Covid-19 Emergency Packages in Southeast Asia

An overview and analysis of fraud and corruption risks

In the wake of the outbreak of the Covid-19 pandemic, governments are grappling with the impact of the pandemic on the economy and on the health and livelihoods of citizens, with special concerns for disadvantaged groups and communities. To avoid an economic collapse and stave off a potential depression, several countries in Southeast Asia have taken dramatic and significant measures to provide an economic safety net for citizens and businesses in distress, including through direct cash disbursements, short and medium-term forgivable loans and deferment of payments, unemployment insurance. Experts and observers have warned that emergency packages may have been adopted and implemented without the necessary oversight procedures and mechanisms, which increases the risks of misuse, fraud and corruption in the implementation of the packages. 

This analysis looks at the Covid-19 emergency support packages implemented by the governments in Southeast Asia and their associated risks of misuse through fraud and corruption. The first section of the analysis describes the measures adopted under the emergency packages in Southeast Asia, the targeted beneficiary groups, the legal basis for the packages, and the implementing agencies. The second section contains a non-exhaustive description of main legal frameworks introduced in response to the Covid-19 crisis. The third section describes the institutional oversight framework monitoring the disbursement of the funds and the implementation of the support packages. The fourth section analyses the risks of misuse, fraud and corruption in the disbursement of the emergency packages.

The data is based on a UNODC questionnaire compiled by experts and practitioners in Southeast Asia during the first two weeks of May 2020 as well as on desk-based research of emergency laws, Covid-19 regulations and media reactions. As governments are revising their policies and institutional arrangements on an on-going basis to respond to the Covid-19 crisis, some of the information may no longer be up-to-date at the time of publishing this article. The study covers Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand, Timor-Leste and Viet Nam.  

1. Covid-19 emergency support packages

According to the questionnaire, all surveyed countries adopted Covid-19 emergency support packages.  Graph 1 below shows the overview of Covid-19 measures taken by countries in S-E Asia. The data also highlights that all countries used cash payments and grants as support measures; while most countries offered tax rebates and loans (graph 2). While Individuals received support in all surveyed countries, Small and Medium-sized Enterprises were supported in eight countries, followed by large businesses in six countries (graph 3).

While no exact data on budgeted and disbursed funds is available, as some of the measures are still on-going and the amount of money being committed is gradually increasing in some countries, the emergency packages are estimated to range from USD 0.11 billion to USD 60 billion. Information on the budgeted fund value of the Covid-19 emergency support packages in Cambodia and Lao PDR were not available at the time of data collection. In all surveyed countries, additional budget has been allocated to health services, supplies and medical equipment.

Regarding the legal basis of adopting the support packages, all countries but the Philippines and Singapore adopted the packages based on a decree. Only the Philippines and Singapore based the emergency packages on a law and subsequently involved the Parliaments in adopting the Covid-19 emergency support packages (graph 4).

The implementation of the emergency support packages and disbursement of funds generally involves already established or newly established committees or ministries and local authorities in some countries. In Vietnam for example, the Ministry of Labour, Invalids and Social Affairs implements the emergency package, while a newly established Special Committee under the Prime Minister's Office composed of representatives of various ministries oversees the implementation. In Malaysia, the already existing National Security Council, chaired by the Prime Minister, coordinates and oversees the implementation of the emergency support packages. In the Philippines, public procurement departments at the local level and mayors are tasked with the implementation. In Myanmar, local authorities are responsible for the disbursement of funds while a newly created special committee coordinates and oversees the overall implementation of the relief measures introduced. 

Graph 5 shows the channels through which governments informed the public on the Covid-19 emergency support packages. Official publications and social media were the most used channels.  

2. Legal frameworks introduced in response to the Covid-19 pandemic

Countries in the region have generally strengthened the Executives' powers under the Covid-19 measures. This has not always gone hand in hand with strengthening oversight measures by Parliaments and other checks on Governments' executive powers. 

Cambodia, for example, introduced the Law about Nation Management in the State of Emergency, which allows the declaration of a state of emergency by Royal Decree for a limited or unlimited time. The law gives powers to the executive to ban, restrict or regulate travel, gatherings of people, market prices, troop mobilization, public spaces, observation through telecommunication systems, media, and other measures as necessary. The law also obliges the government to report on its measures during the state of emergency to the National Assembly and Senate and gives the right to the National Assembly and Senate to ask the government for necessary information and to revise and evaluate the measures.

In Indonesia, the Parliament is expected to pass the Government Regulation in Lieu of Law No. 1 Year 2020 on State Financial Policy and Stability of Financial Systems for the Management of Corona Virus Disease 2019 (Covid-19) and/or Encounter the Threat to National Economy and/or Stability of Financial, short "Perpu No. 1/2020 ". This law is being introduced despite public pressure to not do so. The regulation allows the government to increase the state budget deficit beyond the legal cap of 3 percent of gross domestic product and allocate the funds to programs intended to alleviate the impact of the pandemic on the economy and the financial system. It also grants the government the power to allocate further funds to address Covid-19 by Presidential Decree than through Parliamentary approval. Article 27 of the law states that public officials carrying out their duties under the implementation of this regulation are exempt from any civil and criminal liability if they carry out their acts "in goodwill and according to the law". The regulation, however, does not define the criteria which constitute "goodwill".

In the Philippines, the "Bayanihan to Heal as One Act", introduced in April, allows the President to "reallocate, realign, and reprogram" a budget of almost $5.37 billion from the estimated $8.55 billion national budget approved for 2020, in response to the pandemic. The act also enables him to "temporarily take over or direct the operations" of public utilities and privately-owned health facilities and other necessary facilities "when the public interest so requires".

On March 26, 2020, the government of Thailand declared Covid-19 an emergency situation with reference to the Emergency Decree on Public Administration in Emergency Situations B.E. 2548 (2005). It subsequently issued the Regulation Issued under Section 9 of the Emergency Decree on Public Administration in Emergency Situations B.E. 2548 (2005), The regulation gives special powers the executive to contain and control the spread of Covid-19. The regulation does not mention the Parliament or the exercise of Parliamentary oversight. The regulation also prohibits spreading false information in relation to the virus and refers to the Computer Crime Act.  The Computer Crime Act has been previously criticized for restricting freedom of expression and of the media. On the basis of the Emergency Decree, Executive powers can be further expanded. This is currently not the case, however. Covid-19 related restrictions are currently being considered to be lifted. The emergency decree will be extended until the end of June.

3. Institutional oversight frameworks

Most of the countries did not introduce specific provisions on the prevention and detection of fraud and corruption in the decrees adopting the emergency packages or in the accompanying guidelines on implementation. Instead, they rely on the institutional oversight frameworks already in place to oversee and ensure that the emergency packages are implemented in an accountable and transparent manner, as well as to prevent and detect fraud and corruption in the disbursement of the funds. Such institutions range from internal auditors embedded within local authorities to State Audit Institutions, and anti-corruption agencies.

In Indonesia, Myanmar, the Philippines and Singapore, the specialized anti-corruption agencies were actively consulted by their governments or implementing ministries/agencies on preventing and detecting fraud and corruption in the management of the crisis and the disbursement of the funds (graph 6).

In Indonesia, for example, the Corruption Eradication Commission KPK issued a circular letter on how to prevent and detect corruption in relation to the Covid-19 crisis and the emergency package. KPK also established a task force to specifically prevent and investigate fraud and corruption in the implementation of the Covid-19 emergency support package. The implementing agencies also consulted the Indonesian National Public Procurement Agency LKPP, which works on preventing and detecting corruption and fraud in public procurement, amongst other things. In Myanmar, the Anti-Corruption Commission developed a public campaign on raising awareness on the risks and consequences of corruption in the implementation of the emergency package. At the same time, civil society organizations are involved in monitoring the implementation of the funds in only three (Indonesia, Myanmar, Singapore) out of the ten countries surveyed (graph 7).

In the Philippines, the Bayanihan to Heal as One Act established a Joint Congressional Oversight Committee to which the President reports on a weekly basis, including on the disbursement and utilization of the emergency funds. The reports can be accessed online on the Reports of the Official Gazette and the Senate's website. As the law warrants expedite implementation of the emergency measures, the Philippine's Commission on Audit and the government Procurement Policy Board issued guidelines allowing negotiated procedures in the procurement of Covid-19 related goods and services - as an exception to the normal public procurement procedures. Given that funds are disbursed in a decentralized manner with many implementing agencies involved, the Department of Management and Budget issued guidelines for the disbursement of funds at the local level, placing the liability for due procedures in disbursing the funds on local chief executives and local officials. The Government Procurement Policy Board and the Department of Management and Budget jointly created a publicly accessible online portal to enhance transparency and accountability in the disbursement of public funds in this context. The portal lists all procurement contracts awarded and project specifications.

In Thailand, the National Anti-Corruption Commission has commissioned a corruption risk assessment to identify the corruption risks in the context of Covid-19. Once the "Corruption Risk Mapping Project in the Covid-19 Crisis" is finalized, NACC plans to develop tailored mitigation strategies to prevent these risks.

4. Fraud and corruption risks

The above analysis shows that all surveyed countries in Southeast Asia have put measures in place to protect the livelihoods and health of their citizens, it also shows that some governments have introduced corruption and fraud mitigation mechanisms in relation to the emergency measures introduced.

As all the packages except in two countries are based on decrees and not laws, Parliamentary involvement and oversight has been limited. In most cases, most governments have also not utilized the agencies that have been specially set up to address corruption risks when setting up and disbursing the emergency packages.

Involvement of the public and civil society in the oversight of emergency spending is also rather limited, instances of NGOs' activities in this area were reported only in three countries.

The way governments have published information on accessing the support also creates different risks and avenues for misuse. For example, while social media has proven effective in reaching a large share of the population, misinformation spread by different interest groups and criminal organizations on social media is common. Phishing information through advertisements on coronavirus support online is a method reportedly used by criminals to steal personal information of beneficiaries and use this information in their fraudulent applications for government support.

In relation to the Covid-19 emergency support packages in Southeast Asia, responders to the questionnaire have highlighted the following risks:

The urgency in disbursing the funds as well as the volume of applications pose the additional challenge that time is not enough to check all applications diligently for their merit and to verify the truthfulness of the information provided therein.