Apparently the Philippines, having just completed a mostly successful election and installed an optimistic new president, is looking to Indonesia as a role model to regain international investors’ confidence. No-one is denying it’s a long term project — the Phillipines was once a Southeast Asian economic beacon, but in recent years increasing corruption and confusing government regulation have seen investors leaving for elsewhere. Gross Domestic Investment (GDI) fell to 14% of GDP in 2009 and Transparency International ranks the country 139th out of 180 in its Corruption Perceptions Index.

Indonesia, itself ranked 111th but with GDI more than double that of Philippines’, may not be perfect but has seen greater improvements in government and anti-corruption measures over the past decade. It also has a higher GDP per capita and is closer to getting investment grade rating from international agencies. The Philippines sees this as an example and also as competition, as Southeast Asian countries continue to reshape themselves for new inflows of foreign cash.

The Philippines is not facing an economic crisis, and this might make reforms difficult. New President Benigno Aquino III has pledged to fight corruption and control regulation using already existing statutes, but has not promised larger-scale improvements. This may limit his government’s ability to spend money on necessary transport infrastructure and agricultural development projects. Overseas investors may need to see more obvious action before returning to the Philippines and committing to long term projects. Until then, investment will continue to divert to countries more willing to attract their attention, like Indonesia.

source & article: The Jakarta Globe