The APEC Leaders noted in the Santiago Commitment that corruption is a serious threat to economic growth, and implementing systems to fight corruption is vital to sustained economic development and prosperity.  Corruption prevents the efficient allocation of resources devoted to economic and social development and prosperity.  Corruption prevents the efficient allocation of resources devoted to economic and social development by undermining the effectiveness of investment and aid and distorting government expenditure.  The Leaders have also emphasized the importance of SMEs and urged member economies to make every effort to develop and implement measures to improve their competitiveness, innovativeness and entrepreneurship.  The reduction of corruption in the SME sector is critical to improve the competitiveness, innovativeness, and entrepreneurship of SMEs. 

Through the Code, the APEC leaders highlighted that addressing corruption within the private sector is important.  In a statement from the 2007 APEC Ministerial Meeting, APEC Ministers reinforced that they ‘attach high priority to fighting corruption...’ and ‘endorsed a model Code of Conduct for Business’ which they encouraged all economies to implement.  They welcomed agreement by Australia, Chile, and Viet Nam to pilot the implementation of the Code in their private sectors, particularly within their SMEs.  Further, in the 2007 APEC Leaders Statement, the Leaders reaffirmed their commitment to combating corruption and promoting good governance in order to build prosperity and predictable behaviour in the business environment.  This was reiterated in The APEC Leaders’ Growth Strategy, adopted on 14 November 2010, which seeks to provide secure growth by improving the overall environment for doing business and promoting good governance through combating corruption and promoting transparency in both the public and private sectors. In 2008-2009, Australia, Chile and Vietnam, implemented a pathfinder project for the implementation of the code.  The project’s key objectives include:

ii.    Provide education to a targeted group of SMEs on corruption, through seminars based on the

APEC Code of Conduct for Business

iii.   Enhance the ability for economies, partner organisations, law enforcement bodies, and industry representatives to implement anti-corruption laws and standards with the host economy. 

For 2011, a follow up project is proposed to build on the Pathfinder Project under the leadership of Australia, and help further develop and strengthen the dynamism of Micro, Small, and Medium Enterprises (MSMEs) within targeted sectors. It will implement the Code through the holding of an empirical-based seminar attended by government, regulatory officials, business sector, academe, civil society organizations, chambers of commerce. The Seminar will seek to educate these bodies about their responsibilities under domestic law and the code as well as providing assistance for SMEs to implement the code.

Prior to the conduct of the forum, the project will introduce a new baseline tool that will help in qualitatively measuring the operationalization of the Code of Conduct in respective organizational contexts of APEC member economies. Results of the baseline study will be discussed during the seminar.

The baseline tool will serve as an instrument to gather data and information on how the code was implemented by the member economies.  The tool will require specific information on actual progress of its implementation as described in the following format:

Status of Implementation of the Code

By member economies

Member Economy: ____________________

Sector: ________________________________

Collated information will be immediately used by seminar participants in order to substantiate discussions on the core provisions of the code.  Discussions then will be brought down to operational level as experienced by member economies.  Also through the interactions, exchange of information among participants representing different economies and sectors will benefit in terms of the best practices that will be generated using the tool.  From among these best practices may be drawn synergistic linkages across sectors and member economies promoting mutually beneficial practices and bolstering complementary efforts in the expanded implementation of the code toward achieving domestically viable and internationally competitive MSMEs among the member economies. 

The wider replication of the seminar across sectors of member economies, will result to further development of the code over time.  The continuous use of the tool will ascertain an empirical-based development of the code.  The outcome of the continuous use of the tool would enrich standards of the code, which could be applicable and relevant across sectors and across member economies.  

The process of amending the code could be set off based from the results and analysis of information and data gathered from the use of the tool.  Thus, it is suggested that the member economies that piloted the seminar adopt the use of the tool as a prerequisite for the conduct of similar seminars in the future. 

Initial sectors to be covered by the seminar are MSMEs involved in agribusiness, industry, services, and consumer products, which have the strong potential and capability to grow and expand globally into competitive enterprises.  Strategic MSMEs representing these sectors will be identified by business chambers of member economies.  During the seminar, the workshops will be aimed at interpreting the provisions of the code and identifying their applicability and relevance to each of these priority sectors taking into consideration the variable social, economic and legal-political environments of each sector.  As earlier mentioned, the practical meaning of each provision of the code will be substantiated and supported by the status and progress of the Code Implementation in member economies that will be gathered through the use of the baseline tool.  The workshops will be designed specifically to persuade sectors represented by member economies to adopt/adapt the code sector by sector.  Proceedings of the workshops on the feedback, reactions, insights and comments of the participants on the code would help in further assessing and further developing the code.

Indeed, there will be general discussions on responsibilities under domestic laws governing the priority sectors that will be raised both in the baseline tool and the workshops.  The purpose is to draw up some common learning, insights and best practices that are promoting and bolstering the code implementation and compliance.