1 00:00:00,240 --> 00:00:10,280 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. The Philippines is no 2 00:00:10,360 --> 00:00:14,040 Speaker 1: stranger to storms, but this year the country's been hit 3 00:00:14,160 --> 00:00:17,040 Speaker 1: with some of the most brutal monsoons in the years. 4 00:00:17,480 --> 00:00:20,960 Speaker 2: Hipen Cormeggie ripped through the Philippines, killing more than one 5 00:00:21,040 --> 00:00:22,280 Speaker 2: hundred and eighty eight people. 6 00:00:22,360 --> 00:00:27,120 Speaker 3: Over's forecast to cause widespread damage, power, ouchages and flooding 7 00:00:27,240 --> 00:00:28,640 Speaker 3: across the island of Louzon. 8 00:00:29,400 --> 00:00:32,959 Speaker 1: Hundreds of people were killed when several typhoons barreled through 9 00:00:33,000 --> 00:00:37,040 Speaker 1: the archipelago earlier this year. In the aftermath, Bloomberg reporter 10 00:00:37,080 --> 00:00:40,120 Speaker 1: Andrea Golonzo and our colleagues traveled to one of the 11 00:00:40,159 --> 00:00:44,080 Speaker 1: hardest hit regions, in a village called Francis on the 12 00:00:44,120 --> 00:00:48,280 Speaker 1: outskirts of the capital of Manila. He met Estlita Bagnan annan. 13 00:00:49,680 --> 00:00:53,559 Speaker 3: Esilita was cleaning the mud on her front yard when 14 00:00:53,560 --> 00:00:57,320 Speaker 3: we spotted her. She had a broom, she was wearing 15 00:00:57,480 --> 00:00:58,240 Speaker 3: rubber boots. 16 00:00:58,680 --> 00:01:01,120 Speaker 1: She was cleaning up flood debris that washed up when 17 00:01:01,120 --> 00:01:04,760 Speaker 1: the nearby river overflowed during the storms. 18 00:01:07,160 --> 00:01:09,679 Speaker 3: When we talk to her, she told us that she's 19 00:01:09,720 --> 00:01:15,040 Speaker 3: already exhausted from cleaning her house every time a flood 20 00:01:15,080 --> 00:01:19,560 Speaker 3: comes in. She said, she's already getting sick. She's already old. 21 00:01:20,520 --> 00:01:23,520 Speaker 3: She can't do this every single time. 22 00:01:24,880 --> 00:01:28,680 Speaker 1: Like many people in Francis, Estaliita's house is built close 23 00:01:28,720 --> 00:01:32,520 Speaker 1: to the Pampanga River. For years, villagers have relied on 24 00:01:32,560 --> 00:01:35,399 Speaker 1: the river water for farming, but for at least half 25 00:01:35,400 --> 00:01:38,480 Speaker 1: the year, the river is also a liability. 26 00:01:39,319 --> 00:01:43,640 Speaker 3: Francis village is also what is called a catch basin, 27 00:01:44,120 --> 00:01:48,760 Speaker 3: so whenever there are floods in nearby towns in nearby provinces, 28 00:01:49,360 --> 00:01:54,160 Speaker 3: all the water also end up in that village. 29 00:01:54,200 --> 00:01:58,880 Speaker 1: This region floods every year. After years of fielding complaints, 30 00:01:58,960 --> 00:02:02,600 Speaker 1: the Philippine government finally stepped in a few years ago. 31 00:02:02,680 --> 00:02:06,160 Speaker 1: It allocated money for a dike to stop floodwater from 32 00:02:06,160 --> 00:02:07,320 Speaker 1: inundating the village. 33 00:02:07,960 --> 00:02:11,000 Speaker 3: The villagers were telling us that they were very happy 34 00:02:11,560 --> 00:02:14,600 Speaker 3: when they saw that the dike was being built. They 35 00:02:14,680 --> 00:02:19,079 Speaker 3: thought that it was already the end of their struggles 36 00:02:19,120 --> 00:02:20,800 Speaker 3: with the flooding and the high tide. 37 00:02:21,400 --> 00:02:24,800 Speaker 1: It wasn't, villagers said. The dike, which was completed in 38 00:02:24,840 --> 00:02:29,440 Speaker 1: twenty twenty three, made the flooding worse. When Dreo visited 39 00:02:29,480 --> 00:02:33,000 Speaker 1: Francis at the end of November, it hadn't rained for weeks, 40 00:02:33,520 --> 00:02:35,800 Speaker 1: but the floodwater was still there. 41 00:02:36,600 --> 00:02:40,800 Speaker 3: The residents told us that before, when it rains, the 42 00:02:40,880 --> 00:02:44,799 Speaker 3: water subsides in a couple of days or a maximum 43 00:02:44,840 --> 00:02:49,519 Speaker 3: of a week, but now the water stays on for months. 44 00:02:49,960 --> 00:02:53,239 Speaker 1: An initial government inspection of the dike found it wasn't 45 00:02:53,240 --> 00:02:58,160 Speaker 1: built properly and it wasn't the only one. 46 00:02:57,080 --> 00:03:01,720 Speaker 3: Kamramin pruekto pars of flodlalpat. 47 00:03:02,280 --> 00:03:05,120 Speaker 1: In his State of the Nation address in July, Philippine 48 00:03:05,120 --> 00:03:08,880 Speaker 1: President Ferdinand Marcos Junior announced that his government had uncovered 49 00:03:08,919 --> 00:03:12,720 Speaker 1: a web of corruption that potentially touches thousands of public 50 00:03:12,720 --> 00:03:17,960 Speaker 1: flood control projects. Some were constructed shoddily or had serious defects. 51 00:03:18,480 --> 00:03:21,480 Speaker 1: Others were paid for by the government but never built. 52 00:03:22,160 --> 00:03:24,919 Speaker 1: It's one of the biggest corruption scandals the country has 53 00:03:25,040 --> 00:03:29,240 Speaker 1: ever had to contend with. The Government's probe implicated dozens 54 00:03:29,240 --> 00:03:34,760 Speaker 1: of contractors, public works officials, and politicians who allegedly colluded 55 00:03:34,760 --> 00:03:38,400 Speaker 1: with each other to receive kickbacks over the years. The 56 00:03:38,440 --> 00:03:41,080 Speaker 1: network of corruption may have looted as much as seventy 57 00:03:41,120 --> 00:03:44,480 Speaker 1: percent of the public money allocated to flood control projects 58 00:03:44,480 --> 00:03:47,480 Speaker 1: in the last two years. That's an estimated two billion 59 00:03:47,680 --> 00:03:48,400 Speaker 1: US dollars. 60 00:03:49,040 --> 00:03:51,920 Speaker 2: Corruption is something that's been going on for years in 61 00:03:51,960 --> 00:03:55,400 Speaker 2: the Philippines, but even by Philippine standards, this scandal has 62 00:03:55,440 --> 00:03:56,440 Speaker 2: been pretty shockying. 63 00:03:57,320 --> 00:04:01,760 Speaker 1: Rosalind Matheson is the Chief Asia Course at Bloomberg. She 64 00:04:01,840 --> 00:04:05,760 Speaker 1: says countries across Southeast Asia have struggled with flooding this year, 65 00:04:06,440 --> 00:04:09,680 Speaker 1: but the situation in the Philippines has been complicated by 66 00:04:09,680 --> 00:04:12,040 Speaker 1: a corruption scandal that has struck a nerve with its 67 00:04:12,040 --> 00:04:16,080 Speaker 1: citizens and put intense public pressure on President Marcos. 68 00:04:16,520 --> 00:04:19,960 Speaker 2: There's quite a lot of anger there, frustration, and a 69 00:04:19,960 --> 00:04:22,800 Speaker 2: lot of anxiety about what will happen next year. A 70 00:04:22,800 --> 00:04:25,680 Speaker 2: lot of economists are expecting this to really be a 71 00:04:25,760 --> 00:04:29,159 Speaker 2: drag on the economy and for a lot of businesses 72 00:04:29,200 --> 00:04:31,800 Speaker 2: who are looking at the Philippines and saying is this 73 00:04:31,880 --> 00:04:35,000 Speaker 2: the place to invest or to continue to invest? Is 74 00:04:35,040 --> 00:04:37,560 Speaker 2: their fundamental reform because of theirs. 75 00:04:40,440 --> 00:04:42,880 Speaker 1: This is the Big Take Asia from Bloomberg News. 76 00:04:43,080 --> 00:04:43,680 Speaker 3: I'm Wanha. 77 00:04:44,440 --> 00:04:46,760 Speaker 1: Every week we take you inside some of the world's 78 00:04:46,760 --> 00:04:50,919 Speaker 1: biggest and most powerful economies and the markets, tycoons and 79 00:04:51,080 --> 00:04:55,400 Speaker 1: businesses that drive this ever shifting region. Today, on the show, 80 00:04:55,640 --> 00:04:59,360 Speaker 1: the devastating impact of one of the biggest corruption scandals 81 00:04:59,520 --> 00:05:03,000 Speaker 1: ever to hit the Philippines. We look at how lawmakers 82 00:05:03,000 --> 00:05:06,400 Speaker 1: and contractors fleece the government out of billions of dollars 83 00:05:06,480 --> 00:05:10,320 Speaker 1: that was earmarked to mitigate floods, and how the depth 84 00:05:10,360 --> 00:05:30,120 Speaker 1: of this corruption risks paralyzing the country's economy. Public outrage 85 00:05:30,200 --> 00:05:33,720 Speaker 1: over the years long corruption in projects designed to reduce 86 00:05:33,800 --> 00:05:38,559 Speaker 1: flooding has boiled over in the Philippines. Massive protests began 87 00:05:38,640 --> 00:05:41,479 Speaker 1: this summer and continued through to the end of November. 88 00:05:41,960 --> 00:05:44,800 Speaker 1: Tens of thousands of Filipinos have taken to the streets 89 00:05:45,120 --> 00:05:50,120 Speaker 1: calling for an end to corruption and for prosecutions. Bloomberg's 90 00:05:50,160 --> 00:05:55,000 Speaker 1: Dreoklonzo witnessed that anger firsthand in Francis. That's where he 91 00:05:55,040 --> 00:06:03,680 Speaker 1: met Jesse Ciago, the village chief man. 92 00:06:03,040 --> 00:06:06,760 Speaker 4: Always the people I talk to are angry at the 93 00:06:06,839 --> 00:06:11,960 Speaker 4: high level corrupt officials, congressmen, senators. In the news, we 94 00:06:12,040 --> 00:06:15,479 Speaker 4: see millions of pestls and kickbacks. I sometimes think that 95 00:06:15,520 --> 00:06:19,479 Speaker 4: we never learn those implicated before still end up winning 96 00:06:19,520 --> 00:06:23,200 Speaker 4: elections and then repeating what they did. 97 00:06:23,360 --> 00:06:26,400 Speaker 1: Jesse told Reo that people in the village are furious 98 00:06:26,480 --> 00:06:30,000 Speaker 1: about what they see as rampant corruption. He says, some 99 00:06:30,040 --> 00:06:32,200 Speaker 1: of the people accused in the flood scheme had been 100 00:06:32,240 --> 00:06:36,000 Speaker 1: implicated in corruption scandals in the past and had managed 101 00:06:36,040 --> 00:06:39,560 Speaker 1: to keep their roles in public office. Then of course 102 00:06:39,680 --> 00:06:42,160 Speaker 1: there's the total devastation on the ground. 103 00:06:43,080 --> 00:06:48,719 Speaker 3: There were farmers who don't have farmlands anymore. Students have 104 00:06:48,880 --> 00:06:53,000 Speaker 3: to build a makeshift bridge on the school so that 105 00:06:53,040 --> 00:06:56,359 Speaker 3: they can go to their classes. The village chief also 106 00:06:56,440 --> 00:07:00,359 Speaker 3: told us that it was a struggle for ambulance says 107 00:07:00,400 --> 00:07:04,320 Speaker 3: to reach residents w or having heart attacks because of 108 00:07:04,360 --> 00:07:08,400 Speaker 3: the flooding. And they also worry now that stagnant water 109 00:07:08,839 --> 00:07:12,880 Speaker 3: from the flooding will say there and breathed ben ge Mosquitos. 110 00:07:13,160 --> 00:07:18,680 Speaker 3: So it's really affecting their lives, their livelihoods and their health. 111 00:07:20,800 --> 00:07:23,840 Speaker 1: The dike in Francis was supposed to help prevent these 112 00:07:23,880 --> 00:07:28,480 Speaker 1: types of catastrophes by diverting floodwaters away from homes and businesses, 113 00:07:29,080 --> 00:07:32,480 Speaker 1: but Reo says so far it hasn't worked out. 114 00:07:32,880 --> 00:07:37,280 Speaker 3: Instead of keeping the water in the river and draining 115 00:07:37,320 --> 00:07:40,679 Speaker 3: the water from the streets to the river, the dike 116 00:07:40,960 --> 00:07:45,280 Speaker 3: is trapping the water in streets and in residences. 117 00:07:45,600 --> 00:07:48,920 Speaker 1: The dike took five months to build and cracked open 118 00:07:49,120 --> 00:07:51,720 Speaker 1: less than a year after it was completed. 119 00:07:52,280 --> 00:07:56,200 Speaker 3: We saw that the dyke had poor workmanship. The bars 120 00:07:56,200 --> 00:08:01,360 Speaker 3: were exposed. Part of the dike was already called in gress, 121 00:08:01,400 --> 00:08:05,320 Speaker 3: meaning the Sementa's already been entirely washed away. 122 00:08:06,080 --> 00:08:08,640 Speaker 1: The dike in Francis is just one of thousands of 123 00:08:08,680 --> 00:08:12,360 Speaker 1: projects that a government investigation alleges are part of a 124 00:08:12,520 --> 00:08:16,680 Speaker 1: vast corruption network. There are at least twenty four hundred 125 00:08:16,720 --> 00:08:20,679 Speaker 1: contractors in the Philippines, but just fifteen of them managed 126 00:08:20,680 --> 00:08:24,480 Speaker 1: to corner twenty percent of the flood control projects across 127 00:08:24,480 --> 00:08:26,360 Speaker 1: the country over the past three years. 128 00:08:27,320 --> 00:08:31,800 Speaker 3: The scheme starts with a lawmaker proposing a project to 129 00:08:32,040 --> 00:08:35,400 Speaker 3: the Department of Public Works and Highways. It's kind of 130 00:08:35,440 --> 00:08:39,199 Speaker 3: like they're sponsoring a project with expectation that they are 131 00:08:39,240 --> 00:08:42,120 Speaker 3: going to get a kickback from that project. 132 00:08:43,000 --> 00:08:47,160 Speaker 1: The government says these lawmakers conspired with public works officials 133 00:08:47,160 --> 00:08:50,720 Speaker 1: and contractors. The lawmakers work to get the funding for 134 00:08:50,840 --> 00:08:54,959 Speaker 1: flood mitigation projects through the Senate. The public works officials 135 00:08:55,160 --> 00:08:57,960 Speaker 1: then rig the bids for the projects in favor of 136 00:08:58,000 --> 00:09:02,360 Speaker 1: the contractors in the network. Once those contractors were paid, 137 00:09:02,600 --> 00:09:04,520 Speaker 1: they kicked back a chunk of that money to the 138 00:09:04,559 --> 00:09:09,400 Speaker 1: officials and politicians. How much did these corrupt networks deal 139 00:09:10,000 --> 00:09:13,640 Speaker 1: It's not clear. Estimates vary anywhere from twenty five to 140 00:09:13,679 --> 00:09:17,000 Speaker 1: seventy percent of the total costs of the projects, but 141 00:09:17,040 --> 00:09:20,840 Speaker 1: Bloomberg's Rosalind Matheson says what is clear is that there 142 00:09:20,920 --> 00:09:24,320 Speaker 1: wasn't enough money left for the actual structures to be 143 00:09:24,400 --> 00:09:25,480 Speaker 1: built to standard. 144 00:09:26,200 --> 00:09:29,720 Speaker 2: In some cases, the allegation is that the contractors use 145 00:09:30,080 --> 00:09:35,360 Speaker 2: very substandard products to build these protective dikes. They cut corners. 146 00:09:35,400 --> 00:09:38,240 Speaker 2: So one local said to us, this dike was supposed 147 00:09:38,240 --> 00:09:40,240 Speaker 2: to have, you know, for every ten bags of cement, 148 00:09:40,480 --> 00:09:42,959 Speaker 2: they're only used too And if you look at the dike, 149 00:09:43,040 --> 00:09:45,840 Speaker 2: you can see areas where they've crumbled away and inside 150 00:09:45,840 --> 00:09:47,760 Speaker 2: its hollow. 151 00:09:47,960 --> 00:09:51,720 Speaker 1: The dikes, dams, and bridges that were built were shoddy 152 00:09:52,120 --> 00:09:55,520 Speaker 1: and unable to withstand the severe floods they were supposed 153 00:09:55,520 --> 00:09:59,400 Speaker 1: to contain. That's if they were built at all. 154 00:09:59,559 --> 00:10:01,520 Speaker 2: Every place we went to there was at least one 155 00:10:01,559 --> 00:10:04,760 Speaker 2: ghost project where they said the funds were allocated and 156 00:10:04,840 --> 00:10:08,240 Speaker 2: nothing ever was built, and so the money has just disappeared. 157 00:10:09,080 --> 00:10:12,760 Speaker 1: Government investigators are still trying to figure out exactly how 158 00:10:12,840 --> 00:10:15,280 Speaker 1: much has been lost to graft and corruption for all 159 00:10:15,280 --> 00:10:17,079 Speaker 1: these flood mitigation projects. 160 00:10:17,400 --> 00:10:23,160 Speaker 3: We're not talking yet about subsidel projects, so safe to 161 00:10:23,200 --> 00:10:27,720 Speaker 3: say that the Philippines has lost billions of US dollars 162 00:10:27,920 --> 00:10:31,600 Speaker 3: in this corruption scheme. For the past decade. 163 00:10:31,720 --> 00:10:34,920 Speaker 1: Before the scandal broke, the Philippines ranked one hundred and 164 00:10:34,920 --> 00:10:39,280 Speaker 1: fourteenth on Transparency International's Corruption Index of one hundred eighty 165 00:10:39,320 --> 00:10:43,840 Speaker 1: countries and territories. Dreo says this scandal has revealed just 166 00:10:44,000 --> 00:10:46,280 Speaker 1: how deep the alleged corruption reaches. 167 00:10:47,080 --> 00:10:52,160 Speaker 3: The Public Works chief has called this a syndicate. Everybody 168 00:10:52,440 --> 00:10:55,880 Speaker 3: seems to be in on the scheme, from the top, 169 00:10:55,920 --> 00:10:58,960 Speaker 3: from the lawmakers to the bottom to the contractors. 170 00:11:00,640 --> 00:11:03,280 Speaker 1: Coming up after the break, we look at the government's 171 00:11:03,280 --> 00:11:06,920 Speaker 1: response to the scandal. Will it be enough to reassure 172 00:11:06,920 --> 00:11:10,480 Speaker 1: investors worried about putting money to work in Southeast Asia, 173 00:11:10,800 --> 00:11:19,920 Speaker 1: a region swamped by natural disasters and often clouded by corruption. 174 00:11:26,720 --> 00:11:30,480 Speaker 1: As recently as last month, torrential monsoon rains have triggered 175 00:11:30,520 --> 00:11:34,920 Speaker 1: floods and landslides across Asia, from Sri Lanka to Indonesia, 176 00:11:35,120 --> 00:11:39,320 Speaker 1: Thailand and Malaysia. Initial estimates put the damages for the 177 00:11:39,360 --> 00:11:42,839 Speaker 1: disasters in the region at twenty billion dollars just last 178 00:11:42,840 --> 00:11:46,760 Speaker 1: month alone. Climate change has made the extreme storms that 179 00:11:46,840 --> 00:11:50,960 Speaker 1: batter the region around half a year more commonplace. Corrupt 180 00:11:51,040 --> 00:11:56,480 Speaker 1: practices make the devastation even worse. Bloomberg's Rosalind Matheson says 181 00:11:56,520 --> 00:11:59,319 Speaker 1: the corrupt practices that stand in the way of trying 182 00:11:59,360 --> 00:12:03,080 Speaker 1: to manage class time change are most pronounced in the Philippines. 183 00:12:03,720 --> 00:12:07,000 Speaker 2: Does corruption go on in flood mitigation in other countries 184 00:12:07,400 --> 00:12:11,199 Speaker 2: quite potentially, when you've got politics and big contractors mixing, 185 00:12:11,679 --> 00:12:15,400 Speaker 2: it's a bit of a toxic combination, potentially, But we 186 00:12:15,480 --> 00:12:17,800 Speaker 2: haven't seen the scale of it come to light in 187 00:12:17,840 --> 00:12:20,160 Speaker 2: any way in other countries to the extent that we've 188 00:12:20,160 --> 00:12:21,640 Speaker 2: seen it come to light in the Philippines. 189 00:12:22,480 --> 00:12:25,679 Speaker 1: Since the scandal first broke in July, the Philippine government 190 00:12:25,760 --> 00:12:30,079 Speaker 1: has cracked down hard and fast. Authorities have frozen more 191 00:12:30,120 --> 00:12:33,280 Speaker 1: than two hundred million dollars in assets so far, including 192 00:12:33,320 --> 00:12:37,280 Speaker 1: bank accounts, cars, real estate, and nearly a dozen aircraft. 193 00:12:38,000 --> 00:12:41,000 Speaker 1: A handful of people have been arrested, and President Ferdinand 194 00:12:41,040 --> 00:12:44,600 Speaker 1: Marcos Junior has promised that moral officials would be locked 195 00:12:44,679 --> 00:12:46,199 Speaker 1: up by Christmas. 196 00:12:45,800 --> 00:12:49,800 Speaker 3: But you cannot steal from Filipido people and expect to 197 00:12:49,880 --> 00:12:53,679 Speaker 3: hide or fly away on your private judge you'll have 198 00:12:53,720 --> 00:12:54,480 Speaker 3: the money to run. 199 00:12:54,559 --> 00:12:58,440 Speaker 1: Bloomberg's Roslind Matheson says the current administration wants to show 200 00:12:58,480 --> 00:13:00,760 Speaker 1: the public they're taking the scandal seriously. 201 00:13:01,280 --> 00:13:05,480 Speaker 2: They've frozen hundreds of millions of dollars from bank accounts. 202 00:13:06,120 --> 00:13:09,240 Speaker 2: Have they actually recouped that yet, not necessarily, and it's 203 00:13:09,240 --> 00:13:13,439 Speaker 2: still a small amount of what they estimate was siphoned off. 204 00:13:13,559 --> 00:13:17,520 Speaker 2: They say the investigations are ongoing. Some people have been arrested, 205 00:13:18,000 --> 00:13:21,600 Speaker 2: but so far it's mostly lower level officials who've been arrested, 206 00:13:22,000 --> 00:13:25,000 Speaker 2: and the government says that they have to do really 207 00:13:25,080 --> 00:13:29,840 Speaker 2: proper probes of more senior names, more senior politicians. 208 00:13:31,000 --> 00:13:34,880 Speaker 1: But Roslind says the promise of accountability has done little 209 00:13:34,960 --> 00:13:38,280 Speaker 1: to quell anger in the country. She says, deep rooted 210 00:13:38,320 --> 00:13:42,400 Speaker 1: graft and corruption have been tolerated, even accepted as part 211 00:13:42,480 --> 00:13:46,199 Speaker 1: of life in the Philippines, but this scandal feels different. 212 00:13:46,480 --> 00:13:49,400 Speaker 2: Corruption is something that's been going on for years in 213 00:13:49,440 --> 00:13:52,600 Speaker 2: the Philippines. It's not that startling in a way, it's 214 00:13:52,600 --> 00:13:56,320 Speaker 2: sort of seen as a facet of life. But even 215 00:13:56,400 --> 00:13:59,480 Speaker 2: by Philippine standards, this scandal has been pretty shocking, and 216 00:13:59,520 --> 00:14:03,520 Speaker 2: that's why you've seen big street protests. I think because 217 00:14:03,559 --> 00:14:06,719 Speaker 2: the weather in away is so visceral for people. I mean, 218 00:14:06,880 --> 00:14:10,720 Speaker 2: twenty typhoons at least come through the Philippines every year. 219 00:14:10,760 --> 00:14:13,040 Speaker 2: People know that they have to deal with this weather 220 00:14:13,520 --> 00:14:17,640 Speaker 2: every year, the risk of flooding. It's quite fundamental for them, 221 00:14:18,040 --> 00:14:19,960 Speaker 2: and they've been putting their faith in the government to 222 00:14:20,040 --> 00:14:23,400 Speaker 2: fix it. And then to hear from the President that, 223 00:14:23,560 --> 00:14:25,600 Speaker 2: in fact, this corruption has been going on for years 224 00:14:25,960 --> 00:14:28,000 Speaker 2: it never came to light. So I think it's a 225 00:14:28,040 --> 00:14:31,080 Speaker 2: combination really of this being such a direct impact on 226 00:14:31,160 --> 00:14:32,240 Speaker 2: people's lives. 227 00:14:32,760 --> 00:14:37,200 Speaker 1: The corruption allegations and public uproar that followed have hammered 228 00:14:37,240 --> 00:14:41,600 Speaker 1: Philippine markets. Economic growth in the third quarter were surprisingly 229 00:14:41,680 --> 00:14:45,120 Speaker 1: weak and grew at the slowest piece since twenty twenty one. 230 00:14:45,880 --> 00:14:48,640 Speaker 1: The peso slumped to a record low against the dollar 231 00:14:48,680 --> 00:14:52,160 Speaker 1: in October, and the benchmark stock index fell more than 232 00:14:52,160 --> 00:14:55,520 Speaker 1: fourteen percent at one point this year. To ensure that 233 00:14:55,600 --> 00:14:59,120 Speaker 1: even more money isn't lost to corruption, the government has 234 00:14:59,200 --> 00:15:02,840 Speaker 1: frozen spending for flood control projects through twenty twenty six. 235 00:15:03,680 --> 00:15:06,280 Speaker 1: That might stop the rot in the short term, but 236 00:15:06,480 --> 00:15:08,760 Speaker 1: Roslin says it comes at a cost. 237 00:15:09,440 --> 00:15:12,680 Speaker 2: It's frozen. Not just government spending, but it's frozen people's 238 00:15:12,680 --> 00:15:16,320 Speaker 2: decision making about whether to expand their business, to invest 239 00:15:16,360 --> 00:15:19,160 Speaker 2: in a new plant, to wait and see. Really, and 240 00:15:19,200 --> 00:15:23,080 Speaker 2: that kind of indecisiveness can be a real infection for 241 00:15:23,120 --> 00:15:27,240 Speaker 2: an economy because once that sentiment starts, it's hard to 242 00:15:27,280 --> 00:15:29,800 Speaker 2: know when it starts to fade away again and people 243 00:15:29,840 --> 00:15:31,840 Speaker 2: start to regain confidence. 244 00:15:32,320 --> 00:15:36,080 Speaker 1: Economists and analysts that Roslin spoke to expect the scandal 245 00:15:36,120 --> 00:15:38,720 Speaker 1: to continue to be a drag on the economy through 246 00:15:38,760 --> 00:15:41,360 Speaker 1: at least the first half of twenty twenty six, and 247 00:15:41,440 --> 00:15:45,200 Speaker 1: perhaps even longer. I asked rosalind, what's at stake for 248 00:15:45,240 --> 00:15:48,280 Speaker 1: the Philippines if leaders fail to address the more deep 249 00:15:48,360 --> 00:15:52,720 Speaker 1: rooted issues, including the lack of transparency and budget accountability, 250 00:15:52,880 --> 00:15:54,240 Speaker 1: that are behind the scandal. 251 00:15:54,920 --> 00:15:58,600 Speaker 2: Well, the sense is that unless the Philippines fundamentally addresses 252 00:15:58,640 --> 00:16:00,360 Speaker 2: some of these issues, that it will be stuck in 253 00:16:00,400 --> 00:16:03,920 Speaker 2: this doom loop of corruption and relative underperformance. And really, 254 00:16:03,960 --> 00:16:05,840 Speaker 2: if you look at the Philippines, it's a country that's 255 00:16:05,880 --> 00:16:08,120 Speaker 2: got loads going for it. I mean, it's in a 256 00:16:08,600 --> 00:16:12,880 Speaker 2: terrific location in terms of the global supply chain for trade. 257 00:16:13,000 --> 00:16:17,200 Speaker 2: It has a young, dynamic population, it's quite involved in 258 00:16:17,240 --> 00:16:21,840 Speaker 2: the BPO sector, because it's got a strong English speaking base, 259 00:16:22,160 --> 00:16:25,320 Speaker 2: it's had some success in drawing tech investment from China, 260 00:16:25,680 --> 00:16:27,800 Speaker 2: and so on the surface of it, the Philippines should 261 00:16:27,800 --> 00:16:31,280 Speaker 2: be and is an attractive investment destination. It's just that 262 00:16:31,360 --> 00:16:33,280 Speaker 2: this corruption cloud hangs over it. 263 00:16:34,200 --> 00:16:38,280 Speaker 1: And with this corruption cloud hanging over the Philippines, Rasland says, 264 00:16:38,360 --> 00:16:40,960 Speaker 1: it could pose an even bigger risk for the country 265 00:16:41,120 --> 00:16:45,240 Speaker 1: long term. It could push investors already looking elsewhere in 266 00:16:45,280 --> 00:16:48,600 Speaker 1: Southeast Asia to seek out opportunities to invest and do 267 00:16:48,680 --> 00:16:51,400 Speaker 1: business in places like Vietnam and Thailand. 268 00:16:51,800 --> 00:16:54,080 Speaker 2: For the Philippines has quite a lot at stake in 269 00:16:54,120 --> 00:16:57,360 Speaker 2: this in terms of its ability to present itself as 270 00:16:57,400 --> 00:17:01,360 Speaker 2: an attractive destination for investment and business, especially when it's 271 00:17:01,360 --> 00:17:04,000 Speaker 2: competing against a lot of other countries in the region, 272 00:17:04,040 --> 00:17:07,480 Speaker 2: and those countries are actively touting for business and all 273 00:17:07,520 --> 00:17:10,080 Speaker 2: trying to draw companies as well away from China. As 274 00:17:10,119 --> 00:17:14,160 Speaker 2: the global trade map gets redrawn and global supply chains 275 00:17:14,200 --> 00:17:17,680 Speaker 2: get redrawn, there's a real opportunity here for the Philippines. 276 00:17:17,680 --> 00:17:20,040 Speaker 2: But the danger is if this remains an overhang for 277 00:17:20,080 --> 00:17:22,960 Speaker 2: the next year, other countries will have a one year 278 00:17:23,000 --> 00:17:26,200 Speaker 2: head start on the Philippines in doing so. The warnings 279 00:17:26,200 --> 00:17:29,639 Speaker 2: that we're hearing from investors, economists, and so on is 280 00:17:29,680 --> 00:17:34,440 Speaker 2: that the Philippine government really needs to demonstrate fundamental action here, 281 00:17:34,720 --> 00:17:36,880 Speaker 2: not just you know, here's a few people we found 282 00:17:36,960 --> 00:17:40,720 Speaker 2: who we've arrested and charged, but we really tried to 283 00:17:40,840 --> 00:17:43,520 Speaker 2: rout out the people who are behind the scheme. 284 00:17:44,240 --> 00:17:48,320 Speaker 1: As the Philippine government works to fix the country's reputational damage, 285 00:17:48,440 --> 00:17:51,760 Speaker 1: the villagers of Francis are focused on fixing the damage 286 00:17:51,920 --> 00:17:55,560 Speaker 1: to their town. With no projects being funded next year, 287 00:17:55,880 --> 00:17:58,040 Speaker 1: they're not likely to get a new dake for the 288 00:17:58,040 --> 00:18:03,399 Speaker 1: foreseeable future, and says they're taking matters into their own hands. 289 00:18:03,960 --> 00:18:05,520 Speaker 2: They're like, we're just going to have to get on 290 00:18:06,040 --> 00:18:08,320 Speaker 2: and find a way. So they're trying to dig drains 291 00:18:08,320 --> 00:18:12,520 Speaker 2: down the sides of houses, They're trying to raise roads 292 00:18:12,560 --> 00:18:17,119 Speaker 2: in order to prevent further flooding. What surprised me is 293 00:18:17,119 --> 00:18:20,720 Speaker 2: how stoic people are about it, how is lyn they are. 294 00:18:21,200 --> 00:18:23,439 Speaker 2: They say they're not getting a ton of help, and 295 00:18:23,480 --> 00:18:26,919 Speaker 2: their big concern is obviously that the floodwater will finally 296 00:18:27,119 --> 00:18:29,879 Speaker 2: fully recede, and then you get into the next rainy 297 00:18:29,920 --> 00:18:32,280 Speaker 2: season and it all just begins again. 298 00:18:37,359 --> 00:18:39,720 Speaker 1: This is The Big Take Asia from Bloomberg News. 299 00:18:39,960 --> 00:18:40,640 Speaker 3: I'm one half. 300 00:18:41,320 --> 00:18:44,120 Speaker 1: To get more from The Big Take and unlimited access 301 00:18:44,160 --> 00:18:47,160 Speaker 1: to all of Bloomberg dot Com, subscribe today at Bloomberg 302 00:18:47,160 --> 00:18:50,520 Speaker 1: dot com slash podcast Offer. If you liked the episode, 303 00:18:50,680 --> 00:18:53,200 Speaker 1: make sure to subscribed and review The Big Take Asia 304 00:18:53,280 --> 00:18:56,240 Speaker 1: wherever you listen to podcasts. It really helps people find 305 00:18:56,240 --> 00:19:03,080 Speaker 1: the show. Thanks for listening, See you next time. 306 00:19:01,320 --> 00:19:05,040 Speaker 4: The Spy and d