COMMENTARY: Matuwid na daan patungo saan?

Recently the Asian Institute of Management in collaboration with the Konrad Adenauer Stiftung (Foundation) organized an event on “Institutionalizing Anti-Corruption and Good Governance”, bringing together experts from different think tanks in Asia and reform stakeholders in the Philippines, in order to discuss how to sustain anti-corruption reforms. This seems to be one of the prominent topics right now in the country, given the impending transfer of power to the next President in 2016.  

At the event, presentations by Bureau of Customs Commissioner Bert Lina and Ombudsman Conchita Carpio-Morales emphasized a number of accomplishments in the country’s anti-corruption campaign.

The Ombudsman cited that as of 2014, well over 6200 administrative and criminal cases have been resolved; 631 criminal complaints have been disposed; 825 cases have been imposed with administrative penalties; and there was by the end of 2014, 8,700 cases on the docket (implying a reduction of 12%).

The Ombudsman estimated that her agency would achieve a zero backlog by the end of her term in 2018. This is all the more impressive given the considerable case backlog she inherited when she took over—approximately 11,000 pending criminal and administrative cases in 2011.

Commissioner Lina likewise spoke of reforms to enhance transparency and streamline customs processes such as the use of information technology to provide data to monitor the performance of customs flows. In particular, the Commissioner pushed for a paperless e-customs platform to facilitate data collection and dissemination, along with a performance management system to assess the efficiency of customs reforms.

Commissioner Lina also promised to sustain the open-data reforms of former Commissioner Sunny Sevilla, and he even invited civil society groups to partner with the BOC to develop scorecards and other analyses related to the agency’s performance.

The Ombudsman’s efforts to hold officials accountable and the BOC Commissioner’s efforts to streamline trade facilitation and improve revenue generation illustrate the wide scope of anti-corruption efforts, implying a systems-based approach to their complete resolution.

These and other reform efforts of the Aquino administration seem to have generated early gains in improved corruption perceptions by investors and other stakeholders. The Corruption Perceptions Index (CPI) of Transparency International is a noteworthy example. The Philippines rose from 129th in 2011, to 105th in 2012, to 94 by 2013, and finally to 85th by 2014. Based on its 40-notch climb in rankings, the Philippines posted one of the biggest improvements of any one country, since the CPI was created in the 1990s.


^{Source: AIM Policy Center staff calculations based on data from Transparency International. Due to the dissimilar number of countries ranked for 2011 and 2014, adjusted rankings only account for countries that were ranked by Transparency International for both years.}

Secret Ingredient?

Many tend to over-simplify the fight against corruption, by reducing it to the task of finding “incorruptible leaders.” When a leader is thought to be clean and manages to get elected, then a “halo effect” occurs—essentially a psychological bias influencing general perceptions, including those on the extent and degree of corruption.

Other measures also reflect both perceived and actual progress on reforms. Since 2011, for example,
the Philippines also rapidly ascended in its credit ratings—attaining a total of 11 consecutive credit upgrades since the Aquino administration took over, and reaching investment grade by late 2014. One key aspect behind this, as noted by analysts, is the improved governance climate, producing knock-on effects on macroeconomic stability, debt management, and other economic indicators.

Public officials with integrity and competence are critical in the anti-corruption effort. But what will happen when they eventually step down? What if the next leaders elected are far less benign? These questions go to the heart of sustaining anti-corruption reforms; and international experience seems to point to increased government transparency and openness, combined with active citizens, academe and civil society engagement to help sustain reforms.

Structural Reforms for Anti-Corruption

At the AIM-KAS forum, participants emphasized structural and systems-oriented reforms—implying that these should not be over-personalized. Reform champions are necessary; but sustained reduction of corruption also depends critically on long-lasting structural changes in the business and policymaking environment.

The evidence suggests that corruption thrives in highly opaque environments, and that the monopoly of political power compounded with discretion and little accountability, could fuel large-scale corruption.

The corrupt could also deliberately contribute to a less competitive business environment. Regulations, investment and business permit approvals may be left onerous and unclear, so that the resulting delays more effectively prompt entrepreneurs and citizens to pay extra to get “expedited” services. The corrupt benefit immensely from the long lines and tedious processes because they ensure a regular harvest of bribes.

Furthermore, anti-corruption advocates have begun to raise the issue of deliberately vague and/or flawed policies and laws so that they leave open a good deal of interpretation by incumbent regulators and policymakers, leaving many opportunities for rent-seeking. These loopholes create a veritable “industry” of lobbyists and rent-seekers, adept at navigating the weaknesses in laws and regulations.

Petty bribery then takes a back seat to larger-scale corruption, involving among other risks potential campaign contributions, or actual direct compensation, simply to afford advantages to some industries or firms. The latter, in turn, creates the very distortions in the economy that drive away investors (both domestic and foreign) because there is no “level playing field”.

And that is the crux of the debilitative effect of corruption on economic development and poverty reduction. The economy is weakened—or in our case, it may grow, but fail to be inclusive. And precisely because of this, any growth is also far less likely to be sustained.

Better public goods and public services can crowd out many corrupt practices—for example faster processing due to e-government will reduce human contact and offer far less opportunities for bribe-seeking, while at the same time enhancing the competitiveness of our public services and business environment. That in turn should help spur investments and create more jobs—the very stakeholders who will want to keep good governance gains intact.

Not just “anti-corruption” but “pro-inclusive-development”

The Aquino administration’s rallying cry “matuwid na daan” (the straight road) must now be complemented with a call for direction and development. Matuwid na daan patungo saan? (A straight road headed where?)

According to the presentations in the conference, E-government, simplification of regulations, reforms in procurement, increased transparency and greater freedom of information for citizen engagement are among the key factors that fueled success in other countries’ anti-corruption efforts. Indeed many of these elements are already reflected in the reforms put in place or pipelined by the Aquino administration.

There is still time to push for game-changing reforms that could help promote stronger inclusiveness—in the political sphere through an ANTI-POLITICAL DYNASTY LAW; in the economic sphere through the impending passage of the FAIR COMPETITION LAW; and in the governance sphere through a FREEDOM OF INFORMATION LAW.

These are among the reforms that will entrench anti-corruption and good governance gains. Anything less simply leaves the entire anti-corruption effort to the vagaries of the political process, which itself could be influenced by the corrupt.

Ultimately, reforms must address one of the main factors behind corruption – the belief by many citizens that much of government is corrupt anyway, and so they would rather tolerate the corrupt as long as they somehow receive benefits. (“Lahat naman sila corrupt, so doon na ko sa corrupt na marunong naman magpaambon ng pera.”) Hence investments, jobs and inclusive development—and not simply “incorruptible leaders”—are what will ultimately slay the cancer of corruption.