The Philippines is currently suffering from a credibility crisis in the wake of corruption scandals hounding the Marcos Jr. administration last year, according to former Department of Finance (DOF) Undersecretary Joel Valdes.

In an upcoming episode of the DAILY TRIBUNE program Straight Talk, Valdes said the local economy is grappling with reputational damage among both foreign and domestic investors following the 2025 flood control corruption scandal.

“The Philippines does not have a growth problem,” he said. “What we have is a credibility leakage problem.”

The Philippine Statistics Authority (PSA) reported that gross domestic product (GDP) growth slumped to 3.0 percent in the fourth quarter, attributing the decline to a sharp 41.9-percent year-on-year contraction in public infrastructure investment following multiple probes into alleged anomalous infrastructure projects.

Valdes said that despite the current economic slowdown — which fell below most international projections in the fallout of the “floodgate” controversy — the country remains among the faster-growing economies in ASEAN. He stressed, however, that restoring investor confidence depends heavily on the outcome of ongoing investigations.

“As we speak, international and domestic investors are waiting for the results of investigations into corruption cases,” he said. “So long as those remain unresolved, the next 12 to 18 months will not be favorable.”

Business and consumer confidence indices from the Bangko Sentral ng Pilipinas (BSP) indicate heightened apprehension and subdued optimism following revelations surrounding the infrastructure controversy.

To date, while the Senate has resumed its probe into the issue, only former Senator Ramon “Bong” Revilla Jr., the controversial Discaya contractor couple, and several Department of Public Works and Highways (DPWH) officials have been jailed or charged in connection with anomalous infrastructure projects nationwide.

Meanwhile, the Anti-Money Laundering Council (AMLC) has frozen more than P22 billion in assets linked to individuals and entities implicated in the scandal. However, the whereabouts of fugitive former congressman Zaldy Co remain unknown, while other alleged “big fish,” including Jinggoy Estrada, Joel Villanueva, and Chiz Escudero, have yet to face formal charges despite being linked to alleged budget insertions tied to the controversy.

Valdes warned that certain government financing procedures, if left without adequate safeguards, could result in “leakages.” He also cautioned that political instability — including ongoing impeachment complaints against both the President and Vice President — could paralyze investment decisions, while excessive bureaucracy discourages long-term capital commitments.

“Without ethics, finance becomes extraction — not nation-building,” he said. “Ethics lowers borrowing costs. Governance attracts capital. Credibility beats incentives every time.”

The economist added that amid the current governance challenges, he remains optimistic about the role of the youth in becoming more vocal against corruption.

“I am delighted to see millennials exercising their right to demand change,” he said. “An enlightened and action-oriented youth is critical to shaping 2028 and beyond.”

Valdes cautioned that domestic political noise is only one of several challenges facing the Philippine economy. He noted that geopolitical developments, particularly policies under the Trump administration, as well as rapid advances in artificial intelligence — a sector where the Philippines is still catching up — have compounded economic pressures, allowing regional peers such as Vietnam and Thailand to gain ground.

He underscored the need for reforms to address corruption and restore economic competitiveness.

“Time is not our friend,” he warned. “Our neighbors are leading the pack.”

“If we get credibility right, growth will be predictable and beneficial to the highest number of Filipinos.”

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