Corruption and Cynicism in the Philippines

By Steven Rood

Last Monday, March 10, the Political and Economic Risk Consultancy (PERC) in Hong Kong stated in its annual survey of corruption that, “for the second consecutive year, the Philippines has the dubious distinction of being the worst rated country.” (For an analysis of last year’s rating, click here.)

On the very next day, word was received that in Washington, D.C. the Millennium Challenge Corporation (MCC) judged the Philippines “Compact Eligible” for a large poverty reduction grant based on, among other things, an acceptable “control of corruption” score. “The MCC Board lauded the Arroyo government efforts in fighting corruption in three MCC-funded programs focused on ‘helping curb corruption through improved tax and customs administration and strengthening of their Ombudsman’s Office.’”

What’s going on? There are two kinds of explanations for this apparent contradiction – the first sort is technical and the second sort is much more political.

The MCC relies on outside measurements as it assesses countries’ eligibility for a “Compact.” “Control of corruption” comes from the World Bank Institute (available, here), and the MCC had earlier expressed concern that the Philippines had dropped from the 76th percentile to the 57th (50% is passing grade for the MCC). The Ombudsman’s office delivered a briefing in February to the MCC, arguing that since the World Bank’s data refer to 2006, before the beginning of the MCC’s Philippine Threshold Program, information on accomplishments since that time should allay concerns about the decline (available, here):

During the presentation, Ombudsman Gutierrez informed MCC that the Office of the Ombudsman’s conviction rate at the Sandiganbayan rose from 19 percent in 2006 to 56 percent in 2007.

The Sandiganbayan has penalized almost 1,200 public officials for administrative and disciplinary offenses from 2004 to 2006, she added.

Other measurements of corruption have indeed shown progress throughout the years. The price of textbooks in the Department of Education has been reduced, as has the price of medicines procured by cities where The Asia Foundation works to improve governance in cooperation with the city governments themselves, as well as local chambers of commerce and NGOs. Other data come from regular Social Weather Stations surveys of businessmen, which had the percentage of businessmen reporting the payment of bribes for local government permits declining from 55% in 2000 to 40% in 2007. Similarly, the percentage who reported having to pay bribes in the payment of income taxes declined from 52% in 2000 to 33% in 2007. We can say that those percentages (40% for local permits, 33% for paying taxes) is still too high, but we cannot deny that progress has been made.

And yet the PERC, based on a survey of expatriates thoughout Asia in early 2008, arrived at its gloomy judgment. This leads us beyond the realm of technical progress into that of political controversy, which can drive perceptions.

The PERC report summarizes:

“The Philippines is a sad case when it comes to corruption. The actual magnitude of the problem is bad, but it is probably no worse than in places like Indonesia and Thailand. However, it has been politicized as an issue more than in either of these countries, used by political rivals to undercut each other.”

And, this is all well-publicized since “… the media, even more than the courts, is the forum in which all sides try to wage their battles of defamation.”

All the statistics about progress against bureaucratic corruption – no matter how beneficial that progress is for the citizens of the Philippines – tend not to be perceived in the middle of political turmoil, which is beginning to seem (at least in the media) to be a permanent feature of the Philippines (the WBI’s “political stability” index has plunged precipitously in recent years).