Pervasive RP corruption remains, says Heritage

SCORE ON ECONOMIC FREEDOM SLIDES

Despite the supposed “straight path” taken by President Aquino who assumed power in June last year, the annual Index of Economic Freedom still cited corruption as being pervasive in the country that has resulted in the Philippines under Aquino ranking a poor 115 out of 179 countries in the annual list compiled by The Heritage Foundation (Heritage), a conservative Washington-based think tank, and The Wall Street Journal.

The ranking showed that the Philippines’ freedom score of 56.2 this year even fell from 0.1 point from last year placing it among countries with a “mostly unfree” economy.

It ranked lower than Cambodia which placed 102nd and Sri Lanka, at 107th, in the index.

The Philippines scored the lowest on the “Freedom from Corruption” category where it got a 24 grade.

Heritage Foundation said corruption (in the Philippines) is perceived as pervasive.

“A culture of corruption is long-standing. The government has worked to reinvigorate its anti-corruption drive, but these efforts have been inconsistent,” it said.

The think tank added reforms have not improved public perception and are overshadowed by high-profile cases frequently reported in the Philippine media.

It said progress on reforms has been mixed. Although some fiscal reforms have been accomplished, deeper institutional reforms are required in four interrelated areas: business freedom, investment freedom, property rights and freedom from corruption, according to the survey.

The government imposes formal and non-formal barriers to foreign investments, and foreign remittances do little to promote sustainable growth, it added.

The judicial system remains weak and vulnerable to political influence and corruption, it said.

The country was also given a very low grade of 30 on property rights. Heritage Foundation said although the Philippines has procedures and systems for registering claims on property, including intellectual property and chattel or mortgages, delays and uncertainty associated with a cumbersome court system continue to concern investors.

It cited questions regarding the general sanctity of contracts and the property rights they support as having also clouded the investment climate.

President Aquino recently disputed a recent World Bank agency ruling allowing German airport operator Fraport AG and its local partner, Piatco, to pursue claims on the government over the expropriation of the almost $500 million Ninoy Aquino International Airport (NAIA) Terminal 3 project.

Heritage Foundation added that the judicial system is weak. It said judges are nominally independent, but some are corrupt or have been appointed strictly for political reasons.

“Organized crime is a serious problem. Despite some progress, enforcement of intellectual property rights remains problematic,” it added.

Conversely, the Philippines received its highest score of 91 on government spending as the survey stated that total government expenditures in the most recent year including consumption and transfer payments held steady at 17.3 percent of gross domestic product (GDP).

“Fiscal stimulus and restructuring of public enterprises have widened the fiscal deficit, which had almost reached balance in 2007,” it added.

The Philippines has continued its long slide from being one of Asia’s richest economies to being one of its poorest, according to Heritage Foundation.

It said the economy relies heavily on emigrants’ remittances, which are equivalent to more than 10 percent of gross domestic product (GDP).

Hong Kong remained the world’s freest place to do business for the 17th year in a row in the annual survey.

The United States lost ground and mainland China came 135th in the table.

Hong Kong, a former British colony which was returned to China in 1997, edged out regional rival Singapore to claim top spot in the index.

Hong Kong and Singapore, Australia and New Zealand took third and fourth spots respectively.

Switzerland, Canada, Ireland, Denmark, the United States and Bahrain rounded out the top ten, which is based on criteria including economic openness, trade, the efficiency of domestic regulators, and the rule of law.

Mainland China was ranked 135 in the list of 179 economies, with Cuba, Zimbabwe and North Korea rounding out the bottom of the list.

“While the global average score for the 2011 Index has improved since last year, progress has not been uniform across the regions”, the report said.

“Sub-Saharan Africa achieved the largest score improvement”, it said, adding that “economic freedom held steady in Europe and actually declined in North America.”

The US fell outside the top six deemed to have an entirely free economy as North America recorded “drops in fiscal freedom and government spending, which now trail the world averages”, the report said. –Daily Tribune