Market and Business Backlash Over Flood Control Corruption

PHILIPPINES - In Brief 09 Sep 2025 by Diwa Guinigundo

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As the Philippines' House of Representatives and the Senate pursue public hearings on the anomalous flood control projects, one clear consequence has been a negative market reaction. Just before the weekend, the Philippine Stock Exchange Index slipped 0.75% (46 points) to close at 6,082.92, while the broader All Shares Index fell 0.47%. Property firms bore the brunt of the decline, with only holding companies, mining, and oil stocks posting gains. Analysts attributed the downturn not only to corruption headlines but also to a weak peso and uncertainties in U.S. trade policy. A coalition of 30 business and civic groups called for an independent investigation, denouncing the scandal as “excessive corruption” and a betrayal of public trust. Civic and faith-based organizations echoed these concerns, stressing the diversion of public funds away from health, education, and critical infrastructure. The opportunity cost is just staggering. Finance Secretary Ralph Recto acknowledged the gravity of the issue, estimating losses of ₱42.3 billion to ₱118.5 billion between 2023 and 2025 due to ghost or substandard projects. He warned that such leakage curtails growth, undermines job creation, and erodes investor confidence. Allegations now implicate members of Congress, officials from the Department of Public Works and Highways, its Bids and Awards Committee, and even the Commission on Audit. The Management Association of the Philippines’ 2025 CEO Survey provides further context. Among 200 CEOs surveyed from July 22 to August 25, 83% expressed confidence in their industry’s 12-month outlook, slightly lower than last year’s 86%. Optimism rests on strong macroeconomic fundamentals—sou...