Vietnam tops Asia corruption survey

By Hope Ngo
CNN.com writer

HONG KONG, China (CNN) -- Vietnam, Indonesia and India have been named as the most corrupt countries to do business with in Asia.

On the flip side, Singapore, Japan and Hong Kong were named the cleanest, in a survey on corruption by the Hong Kong-based Political and Economic Risk Consultancy (PERC).

More than 700 expatriate businessmen were asked to grade 12 Asian economies on a corruption scale for the survey -- 0 being the 'cleanest,' and 10 being the least favorable score.

PERC's Bob Broadfoot told CNN.com that in some cases the survey reflected a bias for doing business in certain countries, citing Japan as an example.

"There is quite a bit of corruption going on in Japan, and it's worse than Hong Kong and Singapore, but it's at such a high level that it doesn't affect the operations of foreign companies there," Broadfoot said.

"Our respondents had been asked how corruption affected their specific ability to do business in the countries they operated in; they didn't focus on the bigger picture" he said.

Corruption scandals have claimed several high ranking members of incumbent Prime Minister Yoshiro Mori's government.

It's also helped push Mori's approval and popularity ratings as prime minister to the lowest levels since World War II.

'Negative bias'

Broadfoot also said expatriates in Vietnam had expressed what he considered a negative bias when they had graded the country.

"Even if respondents believe Vietnam is the worst place to do business because of corruption, I actually believe Indonesia is worse, because corruption in Jakarta could actually lead to the breakup of the country," Broadfoot said.

"It's a critical factor affecting country risk," he said.

Unrest in Indonesia has forced the shutdown of a large natural gas field in Aceh, while a local dispute has blocked a shipment of crude oil from Riau.

Northeast vs. Southeast Asia

Overall, Broadfoot said the survey reflected a more negative business outlook for Southeast Asian countries, such as the Philippines, Indonesia, Malaysia, and Vietnam.

"Even if places like South Korea and China received critical grades, investors believe Northeast Asia has enough business opportunities to make investing there worthwhile," he said.

"The Asian economic crisis was triggered by corruption, and investors expected an improvement in these countries, but it didn't get better," he said.

"There will always be investors that will be out to find cheap labor, but reports like these just make it more difficult for these countries to attract the kind of foreign investment that they want," he said.

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