Thai Innovation List: A Gateway to Corruption
จากไชต์: Office of The National Anti - Corruption Commission (ONACC)
จำนวนผู้เข้าชม: 254
In the fiscal year 2023, the Thai government has allocated approximately 29.1 billion baht for the country's science, research, and innovation budget. Of this, 17.46 billion baht is designated for strategic budgeting to support research that aligns with national strategies and plans in science, research, and innovation. The remaining 11.64 billion baht is aimed at funding foundational work that enhances the country’s capability for scientific, research, and innovative development.
The budget allocation for this year is not extraordinarily high, as Thailand has been allocating billions for research for decades. However, what necessitates discussion is the additional focus on “innovation", which seems to serve as an avenue for private sector investment. This has taken advantage of the loopholes in the state procurement process, allowing for effective collaboration with public sector officials to seek profits through specific “Thai innovation list” criteria.
Is this truly the case, or is it merely coincidental? To put it another way, could the “Thai innovation list” become a societal liability?” The Budget Bureau and the Ministry of Finance, particularly the Comptroller General’s Department, have aimed to promote Thai innovation by allowing access to public sector markets. This is meant to create opportunities for Thai entrepreneurs and also to use the public procurement mechanism to lead the way. Subsequently, regulations have been put in place to create an innovation market within public sector organizations. They have authorized various state units, local administrative bodies, and other agencies to proceed with specialized or specific procurement methods for products and services listed under the Thai Innovation List.
This is undoubtedly a positive direction, as significant research from skilled Thai researchers need not remain solely on paper but can be tangibly utilized for the betterment of society.
The problem is not in listing for innovation but in the large gaps in the procurement process.
Certainly, when there's an allowance for 'special or targeted methods of procurement,' it means there's no need for price competition or technical competition. There's also no need for an assessment of a median price, as it might be a research task with no established median pricing criteria. It also isn't necessary to make a public announcement; private discussions can happen before the process of writing the Terms of Reference (TOR). These conditions create loopholes in the procurement process that can lead to corruption risks, as has been reported to the National Anti-Corruption Commission of Thailand (NACC) in many cases.
For example, an innovation that merges art with solar cell technology was implemented in the electric poles in the form of Kinaree (half-bird half-woman), under the administration of the Rachathewa Sub-district, Samut Prakan Province. The project cost around 871 million Thai baht and is currently still under investigation. Another case is a collaboration between the NACC Samut Prakan Provincial Office and the Samut Prakan STRONG: Together against Corruption – TaC Association, focusing on the conservation and restoration of mangrove forests in Samut Prakan Province using artificial mangrove innovations. The project, named 'Artificial Mangroves to Prevent Coastal Erosion and Artificial Roots to Accelerate Sedimentation,' had a budget of about 1 billion Thai baht. Upon examination, several concerns were raised, especially the long delays in project implementation without any work being done.
When looking at the details in the contracts, it was found that the Samut Prakan administrative organization had already made prepayments to the contractors in both contracts. For the first contract, an advance payment of 64.14 million Thai baht was made, and for the second contract, an advance payment of 92.75 million Thai baht was made. These do not yet include indicators to assure whether these budgetary payments in the billions will actually yield results. This is because it's a pilot project based on research studies that haven't been tested before, so the outcome in terms of quality cannot be proven.
From the information in the recommendation document to prevent corruption in non-competitive procurement cases, stemming from the policy to support products registered in the Thai Innovation List, the NACC has detailed information on Thai innovation products that are at risk for non-competitive procurement. This information was gathered from public sector procurement of products listed in the Thai Innovation List from fiscal year 2019 to 2022), and it can be found on the website 'Where Does My Tax Go?' developed by the Digital Government Development Agency (DGA). The Thai innovation products most frequently procured by public sector agencies are:
(1) All-in-One Solar Street Light
(2) Water Treatment System, and
(3) SMART PURE COMPACK Water Purifying Unit.
Common issues found include laws, regulations, and rules that potentially create loopholes allowing for non-competitive procurement, which undermines fair market competition.
The policy of the government, which aims to promote and support Thai entrepreneurs in producing innovative products or services, involves legal issuance and criteria, including benefits that the entrepreneurs will receive for their support.
For example, receiving rights to register innovative products and services for a maximum period of 8 years, allowing state agencies to spend no less than 30% of their procurement budget on innovative products, and also allowing state agencies to procure innovative products through selective or specific methods if there's only one supplier. The unclear definitions and criteria for Thai innovation mean that the policy to support Thai innovative products cannot sustainably encourage entrepreneurs to compete in the market.
The Committee for the Development of the National Innovation System has defined 'Thai innovation' with an exception stating, 'Thai innovation in this context doesn't have to be entirely developed within the country; some parts can be purchased or imported from other countries.' This, combined with the criteria issued by the Committee to Verify Qualifications of Innovative Works Requesting Registration in the Thai Innovation Index, which doesn't specify the proportion of domestic materials required for entrepreneurs wanting to register in the Thai Innovation Index, causes ambiguity.
The definition of Thai innovation, along with unclear criteria, makes it difficult for the policy supporting Thai innovative products to sustainably promote competition in the market. The National Innovation Development Committee has defined Thai innovation with the exception that "Thai innovation does not necessarily have to be developed entirely within the country; some parts can be purchased or imported from other countries." This, coupled with the criteria set by the Qualification Review Committee for the Thai Innovation List, which does not clearly specify the proportion of domestic material usage for entrepreneurs to be listed in the Thai Innovation List, raises questions.
So the question becomes, what measures do we have to fill or reduce the loopholes in the "Thai Innovation List" procurement?
The loopholes in the Innovation Register are not only under media scrutiny, which acts like a watchdog, but also the National Anti-Corruption Office sees the need for measures to reduce vulnerabilities and corruption risks from the procurement of goods under the Thai Innovation List. Currently, they are conducting studies and preparing control measures to reduce budget leaks. They have conducted field studies on the issues and heard opinions to improve anti-corruption measures, especially for local-level procurements under the Thai Innovation List. Additionally, research has been funded on the risk of corruption in the construction and installation of ornamental street lights by local government organizations.
This research found that sub-district administrative organizations comply with the 2017 Public Procurement and Supplies Management Act and the 2017 Ministry of Finance regulations on state procurement and supplies management. However, there are some local government organizations that exploit legal loopholes for undue benefits, such as creating community projects that don't genuinely address people's needs but serve the interests of the administrators in the local governing bodies, whether they are Municipalities or Sub-district Administrative Organizations. These authorities have set higher-than-necessary median prices due to the lack of standard specifications for the installation of ornamental streetlights. Inspection procedures are also not in accordance with the contract, whether in terms of height, distance, frequency, etc. Especially, there's a lack of genuine public participation in these matters.
Even many scholars have raised concerns about the decentralization of power to local levels in the form of 'mini-prime ministers' at localities, which may become the source of lack of transparency in the use of local budgets. Is it time to let government officials, such as the district office secretaries and municipal secretaries, take on administrative roles by reducing the role of influential people in the localities to advisory boards, rather than decision-makers with authority in local administration?
Additionally, the National Anti-Corruption Commission, in its 112th meeting on October 3rd, 2022, reviewed a monitoring report regarding anti-competitive practices arising from policies supporting products listed on the Thai Innovation List. The Commission had the following recommendations to the Budget Bureau and the National Science and Technology Development Agency (NSTDA):
- The Budget Bureau, in collaboration with relevant agencies, should consider establishing guidelines to prevent product monopolies or risks of unfair advantages to specific businesses, especially those on the Thai Innovation List.
- The National Science and Technology Development Agency (NSTDA) should review the criteria for using domestically produced materials and those from Thai businesses in the Thai Innovation List. A minimum of 51% domestic material usage should be set to support and promote the implementation of Thai research, development, and innovation, benefitting the country's economic system. This should also encourage domestic small-scale businesses to produce competitive products sustainably. It should review the process for registering Thai innovative products that may import certain materials from abroad. These imported materials should be quality-checked against industrial standards before being developed into Thai innovative products and services. If some components can be domestically produced and are run by Thais, priority should be given to using such domestic materials.
These are preliminary suggestions from the NACC aimed at recognizing the necessity for a framework of measures to ensure transparent and non-risky procurement processes in the innovation sector. Moving forward, one must keep an eye on the control measures that the NACC will propose as tools to prevent corruption in the innovation procurement process, questioning whether they can effectively close loopholes and overcome fraudulent practices. Personally, I'd like to suggest that, in cases where special or specific procurement methods are required, the agency responsible for overseeing state procurement, such as the Central Accounting Department, should coordinate with all related departments in both the public and state enterprise sectors, as well as the private sector, to establish a standard pricing framework. This aims to determine fair and appropriate prices for each innovation project, eliminating discretionary powers from executives of each organization. Most importantly, the authorities who have the power to consider and approve budget allocation for projects should consider their appropriateness and the benefits that the public will receive, compared to the financial expenditure. This will answer questions like, 'Why are billions spent on projects whose success is uncertain, or whether it's worth the money that's gone in a blink of an eye, on fancy lamps decorated with elaborate designs while regular lights aren't bright or functional?'
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