularly affected by corruption. The figures hide something that is not often acknowledged, that a share of Southeast Asians support corruption and in some cases do not see bribery and use of public office as immoral, inappropriate or even as corruption at all. For example, a 29% of Malaysians surveyed believed that it is okay to use public office for personal wealth. These norms and practices counter anti-corruption efforts. Not only do they undercut moral pressure, the point to accomplices in the system of elite abuse of power and their selective patronage allocations.

Elite Erosion of Anti-Corruption Efforts

It is thus no wonder that the region has seen an undermining of anti-corruption efforts. Much of the undermining is coming from the top, the political elites. These privileged attacks on the Indonesian Corruption Eradication Commission (Komisi Pemnerantasan Korupsi or KPK) have been ongoing for the past two years, but during 2016 have extended to weak appointments to the commission and perceived weakening of the commission’s authority. Charges of favoritism in prosecutions abound. Similar trends were seen in Malaysia and Thailand, where anti-corruption bodies have been seen to be politically manipulated. Officials that supported a more robust prosecution of 1MDB in the Malaysian Anti-Corruption Commission (MACC) were summarily transferred. The Anti-Dynasty Bill in the Philippines, which would have limited the terms powerful families that have controlled power, was not surprisingly defeated in the Congress in February this year. This defeat allows political dynasties comprising of 200 elite families to continue to dominate power – including the Duterte family. In Myanmar, where the new leadership of Aung San Sui Kyi and her party the National League of Democracy assumed office in April, one of the biggest challenges has been to clean up the military’s control of the economy and the entrenched practices of corruption that have evolved in its business dealings.

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Where the undercutting of anti-corruption is being most eroded is in the courts. Getting cases prosecuted is hard enough, especially given the limited enforcement power of anti-corruption bodies across the region. There are examples of tough enforcement. For example, this July in Vietnam thirty-six officials in the Viet Nam Construction Bank (VCB) were put on trial for a case involving the loss of US$405 million and convicted in September with sentences ranging from 22 to 30 years. This has been followed by indictments in six high-profile corruption cases, involving government-linked companies and millions of misappropriated funds. Vietnam has the death penalty for corruption, but it has not been enforced in the high profile cases involving party-linked officials. The government’s tough anti-corruption effort is seen to be selectively enforced, and done so out of political necessity rather than a meaningful drive to end corruption practices.

Elsewhere in the region, corrupt offenders are getting off lightly. Consider Singapore’s actions in the 1MDB scandal. One banker has been jailed – Yak Yew Chee- receiving a paltry sentence of 18 weeks and fine of SUS$24,000. Four banks involved have been fined – Standard Chartered Bank (US$3.7 million), Coutts (US$1.7 million), UBS (1.3 million) and Singapore’s DBS (US$1 million) in amounts that pale in comparison to the flows involved. Singapore has also imposed an entry ban for ten years on former Goldman Sachs director Tim Leissner who fixed up the dodgy 1MDB bond deals involving US$6.5 billion. While these measures contrast sharply with the denials of wrongdoing across the Causeway, they are mere slaps on the wrists for serious ethical breeches. They also do not go after the main players or those that bought bonds, as the focus is on the facilitators rather than the beneficiaries. Implementation of anti-corruption laws has long been a problem. As significant is the lack of judicial and political will to punish corrupt offenders.

Growing Political Risks for Exposure

At the same time, the risks of exposing corruption remain higher. Cambodia’s political commentator and anti-corruption activist Kem Lay was assassinated in broad daylight in Cambodia in July. He was a leading critic of the Hun Sen government’s corruption. In March, Vietnam convicted seven activists, including the 73-year old anti-corruption blogger Dinh Tat Thang. In November, Malaysia did a double-whammy against anti-corruption advocates. It convicted parliamentarian and whistle blower Rafizi Ramli for leaking documents associated with the 1MDB scandal under the Officials Secret Act and imprisoned activist Bersih chairwoman Maria Chin Abdullah in solitary confinement for eleven days under an anti-terrorism law. Within the region, the risks for exposing corruption remain higher than ever. This should not be a surprise given the amounts and scope of graft involved.

Yet, ironically, anti-corruption efforts are being boosted by global developments. First of these has been the rise of hacking and leaks, often tied to intensive in-depth investigative reporting. The Panama Papers is a sign of future trends, as politicians and businessmen cannot assume that they are not going to be exposed. Second, has been a toughening of anti-money laundering enforcement coupled with stronger international corporate integrity agreements (CIA’s) that report bank accounts to tax revenue authorities and tighter counter-terrorist financing measures. These have led to an increase in cross-border investigations and prosecutions as well as fostered greater financial transparency at large. Corrupt leaders and businessmen can no longer rely on their control of domestic levers of power to protect themselves. Increasingly, they can no longer run or hide.

This is perhaps the irony of anti-corruption developments in 2016; within the region anti-corruption efforts are being undermined, but internationally they are being exposed. This is in spite of China’s corrosive regional influence on corruption. Southeast Asia’s corrupt leaders now face greater risk and in the competitive environment for investment more potential losses in sources of income. At the same time, domestic challenges to anti-corruption remain serious and worrying, from the elite attacks on anti-corruption bodies to those on activists. Gaining meaningful traction in anti-corruption in Southeast Asia remains largely elusive as the problem continued to be the region’s plight.

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Dr. Bridget Welsh is a Senior Research Associate at the Center for East Asia Democratic Studies of the National Taiwan University, a Senior Associate Fellow of The Habibie Center and a University Fellow of Charles Darwin University. She analyzes Southeast Asian politics, especially Malaysia, Myanmar, Singapore, Indonesia and other countries in the region. She is committed to engagement, fostering mutual understanding and empowerment.

Her most recent book is entitled The End of UMNO: Essays on Malaysia’s Dominant arty (2016). She has edited  Reflections: The Mahathir Years (2004), Legacy of Engagement in Southeast Asia (2008), Impressions of the Goh Chok Tong Years in Singapore (2009), Democracy Takeoff?: Reflections on the BJ Habibie Period (2012) ,Awakening: Abdullah Badawi’s Years in Malaysia (2013) (the Malay abridged edition Bangkit 2014). She is currently working on a number of projects examining democracy, electoral behavior and polling in Malaysia and regime support across Southeast Asia. She is also currently studying women and gender in politics in Southeast Asia, and has ongoing projects examining electoral politics, freedom in Southeast Asia, Great Power relations in Southeast Asia, and political conditions in Myanmar/Burma. Her dissertation at Columbia University examined the relationship between state power, political rights and revenue extraction in colonial Malaya. These projects reflect a keen interest in democracy and development in Southeast Asia.

She is the Malaysia Director, Senior Advisor for the Myanmar Survey and Southeast Asia Coordinator of the Asian Barometer Survey Project working on surveys in eight countries in the region. She is also a contributor to New Mandala and malaysiakini, the leading news website in Malay