Grow your middle class to fight corruption, says WTO ex-chief

Pascal-Lamy-corriuptKUALA LUMPUR: Former World Trade Organisation (WTO) director-general Pascal Lamy is of the view that a rising middle class is the best way to curb corruption in a country.

He said he had observed in many nations that people who pay taxes, like those in the middle-income category, do not want to pay “twice” or any more than they should through any means such as graft.

“My medium-to-long-term view is that a growing middle-class is the best prophylaxis against corruption,” he said.

“At the end of the day, growing the part of your population that pays taxes is the best way to fight corruption,” he added.

He said it could complement other measures such as carrying out public relations exercises for better awareness, enabling greater transparency, and imposition of rules to avoid conflicts of interest in administration, he said.

Lamy, who is a founding member of Amnesty International in France, said in the course of working on the ground, he had encountered civil societies that often succeeded in battling graft through such measures.

He said this after giving a talk titled “Importance of global trade in the age of rising protectionism”, organised by the Institute for Democracy and Economic Affairs (Ideas) here today.

Lamy also said he believed Malaysia was on track to achieve its goals set under Vision 2020, formulated by the government in the early 1990s, but added that it would happen in the “long term”.

He said Malaysia should move more into investment of human capital and education to achieve its goals.

He said Malaysians needed to be more specialised by having value-added services that could also be exported, to help grow the economy.

Lamy added that “huge public resources” were also needed to address inequality, through social welfare programmes that might require higher taxes to be paid by high-income earners.

However, he said there was no quick way to achieve economic development without inequality increasing at some stage.

He cited examples of this experience among emerging economies such as Europe in the 19th century and China in the present age.

In 2014, Prime Minister Najib Razak had said only one out of every 10 Malaysians pays taxes.

As of 2016, Malaysia’s Gini coefficient, a measurement of the level of income inequality, stood at 0.399, with 0 standing for perfect equality and 1 for maximum inequality.

It has been reported that Malaysia’s average gross national income (GNI) per capita is estimated to be US$9,660 (RM39,400) for the whole of 2017.

The World Bank currently defines high-income economies as those whose GNI per capita stands at US$12,236 (RM49,910) or more.