CORRUPTION is the biggest risk to the Philippine economy’s recovery from the coronavirus disease 2019 (COVID-19) pandemic, according to a survey of the country’s top chief executive officers (CEOs).
A survey by PwC Philippines in partnership with the Management Association of the Philippines (MAP) also showed over half of CEOs expect the recovery to take more than two years.
The country’s top executives also urged the Marcos administration to prioritize accountability and transparency and anti-corruption efforts.
Asked which factors will delay the economy’s recovery, 67% of CEOs answered corruption.
Other factors cited included lower domestic and foreign investments (38%), political uncertainty (30%), uncontrolled inflation (29%), rising oil prices (28%) and lower quality of education (27%).
Inflation averaged 4.9% as of August, as food and oil prices continue to spike.
PwC Philippines Chairman and Senior Partner Roderick M. Danao said corruption is hurting the country’s ability to attract investments.
“Whenever we deal with multinational companies trying to expand, corruption is always one of their significant factors for them to decide whether to go or not. It is very painful for the country because perception alone erodes trust,” Mr. Danao said at a virtual briefing on Monday.
“Unless we address the root cause of corruption, we cannot really accelerate foreign direct investments to the country compared to our neighbors like Vietnam and Thailand,” he added.
PwC Philippines Chairman Emeritus Alexander B. Cabrera said that the private sector should also play a role in addressing corruption.
“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, it is two-sided,” Mr. Cabrera said.
According to the survey, CEOs want President Ferdinand R. Marcos, Jr., who assumed office on June 30, to prioritize accountability and transparency; the fight against corruption; attracting more foreign investments; job generation; and public-private partnerships for infrastructure projects.
MAP President Rogelio L. Singson said that one way to attract more investors is to honor existing government contracts.
“If we really want to develop a good investment climate both for local and foreign investors, start with honoring existing contracts. There are many contracts in the government that has been either brought to arbitration, already won, but have yet to execute,” Mr. Singson said.
OUTLOOK“At the macroeconomic level, however, 52% of the CEOs believe that the Philippine economy still needs over two years to recover from the impact of COVID-19,” the PwC MAP 2022 Philippine CEO survey report said.
In the 2021 survey, 73% of CEOs said the expected recovery of the economy will take more than two years.
This year’s survey also showed 40% of CEOs think recovery will take more than one to two years, while 8% said they expect a rebound within a year.
The Philippine economy grew by 7.8% in the first half of 2022. The government is targeting 6.5-7.5% gross domestic product (GDP) growth this year.
Infrastructure development will be a key growth driver for the Philippine economy in the next 12 months, according to 62% of CEOs. Other growth drivers include domestic consumption (59%), government spending (46%), and foreign direct investments (41%).
The majority of CEOs (87%) are confident that their companies will see higher revenues in the next 12 months. The survey showed 38% said they expect significantly higher sales than pre-pandemic levels this year, while 21% see a return to pre-pandemic sales levels.
However, 35% of CEOs anticipate their companies’ revenues will still be lower than before the pandemic, citing factors such as the threat of new COVID-19 variants, potential lockdowns and talent constraints.
Mary Jade T. Roxas-Divinagracia, PwC Philippines deals and corporate finance managing partner, said the CEOs’ outlook are affected by external and domestic challenges.
“In terms of the concerns of the business leaders, they have identified the higher prices, supply chain issues, as well as labor concerns as possible continuing problems even after the pandemic,” Ms. Roxas-Divinagracia said.
“These (concerns) will be coupled with the global concerns…in terms of higher inflation, higher interest rate, and higher fuel costs. All these things combined are actually giving some of our business leaders sleepless nights, so to speak,” she added.
The survey, which was conducted between mid-July and August, covered 119 CEOs from industries such as financial services, manufacturing, energy and utilities, technology, among others. — Revin Mikhael D. Ochave