MANILA, June 15, 2005
 (STAR) By Ted Torres - The World Bank has granted a $300,000 loan to help clean up the Philippine government, perceived by business people to be among the most corrupt in Asia.

The loan is intended to strengthen the internal audit units of government agencies that vet state purchases, the bank and the government said in a statement yesterday.

The loan was the third granted to the Philippines to help it tackle public sector corruption, World Bank country director Joachim von Amsberg said.

"A key result expected is the establishment of adequate internal controls, particularly in the procurement process, thus lowering opportunities for corruption," Amsberg said.

"We are glad to sign this grant as it will help fight corruption and support better governance in the public sector, which is key to the overall development agenda of the country," Amsberg said.

International business perception surveys tag the Philippines as among the most corrupt places to do business in Asia.

Sixty-six percent of businessmen told the Social Weather Stations (SWS) research firm in a January-March national survey that they saw "a lot" of corruption in the public sector.

Fifty-four percent said most or almost all companies in their own line of business practiced bribery to win public sector contracts.

Another SWS poll taken during the same period showed that more company executives in the Philippines are willing to put their money into a campaign to fight corruption, saying rampant graft raised the cost of doing business by up to 15 percent.

The survey found businessmen are now willing to donate an average of five percent of their net profits to a campaign to rid the country of corruption.

The figure for Manila was at three percent, up from one percent when the survey organization began these polls in 2000.

Managers polled said their companies were asked for bribes in getting local and national government permits and licenses, in paying taxes, complying with import regulations, collecting receivables from the government, supplying the government with goods or services, and making use of government incentives.

Only eight percent of those who were solicited reported it to any public or private anti-corruption group.

Only two of 26 agencies — the Securities and Exchange Commission and the Philippine Stock Exchange — were rated sincere in fighting corruption.

As in previous surveys, the Bureau of Customs, Department of Public Works and Highways, and the Bureau of Internal Revenue were deemed the most corrupt.

Various international agencies have expressed concern about massive corruption in the Philippines, which analysts say has discouraged foreign investors.

Independent estimates suggest at least a fifth of the government budget is lost through graft.

One local watchdog group, Procurement Watch Inc., estimated that the Philippines loses P21 billion a year to corruption in the procurement of government goods and services alone.

In 2003, the Arroyo administration launched an anti-corruption campaign that included "lifestyle checks" on government officials.

Corruption is one of the main causes of the government’s chronic budget deficit, which analysts warn could deteriorate into a full-blown fiscal crisis and derail Mrs. Arroyo’s anti-poverty agenda.

During a visit to Manila earlier last month, US Deputy Secretary of State Robert Zoellick said the Philippines risks missing out on a US aid fund because of rampant corruption, poor fiscal management and peace negotiations with Muslim rebels among other things. — With Paolo Romero, AFP

Finance chief says business climate unaffected by scandals (Star) 06/15/2005

Finance Secretary Cesar Purisima expressed confidence yesterday that the business climate won’t be affected by controversies rocking the Arroyo administration.

Purisima said investors and traders will "see through the noise" stirred up by allegations that President Arroyo’s family took illegal gambling payoffs and that she rigged last year’s election.

"Business is about the economy, less about politics," Purisima said. "I think what we need to focus on is on the fundamentals of business in the country."

Shares rebounded on Friday after tumbling more than seven percent early last week amid worries about the scandals. The benchmark 30-company Philippine Stock Exchange index rose another one percent yesterday to 1955.79 after the market was closed Monday for a holiday.

Last week, confessed bagwoman Sandra Cam told a Senate investigation into illegal gambling that she personally handed payoffs to Mrs. Arroyo’s eldest son, Pampanga Rep. Juan Miguel Arroyo, and a brother-in-law, Negros Occidental Rep. Ignacio Arroyo. The two have denied the allegation.

Later, former National Bureau of Investigation deputy director Samuel Ong claimed he obtained a tape of a wiretapped conversation between Mrs. Arroyo and an election official about rigging the May 2004 vote. Malacañang said the tape was altered.

The allegations came on the heels of Mrs. Arroyo’s sagging approval ratings, the lowest for a Philippine president since the late dictator Ferdinand Marcos, and fresh rumors of a coup plot.

Purisima, spokesman for Mrs. Arroyo’s economic team, told the Foreign Correspondents Association of the Philippines that last week’s drop in the value of the peso was only a reflection of the country’s floating rate policy and that he was confident the market "is smart enough to look at the fundamentals."

He cited the rise in the Philippines’ gross international reserves beyond the $17 billion mark for the first time in two years, growth in exports, increased investment in the service industry, expansion of tourism, a declining deficit, and the target of balancing the budget before 2010, when Mrs. Arroyo’s term ends.

Purisima also said he plans to update investors on fiscal and economic developments during an upcoming road show in Europe and the United States.

"We are going to show them a balanced picture. My goal is to allow them to see through the noise," he said. "The way I view the ongoing political discussions is that it just is a very good evidence of a vibrant democracy in the Philippines." — AP

Reported by: Sol Jose Vanzi

All rights reserved