An IMF study had linked corruption to reduced growth, investment and more inefficient public spending. Ah, that explains a lot!
According to the IMF, if our corruption were reduced to levels like Singapore’s, the investment-to-GDP ratio would rise by approximately 6.6 percentage points, and annual per capita GDP growth would increase by about 1.65 percent.
In other words, we were overtaken by our neighbors because resources for growth were siphoned off our economy by corrupt officials and public works contractors, among others.
Our neighbors have corruption too but they deal with it more decisively. People actually go to jail for corruption in Vietnam, Indonesia, Thailand.
Then there is the Suharto model of corruption in Indonesia and the Marcos (the father) model in the Philippines. Suharto’s corruption tended to keep the money within Indonesia, circulated through domestic power networks and institutions.
On the other hand, Marcos largely took his fruits of corruption offshore, hidden in Swiss and offshore accounts through sophisticated mechanisms.
A 1986 Washington Post report observed that unlike the Philippines, in Indonesia, corruption didn’t involve ostentatious spending or massive wealth parked abroad.
The Post reports: “In the Philippines there was a systematic ripping off of the country,” said an international banker. “You don’t hear the same stories here.”
Then again, it seems the Indonesian lawmakers caught the Philippine ostentatious corruption bug. But the Indonesians will not tolerate it. Hence the riots over the last few days in Jakarta.
The impact of corruption on economic growth in the Philippines has been measured. Models suggest that reducing corruption can meaningfully boost investment and economic growth. Moreover, estimates underscore the significant opportunity cost in lost public investment and higher borrowing.
No doubt about it, corruption scandals sap confidence in the economy.
Our unfolding scandal over ghost flood control projects has wiped out an extraordinary P1.7 trillion in value from our stock market in just three weeks. From Aug. 11 to Aug. 29, 2025, the total value of the market’s profitable companies plunged by 12 percent, tumbling from P14.3 trillion to P12.6 trillion.
What makes the collapse weirdly alarming is that corporate earnings have been rising during this period. In other words, investors are not fleeing because of weakening fundamentals — they are fleeing because of crumbling trust.
Corruption is a weapon of mass wealth destruction because it erodes confidence in the ability of Philippine institutions from the presidency, the legislature and the judicial system to provide good governance.
How much do taxpayers lose?
The World Bank, ADB and IMF estimates that corruption is diverting 20 percent of the budget to politicians’ pockets — implying as much as P2 trillion (on a budget of P6.352 trillion).
DOJ data from 2019 estimated national level corruption at 20 percent of the annual budget. Applied to the 2024 national budget, this loss would translate into about P1.6 trillion annually.
For comparison, the DepEd budget for 2025 is P1.055 trillion.
This high level of corruption means the lost funds could have financed critical infrastructure, education and health care initiatives. We are exceeding safe limits of our debt-to-GDP ratio. We are borrowing to pay interest on interest. All this borrowing crowds out growth-promoting expenditures.
Some current estimates of budget losses through corruption suggest 50 percent to 70 percent of the budget for construction and even 100 percent for ghost flood control projects.
The other big problem is the tendency of those involved in corruption to take their ill-gotten wealth abroad and/or engage in ostentatious consumption. A DPWH district engineer admitted in a Senate hearing that he and his assistant district engineer are regular gamblers in casinos.
Public officials, public works contractors and their young children have shown no sense of patriotism or love of country. This is enough reason for us to have a law to strip them of citizenship. They all have golden visas to Europe anyway.
Most crooks have no fear. The Constitutional mechanisms for dealing with corruption have proven impotent through the years. The last Ombudsman wouldn’t even allow reporters to investigate the SALNs of public officials.
Given that our judicial system is also as corrupt as the rest of the government, it is doubtful if stricter laws will deter corruption. No big fish politician, contractor or DPWH official has ever gone to jail. We are well known for having the best justice system money can buy.
To a DPWH contractor awash with money, a corruption case only means having to bribe his way out of the mess, a business expense.
Society is to blame too. Even the mainstream media is to blame. The plunderers are lionized and featured in lifestyle programs. One daughter of such a contractor has attracted a reported 300,000 followers on social media eager to see her latest exploits in Paris and her multi-million-peso bags and fashion items.
Worse, according to my colleague Tony Lopez, the wife of Senate President Chiz Escudero (exposed receiving political donations from a DPWH contractor) drew 16 million views for her latest multi-million-peso fashion and bag purchases.
One reason we are eating Vietnam’s dust is that they take corruption seriously — a tycoon received the death penalty for a financial fraud that caused an estimated $27 billion in losses.
What we need in the Philippines is a sample case to break the usual inaction interpreted as tolerance. Surely, from the 15 contractors cited by BBM, most if not all of them are guilty of some form of corruption.
Before he was sacked, former Sec Manny Bonoan said the district engineers involved in corrupt projects should not be jailed but just reassigned. At least two of those engineers look guilty as hell with their visible Patek watches and designer attires.
The next move is BBM’s. He must show his determination and sincerity to move against corruption. He must uphold national interest for a change.
We can hope to be surprised.
Boo Chanco’s email address is bchanco@gmail.com. Follow him on X @boochanco