Many Corrupt Asian Nations, But China Biggest Threat-Study

[FaGal]

Many Corrupt Asian Nations, But China Biggest Threat-Study
www.nasdaq.com - March 8, 2005


HONG KONG -The most corrupt countries in Asia are Vietnam, Indonesia and the Philippines, but graft in China poses the biggest global threat because of the country's growing economic influence, a consulting firm said Tuesday in a study.

The report by Political & Economic Risk Consultancy Ltd. said corruption is so bad in China that Communist leaders have been warning the problem could upset social stability and derail the economy.

The Hong Kong-based firm said because China is playing a bigger role in the world economy, a major crisis triggered by Chinese corruption could cause severe global fallout. Multinationals have become increasingly dependent on China, so a crisis would wreak havoc with their bottom-lines, the study said.

"Of all the countries covered in this report, therefore, China is one where corruption - although not necessarily the worst - has the potential to do the most damage," the report said.

Singapore was the least corrupt, followed by Japan and Hong Kong, the firm said.

The report said Indonesia was Asia's most corrupt nation, ranking 9.25 on a scale from zero to 10. "The issue of corruption could make or break Indonesia," the report said.

Graft could break the country because it might make militant Islamic groups more appealing to people who might see the groups as the best way to reorder society, the group said. President Susilo Bambang Yudhoyono must deliver on his promises to crackdown on corruption, and his mission has become more pressing as billions of dollars in aid flows in to victims of the Dec. 26 tsunami, the report said.

"All eyes are on Indonesia," the firm said.

In the Philippines, the report said one of the biggest failings of President Gloria Macapagal Arroyo has been her government's inability to reduce corruption.

"There are so many examples of the system's failing to deal with graft that it is hard to draw any conclusion other than the powers-that-be really prefer the status quo to a serious house cleaning," the report said.

The firm said the Philippines - which ranked No. 2 on the graft list with a score of 8.9 - needed to beef up its anti-corruption forces. There's a backlog of 2,000 cases in the country's anti-graft court, the report said.

Vietnam was No. 3 on the list because corruption is "rampant in powerful state-controlled companies and government ministries, the report said. The country is trying to fight the problem by cracking down on some high-profile targets - like officials in large state-owned companies, the report said.

"Still, as in China, the system is highly resistant to reform," the report said.

India was fourth on the list, partly because the country's "suffocating bureaucracy" created plenty of opportunities for payoffs to cut through red tape, the report said.