BANGKOK – Prime Minister General Prayuth Chan-ocha has quickly embraced infrastructure development as the Kingdom’s economic salvation, and counter-corruption as the country’s political deliverance. But will the government’s sweet-sounding words and grandiose plans alone break the cycle of government officials and their cronies exploiting Thai public expenditure for personal gain? Absolutely not. Real change will only come through deep and comprehensive administrative and technical reforms to the way the government purchases goods, construction and services. For this, Thailand needs an overhaul of its public procurement system.
It is heartening to read that in response to recent mega-project mania, Thailand’s State Policy Office is seeking outside assistance in setting rules and regulations governing procurement by state-owned enterprises (“CoST help sought to set standards for procurement”, The Nation, August 28). Nevertheless, Thailand’s renewed emphasis on infrastructure development calls for a more ambitious plan for controlling corruption, enhancing competition for contract opportunities, and obtaining the best value for public expenditure. Thailand’s current political and economic context presents a unique opportunity to forego tinkering with lower-level rules and instead engineer broad-based reform of the Kingdom’s entire public purchasing regime. The Prayuth government must seize this opportunity by prioritising the passage of a national government procurement law covering purchasing by all Thai public agencies.
Development of Thailand’s modern procurement regime lags behind that of many other countries. Indeed, the key rules for Thai government purchasing derive from stale Prime Minister Regulations dating back to 1992.
And the absence of a national law serves the lesser urges of civilian agencies, as it perpetuates the Cabinet regulating itself on government purchasing with little outside oversight – a known recipe for corruption.
This is certainly no way to run a system valued at 10-20 per cent of GDP in most countries. Vietnam passed a new government procurement law last year. Thailand needs to do so this year – and before the money starts flooding to the mega-projects touted by the Prayuth government.
Among other things, public procurement law sets out strict rules for how governments plan projects, advertise project opportunities to the public, handle public biddings, award projects to bid winners, prevent conflicts of interest and corruption, and allow unsatisfied bidders to file complaints with the government and courts. It is an important tool for maintaining system transparency, fostering open competition for contract opportunities and ensuring that public monies are spent to gain maximum value for taxpayers. Properly-structured public procurement reform may also reduce the perils of Thai administrative decentralisation, limiting local officials’ capabilities to create self-enriching fiefdoms. Moreover, it ensures better project quality by preventing contractors from substituting inferior materials into critical infrastructure (with or without the conspiring of official inspectors) in an attempt to squeeze ever more profit from publicly funded projects. Best to avoid the recent fate of the Vietnamese badminton arena, the roof of which collapsed for lack of construction quality. (The arena was obviously built prior to the advent of Vietnam’s new government procurement law.)
A draft public procurement law has been collecting dust in the Office of Thai Council of State for some time now, its timely passage undermined by jostling of government departments who want to retain discretionary power over this very lucrative part of the administrative state. The delay is inexcusable, especially when one considers that government procurement corruption was cited as grounds for both the 1991 and 2006 military coups. The Prayuth government’s invigorated and combined focus on promoting good governance and speeding up infrastructure projects for the future economic health of the country creates the conditions to set Thailand’s procurement system on a new course with well drafted rules, good oversight, a properly trained procurement workforce and fair opportunity for (“unconnected”) suppliers to compete for public contracts. Thai civilian governments have long demonstrated that they are unwilling to limit (their own) opportunities for procurement corruption. Perhaps a military government can get this done.
Thailand cannot afford to squander any more public resources, nor endure the scourge of further repeated procurement scandals (for the latest allegations, see “Graft suspected in Buri Ram solar cell project”, The Nation, September 7). The forthcoming spending binge to transform Thailand’s infrastructure requires a stronger expenditure and procurement oversight regime, and it must come soon. The open competition afforded by technical reform of the country’s procurement methods will serve to lessen the gap between rich and poor, weakening the grip of vested interests over public contract opportunities.
Without serious public procurement reform now, the coming years will see a repeat of government insiders devising ways to gain personally from the expenditure of budgetary monies, if not the further outright diversion of public funds to their personal use without any public benefit. If properly seized, however, this may be one opportunity for a military-sponsored government to lay the foundations to constrain the behaviour of future civilian governments and ensure that public monies are spent only for public benefit. And importantly, when civilian government is restored, it can return the favour by expanding public procurement reform to set up proper controls over purchases by the Thai military.
Daniel J Mitterhoff teaches Comparative Government Procurement Law at Yunnan University (YNU) in Kunming, China. He is in charge of the Lancang-Mekong College of Law Project at the YNU Law School, a programme designed to bring together graduate-level students from throughout the Greater Mekong Subregion for the study of regional legal problems and their solutions. He can be reached at email@example.com