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MANILA, July 16 (AFP) - President Gloria Arroyo conceded Tuesday that recent warnings by the US ambassador that corruption was scaring away investment in the Philippines were valid.

"Every time we talk with each other, he mentions this problem to me," Arroyo said, referring to US ambassador Francis Ricciardone.

Ricciardone said Monday that Manila was losing out to its Asian neighbors due to perceptions of widespread corruption and constitutional barriers to foreign investment.

The number one barrier is "corruption, not just regarding the courts but also officials outside" the judiciary, he told foreign correspondents.

"Foreign investors have complained about that to me and to other ambassadors here (that) we have a real problem here," Ricciardone said.

Arroyo said Tuesday that Filipino businessmen had also complained that corruption was deterring foreign investment.

Ricciardone had singled out enforcement of intellectual property rights of US companies complaining of piracy as a problem.

His remarks made the headlines of major Philippine dailies which were struck by his frankness.

Guillermo Luz, the executive secretary of the influential Makati Business Club, was quoted by ABS-CBN television as saying that the group believed Arroyo had taken positive steps to fight corruption.

Preliminary results of a survey found that club members perceived corruption had been curtailed in several agencies except in the Philippine national police, the legislative branch and in local governments which were seen to be riddled with graft.

Luz stressed that the Makati Business Club continued to back Arroyo's call for a greater liberalization of the economy.

Dario Rama, head of a special anti-graft commission, agreed there was corruption within the government but stressed that it was gradually being eroded.

"For a start, we have someone sitting in (the presidential palace), the chief executive who is an honest public official," he said.

Rama said the anti-graft commission, which is empowered to investigate the executive branch of government, had carried out "speedy and impartial investigations," of 207 cases since he took office in February. Another 23 cases were still pending he said.

Corruption is a hot issue for Arroyo who took office in January, 2001 after her predecessor Joesph Estrada was toppled from power following allegations of corruption in his administration.

Estrada, a former movie star, is being tried on charges he allegedly stole some 80 million dollars during his 30-month presidency. If convicted, he theoretically faces the death penalty.

The opposition, which is dominated by Estrada allies, has tried to use the corruption issue against Arroyo, saying that her administration is no better than Estrada's.

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