Graft, income gaps hinder Asean economic integration: Report

Widespread corruption and gaping income disparities across nations could potentially sabotage economic integration in South-east Asia, the Chartered Accountants Worldwide warned yesterday.

Political challenges created by China's territorial ambitions in the South China Sea could also hobble the formation of a functioning Asean Economic Community, according to its report.

Chartered Accountants Worldwide chairman Pat Costello said in a statement: "South-east Asia is a very multicultural region with not necessarily consistent approaches to ways of doing business.

"Some staff do not understand the importance of ethics in corporate governance and tend to brush it aside."

INCONSISTENT APPROACHES

South-east Asia is a very multicultural region with not necessarily consistent approaches to ways of doing business. Some staff do not understand the importance of ethics in corporate governance and tend to brush it aside.

MR PAT COSTELLO, Chartered Accountants Worldwide chairman

Mr Costello said it was not surprising that corruption remains a key challenge in the region, but noted that the lack of trust between businesses from different cultures is a problem.

"Business leaders have to make more of an effort to build trust across the borders and within their organisations," he said.

And while South-east Asia has sufficient local talent to drive economic growth, the report cautioned that the "traditional hierarchical societies" here have created a culture where it has been difficult for new talent to emerge.

Businesses, therefore, need to develop policies designed to train and develop local people, ensuring a balance of expertise, the report suggested.

Mr Gerard Ee, president of the Institute of Singapore Chartered Accountants, said: "The growth potential in South-east Asia is huge. Yet, the benefits may not be spread evenly, which will contribute to the already existing disparities across the region. Training future business leaders is of vital importance here."

A version of this article appeared in the print edition of The Straits Times on December 17, 2015, with the headline 'Graft, income gaps hinder Asean economic integration: Report'. Print Edition | Subscribe