Greater economic integration in Southeast Asia could worsen corruption in the region and governments need to work together to strengthen anti-graft agencies and regulations, a watchdog group said.

As the 10 members of the Association of Southeast Asian Nations seek to implement the Asean Economic Community, they risk increasing cross-border bribery cases, money laundering, smuggling and trafficking, Transparency International said in a report released Friday in Kuala Lumpur.

“More cross-border trade and investment can create new opportunities for corruption,” according to the report. “The increase in the quantity of economic transactions could lead to more corruption in absolute terms. The increase in the lawful flows of goods, money or people across borders may be accompanied by an increase in related illicit trade.”

Of the nine Asean nations included in Transparency International’s latest Corruption Perceptions Index, only Singapore and Malaysia scored above 50, a scale in which 100 is very clean and zero is highly corrupt. While it’s possible that greater economic openness could promote competition that would help reduce graft in the region, it’s just as likely to increase it unless there are proper measures to fight it, the group said.

Disconnected initiatives

“While a number of anti-corruption initiatives, partnerships and exchanges do exist within the region, many of them remain disconnected, limited or insufficient to tackle the emerging corruption risks stemming from increased regional integration,” it said.

Southeast Asian governments, including Indonesia and Thailand, have unveiled plans for a wave of spending to improve infrastructure as they seek to boost economic growth and ready for greater regional integration. Asean needs $8 trillion in infrastructure spending by 2020, participants at a World Economic Forum session last year estimated.

“The large number of massive infrastructure projects underway or planned in the region also present opportunities for funds to be siphoned off by the corrupt,” Transparency International said. “If persistent corruption and cronyism cause the benefits of regional economic integration to flow to well-connected elites, leading to greater income inequality, political support for regional economic integration may wither.”

Transparency International is proposing a so-called Asean Integrity Community that would work to combine the anti-corruption resources of member states, businesses and civil society groups. Governments should develop regional standards and priorities for legal frameworks, standardise public procurement regulations, push for asset declaration and freedom of information laws, and whistle-blower protection, it said.

“Anti-corruption and good governance as a main principle of integration are crucial to achieving a level playing field for business and ensuring lasting peace and security, sustainable economic growth, and shared prosperity and social progress,” Transparency International said. –BLOOMBERG NEWS