NB: This article was originally published in The Edge Financial Daily.
Penang recently played host to the inaugural conference of the ASEAN Coalition for Clean Governance, a day-long event which brought together a distinguished line-up of prominent leaders and proponents of clean governance from seven different countries around the region.
As a state that has turned the motto of “competency, accountability and transparency” into something of a sacred maxim, it was naturally relevant for Penang to promote and champion the issue of clean governance through an international conference that discussed its mechanisms, enabling factors and correlation to development.
Clean governance is a critical issue in the world today, more so given the extraordinary circumstances that we now find ourselves in. With the crippling debt crises in the West, the Arab Spring in the Middle East and the political transitions taking place in our own region, the global order would appear to be in the midst of a major reconfiguration. Where once the global economy was ruled by the consumer engines of the West, usurpers have emerged in the form of the newly-awakened giants of Asia.
This shifting global order is significant to us in Southeast Asia. Not only are we are geographically sandwiched between China to the East and India to the West, our economies are also opening up and maturing at a pace that has, despite the financial crises affecting our traditional export markets, actually continued to expand both in production as well as consumption. And with Southeast Asia housing 600 million people or a tenth of the world’s population, and about three billion people if we include East Asia and the Indian subcontinent, we have every right to be optimistic about this promised Asian Century.
However, great care must be taken to avoid the pitfalls of development. The post-industrial Western experience has revealed that economic growth, while succeeding in delivering prosperity and an improved quality of life, may also result in widening inequality and social injustice. This is especially the case when institutional mechanisms are unable to rein in the unsustainable machinations of an unfettered capitalistic system.
In other words, without strong, prudent and responsible public institutions, socio-economic systems would be rendered defenceless against corruption, abuse of power and profiteering by self-interested, greedy and irresponsible elements. And as the unravelling economies of the United States and Europe have proven, great wealth will inevitably be amassed by the elites at the expense of everyone else.
The way to circumvent such a situation is to provide the necessary institutional protections. To put it simply, public institutions are the structural parameters within which the government, markets and society interact with one another. These parameters – judicial, executive, legislative, financial, bureaucratic as well as electoral – represent the fine line between a system that will ensure the translation of economic growth into developmental outcomes that are equitable and socially responsible, and one that will engender misguided distribution of resources, arbitrary justice, an exacerbated wealth gap, and uncompetitive and inefficient markets.
This is where clean governance comes in. If we are able to provide public institutions that are clean, efficient, free from corruption, based on the rule of law, legitimately derived from the people, and participatory as well as inclusive, then we will be able to establish a system that is able to ensure safeguards against the pitfalls of unregulated capitalism.
This is all the more relevant in the context of Southeast Asia today, a region that is witnessing a complicated contestation between democratic transition on the one hand, and the entrenched legacies of patronage, corruption and abuse of power on the other. If not handled with care, the future of a resource-rich and geographically-blessed region may end in ruin.
The challenge then is to ensure that public institutions, especially in vulnerable polities such as ours which are undergoing transition, are not hijacked by vested interests. As the Western experience has shown us, structurally unsound and irresponsible fiscal policies and its selective enforcement have resulted in unsustainable development built upon debt and deception. Without proper institutional foundations, it was only a matter of time before the house of cards came crumbling down. Today, Greece is essentially bankrupt while a few other European countries face similar fates.
The need to appreciate the critical and symbiotic relationship between clean governance and socio-economic development cannot be clearer. Clean, efficient and accountable governance will produce positive socio-economic development. On the other hand, corrupt, inefficient and opaque public institutions will impair economic competitiveness, impede private sector investment and distort the distribution of wealth.
However, in order to effect clean governance, political will is required to engage in a long-term commitment to build, rebuild and reinforce public institutions that will be able to minimise corruption and allow the creation of a more inclusive, equitable and sustainable future.
As former UN secretary-general Kofi Annan once remarked, the UN’s own experiences throughout the world have proven that “without good governance – without the rule of law, predictable administration, legitimate power, and responsive regulation – no amount of funding, no amount of charity will set us on the path to prosperity.”
Thus, it is imperative that we welcome the prospect of the coming Asian Century by realising not only the opportunities that it brings, but also the accompanying challenges. However, we are fortunately blessed with the benefit of hindsight, and will hopefully not repeat the mistakes of others. If we are to learn anything from the fiscal crises in the West, it is that we should very well make sure we get our foundations right. And clean.