THE PHILIPPINES dropped 10 spots globally and languished in the lower third of the Asia-Pacific list in an annual report of businessmen’s corruption perception that tagged the country “among the worst” in terms of dealing with those who “dare to challenge the status quo.”

The Corruption Perceptions Index 2017, which Transparency International released on Thursday, showed the Philippines dropping in rank to 111^th out of 180 countries and territories from 101^st out of 176 on the 2016 list.

In Asia and the Pacific, the Philippines placed 21^st among 31 countries and territories.

After keeping a score of 35 from 2015 to 2016, on a 0-100 scale in which zero denotes a country is “highly corrupt” and 100 means it is “very clean,” the Philippines slipped to 34 in 2017. It was the country’s lowest score in five years, matching its grade in 2012.

The Philippines’ score was also below the 44.39 and 43.07 regional and global averages, respectively.

Within Southeast Asia, the Philippines was outdone by Singapore (which ranked sixth globally with a score of 84) Brunei Darussalam (which placed 32^nd globally with a score of 62), Malaysia (62^nd, 47), Timor-Leste (91^st, 38), Indonesia (96^th, 37), Thailand (also placing 96^th with a score of 37) and Vietnam (107^th, 35).

Faring worse in Southeast Asia were Myanmar (which ranked 130^th with a score of 30), Laos (135^th, 29) and Cambodia (which placed 161^st with a score of 21).

Among others also in Asia and the Pacific, Japan placed 20^th globally with a score of 73; South Korea ranked 51^st with a score of 54; China, 77^th with 41 and India, 81^st with 40.

‘AMONG THE WORST OFFENDERS’
In brief comments on select economies covered by the latest survey, Transparency International noted that “the results from the 2017 index also show that corruption in many countries is still strong.”

“Often, when individuals dare to challenge the status quo, they suffer the consequences. In some countries across the region, journalists, activists, opposition leaders and even staff of law enforcement or watchdog agencies are threatened, and in the worst cases, even murdered,” the report read.

“Philippines, India and the Maldives are among the worst regional offenders in this respect. These countries score high for corruption and have fewer press freedoms and higher numbers of journalist deaths.”

Sought for comment, Chief Presidential Legal Counsel Salvador S. Panelo dismissed Transparency International’s (TI) findings, telling reporters in Malacañan Palace: “Fake news ‘yan,” while Dante L. Jimenez, Volunteer Against Crime and Corruption chairman who takes his post on March 6 as head of the newly formed Presidential Anti-Corruption Commission, said in a telephone interview: “I think that may be true, because there are still many agencies that have been tolerating corruption.”

“That’s why the president would always emphasize to these agencies to stop corruption. So we have to do something about this,” Mr. Jimenez said, adding that the commission that he is about to head “will craft strategies because the Duterte administration has only more than four years until he ends his term.”

“But of course, personally, what is important there is to strengthen the judicial system. We have to bring back the death penalty for plunderers. Unless we bring back these heavier penalties for plunderers, nothing will happen.”

The head of the European Chamber of Commerce of the Philippines (ECCP) expressed concern with this development when asked for his reaction.

“As a chamber that continues to promote the Philippines as an attractive foreign investment destination to potential investors in Europe and around the region, this new report is certainly worrying and also makes our job more challenging,” ECCP President Guenter Taus said in an e-mail.

“What we suggest is to create an effective enforcement mechanism for the Anti-Graft and Corrupt Practices Act and this should certainly serve as a good starting to point in beginning to address these issues. We have long been supportive of legislative and administrative measures that will address corruption in the private sector. Besides the Integrity Initiative, we are willing to assist the government in establishing an effective enforcement mechanism that will ensure that the Anti-Graft and Corrupt Practices Act is not selective of the person involved.”

John D. Forbes, senior adviser of the American Chamber of Commerce of the Philippines, said in a mobile phone message that while he had yet to read the latest report, “when developed country investors look at ASEAN they compare the ASEAN-6 and see Singapore and Malaysia as less corrupt and the Philippines trending upward into a cluster with Indonesia, Thailand, and Vietnam.”

“In another major index of the WEF in 2010, corruption was the number one-concern of business; by 2017 it was the number-three concern after red tape and poor infrastructure,” Mr. Forbes said, referring to the World Economic Forum.

“Philippine investors have been choosing to locate in PEZA zones because they have a great reputation for being corruption-free,” he added in reference to the Philippine Economic Zone Authority.

For Makati Business Club Executive Director Peter Angelo V. Perfecto, “[t]he latest TI rankings should help government recalibrate its anti-corruption efforts and programs.”

“One possible way forward is to partner with the private sector-led Integrity Initiative and, as a first step, issue an executive order that will provide all government agencies a framework for them to partner with private sector in jointly organizing projects and programs for integrity,” Mr. Perfecto said in a separate text message.

“A public-private partnership for integrity and anti-corruption could look deeper into the latest TI rankings to better analyze the index and jointly pursue a program that will help lift the country back up in the rankings.”

In order to improve scores across Asia and the Pacific, Transparency International prescribed: putting in place laws and institutions that will prevent corruption from happening in the first place, reducing impunity for the corrupt, improving space for civil society to speak out as well as improving integrity and values.

Noting that the latest survey “shows high corruption burden in more than two-thirds of countries”, Transparency International said “[t]his year’s Corruption Perceptions Index highlights that the majority of countries are making little or no progress in ending corruption, while further analysis shows journalists and activists in corrupt countries risking their lives every day in an effort to speak out.”

“Further analysis of the results indicates that countries with the least protection for press and nongovernment organizations also tend to have the worst rates of corruption,” it said.

“Every week at least one journalist is killed in a country that is highly corrupt.” — with inputs from Arjay L. Balinbin, Christine Joyce S. Castañeda and Mark T. Amoguis

By Jochebed B. Gonzales
Senior Researcher

APPROVED foreign investment commitments fell to their worst level in 12 years, according to data the Philippine Statistics Authority (PSA) released on Thursday.

The PSA said approved foreign investment pledges for the entire 2017 totaled P105.6 billion, down by an annual 51.8%. This was the lowest amount since 2005’s P95.8 billion.

The tally for the fourth quarter was likewise lackluster, plunging 82.8% to P21.6 billion from P125.7 billion in 2016’s comparable three months.

“The drop in foreign investment pledges in 2017 may be attributed to the high base/denominator effects in previous years,” said Michael L. Ricafort, economist at Rizal Commercial Banking Corp.

He likewise cited “tentativeness on investment” in the face of the five-month siege of Marawi City up to October last year and US President Donald Trump’s “America First” policy that encouraged US businesses to invest more at home than abroad in order to create jobs.

The United States’ approved investment pledges of P8.7 billion in 2017 was merely 8.3% of the total for the year and was 72.2% less than the P31.4 billion in 2016.

For Ruben Carlo O. Asuncion, chief economist at the Union Bank of the Philippines, “the way the government was dealing with different countries may have an impact on foreign investments.”

Approved commitments from the Netherlands and Australia, which were the top two sources of foreign investment pledges in 2016, showed the biggest drops last year. Investment pledges from the Netherlands dropped 80.5% to P9.6 billion last year from P49.4 billion in 2016. Australia, meanwhile, saw pledges drop 87.9% to P3.9 billion in 2017 from P32.4 billion a year prior.

The country’s largest foreign investor in 2017 was Japan, whose approved FIs registered P32 billion, an 18.2% increase from 2016. Japanese investments accounted for 30.3% of total pledges, followed by Taiwan (10.3%) and Singapore (9.6%).

Pledges from China and Hong Kong increased by 53.6% (P2.3 billion) and 16.4% (P1.6 billion), respectively.

The report counted investment pledges from the government’s seven premier investment promotion agencies (IPAs), namely: the free port authorities of Bataan, Clark, Cagayan, Subic and the Autonomous Region of Muslim Mindanao, as well as the Board of Investments and the Philippine Economic Zone Authority (PEZA).

PEZA, which contributed 74% of the total last year, reported a 35.4% drop in approved foreign investment pledges at P78.3 billion versus the year-ago P121.2 billion.

Foreign investment commitments are different from actual capital inflows tracked by the Bangko Sentral ng Pilipinas (BSP) for balance of payments purposes. Latest available BSP data showed net foreign direct investments rising by 20% annually to $8.725 billion in the 11 months to November, surpassing the BSP’s $8-billion full-year forecast.

In the fourth quarter alone, manufacturing continued to receive the biggest portion of approved foreign investment pledges with P8.3 billion, accounting for 38.4%.

This was followed by real estate with investment commitments worth P5.1 billion or 23.5%, as well administrative and support service activities at P3.5 billion or 16%.

The bulk of the approved commitments in the fourth quarter — 29.5% at P6.4 billion — will go to projects in the Cavite-Laguna-Batangas-Rizal-Quezon (Calabarzon) region immediately south of Metro Manila, or the National Capital Region (NCR), that hosts major industrial parks. Calabarzon was followed by NCR’s P5.5 billion or 25.4% and Central Luzon with 22.6% or P4.9 billion.

According to PSA, around 29,813 jobs will be generated from the total projects approved by the seven IPAs for the fourth quarter of 2017.

By Melissa Luz T. Lopez
Senior Reporter

THE PHILIPPINES is unlikely to see a “significant widening” of its current account deficit, even as a bigger gap exposes the country more to “sudden capital outflows,” S&P Global Ratings said in a regional note on Thursday.

The global debt watcher expects Philippine gross domestic product (GDP) to expand by 6.5% this year, slower than the 6.7% clocked in 2017 and below the government’s 7-8% growth goal for 2018.

“We expect a return of traditional GDP growth drivers — consumption and investment — as the leaders of a decent 6.5% growth,” S&P said in the Asia-Pacific Economic Snapshots report it released yesterday.

“As the Q4 figures show, the resurgence of private household spending came just in time, as electronics exports were no longer able to prevent the usual negative contribution of net exports to growth.”

ANZ Research has warned that private spending could ease as a result of higher prices of goods and services, largely due to the implementation of Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion Act (TRAIN). TRAIN, which took effect Jan. 1, introduced higher or additional taxes on fuel, cars, coal, sugar-sweetened drinks and a host of other items. These are expected to shore up an additional P82.3 billion revenues this year, despite a reduction in personal income taxes.

ANZ analysts said that historical data showed that every one percent increase in headline prices caused a corresponding 0.3% decline in private consumption.

BMI Research, however, said rising incomes and sustained remittance inflows should keep consumer activity upbeat.

At the same time, however, S&P said it will “continue to watch the current account, given slower remittance inflows, higher energy prices, and rising imports.”

“Although we do not expect a significant widening of the deficit under our baseline, such a scenario would increase the Philippines’ exposure to potential sudden capital outflows in times of market panic,” the credit rater said.

The current account measures fund flows from goods and services trading, which determines the country’s external payments position.

As of December, the Bangko Sentral ng Pilipinas (BSP) expected the current account to settle at a $100-million deficit in 2017, a retreat from the $28-million surplus logged as of end-September.

For this year, the central bank sees the current account at a $700-million deficit, equivalent to 0.2% of gross domestic product (GDP).

BSP Managing Director Francisco G. Dakila, Jr. last week said a current account gap driven by an increase in investments and imports of capital goods is to be expected in order to prevent the economy from overheating, as such expenditures will help accelerate overall economic growth.

The country’s external trade deficit logged a new all-time-high $4.017 billion in December, taking the full-year gap to $29.786 billion, also the highest on record.

Last year saw merchandise imports surging by 10.2% and exports growing 9.5%, beating the government forecasts of nine percent and eight percent respectively, according to the National Economic and Development Authority.

Increased imports of raw materials like artificial resin, iron and steel are expected to support the “Build, Build, Build” agenda of the current administration, which plans to spend over P8 trillion for big-ticket infrastructure projects until 2022, when President Rodrigo R. Duterte ends his six-year term.

The increased infrastructure spending is expected to boost annual GDP growth to as fast as 7-8% up to 2022 from last year’s 6.7%, 2016’s 6.9% and a 6.2% average in 2010-2015.