RI most plagued by corruption, PERC says

RI most plagued by corruption, PERC says

Agence France-Presse, Singapore

Corruption is the major obstacle to investment and business
growth in Asia's developing economies with Indonesia suffering
the most, a poll of foreign executives showed on Monday.

In contrast, Hong Kong and Singapore -- two of the most
developed Asian economies -- are rated as the places where graft
is most under control, the Political and Economic Risk
Consultancy (PERC) said.

Singapore topped the survey of 96 leading foreign executives
based in the region with a score of 0.89 where the best grade is
zero and the worst is 10.

Arch economic rival Hong Kong was second at 1.22 while
Indonesia was the worst with a score of 9.44, PERC said in its
survey of 12 regional economies.

Japan was third, followed by South Korea, Malaysia, Taiwan,
Thailand, China, India, the Philippines and Vietnam.

The gradings by Singapore and Hong Kong reflect confidence in
the judiciary system which is why the former British colonies
have remained big recipients of foreign investment despite lower
labor costs elsewhere, PERC said.

"Labor is usually much less expensive in neighboring
countries, and except for the excellent harbors, world class
physical infrastructure facilities and educated labor forces,
neither Hong Kong nor Singapore has many natural resources to
draw investors," it said.

"However, foreign companies find it easier and more
straightforward to do many types of business in Asia's two island
economies, which is one of the main reasons they have attained
"regional business center" status.

"The low level of corruption and victims' ability to seek
legal redress though the local legal system when they do
encounter graft are major attributes of Hong Kong and Singapore
that enhance the quality of the overall business environment."

In Indonesia, graft is seen a major drawback for foreign
investors but they are encouraged by President Susilo Bambang
Yudhoyono's drive to stamp out corruption, the survey showed.

"The legal system in that country remains highly suspect, but
President Susilo Bambang Yudhoyono has stepped up the fight
against graft," PERC said,

"There have been a few high profile examples of officials
being arrested and prosecuted, and these anecdotes are raising
hopes that one of the biggest barriers to doing business in
Indonesia, namely, corruption, is being reduced."

Similarly in China, investors like efforts by Beijing to
punish corrupt government officials, PERC said, adding that being
a member of the World Trade Organization (WTO) has helped the
anti-graft drive.

"China stands out as the country where the trend seems to be
improving the most," it said.

In Malaysia, graft is seen as a problem but it is not as
severe as in most neighboring economies, like the Philippines
where the problem is not improving and the government is seen as
nothing about it, the survey said.

Meanwhile, executives recognize Thai authorities have changed
laws and regulations but consider it to benefit large businesses,
many of which have close links with influential politicians, the
survey said.