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Disrupting corruption in government purchases in ASEAN
Even before the pandemic, it was estimated that the world spends over US$7 trillion on health services a year, of which 10–25 percent is lost directly through corruption.
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Today, ministers are meeting under the Saudi Group of 20 presidency to discuss international cooperation to fight corruption. On the agenda will be how harness the new information and communications technologies (ICT) to reduce and eliminate corruption in the era of COVID-19.
Even before the pandemic, it was estimated that the world spends over US$7 trillion on health services a year, of which 10–25 percent is lost directly through corruption (see “Corruption in global health: The open secret”, The Lancet, Nov. 27, 2019)
In middle income countries such as Indonesia, the World Bank estimates that on average 13 percent of gross domestic product (GDP) is spent on government purchases, and in some countries, like Vietnam, up to 20 percent. With corruption rife in public services, it is not surprising that most ASEAN countries, including Indonesia, continue to hover around the middle of Transparency International’s Corruption Perception Index.
Since the pandemic started, not a day goes by without reports of corruption around public spending for healthcare – ventilators, personal protective equipment, face masks are just some of the emergency supplies that have been exposed to scams, fraud and theft.
In Indonesia, when the pandemic was declared, the government introduced legislation which allowed public procurement to be fast-streamed for emergence relief. While the speedy delivery of medical equipment is an essential response to the pandemic, it can also lead to cutting corners and “special deals”. Indonesia Corruption Watch (ICW) recently highlighted its concerns about potential irregularities and a lack of transparency around government purchases.
These issues were brought out in a recent joint statement of the B20, the business advocacy group of the G20 and United Nations Development Program, which called for the “future adoption of new technologies…in preventing and detecting fraud and corruption in public procurement”.
And earlier this year, the G20 countries, of which Indonesia is a member, signed up to “High Level Principles for Promoting Public Sector Integrity Through the Use of Information and Communications Technologies” which focuses on “effective and transparent public administration and digital public services, ICT in public engagement on anti-corruption and ICT in the detection, reporting and investigation of corruption”.
To be fair, things have progressed considerably since the times of paper-based procurement. Most governments now have an at least rudimentary form of electronic procurement which reduces the risk of corruption by removing the “human element”.
Another more recent development is the trend toward publishing open data. Initiatives such as CoST, the Infrastructure Transparency Initiative, working as part of UNDP’s “Promoting a Fair Business Environment in ASEAN” or “FairBiz” regional project, have established common data standards which government agencies can use to publish a wealth of information about their public contracts.
Such data is a powerful tool in the hands of civic groups to reveal anomalies in the purchasing process. Such procurement monitoring systems are being developed with the local public authorities in West Lombok.
The advent of the latest technologies such as artificial intelligence, blockchain and machine-learning offer new opportunities for reducing and eliminating corruption in public procurement. The private sector, concerned about the risk of corruption in developing markets, is already investing heavily into Enterprise Risk Management (ERM) frameworks to detect and prevent corruption, fraud and other forms of malpractice in their subsidiaries and supply chains around the world.
However, similar investments are not yet being made in the public sector of most ASEAN countries.
There are some understandable reasons – money, of course, is in short supply, and there are competing priorities due to COVID-19.
But there are also more fundamental constraints. Telecoms infrastructure and lack of bandwidth is one. The technical capacity of the government procurement departments is another. The readiness of the citizenry and SMEs to work with ICTs and their skepticism about the possibility of living without corruption is yet another.
There are attempts to provide support to governments in developing countries. Various multilateral agencies are developing programs to match technologies and the needs of the public sector purchasing organizations. However, the overall picture remains fragmented, with a lack of sharing of successful tools and strategies.
One proposed solution for ASEAN emanating from UNDP’s “FairBiz” project is to create a Technology Integrity Hub which promotes, funds and encourages collaboration in technological innovation to reduce corruption in public procurement.
An impartial, affordable advisory service would enable public authorities to select the most suitable technologies and identify the best solutions for fast-track development. A tech fund would invest in the emerging technologies. It could operate on the basis of profit-sharing with revenue from resulting technology sales and leasing, creating a self-sustaining model. A coordination team would bring together institutions, agencies and other parties working in the field to combine efforts.
By bringing together technical expertise, market knowledge, end-users and funding, the Hub would be in a unique position to develop and deploy the new technologies to disrupt corruption at this most crucial of times. We recommend that the G20 consider this and invite UNDP to convene governments, companies, technology suppliers, and investors to develop possible strategies to make this happen.
If policymakers, practitioners, business leaders and citizens are ultimately successful in matching the new generation of technologies to with the ultimate goal of maximizing social benefit through the reduction and eventual elimination of corruption, this could make all the difference to the lives, livelihoods and health of men and women in Indonesia, Southeast Asia and indeed societies worldwide.
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Brook Horowitz is chief executive officer of IBLF Global and private sector advisor to UNDP’s Promoting a Fair Business Environment in ASEAN program. Mark Lovatt is chief executive officer of Trident Integrity Solutions Sdn Bhd, Kuala Lumpur, and member of the UNDP Private Sector Advisory Group for UNDP’s Promoting a Fair Business Environment in ASEAN program.
The views expressed are their own.
