BWorld 74, Pres. Duterte's anti-corruption programs and Transparency Intl.

* This is my article in BusinessWorld Special Anniversary issue last Monday.
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The Duterte administration's anti-corruption plans

Corruption takes place when a person has the power to dispense certain actions or render services that other parties needs. Voters who sell their ballots in exchange for money and politicians buying them are both engaged in electoral corruption. Similarly, procurement officers who favor certain suppliers even if others can offer the same products or services at lower prices are also committing corruption.

Elevate the scene to a city or country level, and we can see or suspect large-scale corruption in various levels. Like a cabinet secretary favoring a particular supplier of construction materials and equipment, or arms and soldier uniforms, or school buildings and textbooks, or hospital equipment and medicines, even if other suppliers can deliver those goods and services at a lower price and/or better quality, corruption occurs.

To reduce or eliminate corruption, the process of procurement and signing of contracts should be made as transparent as possible. And the possibility of prosecution and imprisonment for wrongdoing should also be made as certain as possible. Because while the punishment can be as severe like the death penalty but if the chance of being caught and prosecuted is very small, then people will remain corrupt.

During the BusinessWorld Economic Forum last July 12, 2016, Department of Finace (DoF) Secretary Carlos G. Dominguez III outlined some important anti-corruption measures of the Duterte administration. Among these are the following:

1. Reduce income tax (personal and corporate), raise the income tax exemption, all in at P1 million a year. This will reduce corruption in the payment and collection of income taxes, broaden the tax base and hence, can actually raise revenues overall.

2. Rationalize import permit papers, reduce the number of signatures, conduct random audit of shipments, and undertake certain processes outside Manila ports. This will reduce corruption at the Bureau of Customs (BoC).

3. Accelerate the Run After the Tax Evaders (RATE), Run After the Smugglers (RATS), and Revenue Integrity Protection Service (RIPS) programs of the DoF. Undersecretary Gil Beltran was appointed as the anti-red tape czar of the Department tasked to cut the transaction processes at the BIR, BoC, and other agencies under the DoF.

4. Maintain transparency in all dealings — the Executive Order (EO) on Freedom of Information (FoI) that will cover the Executive Department will be signed very soon. This will encourage zero tolerance for corruption.

There are other proposals and programs to reduce corruption at the DoF and other agencies, but the above were highlighted in his speech that day.

These are good proposals. Few permits and bureaucratic signatures can lead to a leaner and smaller government. Instead of 8 or 10 directors in one bureau that require 8 or 10 signatures, make it 4 or 5 and the transaction procedures will significantly improve. The number of officials and their offices will also decline and hence, the need for taxes and fees to keep them going will also be reduced. If people have more money in their pockets because government taxation and mandatory fees have declined, that is already one form of public service. Concrete, down to earth public service.

The extent of corruption in the Philippines is captured in various international reports and studies that are reported annually. One such important report is Transparency International’s (TI) Corruption Perception Index (CPI). TI interviews thousands of expats in many countries worldwide and see their perception of corruption or absence of it in the countries where they do business.

Other selected reports are also included in a separate table by TI. For this piece, four of such reports are included in the table below. These are the (a) World Economic Forum’s (WEF) Executive Opinion Survey (EOS), (b) World Justice Project’s (WJP) Rule of Law Index (RLI), (c) Economist Intelligence Unit (EIU), and (d) IHS Global Insights (GI).

The Philippines has consistently scored only between 34 to 38 over the last four years of TI’s CPI annual reports. So out of 167 countries covered in the 2015 Report, the Philippines ranked 95th or within the lower half of the countries covered. And the Philippines’ low ranking is affirmed in its low score in the four other reports.

I am hoping that reforms initiated by the DoF and other departments of the Duterte administration will be implemented and sustained for the next six years. There will be significant improvement in the country’s corruption perception and reduction in actual practices of corruption in many government agencies, from local to national, and from the Executive to the Legislative and Judiciary.

Transparent and lean government is good. It will be beneficial for businesses and taxpayers and good for the officials and ordinary personnel in government. Trust and respect for both sides will also improve.

Bienvenido S. Oplas, Jr. (@noysky on Twitter) is the head of Minimal Government Thinkers and a SEANET Fellow.

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See also:

BWorld 71, Free trade and higher income, July 11, 2016 

BWorld 72, Economic integration and disruption, July 25, 2016 
BWorld 73, Transco and the big beneficiaries of feed in tariff, July 27, 2016

BWorld 21, More internet use means lesser corruption?

* This is my article in BusinessWorld Opinion last October 28, 2015.

Many Filipinos and Asians now are getting more vocal about their frustrations regarding government (inefficiencies, wastes, corruption, plunder, etc.), corporate monopolies and duopolies, politicians and/or political parties, and so on. One of the explanations is that people have more information and have increased access to the Internet and events happening in their country and abroad.

Table 1. Mobile phone subscribers and internet users in East Asia, per 100 population 

Source: ADB, Key Indicators for Asia and the Pacific 2015.

The column on multiple is not part of the ADB report, it is only added in this paper.

More affordable laptops, tablets, and mobile phones plus greater access to the Internet, are big contributors to this.

In the past, news about a political scandal or a murder can take days or even weeks to be disseminated to the rest of the country. But now, these events can be broadcast within minutes and hours. Facebook, Twitter, Instagram and other social media platforms have helped transformed ordinary citizens into spontaneous reporters of important community events and stories and national issues.

For this piece, I wish to test this hypothesis: “Increased publicly available information, broader access to the Internet, result in lesser government corruption.”

This is not an exhaustive academic paper but another short attempt at explaining what contributes to greater or lesser wastes and corruption in governments, in the Philippines and other Asian countries.

Two sets of data will be used: Internet use and mobile phone subscription data from the Asian Development Bank and corruption perception index by the Transparency International (TI). So the data set is limited and hence, its conclusive function is also limited and hence, may be inaccurate for some countries. Nonetheless, the numbers should give readers more ideas by which they make their own conclusions.

In the table below, note the multiple -- meaning the number of times the figure in 2014 have expanded over the same figures in 2010 or 2000. This is a good indicator for the people’s greater access to information.

From the data shown, if the aforementioned hypothesis is true, the following countries should experience reduction in corruption in 2014 compared to 2010, at least in corruption perception: Philippines, Thailand, Vietnam, and Laos.

Let us now check TI’s data for Association of Southeast Asian Nations (ASEAN) countries. Brunei is not included in the report.

Table 2. Transparency International (TI) corruption perception index in the ASEAN

Source: Transparency International,

http://www.transparency.org/cpi2010/results

http://www.transparency.org/cpi2014/results

The following can be gleaned from the above table:

• Significant improvement in global rank and score in just four years by the Philippines (134th to 85th);

• Mild improvement in global rank by Malaysia (56th to 50th) and Laos (154th to 145th);

• Decline in global rank for Singapore (1st to 7th) and Thailand (78th to 85th);

• Eight of the nine ASEAN countries have experienced improvement in scores, which is an indicator of overall decline in corruption perceptions. The reason why many of them have not improved significantly in global ranking is because other countries have also improved their scores;

• Overall, there is reduction in corruption perception in ASEAN countries. Singapore might have slipped in global ranking and score, but it remains in the top 10.

The hypothesis seems to be confirmed by the above data except in Thailand, which remains under a military junta and dictatorship since 2013 or 2014 with no electoral and popular mandate, nor plans to hold any election in the near future. Corruption perceptions therefore, declines overall.

As people become more empowered with more information, they become more demanding and more politically impatient. People want quicker changes in the socioeconomic conditions of the country. And muted in various political and economic analysis, is the desire by many people to have less government -- less regulations and taxation, less permits and bureaucracies.

More information means people can manage their own lives, their own households and communities better. More information is improvement in people’s welfare itself.

Ignorance partly due to inefficient public education system can be compensated by the people having access to the Web, where people can download and read almost any type of information and skills upgrading they want.

The people’s impatience with government inefficiencies, wastes, and corruption should be a signal for government leaders and officials to reduce and shrink their intervention and assault on the people’s pockets and free will.

So long as people do not resort to violence and deception to expand their income and wealth, there is little or no justification for governments to keep their high degree of regulations and taxation, permits, and bureaucracies.

Bienvenido S. Oplas, Jr. is the head of Manila-based Minimal Government Thinkers, Inc., and a Fellow of Kuala Lumpur-based South East Asia Network for Development (SEANET).
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See also:BWorld 17, More on the Philippine electricity market, August 30, 2015 
BWorld 18, Non-tariff barriers in the ASEAN, September 12, 2015 
BWorld 19, Taxation and regulations in PH mining industry, September 24, 2015 
BWorld 20, DOE Circular to raise electricity prices, October 25, 2015