Can a clean-up help the Philippines clean up? – Asia Times

Advertisement on the back of trishaw in Manila. Around 10 million Filipinos work abroad, sending billions of pesos in remittances back home to support families in a long-ailing economy (Photo: Simon Roughneen)

MANILA  – In a landmark trial the Philippines chief justice was impeached yesterday, a major political score for President Benigno Aquino III’s anti-corruption campaign – an effort that officials feel is key to helping the Philippines emulate its neighbours economic growth

Chief Justice Renato C. Corona was found guilty of failing to declare financial assets by more than 2/3 of the county’s senate, in a trial coming soon after the prosecution of Aquino’s predecessor, Gloria Macapagal-Arroyo, for corruption and election fraud.

After Corona’s fall, how the case against former President Macapagal-Arroyo plays out could be key to altering perceptions that the Philippines is a messy place to do business. “Corruption has made investment uncertain and means companies don’t really know how safe the Philippines is to put their money,” said Mon Casiple, director of the Institute for Political and Electoral Reform (IPER).

In the run-up to Tuesday’s verdict, the Corona hearings veered from the dramatic to the pathos-laden, First ombudsman Conchita Carpio-Morales stunned the senate by saying that Corona had US$10-12 millions in undeclared foreign currency accounts. Then, during his own first day on the stand on Tuesday, Corona disappeared after being asked to be excused, prompting a lock-down of the building in an attempt to fence in the under-fire lawman.

Too late, as it turned out that Corona had taken himself to a Manila hospital, claiming he felt unwell, before returning to testify on Friday in a teary-eyed performance that incorporated a public reconciliation with an erstwhile foe, while the chief justice questioned whether he was obliged to disclose details of what he said was US$2.4million in foreign currency deposits, money he says was accrued over a 30 year career as a lawyer.

Corona supporters say Aquino is carrying out a politicised witch-hunt directed at Macapagal-Arroyo and her allies and add that the government is attacking the judiciary. Several weeks ago the same supreme court that Corona heads ordered the break-up of the Aquino family estate north of Manila – a move that Aquino’s press team said the president supported but one that adds to the intrigue.

Asked whether a couple of high-level prosecutions could make any root-and-branch difference to the sort of business-deterring graft that has plagued the Philippines, spokesperson Carandang said that the cases were just part of the government’s anti-graft drive. “It is not just about these headline-making events,” he says. “We have reformed procurement and appointed people to anti-corruption agencies who are on the same page as the president.”

How far this goes remains to seen, however. Bobby Tuazon, head of the Center for People Empowerment in Governance (CENPEG), a Manila-based think-tank, told Asia Times Online that “Aquino may want to be the president who made big waves against corruption but one or two big ripples are not enough to bring one to the final destination.”

All told, however, analysts say that the anti-graft drive has widespread public support among Filipinos long-wearied by officials on the take, and by politicians pulling fast ones such as Arroyo’s ‘midnight appointment’ of Corona in 2010, just before she stepped down as president after a decade marred by seemingly-endless corruption scandals and accusations of election-fixing.

Mon Casiple told AToL that “there is a public clamour for a clean-up”, and a March report from the World Bank assessed that the Philippines has “a popular government that is seen by many as committed to improving governance and reducing poverty.”

However poverty and income inequality remain high, compared with the likes of Malaysia and Thailand. “People are still suffering from high unemployment (and underemployment) and poverty incidence remains high, according to Norio Usio of the Asian Development Bank (ADB). “There is a missing link between growth and development in this economy,” Usio told AToL.

Reducing corruption is seen by analysts as vital to kickstarting an economy that has fallen behind neighbours such as Malaysia and Thailand. The Philippines US$390bn economy means a GDP per capita of US$4100, well below Malaysia and Thailand whose per-head GDPs stand at US$15600 and US$9700 respectively (figures adjusted for purchasing power parity PPP).

In an interview at Manila’s Malacanang Palace, president spokesperson Sec. Ricky Carandang told AToL that the government hopes for a dividend in the form of increased investment. “I think we will see a lot more [investment] here in the near future,” he said.

President Aquino told a business forum in Manila on May 16 that the country’s biggest corporations were set to invest in excess of US$10bn in the country over the coming five years. “The business sector is making a big bet on the economy, and on our people; in so doing, they are creating opportunities for our countrymen,” remarked Pres. Aquino.

Sec.Carandang says that this new-found confidence in the Philippines by local business could presage much-needed foreign investment. “The best salesperson for foreign investors is really our companies who are now investing here,” he said.

There are numerous untapped growth avenues such as tourism, said Sec. Carandang. Visitor numbers to the tropical Philippines lag way behind not only Thailand and Malaysia, who – despite on-off political unrest – regularly attract around 15-20 million tourists each year, but also Vietnam, whose 5 million 2010 visitors was well ahead of the 3.5m that visited the Philippines. Recent reforms in Myanmar will likely add another temple, beach and scenery-laden regional rival for the Philippines to contend with, as visitor numbers to the once-hermetic country rise from a miniscule starting point.

Boosting tourist numbers means investment elsewhere, acknowledged Sec. Carandang, who added that the government is seeking investors to help improve and expand the country’s rickety infrastructure. “We don’t mind who these are,” he said. “Chinese investors too are more than welcome,” he added, despite an ongoing naval stand-off between the two countries over disputed islands off the main Luzon coast.

Analysts remain to be convinced however, and Norio Usui told Asia Times Online that though domestic investment has increased,“foreign investors still keeps the wait and see position. It is too optimistic to assume FDI increase.”

The Manila government set a growth target of 5%-6% for 2012, but in a recent region-wide assessment of the Asia-Pacific, the Bangkok-based United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) predicted growth of 4-5% for the Philippines, below neighbours Cambodia (6.7%), Indonesia (6.5%), Thailand and Vietnam (5.8%).

The Philippines recently overtook India as the world’s biggest IT-business processing outsourcing (BPO) destination, and there is room for more growth and investment in the call-center sector as the country’s English language proficiency gives it a competitive advantage over similar-income level neighbours.

The country’s 90million+ population is another asset, say some, as other countries in the region age and see populations shrink. “What sets the Philippines apart from the rest of the region is the demographic dividend. You don’t have that problem. If you invest wisely now in infrastructure and people, you will carry your demographic dividend for decades to come,” said Rogier van den Brink, the World Bank lead economist for the Philippines, speaking on May 23.

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