Corruption fallout reflected in November PPI reading, FPI says

THE fallout from the corruption scandal shows up in the dismal purchasing managers’ index (PMI) reading for November, indicating weakening investor confidence and stalled plans to increase output, the Federation of Philippine Industries (FPI) said.

“Globally, corruption controversies are known to undermine investor trust, delay expansion plans, and possibly raise financing costs, and the Philippines has not been immune to these pressures,” the FPI said in a statement.

The group said other factors dragging down the PMI were falling export orders, and adverse weather.

On Monday, S&P Global’s Philippine Purchasing Managers’ Index for manufacturing slumped to 47.4 in November from 50.1 in October. This was the weakest reading since the 46.4 posted in August 2021.

Purchasing manager activity is a proxy for expected levels of manufacturing as companies order raw materials for later processing into finished goods. A reading above 50 signals an expansion in manufacturing and below 50 a contraction.

The PMI queried around 400 manufacturers on new orders, output, employment, supplier delivery times, and purchase volumes.

“The government’s decisive campaign against corruption is the tough but necessary remedy, and with proper reforms and the strict implementation of it, we are confident it will deliver lasting benefits — restoring fairness for businesses and rebuilding trust among consumers,” the FPI said.

The government has pulled back the reins on public spending as it reviews how major projects are bid out, monitored, and paid for in the wake of the flood control scandals, in which many projects were found to be substandard or even never built.

It has also been dealing with allegations that revenue officers have been exploiting the audit process to make businesses pay more taxes or even extort money from them.

The FPI said curbing discretion in government approvals, enforcing clear standards, and ensuring full traceability of goods from port entry to tax audit directly addresses issues that surfaced in recent scandals.

It noted that such measures level the playing field, reduce hidden costs, and inspire confidence among companies that are compliant.

Last month, the Bureau of Internal Revenue suspended audit operations and froze the issuance of Letters of Authority and Mission Orders this week to crack down on audit abuse.

“With demand-side support and credible enforcement now aligned, we look forward to a clearer path to restore confidence, strengthen manufacturing, and position ourselves for recovery in the near term,” it said. — Aubrey Rose A. Inosante