The Foreign Investor Face-to-Face with Corruption

Many countries' response to an economy in recession is foreign capital. The Philippines, for instance, makes presidential state visits to invite foreign investments. The injection of the much-needed cash would actually revitalize its economy. And why not? Direct foreign investments are a more permanent source of outside cash that could bring in income. Investors, however, seek stability. The word "income" in itself signifies results, and results come when you do something. Foreign money does not act on the principle of a calamity or an accident. It will, however, when adverse factors threaten a nation's economic health. An economically irresponsible nation cannot expect foreign capital to come pouring in and continue flooding its market with cash. A nation can not expect dollars to come flowing in if it is beset with corruption and prejudicial policies. Such practices will deprive a nation of foreign investment.

Very often, the word "woo" comes into play whenever economic state visits are made. This means that investors are presented with the basic factors that will make a country attractive for investment. Political stability is a crucial issue that will always affect economy. Internal politics is the first aspect that needs to be examined. In an extreme case, no investor in his right mind would cast his confidence in Somalia. It is a nation without a government and is factioned by belligerent warlords. U.N. relief goods do not make it to its beneficiaries because the private armies intercept them to keep the populace subject to their region's warlord. But a country does not need to be a Somalia to become unattractive.

Corruption is seen as a big deterrent to foreign investment. The increased spending is the least of a business' worries. Corruption can be defined as the adulteration of trust and confidence in an office which functions against the limitations provided to it by a higher authority.

As of 2005, the Political and Economic Risk Consultancy, Ltd., an agency that provides international investors with analytical up-to-date information about the ASEAN region, greater China, and South Korea, noted that foreign companies need places like Hong Kong and Singapore, where their ventures could grow unhampered, and easily expand and diversify ("Corruption still serious" B-16).

Whether we believe it or not, businesses still adhere to the American adage: "What goes around, comes around." One business man was once quoted: "There's still no beating honesty". He continued by saying that the real "catch-less" shortcut to a regulation is the adherence to a regulation, and not in circumventing it. A regulation in itself has the protection needed by all parties involved. In both jurisprudence, and business dealings, there is what is called "good faith". This covers a vast territory of ideas regarding fairness and good intentions to all parties involved. The handshake itself is a gesture of good faith, which, in its age-old significance, says "I am not carrying any weapons, and I come in peace."

Reference:

"Corruption Still Serious In Asia's Developing Nations," Manila Bulletin, December 6, 2005, B-16.