Public procurement—the process through which governments acquire goods and services—plays a crucial role in economic development and national growth.
When carried out with integrity, procurement fosters efficient infrastructure, promotes fair competition, and ensures taxpayer money is spent wisely. However, when corruption infiltrates the system, procurement becomes a tool for favoritism, bribery, and wasteful spending.
In Southeast Asia, public procurement systems vary widely. Countries like Singapore have robust frameworks with strict oversight, while others such as Malaysia and Cambodia continue to struggle with weak legal enforcement, secret contracts, and widespread corruption.
The Knowledge Hub for Regional Anti-Corruption and Good Governance Collaboration (KRAC), in collaboration with Malaysia’s C4 Center, has produced a joint study report to identify good practices and develop pathways toward more effective public procurement systems. The goal is to curb corruption and enhance regional cooperation in procurement reform.
This report highlights three key issues regarding the connection between corruption and the deterioration of procurement systems, drawing lessons from different countries in Southeast Asia:
Key Issues Linking Corruption and Procurement Failures
First, many procurement processes across the region are marred by unfair bidding practices and favoritism. For instance, in Malaysia’s LCS naval ship scandal, over 9 billion ringgits were spent without a single ship delivered—only lower-ranking officials were prosecuted, while high-level decision-makers escaped accountability. In the Philippines, a legal requirement for civil society oversight was undermined by the creation of “fake NGOs” to bypass scrutiny.
Second, transparency remains a major challenge. Many governments conceal procurement details, preventing public monitoring. For example, Indonesia’s e-procurement system—meant to reduce collusion and discrimination—was bypassed in 40-50% of contracts using exceptions such as “national security” or “emergencies.” Cambodia’s $1.7 billion Decho Canal project with China also lacked public disclosure, raising bribery suspicions.
Lastly, governments often exploit “special procurement methods” that sidestep standard regulations and increase corruption risk. These include: 1) Public-private partnerships (PPPs), which can favor cronies; 2) Government-to-government (G2G) deals, which usually bypass open bidding; 3) Emergency procurement, which speeds up processes and avoids scrutiny; 4) Off-budget spending, such as government guarantees for state-owned enterprises (SOEs) that lack public transparency.
The report distills lessons from both strengths and weaknesses across Southeast Asia’s procurement systems. Even efficient countries like Singapore are not immune to gaps—though their corruption problems may be less severe, they still face similar structural challenges.
Closing Gaps: Tackling Procurement Corruption in Southeast Asia
Each country offers unique case studies showing how legal loopholes are exploited. In the Philippines, local politicians often divide large projects into smaller ones to avoid audits. In Malaysia, SOEs are used to conceal corrupt dealings.
In Indonesia, the anti-corruption agency (KPK) lacks authority to investigate defense and SOE contracts—similar to the situation in Thailand. Cambodia and Laos, with their closed political systems, offer the least transparency in budget spending.
To close these gaps and reduce procurement-related corruption, the report proposes six key recommendations, drawn from the best regional practices:
- Legally enforceable procurement laws must be implemented—not just as policy, but as binding legislation.
- Full transparency should be mandated by publishing all procurement contracts, including those related to national security and SOEs.
- Whistleblower protection laws should be strengthened, as many countries still lack systematic safeguards.
- SOEs must be regulated and audited thoroughly, as they are often hotbeds for corruption.
- Public participation should be encouraged through accessible platforms, allowing citizens to help detect fraud and ease the burden on anti-corruption agencies.
- Regional cooperation is essential, including the creation of a shared database to track corrupt behavior among politicians and business elites.
In conclusion, corruption in public procurement is not just about financial losses—it leads to inefficient healthcare, broken infrastructure, and eroded trust in government. Singapore demonstrates that a strong system can enhance procurement efficiency.
Today, we need enforceable laws—not mere guidelines—full transparency with no secret deals, and sustained public pressure for accountability. While this study offers many insightful recommendations, the real question remains: Will governments actually act on them?
Knowledge hub for Regional Anti-corruption and good governance Collaboration (KRAC)
SEA-ACN Workshop | Strengthening Cross-Border Collaboration to Reform Government Procurement and Combat Corruption in Southeast Asia
Discover how a regional workshop led by KRAC C4 Center and SEA-ACN brought together experts from multiple countries to address gaps in public procurement reforms, share best practices, and strengthen efforts against corruption across Southeast Asia.
SEA-ACN Roundtable | Unclear Government Procurement Processes Could Pave the Way for Corruption
Lack of transparency in public procurement processes can facilitate corruption—what measures can we take to mitigate these risks? Discover regional strategies to combat corruption in government procurement from the SEA-ACN Roundtable insights.
SEA-ACN Roundtable | Transform Your Organization with the Power of Corporate Governance
Unlock the power of corporate governance to transform and strengthen your organization. Discover key insights from the SEA-ACN Roundtable, supported by KRAC, UNODC, and regional partners.
