Crisis of confidence

The construction and real estate industries are major contributors to economic growth. Businessmen say thousands of jobs in these industries are currently as frozen as the assets of controversial contractors and public works officials.

Approvals for collecting payments from government agencies have also become more complicated, with the required signatures tripling or even quadrupling. This time, the businessmen say the red tape is meant not to collect grease money or “facilitation fees,” but to spread culpability or broaden deniability in case a project is deemed to be anomalous by probers.

The real property sector had already taken a hit from the property bubble created by the proliferation – and then the abrupt shutdown – of Philippine offshore gaming operators.  

Now the construction sector and its downstream industries are reportedly being battered. The corruption scandal has spread to substandard, overpriced or non-existent farm-to-market roads, schools and hospitals.

This week, Securities and Exchange Commission Chairman Francis Lim lamented in a speech that the “crisis of confidence” arising from the corruption scandal has wiped out an eye-watering P1.7 trillion in market value from the stock market. Lim described corruption as a “weapon of mass wealth destruction.”

Presidential investment and economics adviser Frederick Go clarified that the P1.7 trillion was based on sensationalized “fake news” posted on social media, although there has been a slide on a much smaller scale in the stock market in recent weeks.

Regardless of the actual amount of market value losses, the scandal is turning the country into Asia’s basket case. Not only because of the staggering extent of the corruption now being uncovered, but also because of perceptions that after all the hue and cry, there will only be token punishments. The big fish will get a slap on the wrist and everything will return to business as usual.

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Surely there are honest, competent folks who are in government not to rob the nation but to serve the people and the greater good. But for now, they are being tainted by too many rotten eggs at all levels of government.

Are we a nation of thieves? We’re seeing the impact of this perception in that incident reported by One News’ Gretchen Ho, whose mother was humiliated when a foreign exchange dealer at the airport in Oslo, Norway, upon seeing the Philippine passport, refused to accept her 300 US dollars for currency conversion for fear that it was dirty money being laundered.

The currency dealer reportedly acted on an advisory that had not yet been updated: the inclusion of the Philippines in the gray list of countries under closer monitoring for money laundering by the Paris-based Financial Action Task Force.

The FATF took the Philippines out of the gray list last February; the European Union did the same only in August. The currency dealer in Norway – a non-EU state that is part of the Schengen visa zone – still had the old FATF alert, according to the Department of Foreign Affairs.

We might yet be returned to the gray list, if the FATF would take a closer look at our election campaign system and consider the ongoing corruption scandal.

Being flagged for dirty money at currency exchanges abroad is just one of the hassles Filipinos go through because of weak governance and development woes.

A nation’s standing in the international community is reflected in the strength of passports. Singaporeans, who hold the world’s strongest passport as per the Henley Passport Index for 2025, can enter 192 out of 227 global travel destinations visa-free; the second-ranked South Koreans, 190, and the third-ranked Japanese, 189.

Filipinos, ranked 74th, are visa-free only in 64 destinations. When applying for a Schengen visa, we must submit not only an originally issued birth certificate, income tax return and certificate of employment, but also bank statements with transaction records covering six to eight months depending on the Schengen Area state issuing the visa.

Those are humiliating requirements that I suspect are meant to ensure that the applicant is no hampaslupa planning to become a TNT living off welfare or refugee applicant status within the Schengen zone. But the stringent requirements can’t prevent all the obscenely wealthy Pinoy money launderers from entering Europe, buying up properties and regularly depositing their loot in Switzerland.

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The robbers in our country would have scoffed at money laundering involving such a miniscule amount; $300 would buy only one Hermes handkerchief. But that Norway incident deserves attention, because the millions of Filipinos working overseas could suffer the same humiliation.

One answer is to show a resolute response to the corruption problem. China has executed several former officials for corruption, with another ex-minister currently on two-year suspended death sentence. South Korea has sent several former presidents to prison for graft.

We abolished capital punishment. But we can present to the world a swift and credible probe, with full transparency, accompanied by structural reforms to rebuild damaged institutions rather than just patch them up like Humpty Dumpty, and of course the speedy prosecution and punishment of the guilty.

It’s unfortunate that the Independent Commission for Infrastructure has steadfastly refused to open even part of its hearings to the public, preferring instead to conduct its probe like the Supreme Court, to which the ICI chair used to belong. The Philippine judiciary is not known for integrity; it warranted special mention even in the US State Department’s latest country assessments for corruption.

The impression is that it’s just business as usual in dribbling justice, with VIPs mollycoddled. So far the ICI has questioned the Discayas, former Senate finance committee chair Grace Poe and former public works chief Mark Villar. What these key players told the ICI is left to conjecture, fueling suspicions of hush-hush arrangements.

It seems the ICI tack is to wear out those demanding open hearings, as cases crawl at the usual glacial pace through the legal mill. In the meantime, toss the Marites mill a bone, such as the request for immigration lookout bulletin orders for the big guns.

ILBOs, which Jesus Crispin Remulla promptly approved in a parting act as justice secretary, won’t stop any of the 33 covered people from leaving the country.

The government will have to do more than this, to reassure Filipinos and the world that genuine change is on the way – soon, and with full transparency, the lack of which was a key factor in dragging the nation into this mess.

Source: Philstar

Infrastructure spending slumps in July amid flood control mess

Infrastructure spending declined by 25% in July, amid sluggish disbursements by the Department of Public Works and Highways (DPWH), the Budget department said.

At the same time, Budget Secretary Amenah F. Pangandaman said infrastructure disbursements may remain subdued in the coming months amid the ongoing probe into anomalous flood control projects.

In its latest disbursement report on Thursday, the Department of Budget and Management (DBM) said expenditures on infrastructure and other capital outlays fell by 25.3% to P93.3 billion in July from P124.9 billion in the same month last year.

Month on month, it dropped by 37.3% from P123.8 billion spent on infrastructure in June. 

This marked a reversal of the 6.5% annual increase seen in June after the election ban on public works disbursements was lifted in early May.

The DBM attributed the year-on-year decline in infrastructure spending to weak disbursements by the DPWH, which is currently embroiled in a controversy over anomalous flood control projects.

The Budget department noted the slow DPWH disbursements were due to project implementation schedules, including the timing and phasing of infrastructure activities, as well as delays in procurement, incomplete submission of progress billings and required documents by contractors.

Spending in July was also affected by contractors’ compliance with the new tax clearance requirement of the Bureau of Internal Revenue (BIR) for the release of final payments.

The BIR earlier said the failure of contractors to present their tax clearance will result in the suspension of contract settlements and the imposition of a tax line over the contract amount in favor of the government.

The updated clearance guarantees that every contractor has no outstanding tax liabilities.

“Disbursements for the Revised Armed Forces of the Philippines Modernization Program (RAFPMP) of the DND (Department of Defense) were also lower in July 2025 attributed to the timing of releases, as big-ticket items were scheduled in August,” the DBM said.

At the same time, the DBM said lower spending was partly offset by higher disbursements from the Department of Transportation, driven by local counterpart funding for foreign-assisted projects and the settlement of outstanding payables.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the government should exercise caution to prevent anomalies and corruption allegations.

“However, other infrastructure projects in good order will continue,” he said.

For the January-to-July period, overall infrastructure and capital outlays disbursements slipped by 3.2% to P713.5 billion from P736.7 billion in the same period last year.

The decline was driven by combined factors, including the second-quarter election-related ban and timing of disbursements for the defense modernization program.

As of end-July, the DBM released P4.9 billion to the DPWH for nationwide classroom repairs, alongside P3.5 billion earmarked for the restoration of Gabaldon and other heritage school and the implementation of the Last Mile Schools Program.

‘TEMPORARY SLOWDOWN’

Meanwhile, Ms. Pangandaman said infrastructure spending this year was dented by the election ban, and now the ongoing investigation on flood control projects.

The Budget department warned of a temporary slowdown in infrastructure spending as the DPWH conducts tighter due diligence of projects.

“(This) following rigorous due diligence being undertaken by the DPWH to evaluate and validate status of completed projects, and employ measures to enforce stricter verification of progress billings and other payment claims,” the DBM said.

Earlier this month, the DPWH suspended the bidding of all locally funded projects for two weeks, to help the agency implement safeguards against so-called “ghost” projects.

“The DPWH has also since lifted the suspension of bidding and procurement activities for local projects to ensure continuity and timely implementation of the infrastructure program while implementing safeguards to prevent corruption and ensure compliance with existing laws, rules, and regulations,” the Budget department said.

“Infrastructure spending will hopefully normalize and catch up towards the latter part of the year.”

However, Ms. Pangandaman said it’s too early to tell if the infrastructure slowdown will dent economic growth.

“We’re working with the DBCC (Development Budget Coordination Committee) to crunch the numbers. We’ll know more after the next (DBCC) meeting,” she said.

Analysts said they expect spending to further cool until 2026 amid a widening probe on infrastructure projects.

“We may see even slower infra spending in the coming months amid scrutiny of the DPWH and the corruption scandal,” Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc., said.

Ateneo Center for Economic Research and Development Director Ser Percival K. Peña-Reyes said the flood control scandal is a “very hot issue” that’s likely to cool infrastructure spending through yearend.

Mr. Ricafort also said slower infrastructure spending could also dampen government spending, which contributes less than a fifth to the country’s economic output.

“Risk is slowdown in infrastructure spending and overall economic growth. But would help narrow the budget deficit and curb growth in overall NG (National Government) debt,” he said.

Source: Business World

Right-of-way law seen boosting PHL bid for upper middle-class status

The newly signed Republic Act No. 12289, or the Accelerated and Reformed Right-of-Way (ARROW) Act, can help the Philippines achieve its goal of becoming an upper middle-income country, analysts said.

“This supports the country’s push toward UMIC (upper middle-income country) status by improving connectivity, efficiency, and investor confidence,” Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said via Viber.

“However, strong implementation, fair compensation, and coordination with LGUs remain essential for its success,” he noted.

He noted that the new measure is long overdue and will significantly improve the rollout of infrastructure projects.

“By streamlining land acquisition, it minimizes costly delays and accelerates project completion that is critical for boosting productivity and attracting investment,” he added.

President Ferdinand R. Marcos, Jr. signed the ARROW Act on Sept. 12, Palace Press Officer Clarissa A. Castro said.

Public Works Secretary Vivencio B. Dizon also confirmed the signing in a separate Viber message late Wednesday.

Malacañang has yet to release a full copy of the law, which amends Republic Act No. 10752, or the Right-of-Way Act, extending its coverage to all infrastructure projects carried out under public-private partnerships.

Nigel Paul C. Villarete, senior adviser on public-private partnerships at technical advisory group Libra Konsult, Inc., said that while private property rights are protected in a democracy, they must sometimes yield to the greater good.

He said via Viber that individual ownership cannot extend indefinitely, especially when it impedes community or national interests.

He said the law makes it easier for the government to pursue its infrastructure program.

The measure extends to private companies providing public services the power of eminent domain — including companies in electricity, petroleum, water pipelines, ports, telecommunications, and irrigation.

It also updates the law governing government access or expropriation of land for infrastructure by clarifying the rules on underground right-of-way.

The scope of the new law covers roads, bridges, power and water pipelines, telecommunications facilities, airports, seaports, and irrigation projects, among others.

Agencies will be required to prepare a Right-of-Way Action Plan before acquiring property, which must include a census of affected persons, an inventory of assets, compensation estimates, an implementation timeline, and records of consultations.

Property valuation will follow the market schedules set under the Real Property Valuation and Assessment Reform Act, ensuring fair compensation for land, structures, crops, and other affected assets.

Source: Business World