LA SOLIDARIDAD: Corruption Reduced in the Philippines But PHL Consistently Remains Most Corrupt in the ASEAN 6

Wednesday, September 26, 2012

Corruption Reduced in the Philippines But PHL Consistently Remains Most Corrupt in the ASEAN 6

The good news is the Philippines’ Corruption Perception ranking went down from #141 out of 180 in 2008 to #129 out of 83 in 2011.

This perception is also shared by local executives – based on an SWS survey. In a story carried by the Businessworld Online:

AN ONGOING poll of executives found 71% saying corruption had declined.

Preliminary results of an ongoing survey of enterprises were released by Social Weather Stations (SWS) President Mahar K. Mangahas, who said that 71% — up from 64% in May — claimed corruption had been reduced. The number of executives who claimed to have seen “a lot” of corruption in the public sector, meanwhile, fell to 42% this year from 64% in 2009, and the SWS stressed that while the survey’s coverage was changed, the improvement was seen in all areas included three years ago.

The CP ranking from 2008 to 2011 has shown a reduction – 141 in 2008, 139 in 2009, 134 in 2010, and 129 by 2011.

The Longer and Wider View

The not-so-good news is – the Philippines is still a long ways off from the #5 ranking of Singapore. The next not-so-good news is that the Philippines is still percieved as the most corrupt ASEAN 6 economy.

Is a rank of #129 out of 183 something to be proud about? Glass half empty or half-full? Or 2/3 empty?

Let’s look at the wider perspective – the proverbial forest which contains the Philippines as one of its trees.

The Corruption Perceptions Index 2011 ( 1-10/ Rank) of the ASEAN6 is listed below:

Philippines – 2.6 (129)
Thailand – 3.4 (80)
Indonesia – 3 (100)
Malaysia – 4.3 (60)
Vietnam – 2.9 (112)
Singapore – 9.2 (5)

What those numbers mean is that the Philippines is the most corrupt among the ASEAN6 economies.

Is that for this year only? Not really. The Philippines has been the most corrupt ASEAN6 country since 2008 to 2011. Even if the other ASEAN 6 economies corruption rank decreased, they are still less corrupt than the Philippines – with a variance in ranking that ranges from 17 points to 124 points!

Granted corruption has reduced – however, corruption remains extremely high.

How has the economy fared?

One of the purported outcomes of a reduction in corruption is an improvement in the economy. More than just GDP growth, why don’t we look at how the theoretical pie is split amongst all Filipinos – the GDP per capita.

In terms of GDP per Capita the PHL has yet to exceed the $5000 registered in 2004 and 2006. Given the higher corruption index in 2004 and 2006, the GDP per capita was still higher.

The GDP per capita plummeted to $3,200 in 2007 (prelude to the 2008 recession) but climbed back to $4100 in 2011.

Compared to the ASEAN6, the Philippines replaced Indonesia in the position of having the second lowest GDP Per Capita among the ASEAN 6 since 2007 to 2011. Indonesia now has the third lowest GDP Per Capita while Vietnam at $3400, still has the lowest GDP per capita among the ASEAN 6. Note also that Vietnams 2011 GDP per capita of $3500 is equal to the Philippines GDP Per Capita in 2010.

If we factor in inflation and express the GDP per capita in constant 2000 prices, the GDP per capita has not changed much from $1,048 in 2000 to roughly $1,090 in 2012 (at constant 2000 prices).

In terms of unemployment, the Philippines unemployment rate was 7.3% in 2007, 7.4% in 2008, 7.5% in 2009, 7.3% in 2010, 7% in 2011, and 7% as of Q2 2012.

Compared to the ASEAN 6, the Philippines has the highest unemployment rate in the group, as of Q2, 2012. From highest to lowest:

Philippines- 7%, Indonesia- 6.3%, Malaysia- 2.9%, Vietnam – 2.29%, Singapore -2%, Thailand – 0.8% Four of the ASEAN 6 have unemployment rates that are less than half of the Philippines’ joblessness.

Now let’s throw in underemployment – from an already high rate of 19% early this year to a higher 22% as of Q2 2012.

Reduction in Corruption Must Consider the Competition – and Economic Outcomes

It is not enough that the PHL limit the comparison of its current ranking to its previous rankings.

By excluding the rankings of the the other countries in the ASEAN6, the Philippines loses sight of the best practices which attract investments and create jobs. Competing means that we should not limit our sights to those whom we have overtaken (none thus far) but to set our focus to become number one – and eliminate the BUTS, HOWEVERS, and LUCK which has LOSER written all over it.

It is not enough to say we have improved – but we also need to step up and find out – what are they doing right? What is the cost of doing nothing?

Most of all – if despite the “reduction” in corruption, the Philippines: