THAILAND

THAILAND’S CURRENT CHALLENGE: POLICY CORRUPTION
Panyakorn Amonpapyapakomol *Thailand has suffered from corruption for such a long time. In the past, corruption has beenendemic among state officers. However, Thailand has experienced a significant change in theform of corruption in recent decades. As of now, it is evident that Thailand is suffering froma new form of corruption which has proliferated not only among state officers but politicians,bureaucrats, as well as those from the business sector.
This article will discuss the current forms of corruption that took place through policy andwill present some case studies on the issue. Additionally, it proposes anti-corruption efforts led
by some inspection agencies designed to enhance measures and mechanisms to prevent policy
corruption.
I. CURRENT FORM OF CORRUPTION: LEGITIMACY AND COMPLEXITY
In the past, corruption in Thailand was profoundly witnessed among state officers at alllevels, mostly centred among low-ranking state officers. 1 Bribery and embezzlement werecommon forms of corruption. State officers sought illicit gains by looking for loopholes in theirwork process. Therefore, corruption was not complicated and only a limited number of people
were concerned. Simply put, corruption in the past was an illegal act of those who seek benefits
on the existence of policy and law. There were no attempts to legalize the act by creating oraltering policy or law. 2
In this day and age, corruption in Thailand has become more complex as well as broader
than bribery and asset misappropriation. Those who engage in this recent form of corruption
are no longer confined to embezzlers and bribe takers. They include politicians, seniorbureaucrats, cabinet ministers, and some businessman and multi-national corporations.
Academics have defined the current form of corruption that took place through policy as“Policy Corruption 3.”
The National Anti-Corruption Commission identifies that policy corruption often has thefollowing characteristics 4:Corruption Prevention Officer, Professional Level, Proactive Measures and Innovation, National AntiCorruption Commission, Thailand.
1BertesmannStiftung, (2020) BTI 2022 Country Report: Thailand. Available at https://btiproject.org/fileadmin/api/content/en/downloads/reports/country_report_2022_THA.pdf. Accessed 15 October
2022.
2Sangrungruang, Y. (1983) The suitable model of the office of the commission of counter corruption in Thailand,Chulalongkorn University, Bangkok.
3
Rathamarit, U. (2016) Policy Corruption Project: Legal Measures to Control and Prevent Policy Corruption inThailand, The Thailand Research Fund (TRF), Bangkok.
4
The National Anti-Corruption Commission, What’s Policy Corruption?, Available at
http://baanbangmoung.go.th/public/list_upload/backend/list_2281/files_default_7589_1.pdf. Accessed 15October 2022.
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SIXTEENTH REGIONAL SEMINAR ON GOOD GOVERNANCE(1) Government agencies, cabinet ministers or politicians determine any particular policies
or projects with a claim of national interests or the people’s well-being.
(2) Policy corruption is generated by amending the law, enacting new law, changing policy
or creating new policy to legalize certain policies or projects. For this reason, the public
will recognize the policy or project as being legal.
(3) New policy or project implementation contributes to unreasonable benefits to anindividual, a group of people, friends or relatives of the policymakers whether in theform of money, property or any benefits.
By doing so, the political sector raises certain social issues for the public’s considerationand pushes these issues as a part of an urgent agenda, even when those social issues are not thereal problem of society. The study found that an essential prerequisite for policy corruption islegitimacy building. Therefore, policy corruption is concerned with the use of political power
or political conditions with the mechanism of both legislative power and executive power tomake certain policies or projects possible. Finally, these policies or projects benefit a certain
limited group of people.
This essay will discuss the first example of policy corruption in Thailand: the cancellationof the price ceiling price on medicine. The case has been recognized as the first case ofcorruption for which a former politician was convicted and served a jail term for corruption.
Another case that this essay will elaborate is the rice pledging scheme, which is the most recent
mega-scandal in Thailand. The two cases obviously show how corruption works throughpolicymaking.
II. THE MEDICINE AND MEDICAL SUPPLIES PRICE SCANDAL: THE
DISCONTINUATION OF THE CENTRAL PRICING SYSTEM
Since 1988, the Ministry of Public Health announced the central price of medicine andother medical supplies aimed at controlling the prices at a reasonable level. Thus, hospitals
nationwide could purchase medicine and medical supplies at the median price. There is no needto pay more for medicine than the price ceiling.
The central pricing system, through which the prices were announced and controlled by theministry, came to an end during the administration of the new minister who held a politicalposition. In 1997, he issued an announcement of the Ministry dated 15 December 1997 tocancel the price ceilings for medicine. To legitimate the act, the Ministry claimed that thiswould lead to price competition according to market mechanisms. Therefore, the community
as a whole will benefit from the dropping medical price. Also, the minister claimed that due tothe economic situation and an increase of the value added tax (VAT) from 7 to 10 per centaffected the prices of medicine and medical supplies. As a result, the central pricing system
must be discontinued. The cancellation of the central pricing system provided channels forpeople to seek benefits. 5Roengtam, S. (2007) Understanding Corruption through Policy: Case Study of the Corruption in Medicine andMedical Supplies of Ministry of Public Health, 1998, JOURNAL OF POPULATION AND SOCIAL STUDIES
Volume 15 Number 2 January 2007.

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Simultaneously, in 1998, the Cabinet approved the proposal of the Budget Office to allocate
additional budget to the Ministry of Public Health in the amount of 1.4 billion baht. The
Ministry of Public Health then allocated it to provincial and community hospitals.
Without the central pricing system, each hospital is authorized to make procurement freely
through negotiated prices. As a result, the drug companies sell drugs and medical supplies tohospitals more expensive than usual by 300-600 percent. Concerning the procurement, theinvestigation identified that some politicians and civil servants of the Ministry of Public Healthintervened by various methods from asking, persuading, forcing, negotiating, or recommending
provincial and community hospitals to order medicine, medical supplies, tools and evenunnecessary materials from certain drug companies. 6If hospitals denied making procurement with the drug company directly, there is analternative method for making purchases from the Government Pharmaceutical Organization(GPO). The GPO, which has capability to manufacture some medicines, preferred purchasing
them from drug companies listed by high-ranking politicians and state officers, at very highprices. Also, during the same period, the GPO has charged hospitals various prices for the samemedicines. This contributed to the same result as the public health agencies having purchased
medicine and supplies at an unreasonable price, higher than the market price. 7
From the investigation led by an inspection agency, the Public Health Minister’s advisor
received a 5 million-baht bribe from the deputy managing director of a specific drug company
in exchange for the cancellation of the price ceiling and being proposed as a medicine trade
partner.
In this case, an inspection was triggered after reports by those who work in the ministrythat there was massive corruption in the purchasing of medicine and supplies causing a lot offinancial damage. Firstly, an internal investigation committee of the ministry was appointed.
After that, the Public Health Commission led by the House of Representatives and the National
Anti-Corruption Commission conducted the investigation. There was reliable and sufficientevidence that the procurement of medicines and medical supplies were by far more expensive
than they should have been in 34 provinces nationwide. The fraudulent behaviour involved
administrators of the ministry who abused their power and position to seek benefits, relevant
officials who failed to perform duties required by the law and the pharmaceutical company thatoffered a bribe and sought benefits from the cancellation of the price ceiling. The offenders
were punished with disciplinary and criminal actions. 8
Considering the case, the discontinuation of the central pricing system scandal is the firstcase in Thailand which triggers recognition among the Thai people concerning the adverse
effects of policy corruption. A group of people with political power could exercise power toextort policy to facilitate the business sector, the pharmaceutical companies, with the supportof the executive mechanism led by high-ranking civil servants. However, it is also a renowned

Tangkitvanich, S. (2014) Corruption Menu And Benefit Seeking, Thailand Development Research Institute,Bangkok
7Roengtam, S. (2007) Understanding Corruption through Policy: Case Study of the Corruption in Medicine andMedical Supplies of Ministry of Public Health, 1998, JOURNAL OF POPULATION AND SOCIAL STUDIES
Volume 15 Number 2 January 2007
8Ibid.
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case since the investigation of inspection agencies led to the successful prosecution of theoffenders. 9III. THE RICE PLEDGING SCHEME: A SYSTEMIC COUNTERFIETThe rice pledging scheme is a project initiated by the government in 2011. The government
at the time promoted the legitimacy of the policy by claiming that 1) It would support the priceof rice in the market that would finally lift the well-being of farmers; 2) It could promote thecountry’s economic growth with the expansion of domestic consumption when farmers havebetter income; 3) The scheme would result in a higher price of rice compared to the market
price. The Pheu Thai party proposed the policy during the national election campaign. Whenthe party won the election, the rice pledging scheme was implemented in 2011. 10 The scheme
was a so-called populist policy since it was formulated to maintain the party’s popularity tosatisfy people who cast a vote for the Pheu Thai party.
However, before launching the scheme, many scholars as well as the National AntiCorruption Commission raised concerns that the policy is prone to corruption and could leadto massive devastation due to its size in terms of the amount of budget, the number of people
involved and the area or operation. 11 As a result, they urged for a reconsideration andtermination of the policy. Turning a blind eye and a deaf ear to warnings, the government
initiated the project.
In operation, to begin with, farmers were required to register with the Agricultural Officein their district. They have to provide information regarding the amount of rice planted (by landarea) so that the government could predict the amount of the yield. Meanwhile, the local mill
had to apply to the State and the State will select which mill to participate in the programme.
After the harvest, farmers bring the harvested rice to the registered mill. The mill will record
quantity and quality in terms of moisture, purity and weight. At this stage, a warrant certificate
was issued to farmers. This document made them eligible receive money from the Bank for
Agriculture and Agricultural Cooperatives.
The mill, then, started threshing harvested rice crop into rice before delivering them to thecentral warehouse established in each area. The central warehouse was also required to registerand be selected by the State.
The final procedure was to distribute rice through various methods including exporting
through Government to Government (G2G) deals, packing for domestic sales at cheap price toreduce the people’s cost of living. Also, the government donated some of them to those affectedby natural disasters both in the country and abroad. 12
The corrupt behaviour has been identified in each stage of the rice pledging scheme
operation. Firstly, some farmers provided false information regarding the amount of plantedarea that turned out to be too excessive. The excessive amount of planted area would makeRathamarit, U. (2016) Policy Corruption Project: Legal Measures to Control and Prevent Policy Corruption inThailand, The Thailand Research Fund (TRF), Bangkok.
10Ibid.
11
Mahakun, V. (2018) Lesson learned in fighting corruption in the rice-pledging scheme, ANTI CORRUPTION FOUNDATION, Bangkok.
12
Dechgitvigrom, W. (2014) An epic of Cheating: Rice, Lips Publishing, Bangkok.
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them eligible to bring more harvested rice to join the programme. Some farmers or the millfraudulently imported rice from neighbouring countries at cheaper prices to sell them in theprogramme at higher prices so that they could gain the surplus. 13 For instance, the pledge priceof jasmine rice (moisture content not exceeding 15.00 per cent) was 15,000-20,000 baht/ton,while the market price was 8,000-9,000 baht/ton.
Next, it was found that some unqualified mills and the central warehouses offered bribes tothe state offices in exchange for being selected by the State to join the programme. The mills
played a key role in the corruption process. They distorted the moisture, purity and weight ofthe rice. Consequently, the amount of money that farmers participating in the project received
was less than it should be. The mill distorted the overall weight so that they could bring morerice into the programme. The investigation also found that some mills brought the harvested
rice (with higher quality) received from the farmers and sold them itself. The mills then takeharvested rice from other sources (with inferior quality) and delivered them to the central
warehouse. Meanwhile, the central warehouse also failed to secure the rice as a large amountof rice was lost from the warehouse. They also distorted the moisture, purity and weight of therice in exchange for benefits paid from the mills.
To distribute rice, the government committed a deal “Government to Government (G2G)”.
However, it turned out that there was not trade between states as planned. Some influential
persons in the rice industry had connections with people in the government and set up fakecompanies aboard to buy rice from the government at cheap prices.
From the investigation, the damages were about 136 billion baht. The Supreme Court's
Criminal Division for People Holding Political Positions sentenced a jail term withoutsuspension against the Prime Minster and the Commerce Minister at the time.
The criminal charge against the Prime Minister at the time she violated Section 157 of the
Criminal Code on malfeasance. Section 157 concerns wrongful exercise of duties, and it
stipulates that whoever, being an official, does not exercise any of functions to the injury of
any person, or dishonestly omits to exercise any of his functions, shall be punished. The Court
points out that she failed to scrap the policy in spite of knowing the scheme was plagued bycorruption.
Meanwhile, from the investigation, the former Commerce Minister found guilty offalsifying G2G deal between Thailand and China. The ministry insisted that rice was sold toChinese firms, acting on behalf of the Chinese government. Actually, there was no rice
exported through G2G deals but locally sold. The firms claimed to be Chinese were fraudulent
set up by Thais. The fabricated deals with the Chinese firms caused huge losses to Thailand.
The rice pledging scheme is a new policy that the government initiated without
precautionary measures against possible corruption. The government hastily kicked off theproject in spite of arguments from various actors. Moreover, there are no studies conducted toidentify the possibility of success and failure, pros and cons and other risks of the project. That
is why the scheme is called a populist policy, operating to satisfy those who cast a ballot forthe party. The scheme created opportunities for all parties to seek advantages, and it seemed as
though the process was lawful.

13Ibid.

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IV. POLICY CORRUPTION RISK INDICATOR
Apart from seriously cracking down on corruption and motivating all stakeholders in fraud
prevention, one of the attempts that the National Anti-Corruption Commission initiated toprevent policy corruption is by designing a tool named the “Policy Corruption Risk Indicator”,
or PRI. The cabinet has approved the National Anti-Corruption Commission’s proposal on theissue in 2019.
PRI is a declaration form that all political parties have to submit to the Office of the Election
Commission of Thailand, and it is a prerequisite before elections. PRI aims at providing
information for people to help them decide which political party to vote for. Political partiesare required to select at least one important policy or project to assess. The selected policy or
project must be one that political party prioritizes and which the party intends to implement
after being elected.
With PRI, political parties must identify the origins of the policy or project, including
whether it has cascaded from the national strategy; assess whether their own project or policy
is at risk of policy corruption as well as to provide adequate measures to prevent corrupt
practices; and analyse impacts, worthiness and feasibility. PRI also pushes the political parties
to conduct reliable research attached to the assessment.
The reason why PRI is so important as it would directly help promote transparency andaccountability by making political parties’ data available to all. However, in 2019, after thePRI assessment was implemented, there were only 24 political parties (from 103 parties) that
submitted the form. It reflects that the PRI itself still lacks enforcement. Currently, in order toprepare for the next general election, which could take place by the end of 2023, the National
Anti-Corruption Commission in cooperation with the Office of the Election Commission ofThailand are redesigning the PRI with the intention to prevent policy corruption at thebeginning of the new government term.

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