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Corruption in the Philippines: Survey of Business Execs Reveals ‘Mixed’ Findings

January 22, 2014

Asia Foundation 60th anniversary seriesOn January 15, the results of the latest “SWS Survey of Enterprises on Corruption” were released during an afternoon session of the Good Governance Summit 2014. The previous survey in 2012 showed an impressive record low of 43 percent of business executives who considered corruption to be widespread. This time that finding rose to 56 percent, and has led some to notice a few potholes and dips in the “Daang Matuwid,” (“straight path”) with which President Aquino launched his campaign against corruption.

Of the 24 government institutions rated for sincerity in fighting corruption, five have improved, nine have not changed, 10 have downgraded, and two were included for the first time. Meanwhile, and perhaps more disturbingly, the practices in the private sector (such as the prevalence of double bookkeeping and the low number of companies that report paying taxes honestly) remains unchanged over the past decade.

Since 2000, the Social Weather Stations (SWS), the Philippines’ foremost nonprofit, nongovernmental data generation organization, has conducted 11 rounds of surveys of Filipino business people. As in previous rounds, this survey examines the attitudes and actual experiences of enterprise owners and managers with regard to public and private sector corruption. The methodology has advantages over most other corruption indices: it surveys domestic enterprises (rather than reliance on multinational respondents) leading to greater possible effects on political will; it asks about specific experiences of corruption (rather than perceptions); and it covers various parts of the country (rather than only focusing on the capital city or treating the country as a whole).

The survey also provides a time-series analysis of key indicators such as business executives’ experience of and attitudes toward corruption, the perceived magnitude and prevalence of corruption in the public and private sectors, the sincerity ratings of government agencies in fighting corruption, actual business practices, and private sector behavior in dealing with government agencies. Thus it also allows for comparison over time, allowing analysts to spot trends and monitor changes.

The findings of the 2013 survey are based on face-to-face interviews conducted from the end of July to the end of November 2013 with executives of 951 companies (315 large and 633 small/medium) from seven metropolitan areas across the country: Metro Manila, Metro Angeles, Cavite-Laguna-Batangas, Metro Iloilo, Metro Cebu, Metro Davao, and Cagayan de Oro-Iligan.

This is the second time that the survey has been conducted under President Aquino’s administration. Whereas the impressive gains of the 2012 round were in the context of significant expenditures of political capital by the administration (such as the impeachment conviction of the chief justice and the resignation of the Ombudsman), 2013 witnessed the exposure of a number of high profile cases of corruption (but not yet a satisfactory resolution to these cases). These cases are not necessarily linked to the current administration, but they definitely colored the public discourse during the time of the data collection and interviews.

Other notable findings from the 2013 survey include:

  • Executives seeing “a lot” of corruption in the public sector rose to 56 percent in 2013, from the record-low 43 percent in 2012. Nevertheless, the 56 percent in 2013 is the second lowest since 2000.
  • Solicitations of bribes from enterprises are falling. A record-low 44 percent say they were solicited for any of seven listed types of bribes, an improvement from 50 percent in 2012 and 60 percent in 2009.
  • The Office of the President maintained the “excellent” net sincerity rating in fighting corruption it obtained in 2012 (+80) in 2013 (+77), after a “Bad” -37 in 2009 (during the tenure of the previous president).
  • The Philippine Senate recorded the biggest downgrade, from “good” +36 in 2012 to “neutral” -8 in 2013, after a “neutral” -1 in 2009.
  • The only agency with a “very bad” net sincerity rating is the Bureau of Customs, which downgraded from “bad” -46 in 2012 to “very bad” -63 in 2013, after “very bad” to “execrable” ratings in 2005-2009.
  • Executives saying that the administration’s steps to eradicate corruption are “somewhat/very effective” fell slightly to 73 percent in 2013, from 78 percent in 2012.

Although these results are, for the most part, quite an improvement over the Enterprise Surveys of the past decade under the previous administration, the audience for the Good Governance Summit 2014 presentation seemed to be slightly disappointed by the dip (when compared to last year’s noticeable improvement in the results for public sector corruption). Some in the media subsequently went so far as to write that graft had surged and indicated that there was a significant backsliding in the battle against public sector corruption. In response, SWS rightly clarified that the survey results related to public sector corruption reflect “mixed findings” –partly good and partly bad.

What was clearly a disappointment was the lack of improvement in the long-running practices of the private sector – practices that, like last year, remain basically unchanged over the past decade. For example:

  • 42 percent say that “most/almost all” companies in their own sector of business give bribes to win government contracts, practically the same as the record-low 41 percent in 2012.
  • Those with personal knowledge of public sector corruption in their sector of business in the last three months rose to 38 percent in 2013, still the third lowest since 2000, from a record-low 33 percent in 2012.
  • Citations that “almost all” companies in their line of business conduct honest business practices are flat: demand receipts for all payments (45%); pay the right contributions for employee benefits (45%); issue receipts for all revenues (35%); pay correct wages to employees (35%); keep only one set of books (22%); and pay taxes honestly (20%).

Despite the slight dip in the public sector practices and the continued disappointing practices of the private sector, the business optimism again strengthened:

  • Satisfaction that the national government is promoting a good climate reached a new record-high 70 percent in 2013, versus 69 percent in 2012.
  • Satisfaction that the city government is promoting a good climate hit a new record-high 67 percent in 2013, versus 64 percent in 2012.
  • Business expectations for the next two years are excellent/good, representing a new record-high 76 percent in 2013, versus 74 percent in 2012.

While the Aquino administration has shown significant gains in the fight against corruption, as he reaches the halfway point of his term, the challenge for his administration will be to sustain the focus of his fight against corruption and bring about lasting reforms that are felt by business executives and the nation as a whole.

The 2013 SWS Survey of Enterprises on Corruption was supported through the Australian Aid-Asia Foundation Partnership in the Philippines, and implemented in collaboration with the Makati Business Club through the Integrity Initiative and the National Competitiveness Council

Ky D. Johnson is The Asia Foundation’s deputy country representative in the Philippines. He can be reached at Ky.Johnson@asiafoundation.org. The views and opinions expressed here are those of the individual author and not those of The Asia Foundation.

One comment on this post:

  1. Ibrahim S. Omar:

    Something is wrong somewhere! Surely, Mindanao peace is urgently needed today. There is more wisdom to negotiate with all Bangsamoro freedom fighters rather than one group to finally achieve ‘just and lasting’ peace in war-torn Mindanao. Where are the peacemakers in Luzon, Visayas and Mindanao? Where are the political leaders who want to make a difference? Why can’t the Filipino political leaders declare an all-out war against endemic corruption to clean the government system once and for all? Why can’t the Philippine government finally end the Mindanao war by addressing the root cause of the problem?

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