Why Laos needs to get serious about tackling corruption

Photo: Christian Haugen/CC BY 2.0
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The Prime Minister of Laos has pledged to crack down on the millions of dollars lost in national revenue each year because of a deep-rooted culture of corruption in his country’s organisations.

By Argee Abadines, edited by Holly Reeves

Laos suffers from some of the deepest corrupt practices of any of the ASEAN nations. Officials take decisions that benefit their friends and family and it is considered immoral not to help out members of your personal networks.

Transparency International ranked Laos at 139th out of 175 countries for clear dealings in the public sector. This is an improvement from their 2014 position of 145th but is a constant reminder the government needs to achieve reform and change to kick start real economic development.

Economic growth is suffering from a lack of transparency

There is a strong correlation between economic growth and a country’s transparency ranking – the more transparent a country is, the more appealing it is to investment. Laos has passed landmark laws to reduce corruption and boost economic activity but their implementation remains weak and investors are cautious.

Bounthong Chitmany, head of the Government Inspection Authority which reports on the status of anti-corruption activities explains the primary forms of large-scale corruption include delays in approving documents, bribery, forgery of papers and the unauthorised modification of technical standards and designs. He believes his country lost US$149.40 million (more than 1 trillion Lao kip) due to these corrupt practices between 2012 and 2014. Only US$62.87 million (505 billion Lao kip) of these funds and assets had been recovered.

Officials are part of the problem and forests are paying the price

Government officials overload the cost of projects and forge documents to embezzle state funds. These corrupt practices have created a weak infrastructure, “ghost projects” and poorly paid public workers. There are also cases of officials selling state-owned land below market prices.

Laos is blessed with natural resources and minerals but illegal logging has significantly diminished their forests. According to Global Witness, forest coverage in Laos is now down to 40%, against 71% in 1960. This land is then used for rubber or palm oil production and this plunder of natural resources by foreign corporations has plunged many Laotians into extreme poverty. Subsistence farmers are often left struggling to feed their families. For example, two of Vietnam’s largest rubber companies have taken control of thousands of hectares of community land.

The country’s political structure encourages patronage

One key reason why corruption thrives in Laos is its political structure. The Lao People’s Revolutionary Party (LPRP) monopolises all power and quickly suppresses political dissent of any form. This means joining the party is the only way to advance socially. The LPRP also controls all the key institutions in the country, including the military.

Party members enjoy a number of benefits and privileges and entrepreneurs use their political connections to seek protection and ensure their business thrives. This circle of patronage makes corruption difficult to pin down and tackle.

Crimes could be better investigated if public discussion was more open

International trade is a good example of the problems corruption creates. Petroleum products, cigarettes, and alcohol are trafficked to Laos from Thailand, Vietnam, and China. If the government moves to plug these gaping holes in the export and import market it could access to significant import and export dues. This could mean less reliance on foreign aid and sustainable economic growth which does not quickly erode their natural resources.

To achieve this, the Laotian government needs to support press freedom so reporters can highlight crimes of environmental destruction, say campaigners. Existing laws, such as the expanded anti-corruption law on embezzlement of state or collective property, as well as forgery and deception in bidding procedures, could be used for prosecutions. Penalties for these crimes are currently tame and rarely given.

However, Laos is on the right path and more cases are being scrutinised and criminally prosecuted. For example, one recent investigation discovered police officers accepted US$120,000 (more than 979 million kip) from a drug pusher in exchange for 93 packs of heroin. Civil servants and officers are also now required to declare their properties and income for inspection. Over 1,800 party members of the LPRP have been subject to party discipline.

There is political commitment to tackling the problem

The government is looking at ways to raise public awareness of compliance with anti-corruption laws and ask people to be vigilant against corrupt officials. The intention is that by having proper checks in place the salaries of civil servants can be raised and this will shield them from the temptation of working under the table.

Looking to the future, the reform-minded Prime Minister Thongloun Sisoulith says he will instil transparency and reform into the LPRP. But can he enforce the rule of law or are his efforts all a show? The economy, the forests, and his country’s economic growth all depend on his success.