Crimes Without Victims
The Impact of Corruption on the Economy and Society
Corruption in flood control and other public infrastructure projects is not a crime without victims. Some people may think that it's not so bad because no one was directly harmed, such as being murdered or injured. However, this perception is incorrect. Corruption has become a way of life in the country, with practices like "kalakaran" accepted for generations. People often follow these customs, believing they have no choice.
This view is wrong and harmful. Plundering the Treasury is not a victimless act. Every Filipino is affected by this corruption. The label “People of the Philippines vs Mr. Plunderer Congressman” is fitting for the cases we hope to see tried soon.
Economic Consequences of Corruption
The damage to the economy is already evident. Analysts both locally and internationally are warning that this corruption scandal will lead to a reduction in the country’s economic growth. This is because resources meant for economic development have been diverted to private pockets. Additionally, the scandal has caused political instability, making the country seem too risky for investors.
Capital flight has started, with both foreigners and locals withdrawing their investments. The drop in the peso-to-dollar exchange rate to P59 is a sign of what might come next.
CEIC Data, a company that provides global economic data, noted that the Philippine peso is increasingly out of sync with its ASEAN peers. It has diverged from its usual alignment with the Malaysian ringgit, the Thai baht, and the Singapore dollar. This underperformance reflects growing concerns over the Philippines' external position. There is evidence that the corruption scandal is affecting the country's economy and growth prospects.
Finance Secretary Ralph Recto told the Senate finance committee that corruption has caused up to P118.5 billion in economic losses since 2023. He mentioned that anecdotal accounts suggest corruption in DPWH flood control projects could be between 25% to 70% of the total project cost. This could have translated into 95,000 to 266,000 jobs for Filipinos.
Philippine GDP grew by 5.5% in 2023 and 5.7% in 2024. Recto suggested that if the money had been spent better, the growth could have reached six percent.
Governance and Economic Growth
In a broader sense, the public works corruption scandal highlights weaknesses in governance, transparency, and oversight. These factors are crucial for long-term economic growth, investment climate, and efficient public spending.
Corruption in public works projects costs the government large sums of money, forcing it to borrow more. It also reduces effective infrastructure investment, weakening resilience to natural disasters, which itself has economic costs.
What the senators and congressmen did, in conspiracy with DPWH district engineers and contractors, is clearly a crime against the people of the Philippines. There is no other way to look at it.
Fitch Ratings stated that domestic political uncertainty could affect investment. The Bangko Sentral ng Pilipinas (BSP) observed that the outlook for domestic economic growth has weakened. This outlook reflects the impact on business confidence due to governance concerns about public infrastructure spending.
The BSP also noted that the peso’s decline partly reflects market concerns over a potential moderation in economic growth due to the infrastructure-spending controversy.
In a speech reported by BusinessWorld, BSP Governor Eli Remolona Jr. said, “Governance concerns on public infrastructure spending have weighed on business sentiment. We need a credible resolution to this issue.”
Long-Term Effects of Corruption
Infrastructure investment might slow, which tends to dampen growth, especially in an economy where infrastructure has a large multiplier. Research shows that corruption hinders growth, investment, and productivity.
Analysts from New York-based GlobalSource Partners said massive corruption in flood control projects prevents the country from growing over six percent. These funds could have built schools, improved hospitals, and created up to 266,000 jobs. The resulting drag on productivity led to economic growth of 5.5 to 5.7 percent, when the economy could have expanded closer to over six percent.
They added, “The moral indictment is clear: corruption kills growth, weakens resilience, and erodes trust. When infrastructure becomes a source of private enrichment rather than public service, the entire development agenda collapses.”
For a developing country like the Philippines, good governance is an “economic necessity,” not a “moral luxury.” Every peso lost to corruption is a peso withheld from productive investment. When public works are marred by inefficiency and fraud, they waste resources and weaken the foundations of inclusive growth: connectivity, productivity, and resilience.
Accountability and Justice
The Ombudsman must quickly fulfill its obligation to hold corrupt legislators, DPWH engineers, and contractors accountable. These individuals must go to jail and return what they have stolen. Accused plunderers must undergo an incisive examination of their finances, tax records, and lifestyle checks. Those shown to have unexplained wealth should prove their innocence, as their guilt should be presumed. Their assets must be immediately forfeited in favor of the Treasury.
None of these things could have happened without the involvement of high officials. The Ombudsman must go beyond district engineers and include high-ranking congressmen and senators in jail. Given the adverse impact on all Filipinos, they ought to be treated as traitors.
The success or failure of BBM’s tenure hangs in the balance. The People of the Philippines must prevail in all corruption cases to be filed. The Sandiganbayan must play the role it was designed for and not be too generous to the plunderers, as it seems to have been so far.
Boo Chanco’s email address is bchanco@gmail.com. Follow him on X @boochanco.
