By Pooky-this blog economics journalist
Globally, there is a move to good governance. A country’s judicial system, is where good governance comes from. But is Thailand into governance and just judiciary system? You make this call. Buty this article points to good governance as the corner-stone of success.
Abhisit is heading to New York and the big event, if the Red Shirt does not organize a protest against his visit in New York, will be a closed door meeting with about 100 fund manager.
The key message will be, “Thailand is a great place to invest.”
In the mean time, Thailand ranks as one of the worse corrupt countries in the world and also as one of the most risky political place to be in. And the Asian Human Rights Commission is asking the UN to investigate Thailand.
Much of the above is really because of poor governance in Thailand.
- Good Governance Attracts Investments:
FDI inflows provide states with capital accumulation, technological transfer, and job creation driving them to compete for all available international capital. Some argue that autocratic regimes are able to provide firms with better entry deals into their countries because of less executive constraint, leading them to greater FDI inflows.
Others posit that democratic institutions such as private property and rule of law lead democracies to receive greater inflows (Jensen 2003; Li and Resnick 2003). We agree that strong institutions guarantee protections and the possibility of greater returns to firms, though we do not believe that these institutions exist solely within democratic regimes. These institutions comprise the concept of governance.
We expect states that have higher quality governance attract more FDI inflows than states with poor quality governance. Not all democracies have high quality governance and not all autocratic countries have poor quality governance; we argue that while regime type may still play a role in attracting FDI inflows, a stateâ€™s quality level of governance is a much greater factor in determining the amount if FDI it attracts. In assessing this expectation we implement a TSCS OLS model, incorporating a measure of governance quality from Kaufman, Kraay & Mastruzziâ€™s (2005) governance indicator data-set with all other variables being standard.
An interaction term of democracy and governance will be used to assess which of these concepts is more important in determining FDI inflows, leading us to a greater understanding of what private economic actors focus on when determining their foreign investment strategies.
- Thailand’s Corrupt Judiciary Systems Destroys Thailand’s Good Governance
It is difficult to overstate the negative impact of a corrupt judiciary: it erodes the ability of the international community to tackle transnational crime and terrorism; it diminishes trade, economic growth and human development; and most importantly, it denies citizens impartial settlement of disputes with neighbors or the authorities. When the latter occurs, corrupt judiciaries fracture and divide communities by keeping alive the sense of injury created by unjust treatment and mediation. This way judicial corruption not only maintains social segregation but also fundamentally violates human rights by jeopardizing the due process of law. Corruption occurs at every step of the judicial system, ranging from political interference in the judicial process by government agencies, to small-scale bribery by court clercks.
Examples are numerous: the executive may affect the independence of the judiciary through appointment of members of judiciary not based on objective criteria, outright selling of judgeships and removal of judges critical towards the government. A judge may solicit bribes to delay or accelerate court hearings, or to simply decide a case in favour of a particular party. Lawyers may expedite or delay cases, sometimes working in unison with a judge and/or a prosecutor. Court clercks may demand bribes to perform a task they are already paid for. Judicial systems debased by bribery undermine confidence in governance by facilitating corruption across all sectors of government, starting at the helm of power. In so doing they send a blunt message to the people: in this country corruption is tolerated.
- International business attitudes to corruption
A detailed analysis of the findings is published on http://www.control-risks.com
336 Corruption research their country’s legislation on foreign bribery. Levels of ignorance were highest in Brazil, but even in the United States, which has nearly 30 years of experience with the Foreign Corrupt Practices Act (FCPA), more than 40 per cent of respondents confessed to being totally ignorant of the law, and a further 20 per cent had no more than a ‘vague awareness’. In the United Kingdom awareness levels appear to have declined since the 2002 survey when 68 per cent of respondents claimed familiarity with the country’s anti-corruption laws. Elsewhere, knowledge of the law is broadly similar to before. Reviews of anti-corruption procedures
Despite these low levels of awareness, 74 per cent of US companies said that they had reviewed internal procedures in the last three years in the light of the increased international focus on corruption. This high percentage is likely to be the combined result of stricter enforcement of the FCPA and the impact of the Sarbanes-Oxley corporate governance reforms. In Germany, just over half the companies surveyed had reviewed procedures. This compares favourably with the results of the 2002 survey, and may reflect the impact of a series of high-profile scandals and investigations in Germany in 2005 and 2006.
Trailing were France and Brazil where only 36 per cent and 12 per cent of companies, respectively, had reviewed internal procedures in the past three years in response to international attention to corruption. Almost all Western companies now have business codes explicitly forbidding the payment of bribes to secure business, and a majority ban facilitation payments. This is true even in the United States where the FCPA does not include facilitation payments in its definition of ‘bribery’. In Hong Kong, however, only half the companies have codes forbidding bribes and facilitation payments, while in Brazil only one quarter per cent have anti-bribery codes and just under one third per cent ban facilitation payments.
- UNTAD on Good Governance and Development:
Good governance in investment promotion
The Meeting agreed that good governance in investment promotion (GGIP) is underpinned by four values, namely predictability, accountability, transparency and participation.
The keynote speaker, the Investment Ombudsman of the Republic of Korea, stressed the importance of having effective, speedy and transparent dispute resolution mechanisms to help address problems between investors and the host country. The Ombudsman, who is directly appointed by the President, is mandated to address and resolve difficulties experienced by foreign investors and to help improve the overall investment environment. This task includes providing assistance to foreign companies in resolving grievances related to bureaucratic red tape and administrative procedures.
It was recognized by many speakers that while some developing countries were able to put in place legislation intended to reform the investment climate, problems frequently persisted in relation to implementation, often owing to resource constraints. In other cases, corruption and the abuse of discretionary authority undermined the rule of law and reduced the credibility of the host country. In this regard, one speaker discussed corruption indices as a benchmark for investors.
Various means by which Governments have sought to improve public-sector service standards were examined. The role of client charters as a reference point and a tool to benchmark staff performance was highlighted, and reference was made to UNCTAD’s technical cooperation in providing least developed countries (LDCs) with assistance in the elaboration of client charters for their investment promotion agencies. There is, however, a need to train public officials with a view to changing attitudes and behaviours so as to better deliver the services promised under the client charters and to create for officials of investment promotion agencies (IPAs) the capacity to carry out GGIP reviews in respect of administrative policies, procedures and practices on a regular basis.
The procedural clarity with which decisions affecting investors are taken is also related to the issue of transparency. Some speakers emphasized the importance of delineating clearly the functions of the various actors with whom investors must deal when setting up and operating in host countries. A number of countries reported difficulties, for example, when the body regulating foreign investments also discharged investment promotion functions.
Broad consultation with all stakeholders is needed on issues that affect them in order to increase public support for foreign investment and to ensure a balanced distribution of benefits and costs related to the investment. For example, consultations with labour will serve to ensure that efforts to improve the investment environment are in compliance with recognized international labour standards. One delegate noted that there was no clear evidence of a causal link between liberalization of the foreign investment environment and relaxation of the quality of labour standards.
Host countries also need to be able to provide a forum for investors to make known their experiences and observations, and the obstacles facing them, regarding issues of concern to them. In this connection, a considerable number of IPAs are mandated to undertake policy advocacy functions in order to improve the investment climate. The various means of organizing an IPA to best undertake advocacy and improving the policy advocacy role of IPAs were examined. The Meeting was informed that capacity building for developing country IPAs in policy advocacy would be undertaken by UNCTAD through a technical cooperation project financed by the United Nations Development Account.
Information technology (IT) can often be deployed to improve efficiency in investment promotion and facilitation functions. A recent UNCTAD survey of over 100 IPAs showed that most agencies have a web presence, but that very few have made full use of the IT potential and provide integrated on-line services (single windows). IT helps integrate government processes, which are otherwise scattered and overlapping, for the ultimate goal of simplification of procedures.
Good corporate governance and management practices can help to ensure that accurate and truthful information and data are provided to host Governments, and help administrators in applying local laws and regulations in as efficient a manner as possible. IPAs have an important role to play in this regard. It was suggested that principles of corporate governance and corporate social responsibility should be encouraged by the IPAs in their discussions with investors. Self-regulatory measures and a proper mindset at the firmmanagement level can often help to reduce the enforcement burden on government. Integrity can work only when it exists in both the private and the public sector. In this sense, good corporate governance and good public governance are complementary.
- A number of experts made suggestions, including the following:
International organizations should assist developing countries in implementing measures to improve good governance in investment promotion. UNCTAD should continue to support host country Governments, through its GGIP programme, including through capacity building in IPAs, and in evaluating the impact of its technical cooperation activities on host countries’ investment environment and on actual changes in foreign direct investment. It should also include many more interested and committed developing countries in its programme, particularly the LDCs. This would warrant an enlargement of the donor base to support the programme.
Further examination and exchange of experiences in dispute and grievance resolution between foreign investors and host country administrative bodies, including the ombudsperson model, should be undertaken.
Since IPAs play a unique role in advancing participation and advocating policy change to reflect the concerns of investors on matters that affect them, host Governments should be encouraged to strengthen their mandate in the field of policy advocacy. UNCTAD should further strengthen its programme for building the capacities of IPAs to discharge this function effectively. The policy advocacy role of IPAs was suggested as a topic for possible consideration by a future Expert Meeting.
International agencies should continue to support the further development of corporate governance frameworks in developing countries. IPAs are uniquely suited to encourage corporate governance in their respective countries.
IPAs should be encouraged to integrate and supply web-enabled on-line client services to create transparent and predictable “single window systems”. UNCTAD and other international organizations should provide technical assistance through programmes such as the Investment Gateway.
To the extent possible, use should be made in UNCTAD’s capacity-building activities of synergies between its GGIP programme and its work on investment policies, especially the IPRs. This will help to ensure that the impact of such programmes is sustainable.