As President Gloria Arroyo of the Philippines fights for her political life, there's a tendency to think her story only concerns her nation's 86 million people.
After all, the Philippine economy is much smaller than that of Thailand, the epicenter of the Asian crisis eight years ago.
Investors also have become savvier about viewing economies independently, something few did prior to 1997. So, regional leaders and investors don't seem overly concerned with events in Manila.
Yet Arroyo is at the center of a trend of vital importance throughout Asia: An increasing focus on corruption.
Not since 1997, when Asian business became associated with "crony capitalism" has there been so much focus on cleaning things up. If the effort gains momentum, it may result in healthier Asian economies and a more level playing field for debt and equity investors the world over.
Arroyo's is an extreme case, and one that's playing out graphically in the media. She is the subject of impeachment proceedings amid allegations she cheated in last year's election. Her husband and their congressman son also face allegations of links to illegal gambling.
Street Protests
While her ouster may destabilize Philippine markets, the brouhaha is shining a spotlight on corruption and how it impedes growth from filtering down to the people who most need it. The Philippine masses, tired of politically connected people getting all the economic benefits, are taking to the streets in protest.
Why does this matter to investors? Less corruption may allow consumers a bigger share of an economy's growth, allowing them to consume more. Bond investors may enjoy more legal certainty of being repaid. Greater corporate transparency and independence from politicians would serve equity aficionados.
It used to be that Asian leaders could ensure their popularity with strong growth rates and steady gains in per capita income. That formula kept president Suharto in power in Indonesia for 32 years -- until his ouster in 1998 -- and it's doing just fine by China. Beijing's bargain with its 1.3 billion people is this: We give you fast growth, you don't challenge us.
Yet more and more, popularity is being based on how aggressively leaders attack corruption. Take the once wildly popular Thai Prime Minister Thaksin Shinawatra, whose support has fallen below 50 percent. Along with accelerating inflation, Thais are disenchanted by corruption allegations in Bangkok.
Fair Share
Call it the power of the ballot box. Now that Asian economies are booming again, average voters are looking for their share of the prosperity. Increasingly, many are realizing that corruption is a major reason why the gap between rich and poor is widening.
In Malaysia, Prime Minister Abdullah Ahmad Badawi has quietly worked to tackle corruption, lift standards of public integrity and revamp state-linked companies to attract investors, yet critics are pointing fingers. They include former finance minister Anwar Ibrahim.
Abdullah's "pronouncements have been reassuring, and I have given my complete support for the measures," Anwar said last week. "Unfortunately, the general perception and the facts prove that corruption is now worse than before."
True or not, there's some statistical evidence of that.
Corruption Index
Malaysia's score in the annual corruption perceptions index published by Transparency International dropped to 5 out of 10 last year, compared with 5.2 in 2003.
All this should be a wake-up call to leaders throughout Asia.
Now that the region has recovered from the events of 1997 and growth rates are higher than those in the US or Europe, it's time to work on engineering better growth, not just faster growth.
From Jakarta to Seoul, from Manila to New Delhi and from Beijing to here in Kuala Lumpur, there's a tendency to mask challenges with headline growth rates. They are a form of advertising as well as a diversion. Rapid GDP gets investors' attention and papers over economic cracks.
Asia doesn't need 10 percent growth -- it needs more equitable growth. For decades now, this region has made the mistake of measuring progress with GDP or rising stocks. A better gauge is how the lives of people from the richest to the poorest are changed.
Paradox
Corruption gets much of the blame. In Indonesia, for example, it results in the "paradox of plenty." Too often, citizens of resource-rich nations like Indonesia fail to prosper from underground treasures like oil, diamonds and gold. Politicians and well-connected businesspeople get rich, while ignoring the development needs of the majority.
The good news is that Indonesian President Susilo Bambang Yudhoyono is trying to tackle the problem. Corruption costs his economy the foreign direct investment it needs and makes it harder for the nation's 40 million unemployed to benefit from 5 percent plus growth.
The best news of all, though, is that pressure for change isn't just coming from foreign investors and donors, but voters.
If ordinary citizens can accelerate progress in eradicating corruption, Asia's economy and markets will be much better off.
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