Freeman Cebu Business

Corruption will delay the economic recovery  

INTEGRITY BEAT - Henry J. Schumacher - The Freeman

Having been actively involved in anti-corruption activities since 2011, when we formed the Integrity Initiative (II) and hoped both government and the private sector would actively support that endeavor, I was surprised last Tuesday – 11 years after we formed the II - when I saw the headline in the news: ‘Corruption will delay recovery’.

And I was equally surprised by the statement of Alexander B. Cabrera, PwC Philippines Chairman Emeritus, that the private sector should also play a role in addressing corruption. He added: “Corruption is like a dance. It takes two to tango. If the private sector would not give in, there would also be no corruption. We cannot miss that element that corruption is not one-sided.”

Eleven years ago, we already aspired for a level playing field where companies that do business with integrity enjoy competitive advantage in both government and private sector transactions.

It is positive to note that a good number of companies have subscribed to building a Culture of Integrity. But we also must be honest that we never achieved that the majority of businessmen join the fight against corruption. They saw and still see clear advantages in being ‘flexible’.

But it is enlightening to see that the survey undertaken by MAP and PwC Philippines shows that most respondents believe that the Marcos government should give more priority to fighting corruption. While anti-corruption initiatives were not laid out during the President’s State of the Nation Address in July, the President himself said that the use of government funds will follow the law.

We have to accept that clean government is good business. Studies by the World Economic Forum recognize the link between good governance, transparency, and integrity on the one hand, and high levels of investment as well as performance, on the other. A business venture decision, logically, must begin with having trust in the community where an investment is to be made.

Understandably, investors would only venture into a particular political and social setting that would produce returns for them. Integrity and the availability of information, as research proved, promote accountability and greater predictability of outcomes.

Putting it another way, when integrity is given premium as a matter of standard, trust in government is built. Fair market conditions are achievable, resulting in greater competitiveness and increased business confidence, which will be evident in higher domestic and international investments, consequently generating more employment. A vibrant and dynamic national economy is thus possible, which will help us alleviate unemployment and poverty.

Another reality that needs to be addressed is that powerful families and clans are protecting their dominant market positions against potential competitors at many places through the support of local administrations, over which they exercise control and influence through the linkage of economic power and political positions. As a result, many local markets are closed markets, with low competition and comparative high prices.

In conclusion, there are some matters within the control of the new national and local Philippine government that can improve the situation, starting with decisive measures to address corruption. The problem is a two-way street: fighting corruption will also require the full cooperation by the private sector. But the lead has to come from the new administration, promising to address corruption.

Feedback is highly appreciated, and the Integrity Initiative is in standby to support anti-corruption as a strong tool to enable economic recovery; please contact me at [email protected]

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