Hurry, before the whole house caves in

Hurry, before the whole house caves in | Daily Tribune

The unfortunate picture of a country — no matter how well-imbued with economic potential — perpetually grappling with systemic corruption undermines investor confidence, inflates the cost of doing business, and threatens to derail the nation’s ambitious growth trajectory.

The link between corruption and investor confidence is straightforward, unforgiving, and casts a long shadow over the country’s economic growth prospects.

Consequently, nations plagued by high corruption often see capital flight, a preference for short-term speculative investments over long-term commitments, and a consistently lower standing in global competitiveness indices like the World Bank’s Ease of Doing Business and Transparency International’s Corruption Perceptions Index, both of where the Philippines ranks poorly.

The severity of the situation is significant.

While the economy has posted impressive GDP growth rates in recent years, this growth has often been described as “hollow” or “non-inclusive,” partly because corruption siphons public funds away from vital services like healthcare, education, and infrastructure.

High-profile scandals, such as the massive corruption running to staggering billions of pesos in kickbacks from substandard and ghost flood control projects involving public works engineers, legislators and contractors in apparent collusion are not isolated incidents but symptoms of a deep malaise.

These unmask a system where public office is leveraged for private gain, eroding public trust and signalling to the international community that local governance remains a critical weakness.

This creates the perception of the Philippines as a grotesquely unattractive destination compared to its neighbors like Singapore and Vietnam which have strict anti-corruption deterrents.

The worst-case scenario, should this corruption crisis deepen, is a full-blown economic and social downward spiral.

A catastrophic loss of investor confidence could trigger a sharp devaluation of the peso, a sell-off in the stock market, and a total devastating withdrawal of foreign direct investment.

This would starve the economy of capital, leading to stalled projects, mass layoffs, and rising poverty.

As government revenues shrink due to tax evasion and graft, its ability to service debt and fund essential services diminishes, potentially leading to a sovereign debt crisis.

Social unrest becomes a possibility as citizens, burdened by inflation and lack of opportunities, lose faith in democratic institutions.

The nation could enter a vicious cycle where poverty fuels corruption, and corruption in turn entrenches poverty, relegating the Philippines to the status of a perpetually emerging market, unable to achieve its full potential.

There is no time to lose. Government must allay the fears of investors, and it must move beyond rhetoric and undertake demonstrable, institutionalized reforms.

The solution lies in building robust systems that minimize discretion and maximize accountability.

President Ferdinand R. Marcos Jr.’s creation of an Independent Commission for Infrastructure is a good, reassuring step, but it must prove its usefulness posthaste.

The ICI must exert urgent effort to preserve what investor confidence is left and restore what has been lost by conducting its probe into alleged irregularities not only in flood control, but other infrastructure projects as well, swiftly, impartially, decisively.

It must show results; it must demonstrate credibility in easing investors’ jitters and preventing what has been invested from taking flight.

Strengthening independent anti-corruption bodies like the Ombudsman and the Sandiganbayan is crucial. Their political independence must be ensured, and they must be provided with substantial resources to protect them from the pressures of powerful politicians involved in corrupt activities.

The passage and rigorous implementation of a Freedom of Information Act (currently, there is no FOI law, only an executive order) across all government agencies would be a game-changer.

Budget allocations, contract awards, and government transactions must be made transparent and accessible to the public, and civil society and the media can act as effective watchdogs.

And finally, there is no message more powerful than the prosecution of high-profile figures, regardless of political affiliation, to show the world, investors included, and the citizenry that the government is serious about ending impunity, by effectively addressing the rot of corruption in the system.

The corruption crisis in the Philippines is a clear and present danger to its economic future.

It directly assaults the foundation of investor confidence by fostering an environment of uncertainty and unfair competition.

While the situation is serious, the worst-case scenario of economic collapse need not be inevitable.

The power to change the narrative lies with the government. Through an unwavering commitment to transparency and the ruthless application of the law against all offenders, the Philippines can begin to dismantle the structure of corruption in the country.

Only then can the government reassure the world’s investors that the Philippines is not just a land of potential, but a secure and profitable destination for their capital.