Archive for the ‘expatriates’ Category

Corruption of Asian Economies Rated By Expats

March 12, 2008

From The Daily Tribune
Manila
March 12, 2008

It seems that no country in Asia can beat the Philippines under President Arroyo in the corruption game, with the country again seen by expatriates as tops in corruption.

The Philippines, Thailand, Indonesia and China are among the most corrupt Asian economies, according to results of a regional poll of expatriate businessmen released Monday, with the Philippines topping it, having obtained a 9.0 out of a possible 10 points under a grading system where 0 is the perfect score and 10 the worst.

While the Philippines retained its number one ranking in corruption, Singapore and Hong Kong retained their rankings as the cleanest economies, the Political and Economic Risk Consultancy (PERC) said in its report.

A man uses his mobile phone as he walks past a stock exchange ...
A man uses his mobile phone as he walks past a stock exchange board inside a bank in Taipei March 10, 2008. Asian stocks hit their lowest in nearly seven weeks on Monday, while the dollar was near a record low against the euro and an eight-year low against the yen after weak employment data fuelled U.S. recession fears. Shares in China, Taiwan and Singapore were down more than 2 percent.REUTERS/Nicky Loh (TAIWAN)

The annual survey covers only 13 economies in Asia and excludes other countries notorious for corruption, such as Myanmar and Bangladesh.

Some 1,400 expatriates were polled in January and February this year, PERC said.

Corruption remains a problem in the region despite huge economic progress made over the years, with governments generally lacking the political will to tackle the problem, the Hong Kong-based PERC said.

“The Philippines is a sad case when it comes to corruption,” the consultancy said in a summary report made available to Agence France Presse.

The Philippine situation is “probably no worse than in places like Indonesia and Thailand” but corruption has become politicized and is openly discussed in the media, unlike in authoritarian countries like China and Vietnam, it said.

The Philippines scored 9.0 out of a possible 10 points under a grading system used by PERC under which zero is the best score and 10 the worst.

Even in Philippine based surveys, the government of Mrs. Arroyo is seen to be very corrupt, with some seven out of 10 Filipinos distrusting Mrs. Arroyo as well as her spouse, who is perceived to be part of the conjugal partnership involved in alleged corrupt deals.

The Philippine Senate has an ongoing investigation on the alleged corrupt deals with China where huge kickbacks have reportedly been received by what has been termed “The Greedy Group” plus plus, where ZTE National Broadband Network witness Dante Madriaga, linked the presidential couple to the scam.

There are two other projects also in partnership with China, that are said to be corruption-filled, and where kickbacks have also been received by top Malacañang officials. These are the NorthRail and SouthRail projects, both of which are also scheduled for hearings at the Senate.

The latest fray on corruption, coupled with the sovereignty issue is the joint exploration agreement with China.

Expatriates who were surveyed by PERC also found China to be mired in corruption, coming in at number three.

China’s score worsened to 7.98 from 6.29 last year with corruption seen to be as widespread as ever despite Beijing’s efforts to clamp down on it.

“The economy is growing so rapidly that even low-level officials are able to amass illicit fortunes.

“The penalties for getting caught might be draconian, but graft is so widespread and the potential rewards so great that people seem to be more than willing to take the risks.”

As in the 2007 survey, Thailand remained the second most corrupt economy after the Philippines with a score of 8.0 after the military, which seized power in a coup in 2006, was seen to have failed to tackle the problem.

“The kingdom’s economy has been marking time for two years while it sorts out political problems in which allegations of corruption figure prominently,” said PERC.

Indonesia, which ranked behind Thailand with a score of 7.98, has made improvements under President Susilo Bambang Yudhoyono but the perception of the civil service as one prone to graft remains strong, said PERC.

“International ratings agencies might have improved Indonesia’s foreign and domestic currency debt ratings recently, citing the government’s efforts to tackle corruption… however, the problem is still very serious,” said PERC.

Corruption is also perceived to have worsened in Malaysia, which scored 6.37 in the survey, worse than last year’s grade of 6.25, but the country retained its number six ranking in the poll.

Malaysian Prime Minister Abdullah Ahmad Badawi’s failure to carry out his promise to fight graft was one of the key reasons his ruling coalition suffered its worst ever results during last Saturday’s elections, PERC said.

“A promise to fight corruption was the main campaign theme that won (Abdullah) a big increase in voter support in the last national elections (in 2004),” the consultancy said.

The pressure is now on Abdullah, who rejected pressure to step down despite the poll setback, to show he is serious about fighting corruption in his second term as prime minister, said PERC.

It is not only PERC that has come out with these findings of a corrupt Philippine economy.

Poor governance and corruption are two major complementing constraints on growth of the local economy, which has fallen behind its neighbors in East and Southeast Asia, the Asian Development Bank (ADB) said in its latest country report.

The ADB report also cited poor national revenues, lack of infrastructure and waning investor confidence as hurdles to growth.

In its report “Philippines: Critical Development Constraints,” the ADB said the country’s economy has fallen behind its neighbors in East and Southeast Asia over the past five decades.

It cited studies suggesting that the Philippines ‘ ranking in the control of corruption and maintaining political stability have worsened.

It also said that the pace of poverty reduction has been slow and income inequality remains stubbornly high.

The report added the Philippines has lost momentum in controlling corruption, and has allowed Vietnam and fairly soon, Indonesia, to pass it.

“In the case of political stability, the Philippines has slipped, particularly relative to the 1998 level,” the report added.

The ADB cited studies that show causal relationships between corruption, political instability and weak rule of law, on one hand, and investment, on the other hand, in the country.

“The perception of worsening corruption was found to partly explain the low investment rate in the Philippines. Poor governance was also found to translate into higher lending rates, reflective of premiums for worsening corruption, political instability, and internal conflict, acting as disincentives to private investment,” it said.

The study noted a key reason for weak revenue generation, which are leakages in revenue collection, was “rooted in persistent corruption and patronage problems.”

Governance concerns not only weaken investor confidence, they underlie most other critical constraints. For instance, corruption undermines tax collection; political instability hinders investment and growth and reduces the tax base; and both contribute to the tightness of the fiscal space.

Poor infrastructure is a result of insufficient development spending and of poor governance, the latter causing leakages and misappropriation of public funds, it added.

Similarly, poor governance hinders the pace of poverty reduction, as it reduces growth of incomes and productive employment opportunities. It is also a major factor contributing to inequalities in access to education, health, infrastructure, and other productive assets, as well as to weaknesses of many poverty reduction programs, it said.

“The Philippines must raise revenues, improve infrastructure, strengthen governance to build investor confidence, expand its industrial base and improve access to employment and development opportunities to increase growth and reduce poverty,” the ADB said.

It noted the data released by the government wherein 26.9 percent of families in 2006 were below the official poverty threshold, up from 24.4 percent in 2003.

“While growth has picked up in recent years, with the economy in 2007 posting its highest growth of 7.3 percent in the last three decades, both public and private investment remain sluggish and their share in gross domestic product has continued to decline, raising the question of whether the current economic momentum can be sustained,” the report said.

It also identified a number of critical constraints to economic growth and the fight against poverty in the next five to eight years for the Philippines .

“Targeting and removal of the most critical constraints will lead to the highest returns for the country. It will spur investment, which in turn will lead to sustained and high growth and create more productive employment opportunities,” said Ifzal Ali, Chief Economist of ADB.

“This would ensure that the fruits of development are shared by all,” he added. With Michaela P.del Callar and AFP