ROT IN THE PHILIPPINES

Rajika Jayatilake notes that CEOs in the Philippines see corruption as the biggest hurdle to pandemic recovery

Generally, governments at the helm believe they have the right to control everything in the lives of their people. However, as American philosopher Henry David Thoreau said: “That government is best, which governs least.”

Moreover, when a government is totally immersed in activities that affect people’s daily lives, it leads inevitably to the proliferation of corruption. This happens when politicians and bureaucrats decide to profit personally from situations that are important for people.

As American poet, writer and philosopher Suzy Kassem says: “A system is corrupt when it is strictly profit driven, not driven to serve the best interests of its people.”

This has been the situation in the Philippines for many years. Transparency International’s (TI) 2021 Corruption Perceptions Index lists the Philippines as the 117th least corrupt nation of 180 countries. This means that it’s at the tail end of the least corrupt countries and therefore, is seen as being exceptionally corrupt.

According to a recent survey of top CEOs in the Philippines, corruption is perceived as the greatest hindrance to pandemic recovery. The survey, which is a collaboration between PwC Philippines and the Management Association of the Philippines (MAP), shows that 67 percent of the country’s CEOs expect pandemic recovery to drag on for more than two years because of the dampening effect of corruption.

This perspective has also led CEOs to urge the Marcos administration to prioritise accountability, transparency and anticorruption efforts in governance.

The CEOs survey report notes specific corruption related unresolved issues over the past three years, notably due to “undocumented health spending, misallocated healthcare funds and procurement of outdated equipment.”

Furthermore, the CEOs gave more weight to corruption than other factors that could slow down economic recovery. While 67 percent agree on corruption for instance, 38 percent say that lower domestic and foreign investments are the main cause; 30 percent suspect it’s due to political uncertainty; 29 percent feel it is because of uncontrolled inflation; 28 percent claim it’s due to rising oil prices; and 27 percent believe that it’s the result of a lower quality of education.

Moreover, Chairman and Senior Partner at PwC Philippines Roderick Danao says that corruption is undermining the country’s ability to attract investments. He claims: “Whenever we deal with multinational companies trying to expand, corruption is always one of the significant factors for them to decide whether to go ahead or not. It is very painful for the country because perception alone erodes trust.”

Bribery and corruption in the Philippines bureaucracy, which is an unfortunate legacy of Spanish colonial times, have become ingrained in the social fabric of the nation, and it’s hard to drive out of the system.

“It’s just too tough to break this problem of corruption in agencies, and businesses are feeling it,” says PwC Philippines’ Chairman Emeritus Alex Cabrera. He adds that corrupt practices affect the ease of doing business.

According to GAN Integrity’s recently updated Philippines Corruption Report, there is rampant corruption in the country’s public services, judicial system, police force, tax and land administration, and natural resources – all of which contribute to difficulty in doing business.

For instance, the report finds that businesses face corruption issues when dealing with public services. About 50 percent of business executives had been approached for bribes while almost three out of five businesses anticipate having to bribe to get things done.

Administrative appointments are based on patronage and therefore, are not competitive. This has resulted in an inefficient government bureaucracy that’s riddled with corruption and red tape.

The report states that corruption risks are also high in the Philippines’ judicial system where bribes and irregular payments are common occurrences to solicit favourable judicial decisions. Therefore, the independence of the judiciary is deeply tarnished – with fairness and transparency being undermined by nepotism, favouritism and impunity.

Moreover, there are widespread reports of the police and military engaging in corruption, extortion and local rackets. In fact, the national police force is considered one of the most corrupt institutions, and businesses have no faith in its ability to enforce the law.

The report notes that tax regulations further complicate corporate life in the Philippines with an estimated one in seven businesses anticipating having to bribe tax officials. Corporates believe that only a fifth of businesses pay taxes honestly.

Corruption is also rife in land administration with businesses having little confidence in the government’s ability to protect property rights. Besides, two in five enterprises anticipate having to give ‘gifts’ when obtaining a construction permit.

As Cabrera on the other hand astutely observes: “We cannot miss the element that corruption is not one-sided – it is two-sided. If the private sector would not give in, there would also be no corruption.”

From her vantage point, the former Chairperson of Transparency International Delia Ferreira Rubio notes: “People’s indifference is the best breeding ground for corruption to grow.”

People’s indifference is the best breeding ground for corruption to grow

Delia Ferreira Rubio

Former Chairperson
Transparency International