Corruption Perceptions Index 2022: Stagnation in Global Corruption Levels but a Silver Lining for Asia-Pacific?

On January 31, 2023, Transparency International (TI) published its annual Corruption Perceptions Index (CPI) for 2022. As in recent years, the 2022 CPI demonstrates that more must be done to combat corruption globally – with the Asia-Pacific region (APAC) being no exception. 

TI’s interpretation of the 2022 CPI results is that corruption levels in APAC have been “stagnating across the region for a fourth straight year” with Asian leaders “allowing anti-corruption commitments to fall on the back burner.”

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 scores ranging between 0 (highly corrupt) and 100 (very clean).  TI considers scores below 50 to be failing scores, while scores below 30 indicate severe systemic corruption.

In terms of highlights from the 2022 CPI:

• more than two-thirds of all countries and territories globally have scored below 50;
• nearly 90 percent of countries in APAC have made no significant progress since 2017;
• the average score among APAC countries remains at 45 for the fourth consecutive year; and
• over 70 percent of APAC countries scored less than 50 (i.e., they received a failing score).

TI expressed concerns that rather than spurring improvement, “governments maintained – and in some cases expanded restrictions on civic space and basic freedoms imposed during the pandemic, escalating a worrisome trend toward authoritarianism.”

While the results are sobering, countries and territories in APAC, including South Korea, Vietnam, and the Maldives, “made up nearly half of the world’s significant improvers on the CPI since 2017.”

APAC also continues to host some of the strongest performers globally including, New Zealand (87, ranked 2nd), Singapore (83, ranked 5th), Hong Kong (76, ranked 12th), Australia (75, ranked 13th), and Japan (73, ranked 18th). Other jurisdictions of significance for global businesses, including India (40, ranked 85th) and Vietnam (42, ranked 77th), continue to show room for improvement in their anti-corruption efforts, despite steady economic growth through the pandemic. 

Ones to Watch

China

In our coverage of the 2020 and 2021 CPIs, we highlighted China’s growing efforts in legislation and enforcement to clamp down on bribery and corruption.  Even though China’s score has remained at 45 across 2021 and 2022 (on the back of its steady rise from a CPI score of 39 in 2018), this is unlikely to be attributed to a slowdown in anti-corruption efforts.  Statements from the Chinese government, including from President Xi Jinping last year, suggest that its whole-of-government, “tigers and flies” approach to tackling corruption will not subside anytime soon. 

Recent legislative developments in China back up this messaging.  In April 2022, China’s Supreme People’s Procuratorate and the Ministry of Public Security jointly issued the Regulations on Standards for Filing Criminal Cases under the Jurisdiction of Public Security Organs for Investigation and Prosecution, which, among other things, lowered the monetary threshold for criminal prosecution of offering and accepting bribes to non-state functionaries (e.g., healthcare professionals), embezzlement, and other misappropriation.  From an enforcement perspective, we expect that Chinese regulators will continue to scrutinize certain higher risk or consumer-facing industries including technology, financial services, real estate, and healthcare.

Vietnam

Featured in our 2021 CPI coverage, Vietnam retains its place in the spotlight for a variety of reasons. Southeast Asia’s fastest growing economy has remained resilient throughout the pandemic, with GDP growth of 8.02% in 2022, as the country continues to attract large amounts of foreign direct investments, particularly from multinational companies looking to diversify their supply chains. 

In CPI 2022, the country made significant gains, moving up three points from its 2021 score to 42. This is no surprise given the country’s highly publicized “anti-graft purge” over the last year, which allegedly led to the recent resignation of Vietnam’s President Nguyen Xuan Phuc. Reports suggest that in 2022 Vietnamese authorities initiated criminal investigations of at least 4,646 individuals in about 2,474 cases for alleged corruption, abuse of power, and economic wrongdoing. As Vietnam continues to cement its position as an attractive hub for the global supply chain, we anticipate stronger legislative and enforcement efforts in tackling corruption across both the public and private sectors.

Indonesia

We continue to keep our eyes on Indonesia as investors remain optimistic about its economic potential. The 2022 CPI reflects some cause for concern though for Southeast Asia’s biggest economy on the anti-corruption front, with a four-point drop from 2021 to a score of 34 and a ranking of 110.  Despite several high-profile arrests and investigations in recent years, Indonesian enforcement agencies have historically faced criticism about their priorities and effectiveness in anti-corruption enforcement. The effect of Indonesia’s new Criminal Code (slated to come into effect in January 2026) on the government’s enforcement efforts also remains to be seen. Some critics have already voiced concerns that the new Criminal Code could “exacerbate corruption in the country,” especially considering the ambiguous language of certain provisions and the broad discretion afforded to local enforcement officials.

Looking Ahead

Even as the world begins to emerge from the pandemic, the “overall [corruption] situation has barely improved,” with TI noting that grand corruption remains a problem in Asia. This can be seen in APAC jurisdictions such as Malaysia (47, ranked 61st), which continues to be plagued by corruption scandals allegedly involving senior government officials.

With countries beginning to open their borders completely, and corporates revitalizing expansion efforts or diversifying their supply chains into growth markets across Asia, such as India, Indonesia, and Vietnam, corruption and other compliance risks will continue to evolve and increase.  Companies doing business in the region need to remain vigilant. This means conducting meaningful assessment of risks (e.g., by performing robust diligence on investment targets, business partners, and other third parties), and implementing appropriate controls that address the risks unique to the specific jurisdiction(s) – there is simply no “one size fits all” approach to compliance.

The 2022 CPI results also demonstrate that even top-scoring countries with traditionally low levels of public-sector corruption are not immune to regression in the index – Singapore (83, tied in 5th place with Sweden), for example, saw its lowest score since 2012. TI pointed out that in certain high-scoring jurisdictions (e.g., Hong Kong), lax money-laundering controls and other mechanisms that promote financial secrecy can facilitate cross-border corruption and pose significant obstacles to fighting corruption globally.  TI’s analysis confirms that even in high-scoring jurisdictions, governments and companies cannot be complacent. These jurisdictions are often attractive jumping-off points for conducting business in challenging neighboring jurisdictions. Corrupt behavior often occurs among a constellation of bad conduct, and companies should be mindful of the varying nature and degree of compliance-related risks they face, including corruption, money laundering, fraud, supply chain integrity, sanctions and export controls, or other interwoven compliance risks.

For more information about assessing and addressing compliance-related risks in the Asia-Pacific region, and around the globe, please contact us.