Corruption? No… It’s stability silly.By Philip Dominguez Mercurio
I was dropping off Master Danongan Kalanduyan after one of our practices a few weeks ago. We were discussing his third trip to Alaska but as we entered the I-380 over crossing, we couldn’t help but stumble upon the wonderful world of Philippine politics. He had much to say, particularly about recent events and how La Presidente should resign.
I was trying to distance myself from the fiasco but it’s hard to avoid. Steve Angeles of Balitang Amerika was joking with me about how we should stake out the Arroyos, perhaps getting the chance to question them. Well… if I catch them playing mahjong, I’ll definitely let you know.
What really amazed me though was not what happened but how fast things unraveled.
Perhaps some of you have forgotten but just a few months ago, things were on the up and up. The economy reportedly grew by 6.1% (its fastest in 15 years) spurred on by the passage of taxes aimed at alcohol and tobacco. The Supreme Court opened foreign investment into the fledgling mining sector allowing fellows such as President Jintao to visit trouncing billion dollar investments for the industry. And even with continued political bickering over the stalled VAT tax dragging down the market, some investors remained optimistic finding opportunities in our blue-chip stocks believing they could ride out the political storm.
Now, we all know what happened next.
But here’s the thing. When things happen like this, we naturally cast blame on our country’s chronic corruption.
This makes sense until one realizes corruption is pervasive not only in the Philippines, but in every nook and cranny of Asian society. Rioting on the Chinese mainland has increased by the tens of thousands from just a decade ago due to the insensitivities of corrupt officials to the well-being and health of much of the rural populace. Corruption scandals have plagued Thailand’s Prime Minister Thaksin Shinawatra’s administration leading to his decreasing popularity. Sentences for six years were handed down to a cabinet minister and an aide from Malaysia’s ruling party, UNMO, both of whom were accused of bribing delegates during internal party elections. And investigations into Indonesia largest bank, Bank Mandiri, have produced lending irregularities, much of them connected to many powerful businesses, totaling upwards of 12 trillion rupiah. Corruption in fact in so endemic thorough Indonesia’s system, Singaporean officials decided to aid tsunami survivors themselves, literally using their military to bring in supplies and build homes with not a dime falling into the hands of Indonesian authorities.
Countries such as Indonesia in fact have been ranked regularly as one of the world’s most corrupt countries by Transparency International and therefore, if our belief in corruption is true, should logically be mired in economic slump like the Philippines.
That’s been true… until recently.
Some of the lowest interest rates ever are spurring construction of an amazing array of office buildings, apartment complexes and shopping malls in Indonesia’s metros. Malaysian and Singaporean investment firms and banks along with others from London and Frankfurt have sought out controlling stakes in some of Indonesia’s biggest banks. Philip Morris, the largest cigarette maker, planned their own takeover, this time of Indonesia’s third largest cigarette maker, PT Hanjaya Mandala Sampoerna, using an initial investment of $5 billion dollars to enter the world’s 5th largest cigarette market.
Now, it’s not like Indonesia suddenly ceased being corrupt. The increased consumer spending and economic expansion of 6.3% have all been on the heels of the election of President Susilo Bambang Yudhoyono, a general who earned his MBA in St. Louis and earned a doctorate in economics in Indonesia (sounds familiar?). His promise to improve the business climate has yielded results and lead investment firms such as Fitch to upgrade the country’s creditworthiness. If there is a lesson to be learned from this… it’s that even in a world of crooked politics, economies could survive… even thrive.
And so coming back to the Philippines, perhaps corruption isn’t the biggest culprit driving down our country but the political haggling at the top. Some could pointedly cite the $70 billion deficit, the mired and often evaded tax collection system that has been cited as one of the worst in the world and the trickle of foreign investment (so small that even Cambodia had twice our amount last year, though they are 8 times smaller than us) as other major culprits in this unending downward spiral.
But unfortunately those problems are a part of the growing pains of up-and-coming nations. Malaysia’s economic weaknesses are beginning to surface after an economic over-dependence on heavy infrastructure spending that’s burdening their growing foreign debt. Thailand also is facing the harsh realities of ending their $2.2 billion fuel subsidies to the displeasure of the populace, 40% of whom polled giving a vote of no-confidence to the government’s future handling of the economic situation. But even with those problems, they are unlikely to cause a total meltdown of a government’s stability.
What it all boils down to then is the complete incompetence of those at our highest levels. Their bickering, often destructive, has leveled any hope that a sustainable economic recovery could be reached. I fully believe if everyone just shut-up, go about their business but keep on the down low, outside investors and foreign capital would start flooding in, even if not all the problems have been fixed yet. A country as corrupt as ours has the ability to improve but if its political climate doesn’t change; all the gains the country has made will evaporate.
It unfortunately has already. – PDM