On January 30, 2024, Transparency International (TI) published its annual Corruption Perceptions Index (CPI) for 2023. The 2023 CPI suggests there has been limited progress in the global fight against corruption, with TI observing that a “vast majority of countries have made no progress or declined in the last decade.”

For the Asia Pacific (APAC) region in particular, TI observed that “very few countries show sustained turnarounds that indicate significant changes in corruption levels,” with “the lack of delivery by elected officials on anti-corruption agendas” being among several reasons for stagnating CPI scores in the region.

The CPI ranks perceptions of public-sector corruption in 180 countries and territories from a variety of sources, reflecting the views of experts and businesspeople. Countries and territories obtain CPI scores ranging from 0 (highly corrupt) to 100 (very clean).

At a high level, this year’s results show:

• Sixty-eight percent of countries globally have CPI scores under 50;
• For the fifth year in a row, APAC’s average CPI score “stagnates stubbornly” at 45; and
• Seventy-one percent of APAC countries have a CPI score below the regional average score (45) and the global average score (43).

In its report, TI expressed concern about the “global trend of weakening justice systems” that is “reducing accountability for public officials, which allows corruption to thrive.” This is even as countries continue to prioritize post-pandemic economic recovery amidst geopolitical headwinds and an unpredictable economic outlook.

The APAC region continues to host many of the global top scorers including, New Zealand (85, ranked 3rd), Singapore (83, ranked 5th), Hong Kong and Australia (both scoring 75 and ranked 14th), and Japan (73, ranked 16th). Even so, TI did not spare these jurisdictions from critique, observing that top-scoring countries in the region were “slowly declining” in their battle against public-sector corruption.

While jurisdictions of significance for global businesses and investment have made some progress from their historical scores from a decade ago, their scores have fallen from last year. These include China (42, dropping three points from 2022) and Vietnam (41, dropping one point from 2022). South Korea (63, ranked 32nd) has seen significant improvements in its CPI score over the years, although its score remained the same in the last two years.

In spite of TI’s criticisms, we observe that certain jurisdictions in the APAC region continue to strengthen legislative and enforcement efforts against corruption, including in Vietnam which has pursued an aggressive anti-graft crackdown across multiple sectors. Australia has also increased its commitment to battling corruption by establishing its own National Anti-Corruption Commission in 2023 and tabling a bill to amend the country’s decades-old foreign bribery law (also reported in our June 2023 Top 10 International Anti-Corruption Developments).

Ones to Watch

China

In recent years, including in 2022, we highlighted China’s continued legislative and enforcement focus on tackling corruption at all levels, across both the public and private sectors. The past year has been no exception, with President Xi Jinping recently pledging to deepen the country’s anti-corruption crackdown, even highlighting industries of focus such as finance, energy, infrastructure, and healthcare. These statements from the top are backed by trends in enforcement activity. For example, China’s anti-corruption watchdog recently announced that 110,000 Chinese Community Party Officials faced disciplinary action for a variety of infractions, including for “receiving expensive gifts, money or attending lavish meals and celebrations.”

Most recently in January 2024, the Standing Committee of the National People’s Congress voted to adopt Amendment XII to the country’s Criminal Law which stipulates stiffer penalties for both bribe givers and recipients (particularly where they are repeat offenders or where the bribes involve major governmental projects or key sectors). Chinese laws targeting bribery and corruption have traditionally been focused on bribe recipients in the public sector. These amendments represent a shift in legislative strategy that likely will trickle down to enforcement, particularly with the government vowing to tackle corruption at all levels, including “ants and flies.”

Indonesia

Indonesia remains one of the fastest growing markets in the region, if not the world. That said, the resource-heavy country did not see its CPI score change from 2022 to 2023 (34, ranked 115th), and its CPI score remains a far cry away from its peak in 2019 (40). Indonesia, like many countries in the APAC region and the world, is also going to the polls this year in February 2024, at the presidential and legislative levels.

As we highlighted last year, Indonesian enforcement agencies, including its Anti-Corruption Commission (KPK) face criticism with respect to their priorities and effectiveness, particularly as amendments to the country’s anti-corruption laws in 2019 and other actions in recent years arguably eroded the KPK’s powers.

It remains to be seen if and how changes at the highest levels of government (particularly with current President Joko Widodo stepping down) can help the country tackle deep-seated corruption issues, although some critics are not optimistic.

Malaysia

Malaysia is one of the significant improvers in the APAC region, improving three points in its 2023 CPI score (50, ranked 57th). The country has also seen some improvements in political stability as Prime Minister Anwar Ibrahim crossed the one-year mark for his unity government at the end of 2023. Prime Minister Anwar Ibrahim has made combatting corruption “a central theme of his reform agenda.”

From an enforcement perspective, the Malaysian Anti-Corruption Commission (MACC) has had a significant year, bringing corruption and money laundering charges against a former Prime Minister and charges (for failing to disclose assets under Malaysia’s anti-corruption laws) against a former Minister of Finance.

In this regard, some critics have argued that Prime Minister Anwar Ibrahim has used the MACC to target his “political rivals” – claims that he denies. Interestingly enough, following the release of the 2023 CPI results, the MACC called for “political will to improve anti-corruption strategies and good governance” so that Malaysia can achieve the government’s target of being ranked 25th in the CPI ranking by 2033.

Recently, former Prime Minister Najib Razak’s jail term and financial penalties were substantially reduced through a partial royal pardon following his conviction for corruption offences in relation to his role in the 1Malaysia Development Berhad (1MDB) matter. Critics are concerned that the decision, which under the Malaysian Federal Constitution is made by Malaysia’s king with the advice of the Pardons Board, may negatively impact public confidence in Malaysia’s fight against corruption. It remains to be seen if and how political developments in the country will affect its stance in rooting out corruption.

Looking Ahead

Even as TI interprets the 2023 CPI as showing “little to no meaningful progress towards curbing corruption” in APAC, it bears watching how upcoming elections in APAC countries (e.g., Indonesia, South Korea, India, and Pakistan) will impact countries’ commitment to taking concrete steps to address public sector corruption. In some ways, potential changes in government may also create their own unique corruption risks, particularly with respect to licenses and permits, procurement, and tenders for government projects. These risks are exacerbated in certain APAC jurisdictions that struggle with endemic corruption.

It would be misguided to assume that high-scoring countries in the APAC regions face limited corruption risks. Traditionally strong performers have seen their scores fall from 2022, including New Zealand (falling two points) and Hong Kong (falling one point). Singapore continues to fare well in its CPI scores even as there were no changes from the previous year. Yet, the country recently saw a former minister being charged with multiple offences including corruption (the first time a Singaporean minister has faced a corruption charge since 1986). In the wake of this latest corruption probe, Singapore’s leaders have come out to reiterate the country’s commitment to keeping the country “incorruptible,” even publicly discussing details of limitations placed on public officials with respect to gifts, meals, and entertainment.

As countries continue to prioritize their post-pandemic economic recovery, corporates are no different. Companies must also grapple with other pressing business continuity issues including unpredictable geopolitics, changing governments, and supply chain disruptions. With these variables, companies must be proactive in identifying how corruption and compliance risks may evolve locally and ensure that they are calibrating their resources to appropriately tackle these risks. This is in addition to distributing their resources to identify and remediate legal and compliance risks arising from other areas including sanctions and export controls, money laundering, and foreign investment regulations.

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