SWS Business Survey: ‘Corruption still a problem’

29 June 2007 – The recent survey on businessmen’s perception on the level of corruption in the country remains high. The good news, though, is that 17 of 29 government agencies improved in their sincerity ratings to fight corruption over the last two years. Sixty-one percent of managers also see a good or excellent business weather over the next two years.

The 7th annual SWS Business Survey on Corruption, conducted in partnership with Makati Business Club and The Asia Foundation, also point to declining incidence of bribery for government contracts in Metro Manila. However, the survey also revealed that 3 of 5 managers were still asked for a bribe in 2006 on at least one government transaction.

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Reporting Bribe-solicitation
Since 2004, around 61% of managers have been asked for a bribe on at least 1 of 7 index transactions. In the latest survey, managers were asked for a bribe in the following government transactions: getting local government permits and licenses (40%); getting national permits and licenses (37%); paying income taxes (33%); complying with import regulations (25%); supplying goods/services (22%); collecting receivables (20%); and availing of incentives (13%).

Futility is the main reason for not reporting bribery. Only 6% of managers reported to authorities that they had been asked for a bribe. Sixty-nine percent of managers believe that “nothing will be done”; 49% were afraid of reprisal; and 48% believe it is “standard practice.”

Government Sincerity in Fighting Corruption
Ratings of almost all agencies for sincerity in fighting corruption are up in 2007, except for the Presidential Commission on Good Government (PCGG).

Of 29 agencies rated, 12 are positive ratings and 17 are negative ratings. Eight rated Moderate, Good or Very Good [+11 to +50] (DTI, SSS, SC, DOH, City/Mun. gov’t, COA, Sandiganbayan, GSIS); 9 are Mediocre [-10 to +10] (DepEd, Trial Courts, Ombudsman, DBM, OP, Senate, PAGC, DA, AFP); and 12 are Poor, Bad or Very Bad [-50 to –11] (DOTC, DILG, DOJ, PCGG, DENR, PNP, LTO, House of Rep., Comelec, BIR, DPWH, BoC). PCGG got a higher negative rating.

Election Contributions
One out of four (23%) said that a typical company in their sector would donate to the 2007 election campaign. The average estimated donation was P245,000.

Business Ethics
Only a minority of companies always demand for receipts, issue receipts, keep only one set of books, and pay taxes honestly: 50% say “almost all” companies in their industry demand receipts (36% say most companies); 35% say “almost all” issue receipts (44% say most companies); 24% say “almost all” keep one set of books (39% say most companies); and 18% say “almost all” pay taxes honestly (38% say most companies).

Transparency Information Bureau
Filipino managers are enthusiastic about the idea of establishing a Transparency Information Bureau. It is “like a Credit Information Bureau, except that, instead of Credit Ratings, it will make Transparency Ratings on the reputation of individuals, companies, and agencies regarding honest and ethics in business.”

The survey found 82% of the managers saying that their company would be willing, if asked by such a bureau, to give information about other people or companies regarding honesty and ethics in business.

Anti-Corruption Fund
Managers’ stated capacity to pay into an anti-corruption fund is 2% (median) of Net Income, down from 5% in 2006. Yet, in the last two years, two out of five spend an average of P292,000 to fight fraud or corruption in their own firms, and one out of five donated an average of P136,000 to an anti-corruption fund. In the next two years, one of two managers are willing to donate an average of P100,000 to a private anti-corruption fund.

Business Weather
Sixty-one percent see good or excellent business weather over the next two years – up from 46% in 2006 and 2005. One-half are satisfied with the National Government, and two-thirds are satisfied with the Local Government, on their promotion of good business climate.

Survey Background
The 2007 SWS Business Survey on Corruption was the seventh in an annual series done in partnership with the Makati Business Club, for the Transparent Accountable Governance (TAG) project sponsored by The Asia Foundation with support from the United States Agency for International Development (USAID). The findings are those of the SWS research team and do not necessarily reflect the views of TAF or USAID.

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