Perceptible decline in corruption?

Transparency International (TI) has stated that Pakistan’s ranking in Corruption Perception Index (CPI) has improved, indicating a reduction in public sector corruption. Pakistan’s score of 29 out of a 100 and ranking of 126 out of a total of 175 countries is the “best Pakistan has ever achieved since the first CPI was issued in 1995,” according to the Chair of TI, Pakistan chapter. A comparison with 2013 data reveals that Pakistan’s score was 28 and its ranking was 127 out of a total of the same number of countries, ie, 175. In 2012, Pakistan scored 27 out of a 100. Thus the data reveals that the PML-N government has improved its performance over the first year and a half of its tenure and this must be appreciated.

Dismissing this modest improvement as a reflection of peoples’ perceptions that may not be rooted in reality is not the right approach. Additionally, to argue that given the extent and range of mega corruption scandals that were reported during the tenure of the PPP-led coalition government during 2008-13 a one-point improvement, by itself, is not significant in our historical context is also not fair as any improvement is a major challenge for any government. And while there are serious reservations over the incumbent government’s expenditure priority sectors with many arguing that water, education and health must be supported over a public transport system yet there have been few mega-scandals during the incumbent government’s tenure in comparison to the PPP government. But the PPP government can well argue that in 2007 Pakistan ranked 138 out of 179 countries and hence ranking improved during their tenure as well.

Economic theory acknowledges the relevance of perceptions in determining decisions taken by investors (local and foreign) as well as the general public that are likely to have dramatic implications on macroeconomic performance including foreign direct investment/local investment as well as market performance in the products, services and the currency sectors with implications on growth and employment. In short, improving perceptions was one of PML-N government’s major focus and, in this context, it is gratifying that its objective was achieved.

The CPI is calculated on a representative sample’s response to ten questions that include governance. However, one study undertaken by TI for Slovenia has a particular relevance for Pakistan’s economy and one would hope that lessons would be drawn from that study which maintained that: “one of the main findings of the report reveals that most lobbying in Slovenia takes place outside of the recorded and reported lobbying contacts – in the shadows, behind closed doors. These opaque lobbying practices attest to legal deficiencies and a poor practical implementation of Slovenian legislation”. In Pakistan, government after government (military as well as civilian) has been forced to back down from implementing announced taxation reforms that seek to enhance documentation with the objective of reducing the large parallel illegal economy and making the tax structure more equitable, fair and non-anomalous but to no avail. What has been witnessed time and again is behind the scenes negotiations between the affected influential group and government representatives with the latter deferring their decisions year after year.

However, the government would be well advised to note one major CPI result that is likely to have a major impact on our own CPI in years to come. The TI has revealed that China emerged as one of the biggest “faller” in corruption (with a score of 36 out of 100) and three Chinese companies scored a poor three out of 10. The Pakistan government has signed 42 billion dollar worth of Memoranda of Understanding (MoUs) with China where Public Procurement Rules Authority (PPRA) have been bypassed on grounds that no other foreign country/company is willing to enter Pakistani market at present. One would hope that the government does take adequate measures to ensure that transparency and disclosures are mandatory for all joint ventures.