RP seen as most corrupt in Asia (1,476 expats polled on business climate in 13 economies)

SINGAPORE—The Philippines is perceived as Asia’s most corrupt economy, with Thailand and Indonesia ranked second, a survey of 1,476 expatriates showed.

Singapore is seen as the least corrupt of 13 economies, followed by Hong Kong and Japan, according to the survey by Political and Economic Risk Consultancy Ltd., or PERC, which was conducted in the first two months of the year.

Most of Asia is struggling to fight corruption that’s been a constraint to business in the region. The Philippines, whose corruption score posted the steepest rise, has been getting the least amount of foreign direct investments and lower foreign capital flows to its stock market compared with Indonesia and Thailand, PERC said.

“The Philippines has the distinction of being perceived in the worst light this year,” Hong Kong-based PERC said. “It is bad and has been bad all along. People are just growing tired of the inaction and insincerity of leading officials when they promise to fight corruption.”

The Philippines got a score of 9.40 from 7.80 last year in the poll, which has a grading system of zero as the best possible score and 10 as the worst. Thailand, which has a junta-backed government after last September’s coup, is probably the country where corruption problems are most visible, PERC said.

Indonesia, deemed Asia’s most corrupt country in the past five years, improved its score to 8.03, the same as Thailand. President Susilo Bambang Yudhoyono’s campaign against corruption has yielded positive results, though it’s being undermined by local-level officials, government bureaucrats and senior politicians, the report said.

Vietnam is the fourth most corrupt as the government is seen to take a selective approach to fighting corruption, the survey said. It scored 7.54 from last year’s 7.91. Vietnam was ranked the most corrupt economy in 2001.

“As in China, the biggest problem in Vietnam lies with state-owned companies and with people trying to use their positions to plunder state assets,” the survey said.

China, the world’s fastest growing-major economy, is the seventh most corrupt. The country’s score improved to 6.29 from last year’s 7.58 as tight media censorship probably helped, the report said.

India is the fifth most corrupt, followed by South Korea, PERC said, adding the Indian government must hasten reforms. India’s score improved to 6.67 from 6.76 last year.

Malaysia is perceived the eighth most corrupt country. Prime Minister Abdullah Badawi has permitted a more open discussion of the problem of graft, though he has yet to deliver on his campaign promise to cut corruption, PERC said.

Singapore, the least corrupt among the 13 economies for the 10th straight year, is increasingly becoming vulnerable to corruption in other countries as state-linked companies invest overseas, the report said.

The sale of Shin Corp. by investors, including the family of deposed Premier Thaksin Shinawatra, to Singapore’s state-owned company Temasek Holdings Pte., angered Thais because the family didn’t pay tax on the proceeds. Shin Corp., which was sold last year, owns the biggest Thai mobile-phone company.

Reacting to the report, President Arroyo said on Tuesday the findings of the latest PERC survey was apparently based on “old data” and biased media reports.

The President brushed aside the latest PERC survey results during an interview with business journalists and referred to the upbeat credit ratings given to the Philippines by foreign credit-rating agencies.

“The credit ratings are fine. As for political analysis, they work on old data, they don’t work on up-to-date data. And then they look at newspapers. And if you’re going to look at who are the ones in Transparency International Philippines, they are made up of opposition people,” she said.

Transparency International, also based in Hong Kong, had consistently given the Philippines low marks in fighting corruption.

Constancia de Guzman, chairman of the Presidential Antigraft Commission (PAGC), said that PERC itself noted that the survey results did not reflect a worsening of the actual situation in the Philippines.

“If we are to talk about the government programs on anticorruption, we have done, and are doing, a lot. This is observed by our stakeholders,” she said.

She cited a recent statement made by the American Chamber of Commerce and Industry (Amcham) expressing confidence in the Arroyo administration’s governance.

(Bloomberg, M. Gonzalez)