When Thongloun Sisoulith came to power in 2016, he set out to tackle corruption. Now, two years on, his war against corruption is failing.
Despite a fierce anti-graft campaign, corruption in Laos has worsened since 2017. Transparency International released its annual corruption index. Laos slipped from 123rd place to 135th.
(Source: Trading Economics)
One Vientiane resident spoke anonymously about the impact corruption has on local services. “If you apply for any service, you will have to attach a white envelope including ‘tea money’… otherwise, you will experience a long wait,” the source said.
The government launched an anti-corruption drive with limited results
The scathing results come after the Laotian government set out to tackle corruption. When Thongloun Sisoulith came to power in 2016, corruption was rife.
Undocumented extra payments were commonplace when acquiring licences. Companies gave gifts to tax officials to avoid taxation. Bribes were the norm in the customs sector. Agents often expected money in the process of importing and exporting goods.
The government was haemorrhaging money through corrupt practices. In 2015, auditors found a network of 25 ‘ghost projects’. These projects received state budgets for the construction of roads in Northern Laos. But the roads were never built. The scandal went right to the top of Laotian government. The former Minister of Finance was arrested for his involvement in the case. In total, between 2012 and 2014, corruption cost the country over 1 trillion kip (US$123 million).
When Thongloun Sisoulith arrived in office, he launched an anti-corruption campaign. The State Inspection Authority (SIA) received a mandate to investigate embezzlement in government ministries.
Between April 2016 and February 2017, the authority made 25 corruption-related arrests. More than 140,000 provincial civil servants had to declare their finances. It was one of the most comprehensive corruption investigations ever undertaken in Laos.
Thongloun Sisoulith’s efforts to tackle corruption were acknowledged in the corruption rankings. Laos rose to the 123rd position in the corruption index. But the situation has now worsened again.
The war failed
In 2017, corruption worsened again. The government lost US$50 million to corruption in 2017, a threefold increase on 2016 levels. The government is losing the war on corruption.
Investigations delivered initial success, but structural failings in Laotian society encourage corruption. There are no laws clearly defining business conduct. In the absence of regulation, businesses formulate practices. In this environment of legal uncertainty, bribes and illegal payments proliferate.
The country’s political structure also creates an environment for corruption to flourish. The centralisation of power in the Lao People’s Revolutionary Party (LPP) means the only way to advance is through the party. This gives party members a lofty position in Laotian society. They can protect businesses, promote friends and family. With only one route to power, those in the party hold a monopoly. They can demand bribes and companies have little option but to pay.
Tight controls of the press also prevent the media from holding politicians to account. When officials are under investigation, reports are only made to the National Assembly. Press coverage is limited.
How will the failed war on corruption affect Thongloun’s popularity?
Thongloun Sisoulith’s position at the top depends on economic growth and a clean government. It is currently in a strong economic position. The economy is enjoying annual growth around 7%. Economic forecasts indicate this growth is sustainable.
(Source: Trading Economics)
Providing Thongloun maintains strong economic growth, his popularity will remain unaffected. Also, senior members of his government have remained above investigation so far. There has been no repeat of 2015 when the upper echelons of government were implicated.
Thongloun can offset worsening corruption with strong economic performance. Ultimately, money talks. Improving standards of living help the public tolerate corruption. However, Thongloun has no buffer. Should economic performance wobble, he will find the public unforgiving.