RP corruption tag eroding investor confidence — envoy

The latest corruption tag on the Philippines by Germany-based watchdog Transparency International (TI) is seen as another blackeye on the country, a senior Filipino diplomat yesterday said.

In its Global Corruption Report 2009, TI said graft and corruption are a fact of life in the Philippines, tracing the root of most of the biggest corruption-tainted projects in the country to multimillion-dollar foreign-assisted projects involving foreign firms.

“This is certainly another blackeye on the Philippines. It shows how the international community look at the country and this is something that should not be disregarded or simply ignored by the government,” the diplomat, who asked not to be named, said in an interview.

TI cited the case of the botched $329.5-million National Broadband Network (NBN) project awarded to Chinese telecommunications supplier ZTE and the $503-million Northrail project that were both suspected of having involved President Arroyo or those close to her in massive kickbacks as examples of projects that posed “significant corruption risks.”

The agency said the government’s failure to put a ceiling or cap on costs for projects funded by foreign donors leaves them open to collusion and bid-rigging.

Earlier, TI had ranked the Philippines 141st out of 180 countries in the Corruption Perceptions Index that it issued annually.

“With reports like this coming out, it would be very hard, especially for us diplomats to sell the country to foreign investors,” the Filipino diplomat stressed. “Unless we do something about it, like address corruption and improve the infrastructure and governance, that’s the time investments would come in.”

In a previous interview, United Kingdom’s ambassador to the Philippines Stepehen Lillie admitted that “more needs to be done” by the government to attract foreign businessmen, particularly British investors.

“You have to look at the Transparency International table because ultimately, the transparency, the corruption is determining for a lot of people,” Lillie said. “The fact is whenever a big company encounters significant problems in any market whether its in the Philippines or anywhere else, of course it’s bad for a country’s reputation and that’s why its important those sort of things don’t happen.”

Recently, the Philippines ranked 9th among key emerging markets for British investors in 2009, but still fell below its Southeast Asian neighbors in the overall rankings.

According to a new research published by the UK Trade and Investment, the Philippines has improved its standing by jumping 14 spots from 23rd place the previous year.

But fellow Association of Southeast Asian Nations (Asean) member Vietnam emerged as the No. 1 choice for investors when asked in a survey which of the following emerging economies they are considering investing in over the next five years.

United Arab Emirates was second, followed by Mexico, South Africa, Malaysia, Indonesia, Singapore, Turkey, Philippines and Saudi Arabia.

Political risk, including the risk of nationalization and expropriation, was cited by 50 percent of survey respondents as the greatest government-related obstacle to doing business in emerging markets.

“If the Philippines wants to leap from number nine to number one in our lead table then there are quite a few things to that can be done. That is to really ensure there is a level playing field for business,” Lillie said.

He noted that foreign companies who come to the Philippines want to have confidence that they can compete with local companies.

“They want to have confidence that the law would be followed, confidence that they will not be subject to unethical practices. These things matter,” he said. –Michaela P. del Callar, Daily Tribune