About Heesu Chung

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Myanmar Should Adopt Formal User Fees To Displace Petty Bribery

Corruption is part everyday life in Myanmar. While the wealthy can use bribery to get around the law, for the vast majority of Burmese citizens, bribery is necessary to get things done even when the law is on your side. The term “tea money” exists in common parlance to describe the small bribes necessary to obtain even the most basic of services—bribes that are so ubiquitous that many people don’t think they count as corruption. The imposition of unofficial, discretionary and discriminatory “fees” means that formally public services are in practice “privatized.”

One explanation for the persistence of this petty corruption is that both the national government and the regional governments lack the revenue necessary to provide the public services that, under Myanmar’s Constitution, the government is supposed to provide. According to the Asia Foundation, “Decades of deliberate neglect of Myanmar’s tax-administration system have left the country with one of the lowest tax takes in the world [….] Myanmar’s tax revenues in 2016–17 were only 6–7% of GDP. This compares to 10–20% of GDP for countries at similar levels of income.” The country does earn significant revenue from natural resources, but these rents have gone into the pockets of military elites; other revenue sources are severely limited. When the demand for government services and benefits outstrips the supply, people become willing to pay extra for the promised public goods. The idea that these extra fees are acceptable is exacerbated by the fact that Myanmar’s lower-ranking public servants earn very low official salaries. But allocating public services on the basis of bribe payments is not fair, equitable, transparent, or efficient.

In an ideal world, Myanmar would reform its tax system, collect adequate revenue, pay its public servants decent salaries, and be able to provide all of the goods and services to which its citizens are legally entitled. But while we can all hope Myanmar works toward that goal, nothing like that is going to happen anytime soon.

A more practical short-term solution is to raise the official administrative fees—or “user fees”—for public services. Continue reading

Can Blockchain Help Bypass the Problem of Corruption in Development Aid?

Corruption undermines the effectiveness of foreign aid. While precise numbers are hard to come by, numerous press reports suggest that mass “leakages” (a euphemism for probable theft) are all too common. UN Secretary General Ban Ki Moon has reportedly asserted that approximately 30% of foreign aid is lost to corruption, though controversy over the magnitude and impact of the problem remains (see, for example, here, here, and here). The perception of a severe problem has naturally led to searches for innovative solutions, including technological solutions. One possibility that has been garnering some recent attention is blockchain technology. In fact, a few months ago, the Ministry of Foreign Affairs of Denmark, the think tank Sustainia, and the blockchain currency platform Coinify jointly published a report delineating how blockchain technology can be used to “hack the future of development aid.”

Blockchain systems make use of a shared digital “ledger,” in which each transaction contains the history of all previous transactions; because the ledger is transparent and distributed across many computers, rather than stored in a centralized database, it is (allegedly) not susceptible to manipulation or hacking, and ensures the transparency of all transactions (though not necessarily the real-world identities of those engaged in those transactions). Blockchain is probably best known as the technology that makes possible Bitcoin and other so-called cryptocurrencies. But blockchain technology and its applications are rapidly evolving, and many have already begun to see how this technology can be used as a tool to combat corruption, for example by increasing transparency in land records and by using blockchain systems to support anti-money laundering efforts. Now, companies such as Disberse, AID: Tech, and Donorcoin are developing blockchain-based fund management systems that, their proponents contend, can help reduce corruption in development aid. Blockchain technology would allow donors to transfer money to end users directly (and instantaneously), bypassing the formal financial institutions and corrupt bureaucracies that have often been the source of financial leakage, and preserving a transparent record of all transactions. This would help ensure that aid money goes to where it is intended to go.

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Can the KPK and the Indonesian Public Finally Root Out State-Sanctioned Corruption? Updates from Novanto’s Corruption Scandal

Indonesia’s Corruption Eradication Commission (KPK), established in 2003, has had many successes, including prosecutions of several former Ministers, the former Governor of Indonesia’s Central Bank, and a former Chief of Police. As of the end of last year, the KPK had tried and convicted a total of 119 members of parliament and 17 governors, among others. Now, the KPK is on the verge of catching one of its biggest fish yet: Setya Novanto, former Speaker of Indonesia’s House of Representatives Speaker. Novanto was finally detained, indicted, and brought to trial at the end of last year for his alleged embezzlement of 2.3 trillion rupiah (approximately US$170 million) from a 5.9 trillion rupiah national electronic identity card (e-ID) project. Novanto allegedly played a central role in allowing the mark up e-ID procurement costs in order to steal millions and redistribute them to the pockets of around 100 public officials, including approximately $7.4 million for himself. Novanto had been implicated in many previous scandals, but had managed to avoid punishment. This time, prosecutors are seeking a jail term of at least 16 years, plus a repayment of $7.4 million he is suspected of plundering. Novanto denied all the allegations and blamed the Interior Ministry, but the evidence, gathered and submitted by the KPK, is against him. With the final judgment to be made soon, the KPK is on the verge of winning one of the biggest corruption cases against a senior politician.

If the KPK wins this case, it would be an important victory, demonstrating the KPK’s power, as an independent anticorruption agency, to hold accountable even the most powerful politicians, and inspiring the Indonesian public to hold politicians to higher ethical standards. At the same time, though, a victory in this case won’t mean that the war against endemic corruption of has been won: the legislature and other powerful state actors will continue to fight back, especially by weakening the power of the KPK. Civil society, and the public at large, must continue to be vigilant to provide the backing the KPK needs to retain its power and independence.

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