Foreign investors are raising concerns over a widening corruption scandal involving flood control projects, warning it could damage the Philippines’ business reputation and increase already high operating costs.
Florian Gottein, executive director of the European Chamber of Commerce of the Philippines (ECCP), said the issue has become a “hot topic” among investors and has made international headlines, tarnishing the country’s image.
“Definitely, it’s not the best picture we’re sending out here,” Gottein told reporters at the Arangkada Philippines Investment Forum 2025 on Thursday.
“The question now is whether this is limited to flood projects or if it will spill over into other infrastructure projects as well,” he said.
The scandal has already affected ECCP members in the construction sector, with several projects stalled and dragging down sales of construction materials.
Gottein warned that deep-rooted corruption has long distorted the business playing field.
“When you want to participate in government-funded projects, there are kickbacks,” he said. “What we see now is 25 to 30 percent of project funds being siphoned off. That’s one reason why the cost of doing business is so high in the Philippines.”
While new investors have yet to raise red flags, existing firms are voicing concerns about the uncertainty caused by the scandal. Gottein said the government should conduct a swift and credible investigation and implement safeguards to prevent a recurrence.
“What’s essential now is how fast the government and responsible agencies investigate and act on the findings,” he said.
Gottein said corruption exacerbates the Philippines’ weaknesses in ease of doing business and competitiveness.
He said that despite the Ease of Doing Business Law, many chamber members still struggle with its poor implementation.
Beyond the specific issue of flood control, Gottein said investor confidence would depend on whether the Philippines could enforce reforms, curb systemic corruption and restore trust in its infrastructure program.
