‘Corruption still a major obstacle in doing business in RP, SEA’

While American businesses acknowledge the importance of Asia in the global economy and continue to have confidence in Asian markets despite uncertain economic conditions, corruption is still seen as a major impediment to doing business, especially in the Southeast Asian region.

This was revealed by the results of the Fourth Annual Gallup Business Survey jointly commissioned by the American chambers in countries belonging to the Association of Southeast Asian Nations (ASEAN) — Indonesia, Malaysia, Singapore, Thailand, the Philippines and Vietnam.

"Once again, corruption is identified as a major impediment to doing business in the region and a source of high dissatisfaction for members," said Robert Sears, executive director of the American Chamber of Commerce of the Philippines Inc. (AmCham). "This, in combination with weak laws and regulations, has a significant effect on investment decisions and hampers business competitiveness."

The result of the survey, conducted by the Gallup Organization from April 19 to May 10, was posted Tuesday on the AmCham website at www.amchamphilippines.com.

Sears noted that dissatisfaction levels due to corruption went up to 61 percent this year, with AmCham member organizations in Indonesia and the Philippines reporting higher levels of dissatisfaction at 96 and 88 percent, respectively.

The report also showed that concern about corruption, weak laws and local protectionism emerged as an issue this year for Malaysian members, with 46 percent saying that corruption is an issue of concern. Another 30 percent cited local protectionism as another cause for worry.

The Gallup report noted that none of these factors was registered as statistically significant in Malaysia in 2004.

AmCham members in Malaysia, however, expressed strong satisfaction with office lease costs, the only country in the ASEAN region to have claimed strength in this area.

In contrast, American chambers in Singapore and Vietnam expressed dissatisfaction with office lease and housing costs while the Philippines and Thailand no longer regard office lease costs as among the strengths of their operations.

Among AmCham member organizations in ASEAN countries, only members from Singapore placed satisfaction with the government and the political system at a high 91 percent. Higher satisfaction rating was given to infrastructure at 97 percent.

Poor infrastructure remains a concern in Indonesia, Vietnam and the Philippines, the report stressed.

Eighty-one percent of American senior managers, however, believe that "Asia’s contribution to their company’s global revenues and operations will increase in the next two years" while 80 percent expect "to expand their business operations in the region."

More than half also expect their workforce to expand while 61 percent are equally optimistic about profit growth. There was less expectation, though, that local economic conditions would improve, with only 36 percent saying that they are looking forward to local conditions getting better during the year. This was down significantly from the 69 percent of those surveyed last year who said they believed things would get better in the local business environment.

This bullish outlook on the ASEAN business landscape is not reflected in their attitude towards the world economy, however. The Gallup report noted that only 29 percent of survey respondents expect the world economy to improve in 2005 compared to 66 percent who said so last year.

"Our members have become more cautious about the future outlook for the global and local economies, but Asia is believed to have continued growth opportunities," Sears said in the website.

"Asian markets are clearly regarded as increasingly important to a company’s international competitiveness and continued growth," he added.