LED - SD with Impact by Local Governance Support Program in ARMM

LOCAL ECONOMIC DEVELOPMENT Writer Simon Peter Gregorio Editor Lourdes "Didith" Mendoza Project Management Amihan Perez Ateneo Center for Social Policy and Public Affairs (ACSPPA) Technical and Editorial Team Rene “Bong’Garrucho, LGSP Mags Maglana, LGSP Cecille Isubal, LGSP Aser Realubit, LGSP Myn Garcia, LGSP The NATCCO Network Art Direction, Cover Design & Layout Jet Hermida Photography NATCCO FotoBank LGSP PhotoLibrary

local economic development: STIMULATING GROWTH AND IMPROVING QUALITY OF LIFE

Local Economic Development: Stimulating Growth and Improving Quality of Life Service Delivery with Impact: Resource Books for Local Government Copyright @2003 Philippines-Canada Local Government Support Program (LGSP) All rights reserved The Philippines-Canada Local Government Support Program encourages the use, translation, adaptation and copying of this material for noncommercial use, with appropriate credit given to LGSP. Although reasonable care has been taken in the preparation of this book, the publisher and/or contributor and/or editor can not accept any liability for any consequence arising from the use thereof or from any information contained herein. ISBN 971-8597-09-3 Printed and bound in Manila, Philippines Published by: Philippines-Canada Local Government Support Program (LGSP) Unit 1507 Jollibee Plaza Emerald Ave., 1600 Pasig City, Philippines Tel. Nos. (632) 637-3511 to 13 www.lgsp.org.ph Ateneo Center for Social Policy and Public Affairs (ACSPPA) ACSPPA, Fr. Arrupe Road, Social Development Complex Ateneo de Manila University, Loyola Heights, 1108 Quezon City This project was undertaken with the financial support of the Government of Canada provided through the Canadian International Development Agency (CIDA).

A JOINT PROJECT OF

Department of the Interior and Local Government (DILG)

National Economic and Development Authority (NEDA)

IMPLEMENTED BY

Agriteam Canada www.agriteam.ca

Federation of Canadian Municipalities (FCM) www.fcm.ca

Canadian International Development Agency

CONTENTS FOREWORD ACKNOWLEDGEMENTS PREFACE

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ACRONYMS

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EXECUTIVE SUMMARY

INTRODUCTION

CHAPTER 1: OVERVIEW AND RATIONALE FOR LOCAL ECONOMIC DEVELOPMENT (LED)

Overview of the Sector

Rationale for Local Economic Development (LED)

Nature of Local Economic Development (LED)D

Goals of Local Economic Development (LED)

Principles of Local Economic Development (LED)

Key Success Factors for Local Economic Development (LED)

CHAPTER 2: LGU MANDATES FOR LOCAL ECONOMIC DEVELOPMENT (LED) AND RELATED

LAWS Local Government Code

The Social Reform and Poverty Alleviation Act

Laws on the Development of Small and Medium Enterprises (SMEs)

DILG Memorandum Circulars on Local Economic Development (LED)

CHAPTER 3: ROLE OF LGU AND OTHER STAKEHOLDERS IN LED

Regular Functions of LGUs with Consequences for Local Economic Development (LED)

Role of Other Local Economic Development (LED) Stakeholders

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CONTENTS CHAPTER 4: STRATEGIES TO FACILITATE LOCAL ECONOMIC DEVELOPMENT (LED)

Strategies to Facilitate Stimulating Growth and Improving Quality of Life

Ineffective Local Economic Development (LED) Strategies that the LGUs Should Avoid

Capacity Building Process for LGU-facilitated Local Economic Development (LED)

CHAPTER 5: ISSUES AND RECOMMENDATIONS REGARDING LED IMPLEMENTATION

Micro Enterprises

Small and Medium Enterprises

Local Government Units

CHAPTER 6: GOOD PRACTICES IN PROMOTING LOCAL ECONOMIC DEVELOPMENT (LED)

Formulating and Implementing a Comprehensive Local Development Program: Irosin,

Sorsogon The Lingap Tanaw Program: Naujan, Oriental Mindoro

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Investment Promotion Program: Bohol

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A Municipalityâ&#x20AC;&#x2122;s Investment and Promotion Program: Tigaon, Camarines Sur

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Dalan sa Kauswagan Project: San Carlos, Negros Occidental

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Breaking Financial Barriers: San Fernando, Pampanga

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The City Livelihood Assistance Program: Pagadian, Zamboanga del Sur.

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Pushing Development through Cooperativism: Bulacan

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CHAPTER 7: REFERENCES AND TOOLS

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ENDNOTES

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FOREWORD

he Department of the Interior and Local Government is pleased to acknowledge the latest publication of the Philippines Canada Local Government Support Program (LGSP), Service Delivery with Impact: Resource Books for Local Government; a series of books on eight (8) service delivery areas, which include Shelter, Water and Sanitation, Health, Agriculture, Local Economic Development, Solid Waste Management, Watershed and Coastal Resource Management. One of the biggest challenges in promoting responsive and efficient local governance is to be able to meaningfully deliver quality public services to communities as mandated in the Local Government Code. Faced with continued high incidence of poverty, it is imperative to strengthen the role of LGUs in service delivery as they explore new approaches for improving their performance. Strategies and mechanisms for effective service delivery must take into consideration issues of poverty reduction, peopleâ&#x20AC;&#x2122;s participation, the promotion of gender equality, environmental sustainability and economic and social equity for more long- term results. There is also a need to acquire knowledge, create new structures, and undertake innovative programs that are more responsive to the needs of the communities and develop linkages and partnerships within and between communities as part of an integrated approach to providing relevant and sustainable services to their constituencies. Service Delivery with Impact: Resource Books for Local Government offer local government units and their partners easy-to-use, comprehensive resource material with which to take up this challenge. By providing LGUs with practical technologies, tested models and replicable exemplary practices, Service Delivery with Impact encourages LGUs to be innovative, proactive and creative in addressing the real problems and issues in providing and enhancing services, taking into account increased community participation and strategic private sector/civil society organizational partnerships. We hope that in using these resource books, LGUs will be better equipped with new ideas, tools and inspiration to make a

S E RV I C E D E L I V E RY W I T H I M P A C T: R E S O U R C E B O O K S F O R L O C A L G O V E R N M E N T

FOREWORD

difference by expanding their knowledge and selection of replicable choices in delivering basic services with increased impact. The DILG, therefore, congratulates the Philippines-Canada Local Government Support Program (LGSP) for this milestone in its continuing efforts to promote efficient, responsive, transparent and accountable governance.

HON. JOSE D. LINA, JR. Secretary Department of the Interior and Local Government

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ACKNOWLEDGEMENTS This publication is the result of the collaboration of the following individuals and institutions that support the promotion of economic development by local governments in their localities. The Local Government Support Program led by Alix Yule, Marion Maceda Villanueva and Rene "Bong" Garrucho for providing the necessary direction and support The National Confederation of Cooperatives (NATCCO Network), particularly Lourdes Hernandez, Mimin AznarBuban and Edna Reyes for undertaking the research and roundtable discussion and preparing the technical report which was the main reference for this resource book; and for assisting in the review of the manuscript The World Bank Group for its Local Economic Development knowledge products (i.e., process, strategies and tools). The World Bank supports the development of sustainable Local Economic Development through knowledge sharing, learning activities and advisory services Participants to the Roundtable Discussion on Enhancing the Role of LGUs in Local Economic Development held last May 28-29, 2002 in Pasig City. Their expertise and the animated exchange of opinions helped shape the technical report on which this publication is based: Mayor Hector Villanueva, Socorro Banugon and Eric Laxina of Bais City, Negros Oriental; Mayor Habib Magdar Loong and Fred Sajot of Parang, Jolo; Resti Tejido of Bohol Province; Zenaida Ramos Mai, Arnel Oliveros, Ma. Rosette Bagayas and Bernardita Santos of Anao, Tarlac; Leonardito Plaza of Sta. Josefa, Agusan del Sur; Fr. Edwin Saldon of Zamboanga del Norte; Ray Roquero of the League of Municipalities; Rhea Rose Victoria of the League of Cities; Jerry Clavecillas of BSMED-DTI; Rosana Urdaneta and Myrna Velasco of TESDA; Termizie Masahud of DTI-Tawi-Tawi; Assistant Secretary Austere Panadero, Dir. Teresita Mistal and Anna Liza Bonaqua of DILG; Roberto Pagdanganan, Presidential Adviser on Cooperatives

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ACKNOWLEDGEMENTS

Anne Germain of CIDA; Hideaki Hoshina of JICA; Sonia Tiong-Aquino of UP-ISSI; Zita Calugay of UP-NCPAG; Connie Pabalan of DAP; Gemma Regina Cunanan of Ateneo School of Government; Marcia FeriaMiranda of Punla Sa Tao Foundation; Rafael L. Coscolluela of ESKAN; Rodolfo Perez of SEED Inc.; Marian Boquiren of SwissContact; Sixdon Macasaet of NATCCO; Rica Lane of Venture for Fund Raising; Ma. Luisa Tumang of JEP Consultants & Trainers, Inc.; Virginia Pacunio of Touch Foundation, Inc.; Reynaldo Feria of Planters Development Bank LGSP Advisor Divina Luz Lopez; Managers Tess Gajo, Abe dela Calzada, Paz Christi Moneva and Victor Ozarraga; and Officers Antonio Tantioco, Dicky Limbaga and Rizal Barandino Cecille Isubal and Aser Realubit for providing feedback that helped ensure that the resource book offers information that is practical and applicable to LGU needs and requirements Amihan Perez and the Ateneo Center for Social Policy and Public Affairs for their efficient coordination and management of the project Lourdes "Didith" Mendoza for the excellent editorial work Simon Peter Gregorio for effectively rendering the technical report into user-friendly material Mags Z. Maglana for providing overall content supervision and coordination with the technical writers Myn Garcia for providing technical and creative direction and overall supervision of the design, layout and production Sef Carandang, Russell Fari単as, Gigi Barazon and the rest of the LGSP administrative staff for providing support. iv

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PREFACE

ervice Delivery with Impact: Resource Books for Local Government are the product of a series of roundtable discussions, critical review of tested models and technologies, and case analyses of replicable exemplary practices in the Philippines conducted by the Philippines-Canada Local Government Support Program (LGSP) in eight (8) service sectors that local government units (LGUs) are mandated to deliver. These include Shelter, Water and Sanitation, Health, Agriculture, Local Economic Development, Solid Waste Management, Watershed and Coastal Resource Management. The devolution of powers as mandated in the Local Government Code has been a core pillar of decentralization in the Philippines. Yet despite opportunities for LGUs to make a meaningful difference in the lives of the people by maximizing these devolved powers, issues related to poverty persist and improvements in effective and efficient service delivery remain a challenge. With LGSPâ&#x20AC;&#x2122;s work in support of over 200 LGUs for the past several years came the recognition of the need to enhance capacities in service delivery, specifically to clarify the understanding and optimize the role of local government units in providing improved services. This gap presented the motivation for LGSP to develop these resource books for LGUs. Not a â&#x20AC;&#x153;how to manual,â&#x20AC;? Service Delivery with Impact features strategies and a myriad of proven approaches designed to offer innovative ways for local governments to increase their capacities to better deliver quality services to their constituencies. Each resource book focuses on highlighting the important areas of skills and knowledge that contribute to improved services. Service Delivery with Impact provides practical insights on how LGUs can apply guiding principles, tested and appropriate technology, and lessons learned from exemplary cases to their organization and in partnership with their communities.

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PREFACE

This series of resource books hopes to serve as a helpful and comprehensive reference to inspire and enable LGUs to significantly contribute to improving the quality of life of their constituency through responsive and efficient governance. Philippines-Canada Local Government Support Program (LGSP)

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ACRONYMS ACSPPA ADB AIM ARC ARMM BIPC BIPP BIPT BLGD BOI BOO BOT BRW BT CBD CBFM CBIS CBMS CDF CEO CIDA CILDAP CLAP CLUP COA

Ateneo Center for Social Policy and Public Affairs Asian Development Bank Asian Institute of Management Agrarian Reform Community Autonomous Region in Muslim Mindanao Bohol Investment Promotion Center Bohol Investment Promotion Program Bohol Investment Promotion Team Bureau of Local Government Development (DILG) Board of Investments Build-Operate-Own Build-Operate-Transfer Bureau of Rural Workers Build-Transfer Central Business District (Tigaon) Community-Based Forest Management Community-Based Information System Community-Based Monitoring System Countryside Development Fund City Engineering Office (LGU) Canadian International Development Agency City Livelihood Development Assistance Program (Pagadian City) Cluster Development Approach Project (LGU) Comprehensive Land Use Plan Commission on Audit

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ACRONYMS COMB CSOs DAP DAR DBM DBP DILG DOH DOLE DOST DPWH DSWD DTI FAPs GAD GOP IAD InFRES IPAG IPRA IRA IRAP ISSI IT KPP LCEs viii

Coordinating and Monitoring Body Civil Society Organizations Development Academy of the Philippines Department of Agrarian Reform Department of Budget and Management Development Bank of the Philippines Department of the Interior and Local Government Department of Health Department of Labor and Employment Department of Science and Technology Department of Public Works and Highways Department of Social Welfare and Development Department of Trade and Industry Foreign-Assisted Projects Gender and Development Government of the Philippines Integrated Area Development Program Infrastructure for Rural Productivity Enhancement Sector Project Investment Promotion Advisory Group (Bohol) Integrated Protected Resource Area Internal Revenue Allotment (LGU) Integrated Rural Accessibility Planning Institute for Small Scale Industries information technology Kaunlaran sa Pagkakaisa Program (Bulacan) Local Chief Executives

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ACRONYMS LDCs LED LEDA LEDP LETPA LGA LGUs LHB LPRAA LPRAO LSB MAHAL, Inc. MARC MBN MC MDFO MFARMCs MPDO NATCCO NCIP NCR NCRFW NEDA NIPAS PANACEA PAO

Local Development Councils (LGU) Local Economic Development Local Economic Development Authority Local Entrepreneurship Development Plan Local Economic Transformation Program Agenda Local Government Academy (DILG) Local Government Units Local Health Board (LGU) Local Poverty Reduction Action Agenda Local Poverty Reduction Program Action Officers (LGU) Local School Board (LGU) Mindoro Assistance for Human Advancement Through Linkages Inc. Municipal Agrarian Reform Council Minimum Basic Needs Memorandum Circular Municipal Development Fund Office Municipal Fisheries and Aquatic Resource Management Councils Municipal Planning and Development Officer National Confederation of Cooperatives National Commission on Indigenous People National Capital Region National Commission on the Role of Filipino Women National Economic and Development Authority National Integrated Protected Area System Panay, Negros and Cebu Area Public Attorneyâ&#x20AC;&#x2122;s Office

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ACRONYMS PARUL PBAC PCCI PCEDO PDI PESOs PIDS PIME PNB PS SB SEF SERDEF SMEDC SMEs TESDA TLRC TQM UA & P UNDP UP ZOs

Poverty Alleviation through Rural Urban Linkages (UNDP) Pre-qualification, Bids, and Award Committees (LGU) Philippine Chamber of Commerce & Industry Provincial Cooperative and Entrepreneurial Development Office (Bulacan) Parallel Drug Importation (DOH) Public Employment Service Offices Philippine Institute for Development Studies Planning, Implementation, Monitoring and Evaluation Philippine National Bank Personnel Services (LGU) Sanggunian Bayan (LGU) Special Education Fund Small Enterprise Research and Development Foundation (UP-ISSI) Small and Medium Enterprise Development Council Small and Medium Enterprises Technical Education Skills and Development Authority Technology Livelihood and Resource Center Total Quality Management University of Asia & the Pacific United Nations Development Programme University of the Philippines Zoning Ordinances

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EXECUTIVE SUMMARY

iscussions on local economic development or LED have been going on in the past years among local government circles but it has not gained momentum until now. The renewed emphasis on poverty reduction and sustainable economic and social development has heightened its importance and urgency. Trends such as this pose the peril of misinterpretation. The hype and the rhetoric may be mistaken with the substance. Focus may be given on the peripherals and not the core. Hence, this LED resource book, while not purporting to say the last word on the subject, seeks to contribute to the discussion on LED, and to guide the implementation of the process. This book will clearly define the goals and principles of LED, delineate the roles of the various stakeholders, and expound on strategies that LGUs can adopt to facilitate LED. But first a situationer.

THE ECONOMIC SECTOR IN THE PHILIPPINES The Philippines remains a predominantly agricultural country. Majority of the countryâ&#x20AC;&#x2122;s poor are in this sector. Within this background, enterprises abound. Ninety one percent (91%) percent of the 494,474 enterprises in the country are micro enterprises or those with assets valued at less than PhP1.5 million. Micro enterprises employ from one to nine workers. Half of all the enterprises in the country are found in three areas: the National Capital Region, Southern Luzon, and Central Luzon. Four out of ten of these enterprises are into wholesaling and retailing. Three out of the ten are engaged in providing social, community, and personal services. Only two out of ten are into manufacturing.

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EXECUTIVE SUMMARY

Eight out of ten of these enterprises are organized as single proprietorship. Only one out of ten are corporations. Many enterprises are unregistered and belong to the so-called “informal economy.” The informal economy consists of many entrepreneurs or itinerant workers who are outside the official business and worker registration system. They are not usually captured in official statistics. Mostly, they are home-based workers, street traders and street vendors, roving or seasonal job workers on building sites or roads; and those in between streets and home (e.g., waste collectors, push-cart boys). Many of their business ventures in the informal economy are the tiniest of micro enterprises.

WHAT LOCAL ECONOMIC DEVELOPMENT IS Local Economic Development or LED is “the process by which actors within LGUs (barangays, municipalities, cities, and provinces) work collectively to improve conditions for economic growth, employment generation, and quality of life for all.” The goals of LED are improved quality of life and poverty reduction. There are many effective approaches for LGUs to facilitate LED but the principles that underpin the different approaches are consistently the same: Balanced economic growth with social and gender equity, sustainability, social development, peace, and cultural responsibility A multi-stakeholder partnership The private sector as the engine of employment and growth LGU as enabler Transparency and accountability

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EXECUTIVE SUMMARY

LEGAL FRAMEWORK FOR LED The legal framework for LED are expressed in laws such as the Local Government Code, the Social Reform and Poverty Alleviation Act, laws on the development of small and medium enterprises (SMEs), laws on the informal sector, and laws on investment. There are also a number of Department of the Interior and Local Government (DILG) memoranda governing LED.

WHAT LGUs AND LOCAL STAKEHOLDERS CAN DO Far from being a novelty, LED is part and parcel of the LGU’s regular functions and is not separate from them. The novelty of LED, if one can call it that, is the approach or transformed mindset by which these functions or services are performed and delivered. The regular functions of LGUs relating to LED include among others: policy-making and taxation regulation, planning and budgeting, collection, storage, and dissemination of information. They are also given the tasks of marketing and public relations/investment and enterprise promotion, public safety and cultural heritage activities, and the provision of social and environmental services. There are a number of strategies that LGUs and their partners can adopt to promote LED. These strategies range from the provision and improvement of so-called “hard”infrastructure (e.g., roads, bridges, ports, industrial parks) to the enhancement of the quality of local human resources through so-called “soft” services.

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EXECUTIVE SUMMARY

WHAT LGUs AND THEIR PARTNERS HAVE DONE The municipalities of Irosin and Naujan are models in involving and eliciting stakeholder participation in the LED process from planning, resource mobilization to implementation, and monitoring and evaluation. Both are distinguished in their ability to pursue equity and social development with economic growth and in investing in so-called soft infrastructure (e.g., health and education) to improve the lives of their constituents. The Province of Bohol and the town of Tigaon demonstrated how LGUs at different levels can attract external or inward investors through a tight definition of strategies (framework for investment promotion and land use plan), provision of incentives (Investment Code) and the creation of the requisite structures responsible for policy formulation and implementation (Investment Promotion Center, Livelihood Promotion Unit, Municipal Trade and Industry Board and Municipal Livelihood Council). LGUs can also create an environment conducive to LED as San Carlos City in Negros Occidental did by expanding physical access within the city, especially to poorer sections of the local population. San Fernando in Pampanga also pursued a similar expansionary strategy, this time of fiscal space, to give the city enough resources to make its physical and institutional environment friendly to LED. These LGUs may differ in location, resource endowments and challenges but their key success factors were the same. These success factors were sound and realistic planning; commitment to LED and effective leadership and management of the process; continuous capability building; and an enabling environment for LED.

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INTRODUCTION

his resource book introduces Local Economic Development or LED to local chief executives, rank and file members of the local and national bureaucracy, businessmen, would-be entrepreneurs and investors, NGOs, cooperatives and other local players. It provides basic information about LED: its nature, principles, goals, strategies, and the issues surrounding its implementation. Stories of some local government units (LGUs) that have succeeded in promoting it are also included to show how local officials and local stakeholders can collaborate to jumpstart economic development in the locality. The book is divided into seven main sections:

An Overview of LED and the Rationale for Pursuing LED The LGU’s Mandates Concerning LED and Related Laws Roles of LGU and Other Stakeholders in LED Strategies to Facilitate LED Issues and Recommendations Regarding LED Implementation Good Practices in Promoting LED References and Tools for LED

Chapter 1: Overview and Rationale for Local Economic Development (LED). Outlines the scop scope -- the various economic sectors and types of enterprises involved and their current situation; its nature, goals, principles, and the key factors for successful LED. As you will discover in reading this chapter, LED is more than just economic growth, industrial parks/zones, urbanization, high-rise buildings, malls and the usual landmarks associated with modernity. It also discusses how LGUs are envisioned to be an enabler or facilitator of the LED process, and at the same time, advises LGU flexibility in taking on other roles when the situation requires.

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INTRODUCTION

Chapter 2: LGU Mandates for LED and Related Laws. Enumerates the LGU mandates in promoting LED and related laws that impact on the performance of these mandates. Chapter 3: Role of LGU and Other Stakeholders in Local Economic Development (LED). Enumerates the regular functions of the LGU and discusses the consequences of these functions in the pursuit of LED. From the discussion, LGUs will find that LED is not something new, alien, or separate from what they are already doing on a daily basis or what it is providing by way of services to its constituents. The novelty of LED, if one can call it that, is the approach or transformed mindset by which these functions or services are performed and delivered. The third chapter also discusses the various roles of other LED stakeholders such as micro, small, medium, and large enterprises, civic and professional organizations, cooperatives and microfinance institutions, and educational institutions. Chapter 4: Strategies to Facilitate Local Economic Development (LED). Presents strategies that LGUs can use to facilitate LED. The strategies range from the provision and improvement of so-called “hard” infrastructure, e.g., roads, bridges, ports, and industrial parks, to the enhancement of the quality of local human resources through so-called “soft” services. The chapter also explains strategies for attracting and retaining external or inward investors and encouraging indigenous entrepreneurs to start enterprises and to grow their existing businesses. It ends with a discussion on what strategies to avoid and the processes for planning LGU-facilitated LED and building capacity for the LED process. Chapter 5: Issues and Recommendations Regarding LED Implementation. Deals with issues in LED implementation as these impact on LGUs and other LED players like micro enterprises, small and medium enterprises. LGUs face a number of constraints in implementing LED. These constraints are: financial, technical-managerial, lack of political will and commitment, lack of sustainability of LED efforts, insufficient support systems for LED, conflicts between national and local governments, and issues regarding inter-local cooperation. Some recommendations are provided. 2

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INTRODUCTION

Chapter 6: Good Practices in Promoting Local Economic Development (LED). Contains the stories of eight LGUs that have successfully promoted LED. More than the results, the eight cases illustrate the use of the different LED strategies presented in the fourth chapter. Chapter 7: References and Tools. Contains references and tools that the readers may find useful in deepening their understanding of the issues presented in this resource book. Some of the topics discussed in all chapters may already be familiar to some LGUs, and they may feel justified to skip or gloss over those portions. Just the same, we recommend that they still read this resource book in full, perhaps not in one sitting but by choosing portions that are relevant and important for the challenge of the day. Local chief executives and elected officials may be tempted to jump immediately to Chapter 4 on Strategies to Facilitate LED and Chapter 6, Good Practices. We urge them to read Chapters 1 and 3 first so that they can better appreciate the context of these strategies, the stakeholders involved, and the distinctiveness of LED from previous, and even current, economic development philosophies and approaches. The cases featured in Chapter 6 were designed to meet specific challenges at a particular time and context. They may or may not be applicable to those in a different situation. They are presented here to inform and inspire LGUs and to trigger their creativity. This resource book is also for local entrepreneurs, chambers of commerce and local industry associations, cooperatives, microfinance institutions, peopleâ&#x20AC;&#x2122;s organizations, non-government organizations (especially those engaged with the informal sector and implementing livelihood projects), and agencies providing various kinds of assistance such as capability building to LGUs. The resource book can help them to better understand the LED process and their unique and indispensable roles in it. It can also show how their efforts can complement or support the efforts of the LGUs they are working with. S E RV I C E D E L I V E RY W I T H I M P A C T: R E S O U R C E B O O K S F O R L O C A L G O V E R N M E N T

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OVERVIEW AND RATIONALE FOR LED

CHAPTER

his chapter explains the nature of Local Economic Development (LED), its goals and guiding principles, the key factors or characteristics of successful LED efforts. The ultimate outcomes of LED are improved quality of life and poverty reduction. It is guided by the principles of growth with equity, sustainability, social development, peace, cultural responsiveness and good governance (transparency and accountability). The private sector is the driver of economic growth with the local government unit (LGU) ideally performing an enabling role. Successful LED efforts are characterized by sound and realistic analysis and planning, commitment to and effective leadership and management of the LED process, continuous capability building, and an enabling environment for LED.

❙ Overview of the Sector LED encompasses primarily the economic sectors of local society – agriculture, commerce, trade, finance, manufacturing -- and all types of enterprise from micro to large enterprises. It covers both the formal and informal sectors of the economy and extends from production and provision of goods and services to their distribution and use by local people. LED is often associated with industrial parks, export processing zones, high-rises, rapid urbanization, and conversion of land from agricultural uses to commercial, residential, and industrial uses. This certainly is LED but only one aspect of it. It is not even representative of LED considering the reality that the Philippines remains predominantly agricultural and that ninety-one percent (91%) of the 494,474 enterprises in the country are micro enterprises. Many more enterprises are not included in the statistics because they are unregistered and belong to the so-called informal economy. To better understand what LED is, it is necessary to have a bird’s eye view of the country’s economic structure. S E RV I C E D E L I V E RY W I T H I M P A C T: R E S O U R C E B O O K S F O R L O C A L G O V E R N M E N T

1 LOCAL ECONOMIC DEVELOPMENT

◗ AGRICULTURE Agriculture remains an important sector in Local Economic Development for two reasons: First, most of the Philippines’ poor are into agriculture. Sixty-eight percent (68%) of low-income employed workers are in the agriculture sector. Seventy-four percent (74%) of employed low-income males and fifty-six percent (56%) of employed low-income females are in the sector. Local Economic Development should lead to the reduction of the absolute number of people considered poor. In turn, lifting people from poverty entails addressing the problems of low agricultural productivity and environmental degradation while at the same time lessening people’s dependence on the agricultural sector as their sole source of income. Second, in times of economic slowdown, the sector provides a safety net for employment. Between 1991 and 1993, when the Philippine economy contracted, almost half of all new employment was generated in agriculture. Between 1994 and 1995, when the economy grew, employment in the sector fell by two percent (2%). For many rural LGUs, the development of the local economy means moving majority of farmers and farm workers from less financially rewarding agricultural work to better paying employment. It would require providing additional source of income to two out of three household heads in the agrarian sector that have no additional source of income.

◗ THE INFORMAL ECONOMY / SECTOR The informal economy consists of many entrepreneurs or itinerant workers that are outside the official business and worker registration system and therefore not usually captured in the official statistics. Many enterprises in the informal economy are the tiniest of micro enterprises.

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OVERVIEW AND RATIONALE FOR LED 1

The major actors in the informal economy / sector and their characteristics are: Home-based workers. Home-based workers usually work at home or outside the establishment that buys their products. Just the same, they have prior agreements to supply goods or services to the establishment. Their remuneration consists of the prices paid for their products. They do not employ workers on a regular basis. Home-based workers are often classified under “selfemployed” or “own account workers.” Street traders and street vendors Itinerant or seasonal or temporary job workers on building sites or road workers Those in between the streets and home, e.g., waste collectors, pushcart boys.

◗ DISTRIBUTION OF ENTERPRISES BY ASSET SIZE AND EMPLOYMENT Micro enterprises are defined by law as those businesses that employ from one to nine workers. Micro enterprises have assets valued at less than PhP1.5 million. Small enterprises are the second most numerous, constituting eight percent (8%) of the total. Small enterprises employ from ten to 99 workers and assets valued between PhP1.5 million and PhP15 million. Medium enterprises and large enterprises constitute the very narrow apex of the economy. Medium enterprises employ from 100 to 199 workers and have assets valued between PhP15 million and PhP60 million. Large enterprises are those that employ 200 workers and above and have assets worth more than PhP60 million.

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◗ DISTRIBUTION OF ENTERPRISES BY REGION One out of four enterprises are found in the National Capital Region (NCR). Southern Luzon accounted for fourteen percent (14%) of the total while Central Luzon had ten percent (10%). Southern Mindanao and the Ilocos region followed with eight (8%)and seven percent (7%) shares of the total. The rest of the regions have shares below six percent (6%).

◗ DISTRIBUTION OF ENTERPRISES BY INDUSTRY Four out of ten enterprises in the country are into wholesaling and retailing. Three out of ten are engaged in providing community, social, and personal services. Two out of ten are into manufacturing. The remainder are involved in financing, insurance services, business services, transportation, storage and communications, construction, mining and quarrying, and agriculture, forestry and fishery sectors.

◗ DISTRIBUTION OF ENTERPRISES BY OWNERSHIP STRUCTURE Eight out of ten establishments in the Philippines are organized as single proprietorships. Only one out of ten are private corporations. The rest are partnerships, cooperatives, and other types of organizations.

◗ ENTERPRISES THAT GENERATE THE MOST EMPLOYMENT AND ADD THE HIGHEST VALUE In generating employment, the small and medium enterprises that currently add the most jobs in the economy are: Restaurants and cafes Private education services

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Private medical and dental services Repair of motor vehicles; and Barber and beauty shops At present those small and medium enterprises enterprises that add the greatest value to products and services in terms of amount are:

Private educational services Restaurants, cafes, etc. Amusement and recreational services Private medical and dental services; and Motion picture and other entertainment services

❙ Rationale for LED From the above overview, it is clear that economic policies and strategies pursued in the past and continuing on to the present have neither produced sustainable growth nor reduced poverty. Economic policies and programs in the past have catered to the larger enterprises and have been biased toward urban areas despite the reality that majority of Filipinos are in the rural areas and the overwhelming majority of enterprises are micro enterprises. They have failed to address the “missing middle” in the country’s economic structure. Another reason for the lack of sustainable growth and reduction of poverty is that most economic initiatives were centrally planned and failed to effectively mobilize local resources and structures. Missing from the process were the active leadership of and facilitation by the local government. The UNDP Poverty Alleviation through Rural Urban Linkages (PARUL) - LED Programme of 1997 sought to address this by promoting a facilitative approach to local economic development through better understanding of public-private coalitions and the essentially facilitative role of government.1 S E RV I C E D E L I V E RY W I T H I M P A C T: R E S O U R C E B O O K S F O R L O C A L G O V E R N M E N T

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Today, it is universally recognized that local government units stand at the frontlines of sustainable economic growth and poverty reduction. The UN Habitat II Conference in 1996 declared that “Local government is the central factor in social and economic development.” Experiences of pioneering local governments like the Cebu provincial and city governments showed that LGUs are in a privileged position and have an indispensable role in promoting economic development. The passage of the Local Government Code in 1991 expanded this role further by providing greater space for and powers to LGUs to pursue LED. Today, no one doubts that economic development will invigorate and heighten local economic activity. A more active local economy causes the LGU’s tax base to expand and deepen, which in turn leads to improved internal revenue generation and management. With prudent and effective use of financial resources, local economic development translates to better social services for the local citizenry. A healthy, educated citizenry due to better social services delivery enhances the reputation of the LGU and the image of local government officials in the country and in the international community. This boosts their chances of attracting more investors, and politically, of continuing their stay in office.

❙ Nature of LED Local Economic Development (LED) is “the process by which actors within LGUs (barangays, municipalities, cities, and provinces) work collectively with the result that there are improved conditions for economic growth, employment generation, and quality of life for all.”2 The term local in the definition signifies that LED involves building the economic strength of a local area to improve its economic future. This being the case, the prime movers or driving forces are barangays, municipalities, cities, and provinces singly or collectively. LED is territorial in approach.

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The adjective economic drives home the importance of identifying and seizing business opportunities, supporting entrepreneurial initiatives, creating a climate friendly to investment and business activity, and facilitating access of local products and services to markets. The term development emphasizes that local economic development is holistic, focusing not only on the economic dimension but also on the social, cultural, politico-administrative aspects. Economic development is a means not an end. Economic growth is a necessary but not a sufficient condition for development. LED is not just simply setting up large export processing zones or agro industrial estates. It is not simply building roads, ports, and airports. The quality and direction of growth is as important – and perhaps more so – than its quantity or size. Growth that destroys the environment, or that fails to create local employment and reduce poverty is unlikely to be sustainable in the long run. Sustainable development is at the heart of LED. This means satisfying the needs of the present generation without sacrificing the future of succeeding ones. LED also promotes the following: Optimization of usually scarce resources in an area Integration of barangay, municipal, and provincial plans and priorities with regional and national plans from the bottom upwards; Citizen participation and consensus building among stakeholders. However, it is important to remember that while focused on the local, effective LED necessarily has links to the regional, national and international levels. It is also important to remember the difference between local and national economic development. National economic development is concerned with setting the overarching framework and ground for the sustainable growth and overall competitiveness of the economy through the use of policy instruments such as inflation targeting, and/or floating the exchange rate. National economic development deals with industry wide and inter-industry matters, while local economic development concentrates on firm, inter-firm, and cluster dynamics. The critical levers in local economic development are, among others, land use plans, taxation, wage setting (regional level), and the provision of infrastructure and social services. S E RV I C E D E L I V E RY W I T H I M P A C T: R E S O U R C E B O O K S F O R L O C A L G O V E R N M E N T

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❙ Goals of LED The immediate goals of Local Economic Development are: Increase in cooperation and acceptance among LGUs, the private sector, and civil society organizations (CSOs) Effective local governance The generation of new/improved jobs Increasing incomes The ultimate goals of Local Economic Development are: Poverty reduction Improved quality of life

❙ Principles of LED There are many effective approaches for LGUs to facilitate Local Economic Development but the principles that underpin the different approaches are consistently the same: 1. Balanced Economic Growth with Social and Gender Equity, Sustainability, Peace and Cultural Responsibility Economic growth is not sufficient. It must be pursued in a manner that would reduce poverty, distribute the benefits of growth equitably among the different sectors of society, and lead to better relations between men and women.

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It should not destroy the environment to the detriment of present and future generations. Today, there is a growing recognition of the multiplicities of local economies existing in one country and of the different sectors and sub-sectors even in one local economy. These so-called “economies” and “sub-sectors” relate to each other in different ways. An important principle of LED is the notion of balance between rural and urban development, economic growth with social development (e.g., health and education, the economic sources of development with environmental concerns, and women and men). One of the objectives of the UNDP PARUL-LED Programme of 1997 was “to promote a balanced pattern of rural and urban development.” LED should lead to better health and education; understanding and harmony among peoples; recognition and respect for the diversity among cultures; and promotion of the positive values and ways of life of different peoples residing in the barangay, municipality, city, or province. 2. LED as Multi-Stakeholder Partnership LED is a partnership among and between government, the industry associations and private business organizations, non-government organizations, people’s organizations, cooperatives, and informal sector associations. Each of these actors has a role to play in Local Economic Development. 3. Private Sector as the Engine of Employment and Growth The private sector is the engine of growth for increased employment and economic growth. It occupies this privileged position by reason of the incentive structure in which it operates, i.e., the creation of value for its incorporators and investors and the presence of competitors; its greater sensitivity to market signals and movements; its relative freedom to take on risks compared to the government bureaucracy, and its capacity to mobilize and develop resources and transform them into different forms of capital (that is, managerial, technological). In areas where the private sector is underdeveloped, the LGU may initially be the driver of economic growth and the provider of employment but it must be emphasized that this role is temporary and must be transferred as soon as the private sector is ready to assume this role. S E RV I C E D E L I V E RY W I T H I M P A C T: R E S O U R C E B O O K S F O R L O C A L G O V E R N M E N T

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4. LGU as Enabler The envisioned role for LGUs is as an enabler and creator of an environment conducive for quality and sustainable development through its various roles and functions. These roles and functions and their consequences to LED is explained in greater detail below. The basic goal of an enabler is to create a social, physical, and economic environment conducive to the development of the locality and to structure this environment through appropriate rule-making and enforcement. In conjunction with so-called invisible market forces and private initiative, it acts as the “visible” hand in Local Economic Development, facilitating but always maintaining a prudent “arm’s length” from the other players. In certain situations and in certain areas, the LGUs may have to take the lead role in jumpstarting LED. This happens when there are insufficient private or voluntary/social sector providers of a service or when the capacities of these private or voluntary/social sector providers are inadequate. A common example is the provision of utilities such as water and electricity that are critical to the locality’s development. The LGU may choose to directly implement, and/or own, and/or after completion, manage the facility if the financial, technical, and managerial capacity are lacking in the private/voluntary sector or if there are no private sector takers for the project because of the project’s risk profile (i.e., the long gestation period from conceptualization to operation, the level of sunk costs, the long payback period, and the perceived low return from the investments.) Another occasion for LGU intervention is in the presence of so-called “market failures” like cartels when private sector players conspire to bid up the prices of critical commodities to the peril of society, especially the poorest. An example would be the government’s Parallel Drug Importation (PDI) program and the LGUs’operation of hospital-based and barangay-based pharmacies to distribute drugs bought through PDI. Even then, such decisions must not be taken lightly, and all other options besides actual implementation, ownership, management, and direct competition with the private sector should

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be weighed carefully. It may well be that the provision of appropriate fiscal and regulatory incentives would be sufficient to attract private investors to implement, own, and manage the project instead. Prudence is advised here because LGUs themselves have limited resources and other equally important concerns other than infrastructure and economic projects. Funds allotted for physical and economic infrastructure mean less money available for social services. Regular changes in the LGUâ&#x20AC;&#x2122;s top leadership also do not provide the stability and focus for the implementation of very long-term projects. The partisanship associated with electoral processes introduces other factors which are often unfriendly to the effective implementation of economic projects and the efficient management of public enterprise. Local Chief Executives (LCEs) and officials have to deal with more stakeholders than private businesses do. These stakeholders jockey to shape the political, economic, and the institutional environment to favor their interests over those of others. The danger of co-optation is always present. Another case for treading carefully into this area is that publicly owned and managed enterprises often have few incentives to perform. Funds for these public enterprises are â&#x20AC;&#x153;cheaply obtainedâ&#x20AC;? because they come from the LGU budget or from dedicated financing facilities. In many cases, enterprise performance targets are not set, nor are allocations linked to performance and projections. These enterprises are oftentimes successful in their attempts to shape the rules (i.e., policies and regulations) in their favor. The results are inefficient, heavily subsidized monopolies that in the end stunt private sector development and increase the costs for both end-users and taxpayers. In summary, LGUs have to be flexible and have to be prepared to switch roles in LED if necessary. The rule of thumb is that even when LGUs have to be the direct implementer, owner, and manager of public economic enterprises, they have to strive to become an enabler and facilitator and avoid stunting the growth of the private and voluntary sectors.

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5. Transparency and Accountability LED is impossible without effective local governance. And local governance is ineffective without the principles of transparency and accountability. LGUs inspire confidence from external investors and local businesspersons by instituting transparent, stable, and fair policies and establishing systems, procedures, and practices that effectively exact accountability of local officials. A virtuous circle is created by accountable and transparent governance. Effective local governance attracts and intensifies business activities that generate jobs, increase the citizens’income, and reduce poverty. These lead to higher revenues for the LGUs, which if properly managed, translate to more and better resources for services that enhance the quality of life of its citizens. A prosperous, healthy, and happy citizenry boosts the reputation of the LGU and its officials, improving their chances for re-election or for gaining higher office. Good politics make for good economics. Transparent and accountable governance reduces the cost of doing business in the form of bribes, grease money, facilitation fees paid to rent-seeking bureaucrats and politicians. These bribes are ultimately passed on to the consumers in the form of higher prices.

❙ Key Success Factors for LED 1. Sound and Realistic Analysis and Planning LED begins with a sound assessment of the opportunities and threats to the barangay, municipality, city, and province as well as their strengths and weaknesses. . Good analysis and planning are essential because LGU resources are limited. Without sound plans, a great deal of human and financial resources is in danger of being wasted. Plans also have to be realistic. Too often, many plans are actually “wish lists”because they are not based on a sober assessment of the human, logistical, and financial capacities of the LGU, the natural and human resource endowments of the area, and the interests of the major actors. Often in such plans, the benefits are grossly exaggerated while the costs are papered over. Sound, realistic, and responsive planning can only be done if the LGU actively involves the major stakeholders and treats the undertaking as a partnership and not its exclusive preserve or dominion. 18

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2. Commitment to LED and Effective Leadership and Management of the Process Genuine participation of stakeholders is the cornerstone for engendering ownership and commitment within the barangay, municipality, city, or province over the resulting plans The LGU must build the edifice by following through on its implementation, maximizing the use of meager resources, effectively leading and managing the LED process, and above all remaining committed in the face of various challenges to the construction of a prosperous, just, and harmonious barangay, municipality, city, or province. 3. Continuous Capability Building Effectively leading and managing the LED process require both political will and strong institutional capacity. Strong institutions are not built overnight but are realized only through the continuous and sufficient provision of training and capability building and of system and process improvements. Human resources and systems development always lag behind in the march towards progress because investments in these areas are rarely made or are the first to be sacrificed when budgets are slashed. Politicians normally opt for those projects that are visible and yield an immediate return. 4. An Enabling Environment for Local Economic Development A critical factor in the success of LED is a supporting and enabling environment for LED. This consists of supporting policies and regulatory frameworks (e.g., a low-interest rate and low inflation regime that allows entrepreneurs to borrow at reasonable rates; laws supporting joint venture arrangements, etc.), and supporting institutions (e.g., a viable government finance and guarantee corporation). Equally important are the introduction and enforcement of policies to protect the different ecosystems. Agricultural productivity would suffer unless the fertility of the soil is maintained. Denuded watersheds deprive poor upland dwellers of their sources of livelihood; threaten lowlands with flooding; and diminish water supply.

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LGU MANDATES FOR LED AND RELATED LAWS

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GU mandates related to LED are expressed in various laws like the Local Government Code and the Social Reform and Poverty Alleviation Act and Memoranda Circular of the Department of the Interior and Local Government (DILG). In addition, LGUs have to be conversant with laws on small and medium enterprise development.

❙ Local Government Code Republic Act 7160 or the Local Government Code has given the local government units (LGUs) more power and authority to accelerate local economic development and improve the quality of life in our communities. The following provisions are the most relevant to LED.

◗ SEC. 16 “Every local government unit shall exercise its powers… which are essential to the promotion of the general welfare. Within their respective jurisdictions, local government units shall… promote full employment among their residents…”

◗ SEC. 17 (B)(2)(IX) “Public markets, slaughterhouses and other municipal enterprises.”

◗ SEC. 17 (B)(2)(XI) “Tourism facilities and other tourist attractions, including the acquisition of equipment, regulation and supervision of business concessions, the security services for such facilities.” S E RV I C E D E L I V E RY W I T H I M P A C T: R E S O U R C E B O O K S F O R L O C A L G O V E R N M E N T

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◗ SEC. 17 (B)(3)(IX) “Investment support services, including access to credit financing”

◗ SEC. 35 “Local government units may enter into joint ventures and such other cooperative arrangements with people’s and non-governmental organizations to… develop local enterprise… to improve productivity and income, diversity agriculture, spur rural industrialization… and enhance the economic and social well-being of the people.”

◗ SEC. 36 “A local government unit may… provide assistance… to such people’s and non-governmental organizations, for economic, socially-oriented projects to be implemented within its territorial jurisdiction.”

◗ SEC. 109 “Functions of Local Development Councils.”

❙ The Social Reform and Poverty Alleviation Act RA 8425 or the Social Reform and Poverty Alleviation Act stipulates that it is the declared policy of the State "to adopt an area-based, sectoral and focused intervention to poverty alleviation wherein every poor Filipino family shall be empowered to meet its minimum basic needs of health, food and nutrition, water and environmental sanitation, income security, shelter and decent housing,

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peace and order, education and functional literacy, participation in governance, and family care and psycho-social integrity." It mandates LGUs through the Local Development Councils (LDCs) to formulate, implement, monitor and evaluate poverty reduction programs in their respective jurisdictions, consistent with the poverty reduction strategy of the national government.

❙ Laws on the Development of Small and Medium Enterprises (SMES) To push Local Economic Development, there is a need to craft a framework that would mold SMEs into globally competitive enterprises. The following national policies have been legislated to provide such framework.

◗ MAGNA CARTA FOR SMALL ENTERPRISES (R.A. 6977) The law provides a climate that minimizes regulations while at the same time assuring stable operating rules. It requires close coordination between government institutions involved in SME development and the private sector so there is coherence in both policy thrusts and implementation of action programs. For this purpose, the Small and Medium Enterprise Development Council (SMEDC) was created. To address the problem of access to financing, the Magna Carta requires all lending institutions, whether public or private, to set aside at least 6% and 2%, respectively, of their total loan portfolio for SME credit for a period of 10 years from August 12, 1997 to August 9, 2007.

◗ KALAKALAN 20 (R.A. 6810) Assistance is provided to countryside barangay and business enterprises through minimum regulation, and provision of financing and other government services and assistance.

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◗ AN ACT PROVIDING ASSISTANCE TO WOMEN ENTREPRENEURS (R.A. 7882) Government financial institutions are mandated to provide financial assistance to non-government organizations engaged in developing women entrepreneurs engaged in manufacturing, processing, service and trading businesses

◗ THE OMNIBUS INVESTMENT CODE (E.O. 226) SMEs that are engaged in the priority areas of the investment priorities plan are entitled to the standard incentives under the code such as income tax holiday for 4-6 years, tax and duty free importation of capital equipment, additional deduction from taxable income for labor expense, exemption from contractor’s tax, unrestricted use of consigned equipment, and access to bonded manufacturing warehouses. Additional incentives are given to SMEs that locate in less developed areas. SMEs that are registered with the Board of Investments (BOI) may avail of technical and other support services provided by the agency.

❙ DILG Memorandum Circulars (MC) on LED ◗ MC NO. 2002-48: LOCAL ECONOMIC TRANSFORMATION PROGRAM FOR LOCAL GOVERNMENTS The Circular articulates the economic philosophy and approach of the Arroyo Administration as outlined in her first State-of-the-Nation Address on July 23, 2001, which are: An economic philosophy of free enterprises by: attracting investment to create jobs and employment; addressing long structural issues such as basic infrastructure like power, transportation and communication; harnessing private sector participation via Build-OperateTransfer (BOT), Build-Transfer (BT), Build-Operate-Own (BOO) and other forms of privatization;

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promoting fast-growing industries; streamlining operations and slashing red tape and; harnessing our competitive edge in tourism. The modernization of agriculture founded on social equity A social bias to balance economic development by making microfinance a cornerstone in our fight against poverty, among others, and Improving moral standards and the rule of law by upholding law and order through a holistic response consisting of political, economic and psycho-social security In order to achieve these, paradigm shift towards good local governance is required, through the following: Transforming local leaders from mere administrators and political technocrats to accountable entrepreneurial development managers Encouraging LGUs to be more creative and innovative for excellent service delivery, and in dealing with current and emerging challenges Institutional reforms to strengthen linkages and coordination among LGUs, the private sectors and other concerned sectors in the formulation and implementation of social reforms and antipoverty and economic development programs Establishing mechanisms and standards that ensure transparency and accountability in local government operations and transactions; and Localizing consensus building mechanisms and strengthening the local special bodies With their newfound roles as local economic managers, it is imperative for local chief executives and other local officials and personnel to recognize their responsibility to secure the economic well being of people in their localities. They can do this by creating an environment conducive to growth and investment.

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◗ MC NO. 2002-107: ORGANIZATION AND/OR STRENGTHENING OF LOCAL SMALL AND MEDIUM ENTERPRISE DEVELOPMENT COUNCILS (SMEDCS) The Memorandum Circular enjoins all city and municipal mayors to organize and strengthen their respective Small and Medium Enterprise Development Councils (SMEDCs). Cities and municipalities without existing SMEDCs or their equivalent local councils or bodies are encouraged to organize their respective councils. The functions of the City and Municipal SMED Councils are as follows: Help establish the needed environment and opportunities conducive to the growth and development of enterprises in the locality Recommend to the Sanggunian all policy matters affecting businesses in the locality Formulate a Local Entrepreneurship Development Plan (LEDP) to be integrated into the Local Development Plan and facilitate implementation of the same Coordinate and integrate various government and private sector activities in the locality relating to enterprise development; Formulate, disseminate and advocate policies, principles and implementing guidelines in the development and promotion of local enterprises and Develop and provide appropriate services beneficial to local enterprises and entrepreneurs.

◗ MC NO. 2002-09: IMPLEMENTATION OF THE LGU-CLUSTER DEVELOPMENT APPROACH PROJECT (LGU-CLAP) AS A STRATEGY IN THE ADOPTION OF ONEVILLAGE, ONE-PRODUCT MOVEMENT Consistent with the mandate of the Department in implementing the LGU-Cluster Development Approach Project as a venue for the adoption of the One-Village, One-Product Movement, all Regional Directors were directed to implement the following priority concerns until the end of December 2002:

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Formally organize at least one cluster per region by the end of December 2002 through appropriate SB Resolutions and MOAs and strengthen existing clusters in Regions I, II, IV, and VI through capacity building and alliance building with appropriate agencies and institutions on product packaging, marketing and investments Assign Regional/Provincial LGU-Cluster Coordinators to take charge in replicating and strengthening the LGU-Cluster Development Project in the LGUs Provide technical assistance in advocating the One-Village, One-Product Movement and integrating appropriate cluster programs, projects and activities in concerned local development plans Allocate corresponding fund support to cluster-related activities in the regions; and Submit semi-annual reports on the implementation of the project, starting December 2002. The monitoring form shall be provided by BLGD (Bureau of Local Government Development) as OPR of the project.

◗ MC NO. 2001-172: GUIDELINES ON POVERTY REDUCTION PROGRAM FOR LOCAL GOVERNMENTS The Memorandum Circular enjoins all Provincial Governors, City and Municipal Mayors to formulate their respective Local Poverty Reduction Programs using the following general guidelines: Designation of Local Poverty Reduction Program Action Officers (LPRAO) Program Formulation and Development - local poverty situation analysis Project Identification and Prioritization Suggested Outline of the Local Poverty Reduction Program - Local Poverty Situation - Vision for Poverty Reduction - Poverty Reduction Strategy - Poverty Reduction Projects, Goals and Objectives

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- Poverty Reduction Action Plan - Milestones and Indicators of Achievement in Poverty Reduction Integration of Poverty Reduction Program in the Local Development Plan Funding Support Monitoring and Evaluation

◗ MC NO. 2001-109: INITIAL AREAS FOR ACTION IN THE IMPLEMENTATION OF PROGRAMS ON POVERTY REDUCTION AND LOCAL ECONOMIC TRANSFORMATION The Memorandum Circular provides directives to all Local Chief Executives in implementing Poverty Reduction and Local Economic Transformation projects. Poverty Reduction Designation of a Local Poverty Reduction Program Action Officer in each province, city and municipality Inventory of poorest families per criteria set by DILG Memorandum Circular Nos. 98-51 and 9854 Identification of local needs in the areas of food, shelter, employment and education per the President’s State of the Nation Address last July 23,2001 Utilization of the poverty reduction tools such as the Minimum Basic Needs (MBN) Approach, Integrated Rural Accessibility Planning (IRAP) Data, Community-Based Monitoring System (CBMS) Approach and other tools to identify target beneficiaries Formulation of a Local Poverty Reduction Action Agenda (LPRAA) based on identified priority needs of the locality, to be incorporated in Local Development Plan Identification of External and Internal sources of assistance to implement identified projects in the LPRAA

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Local Economic Transformation Creation or activation of a One-Stop-Shop Investment Promotion Center in each province, city and municipality Inventory of existing small and medium enterprises in each province, city and municipality Identification of priority needs of the locality on small and medium enterprise development, cluster and development areas establishment of economic zones (eco-tourism, eco-industrial or eco-agricultural) and other economic concerns Formulation of a Local Economic Transformation Program Agenda (LETPA) based on identified priority needs, which shall be incorporated in Local Development Plan; Utilization of various tools in needs identification such as Comprehensive Land Use Plan (CLUP), studies on urban management and BOT Guideline Identification of external and internal sources of assistance to implement projects identified in the LETPA All provinces, cities and municipalities are advised to submit all LPRAAs and LETPAs to the Bureau of Local Government Development (BLGD), through the proper DILG channels.

◗ MC NO. 2001-105: DESIGNATION OF LOCAL POVERTY REDUCTION PROGRAM ACTION OFFICERS AND THE FUNCTIONS OF THE LPRAO ◗ MC NO. 2002-30: GUIDELINES PRESCRIBING TIME PERIODS ON THE ADOPTION, REVIEW AND APPROVAL OF COMPREHENSIVE AND LAND USE PLANS (CLUPS)/ZONING ORDINANCES (ZOS) OF MUNICIPALITIES, COMPONENT CITIES, HIGHLY URBANIZED CITIES AND PROVINCES Gives the guidelines on scope & coverage, CLUPs in Plan Preparation stage, in Review/Approval stage, regular updating period, technical assistance, reporting and monitoring system, sanctions and penalties

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◗ MC NO. 2002-81: CREATION OF LOCAL CULTURE AND THE ARTS COUNCIL Mandates the creation of Provincial, City/Municipal Councils for the Culture and the Arts; composition and functions; and the role of DILG

◗ MC NO. 95-162: INVENTORY OF LGU TOURISM, CULTURE AND THE ARTS COUNCILS LGUs to submit inventory to update the Directory on Local Culture and Arts Councils and Local Tourism Councils

◗ MC NO. 2001-19: SOLID WASTE MANAGEMENT PROGRAM IMPLEMENTATION OF REPUBLIC ACT NO. 9003 OTHERWISE KNOWN AS THE ECOLOGICAL SOLID WASTE MANAGEMENT ACT 2000 Outlines the composition of the Provincial and City/Municipal Waste Management Board; role of DILG

◗ MC NO. 2001-38: ADDENDUM TO DILG MC 2001-19 RE-IMPLEMENTATION OF REPUBLIC ACT 9003, OTHERWISE KNOWN AS THE ECOLOGICAL SOLID WASTE MANAGEMENT ACT OF 2000 Outlines the composition and functions of the Barangay Ecological Solid Waste Management Committee and other related matters.

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LGU MANDATES FOR LED AND RELATED LAWS 2

◗ MC NO. 2001-48: ADDENDUM TO DILG MC 2001-19 RE-IMPLEMENTATION OF REPUBLIC ACT 9003, OTHERWISE KNOWN AS THE ECOLOGICAL SOLID WASTE MANAGEMENT ACT OF 2000 Gives the general characteristics and components of the Provincial, City/Municipal Solid Waste Management Plans; role of DILG

◗ MC NO. 2001-48: INVENTORY OF ALL SOLID WASTE DISPOSAL FACILITIES AND SITES IN LGU Mandates LGUs to conduct inventory of all existing and proposed solid waste disposal facilities and sites within their areas of jurisdiction; role of DILG

◗ JOINT MEMORANDUM (DILG, DBM, NCRFW) CIRCULAR NO. 2001-01: GUIDELINES FOR INTEGRATING GENDER AND DEVELOPMENT (GAD) IN THE LOCAL PLANNING AND BUDGETING SYSTEM THROUGH THE FORMULATION OF GAD PLANS Gives the guidelines for integrating GAD in local planning and budgeting (objectives; the GAD plan; GAD programs, projects and activities; appropriations for GAD; implementation and monitoring of GAD plans)

◗ MC NO. 2002-163 Creation of Local Council for Women

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ROLE OF LGU AND OTHER STAKEHOLDERS IN LED

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ROLE OF LGU AND OTHER STAKEHOLDERS IN LED

his chapter expounds on the role of LGUs and other stakeholders in facilitating LED. As will be read in the succeeding pages, LED is not something foreign or special to what LGUs are already doing. Rather, LED is a transformed or new “mindset”of performing these regular functions. The chapter also discusses the various roles of other LED stakeholders such as micro, small and medium, and large enterprises, civic and professional organizations, cooperatives and microfinance institutions, and educational institutions.

❙ Regular Functions of LGUS with Consequences for LED Regular functions of LGUs have important consequences in facilitating Local Economic Development.

◗ LGU POLICY MAKING AND TAXATION FUNCTION Ordinances and resolutions passed by the different local legislative bodies strongly influence the area’s competitiveness and attractiveness to external investors. Local tax ordinances and incentives strongly determine investors’ cost of doing business in an area and is often a factor in their decision to locate or not. Tax breaks, rebates, grants, provision on the use of local materials and local employment, protection measures for infant and experimental industries and innovative enterprises can spur the learning, searching, and risk taking by local entrepreneurs, local employment, the growth of new enterprises, and the strengthening of existing ones. Care must be taken by the LGU not to rely exclusively on these inducements or incentives as they can encourage inefficiency among benefiting enterprises. Zoning ordinances and local land use plans define the trajectory and the kind of development that would prevail in the area. LGU policies help create an enabling environment for LED.

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◗ REGULATORY FUNCTION LGU regulatory policies (e.g., traffic ordinances, limitation on the number of franchises granted to public utility vehicles like tricycles, restriction on quarrying activities, promotion of waste reduction) limit the harmful effects of economic growth on the environment. LGU regulations can also affect the economic operations of certain vulnerable sectors, e.g., regulations on street vendors and the informal sector, rental fees for stalls in the public market, traffic rerouting. Simplifying the process and upholding honest and aboveboard transactions in securing building and business permits and in the payment of real property taxes can enhance the image of the LGU as an investment site. The procedures should not be cumbersome, and there ought to be a single point of contact to avoid repetition.

◗ PLANNING AND BUDGETING Local development plans signal to LED partners the priorities and directions of the local government while the approved LGU budget is a testament to its resolve to see the plans through to reality. It is also important that the plans and priorities for LED be integrated into the annual LGU investment plan. LGU planning and budgeting activities are venues for creating consensus, building partnership, and promoting stakeholder ownership of Local Economic Development. A sound and realistic planning process will allocate and define the roles of the different stakeholders in LED and establish mechanisms for coordinating the various and diverse efforts.

◗ COLLECTION, STORAGE, AND DISSEMINATION OF INFORMATION LGUs, through the different offices, are also important collectors and repositories of information. The LGU must ensure that information on the locality is accurate, systematically stored, updated, and readily accessible to business investors. Information that the LGU must gather includes

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population, labor force, wage rates, existing enterprises, employment opportunities, transportation links, available lands and building, mapping information, infrastructure, and credit facilities for businesses.

◗ PROCUREMENT OF GOODS AND SERVICES In many areas, especially in lower class, rural municipalities, LGUs are often the biggest employer and one of the largest, if not the largest, consumer of goods. For all the criticism the practice has received, the employment of casuals in the local administration or in local infrastructure projects provides a means for people in the community, especially the less skilled and poorer members, to earn some income. The local budget is watched by some entrepreneurs, as this influences the fortunes of their own businesses. Transparent and fair procurement activities stimulate competition among local businesses, and if the goods and services procured constitute a substantial sum, LGU purchases and acquisitions can inspire the creation of new enterprises.

◗ MARKETING AND PUBLIC RELATIONS/INVESTMENT AND ENTERPRISE PROMOTION Investment promotions, trade missions, job fairs, and the construction of exhibition halls and showrooms create an awareness among potential investors of local products and match local producers and service providers with outside buyers. By supporting their participation in international trade fairs, LGUs provide local enterprises the opportunity to learn the latest craft and to rub elbows with the world’s best. Hopefully, local enterprises will be inspired to become worldclass in the process.

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â&#x2014;&#x2014; MANAGEMENT OF PUBLIC ECONOMIC ENTERPRISES AND THE PROVISION OF PHYSICAL FACILITIES LGUs influence LED through the provision and/or management of public infrastructure like public markets, abattoirs, transportation terminals, water and power utilities (in some provinces) and roads. The public market is often the showcase of a city or municipality, an indicator of its status. How competently it is managed indicates how well the city or municipality is doing. Municipal or city policies on purchase of rights to stalls and stall rentals can facilitate or deny access to the economically active poor of the municipality and city. Studies on investor behavior reveal that the presence, quality and cost of critical infrastructure like water and electric utilities, communication facilities, roads, ports, airports, and transport facilities rank high in their criteria for choosing locations for investment. In rural areas, the construction of farm to market roads lessens the dependence of farmers on middlemen and allows them to capture more of the profits. This translates to cheaper prices for consumers and more business for public market vendors. Rural public works projects are also sources of income for the rural folk during the dry season. These public economic enterprises lend support to local economic development. They also generate income for the LGU. However, care must be taken that these public enterprises are managed efficiently. In many areas, these transport terminals, public markets, and abattoirs are virtual monopolies; in others, they are in direct competition with privately owned markets and supermarkets. LGUs should weigh the economic costs of maintaining ownership and management of these facilities with their public benefits. In certain instances, it may be possible for LGUs to retain ownership but turn over management of these facilities to the private sector. This will allow LGUs to concentrate on monitoring and enforcing sanitary standards in abattoirs and among food handlers. The opportunities that public markets provide to the economically active poor of the locality to sell their products are a case for retaining ownership of public markets. That space may be absent or may be too costly for the poor to afford if public markets were privatized.

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Certain facilities are better provided by higher-level LGUs than lower level LGUs. Provinces can take on the implementation of projects that are far beyond the capacity of individual municipalities or which benefit several municipalities at once. For example, in the agriculture sector, the Local Government Code directs provinces to provide “agricultural extension and on-site research services and facilities which include the prevention and control of plant and animal pests and diseases, dairy farms, livestock markets, animal breeding stations, and, artificial insemination centers.” Because of their coverage, the need to protect water sources, and the linkages that have to be established between these and the users, some irrigation facilities are better provided by provinces than by individual municipalities/cities. Provinces can also coordinate the activities and efforts of LGUs in its jurisdiction like the function that the Zamboanga del Norte Provincial Government performed in the DDKRM (Dapitan City – Dipolog City– Katipunan – Roxas – Manukan) cluster.

◗ PUBLIC SAFETY AND CULTURAL HERITAGE ACTIVITIES A low crime rate and a stable peace and order situation are prized by both local and external investors. More than stunning natural wonders and sceneries, peace and order is the deciding factor in the success and failure of a municipality, city, or province as a tourist destination and business location. Cultural heritage activities and facilities create a sense of community while enhancing the tourism potentials of the LGU.

◗ PROVISION OF SOCIAL AND ENVIRONMENTAL SERVICES Primary health and curative services, water and sanitation, and activities connected with solid waste management like the promotion of waste segregation and the three R’s (reduce, re-use, recycle), are important programs for improving the well-being of the citizens. Good health leads to increased productivity and reduced medical expenses. Support to education like the Special Education Fund contributes to human capital formation and prepares the LGU to compete in the knowledge economy, where the only sustainable competitive advantage is an educated, highly skilled, and trainable workforce. S E RV I C E D E L I V E RY W I T H I M P A C T: R E S O U R C E B O O K S F O R L O C A L G O V E R N M E N T

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There are also opportunities for local entrepreneurs in solid waste management, especially the recycling business. LGUs themselves can be entrepreneurial by striving to at least recover the cost of delivering services. The Municipality of Malalag in Davao del Sur charged user fees for its health services. These had the salutary effects of augmenting the LGU’s budget for health and of changing the mindset of the citizens, who as paying customers, became more demanding of the quality of the services they were receiving, pushing the providers to improve their performance as a result. In summary, by the effective, efficient, and transparent performance of their regular functions, LGUs already exert a considerable influence on Local Economic Development. The development of the local economy can be achieved singly and (more often) through complementation and supplementation with same-level and higher-level LGUs. The infusion of external funds is important but LGUs need not wait for their arrival to start the LED process. Equally important are efforts to tap “indigenous” sources of growth.

❙ Role of Other LED Stakeholders Stakeholders are individuals, firms, and/or organizations in the public, private, civil society or non-profit sectors who are affected and can affect the LED process. The major stakeholders are those that have the greatest interest and ability to contribute to the planning and implementation of the LED. Different stakeholders have different roles, and some would participate more than others. There are numerous benefits to involving stakeholders in the LED process. First, stakeholders bring specialized knowledge and different perspectives, thereby expanding the breadth and depth of the LED process, particularly in the planning stage. Local community representatives are likely to be better informed about local problems and opportunities. Business representatives know better than the LGU the competitive position of the community.

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Second, stakeholders bring professional expertise, financial resources, and physical assets to the LED process. And third, by their presence, stakeholders lend legitimacy to the LED process, and their involvement creates ownership of the vision, mission, objectives, and strategies of LED. Ownership, in turn, makes it more likely for the stakeholders to volunteer their time, labor, and physical and financial resources to support LED implementation programs. The private sector is the main engine for local employment and growth. Singly or collectively as chambers of commerce and industry associations, its task is to scan and seize opportunities, take risks, develop markets, and create economic value. It accomplishes this better than government does because it has more at stake – the survival of the enterprise -- and has lesser constraints. While government has a captive market for its revenues, a business has to woo, pursue, and cajole fickle consumers to buy its products or services in the midst of cutthroat competition. It must be efficient and innovative lest it perish. In promoting LED, the LGU has to be aware of the different kinds of enterprises and the different roles they play.

◗ MICRO ENTERPRISES In areas where small and medium enterprises are scarce, micro enterprises serve as incubators or seeds for growth enterprises. However, studies in other countries have shown that very few micro enterprises graduate to become small and medium enterprises. Because many are homebased and utilize “free” part-time family labor, they are not individually significant generators of employment. Collectively because of their sheer numbers, they do employ many people who would otherwise remain idle.

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Many micro enterprises are constrained from growing because of the limited market (the immediate neighborhood for variety stores and itinerant vendors), the limited production area (the backyard or the living room of the house), the competition caused by the low barriers of entry and exit, and at times, the short shelf life of the product (e.g., fish). Many micro enterprises have an ad hoc character and are taken up and just as easily given up depending on the season. Thus, it is not surprising to see a vendor selling drinks and fish balls when schools are in session and employed as a temporary construction worker when students are on summer vacation. It is not uncommon for poor people to engage in several micro enterprises at the same time. Micro enterprises, especially home-based enterprises run by women (e.g., backyard livestock raising; variety stores, etc.), often start out as “sidelines” whose earnings add-on or supplement the household’s income. Income from micro enterprises helps in beefing up a poor household’s consumption and allows it to make investments in a child’s education or to improve the house. They are important defensive measures in times of crisis, and reduce the household’s vulnerability to economic shocks and risks (e.g., retrenchment of the spouse, seasonality of demand or supply characteristic of certain livelihoods, etc.). Micro enterprises are an important safety valve of the economy during times of economic crises. The number of micro enterprises (and of the self-employed) expands when the formal business sector slows down and the formal labor market contracts.

◗ SMALL AND MEDIUM ENTERPRISES Unlike micro enterprises, small and medium enterprises not only increase the income of its owners but also generate employment of persons other than members of the owner’s household. The markets of small and medium enterprises are usually larger and more competitive. They are often outside the locality. Entry barriers are higher; the start-up capital is larger and the required skills are more sophisticated. They are subject to greater regulation from the government in the areas of wages and benefits, taxes, occupational safety and health, compliance to environmental standards, etc. 44

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One of the 20 key commitments regarding economic development made during the UN Habitat II Conference in 1996 is for “economic development to focus on small and micro enterprise particularly those developed by women.”

◗ LARGE ENTERPRISES Large enterprises are huge employers and investors. For this reason, they are also the largest taxpayers and are often the heaviest users of the latest technology. Large enterprises are also storehouses of talent of various kinds—managerial, technical, and financial – that can be tapped for LED.

◗ ORGANIZED BUSINESS GROUPS Organized groups of businesses like chambers of commerce and industry associations play a crucial role in setting and enforcing quality standards, upgrading the industry’s human and technological resources, product development, marketing, and management training. Some industry associations also provide business development services and broker financing to its members from lending institutions. Local guilds, craft and professional associations help create a unique LGU brand and are the allies of LGUs in many projects like health, livelihood, and urban regeneration. For example, Angono’s painters have created a name for themselves and for the town in the local and international art scene. They are also spearheading urban regeneration efforts by bringing their art to the walls and streets of Angono. Civic groups like the Rotary Club, Soroptimist International, Lions, Kiwanis, and Jaycees are active in local beautification and greening efforts and sponsor medical missions to impoverished areas.

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â&#x2014;&#x2014; COOPERATIVES AND MICROFINANCE INSTITUTIONS Cooperatives and microfinance institutions serve as local treasuries and depositories of community savings. They promote a culture of frugality, discipline, trust, self and mutual help, and entrepreneurship. In many rural villages, they fill the large demand for credit from small business persons, many of whom are women, and farmers who are shunned by the formal financial institutions because of their small credit needs, lack of assets for collateral, or lack of documentation to prove ownership of land. In many rural villages, cooperative-run stores are the communityâ&#x20AC;&#x2122;s sole source of cheap commodities. Cooperatives and microfinance institutions are important drivers of LED because the savings deposits and share capital they collect from the members are re-invested in the locality and not siphoned off and lent out to urban consumers. These investments generate additional household income for the borrowers and members, and in larger enterprises, local employment. Through their social health insurance, mortuary packages, and emergency loans, cooperatives and microfinance institutions cushion the impact of economic shocks, personal loss, illness, and natural disasters on their members and borrowers. In the absence of these social protection measures, hardhit households have no recourse but to divest themselves of critical economic assets like land and livestock. Cooperatives and microfinance institutions can serve as conduit and manager of LGU funds, e.g., for livelihood projects. Cooperatives of market vendors can assist in the effective management of the municipal or city public market and abattoir.

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◗ NON-GOVERNMENT ORGANIZATIONS (NGOs) AND PEOPLE’S ORGANIZATIONS (POs) NGOs and POs are known for their social innovations, organizing and mobilizing capabilities at the grassroots-level, and participatory methods and techniques. Less burdened by hierarchies, protocols, bureaucratic constraints, and legal considerations, NGOs have the comparative advantage over LGUs in the generation of so-called social capital or “shared relations, network of trust, and mutual help mechanisms.” Using this comparative advantage to the hilt, non-government organizations can perform different roles in local economic development. NGO and PO representatives sit in the Local Development Council and other Local Special Bodies like the Local School and Health Boards. They are critical actors in setting the overall direction of LGU through the formulation of land use plans, local economic development and investment plans, local health plans, education activities and the utilization of the Special Education Fund (SEF). Active collaboration with NGOs and POs can ensure that the planning process is participatory, beginning from the purok level and moving upwards to the barangay and to the municipal and city levels, and even to the provincial level. NGOs and POs are good channels of the sentiments, needs, and views of the grassroots and disadvantaged sectors of the locality. They can assist the LGUs in service delivery and can even be contracted to deliver certain services themselves, e.g., collection of recyclable materials. The LGU can and should utilize the social capital that people’s organizations have generated in their communities. POs can mobilize the people to provide voluntary labor for rural public works’projects. As in other areas, they can assist the LGU in securing the right-of-way for road, water system and irrigation projects, thereby lessening the cost and generating savings for the LGU. Many LGUs have organized and mobilized fisherfolk organizations to guard municipal waters and enforce local ordinances or resolutions from Municipal Fisheries and Aquatic Resource Management Councils

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(MFARMCs) banning the use of destructive fishing methods and encroachment in municipal waters by large, commercial fishing vessels. Some non-government organizations and peopleâ&#x20AC;&#x2122;s organizations can serve as watchdogs, monitoring LGU implemented projects and providing an independent evaluation of LGU programs. NGOs sitting in the local Pre-qualification, Bids, and Award Committees (PBAC) can help protect the integrity of the procurement process.

â&#x2014;&#x2014; EDUCATIONAL INSTITUTIONS Hosting a state or private university and college can be a source of pride for an LGU. In many places abroad, the town or city is actually built around a university, and the latter is a significant contributor to the local economy. The academe is an incubator of ideas and creators of knowledge. A predominantly agricultural locality relies on the local agricultural college to undertake research, provide workable solutions to problems, develop, test, demonstrate, and encourage new technologies in crop science. In budding commercial and industrial economies, universities are often sources of managerial talent and providers of the human resource requirements of growing businesses. Some universities and colleges have business resource centers that provide business development services to sunrise industries and growing enterprises. The business development services vary ranging from actual financing to technology transfer, product development, marketing, financial management, and business planning.

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STRATEGIES TO FACILITATE LED

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n this chapter, some strategies that local governments could apply to facilitate local economic development or LED are presented. The emphasis is on the word some, as the list and the descriptions are not exhaustive. There are a number of strategies that the LGU can adopt to facilitate Local Economic Development. They sometimes overlap. The strategies that are not mutually exclusive can be combined in a number of ways. In general, these strategies have to do with: 1. Formulating a local economic agenda 2. Establishing a local economic development authority 3. Creating and improving the environment for would-be investors 4. Retaining and encouraging existing businesses to grow 5. Encouraging new enterprises 6. Creating a conducive environment for cooperatives 7. Focusing on the formation and growth of clusters 8. Targeting specific areas for regeneration and development 9. Targeting disadvantaged sectors 10. Alliance building with the private sector and other LGUs

Each of these strategies is explained and discussed in this chapter. At the end of each discussion, this resource book links the strategy to Philippine laws and experiences by citing specific statutes and LGUs that have implemented the strategy or parts of it. Some of these LGUs are the subject of case studies in Chapter 6. A number of the strategies are informed by learnings on local economic development gleaned and promoted by the World Bank and other international institutions.

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In addition, the chapter lists down ineffective LED strategies that the LGU should avoid, namely:3 1. Expensive untargeted foreign investment marketing campaigns 2. Excessive reliance on grant-led investments 3. Overgenerous incentives for inward investors 4. Business retention subsidies 5. “Low road” strategies like cheap labor and cheap capital 6. Supply-driven capability building and credit programs 7. Credit rationing 8. Government-led retail credit projects. Aside from the strategies that LGUs can use and should avoid, this chapter will also give a brief description of the capacity building process for LGU-facilitated LED.

◗ FORMULATING AND IMPLEMENTING A LOCAL ECONOMIC PLAN Facilitating local economic development begins with the formulation of a local economic plan. The process must be participatory and involve the major stakeholders of LED. Formulating the Local Economic Development Plan begins with an environmental scan of the opportunities and emerging trends and the capacity of the municipality, city, and province to take advantage of the opportunities. The environmental scan should uncover the LGU’s comparative advantage. It must be said here though that deciding on the LGU’s comparative advantage is not a once-and-for-all process but a continuing endeavor. Recent studies have shown that the discovery of an area’s comparative advantage is achieved less by one-shot, step-by-step planning than by an iterative process of “selfdiscovery”and of “searching and learning”consisting, on the one hand, of flexible planning and on the other, of entrepreneurial risk-taking and trial and error.4 The planning process for LED should recognize the varying conditions among LGUs, especially their differing physical/natural resource endowments and ecosystems, available human resources, and financial capacities. Planning for a rural and predominantly agricultural locality will differ from urban

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planning. Rural LGUs have an abundance of natural resources but they usually have fewer financial resources and limited capacity compared with their urban counterparts. Be this as it may, the process of the identifying and implementing an LGU-facilitated LED effort is the same. The process follows five stages:5 1. The LGU organizes the LED effort. It identifies and organizes the stakeholders. 2. The LGU and the stakeholders jointly undertake a competitive assessment using information from the Comprehensive Land Use and other plans, and SWOT (Strengths, Weaknesses, Opportunities, and Threats) techniques, among others. 3. The LGU and the stakeholders prepare their LED strategy/ies and render them into a LED Plan. 4. The LGU and the stakeholders implement the LED Plan. 5. The LGU and the stakeholders monitor, review and evaluate the LED Plan Throughout the whole process, there is constant monitoring, reviewing, gathering lessons, and providing feedback to the planners and implementers. The Local Economic Development Plan should contain the following:6 1. 2. 3. 4. 5. 6.

Vision Statement Mission Statement Objectives Performance Measurements Strategies and Programs Organizational Structure

The Local Economic Development Plan must dovetail with the approved land use plan in targeting particular parts of the LGU for regeneration and growth.

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Specific Philippine Context and Experiences: DILG MC No. 2002-48: Local Economic Transformation Program for Local Governments DILG MC No. 2002-30: Guidelines Prescribing Time Periods on the Adoption, Review and Approval of Comprehensive and Land Use Plans (CLUPs)/Zoning Ordinances (ZOs) of Municipalities, Component Cities, Highly Urbanized Cities and Provinces The Integrated Area Development Program of Irosin, Sorsogon The Lingap Tanaw Program of Naujan

◗ ESTABLISHING A LOCAL ECONOMIC DEVELOPMENT AUTHORITY (LEDA) A new initiative requires a champion and new structures for implementation. Many worthy undertakings begin with a bang only to fizzle out midstream because responsibility for its implementation rests with not one office or person but is scattered across different offices. Even prior to the formulation of the Local Economic Development Agenda, the LGU ought to convene a Business Development Group or LED Steering Committee under the auspices of the Local Development Council that would prepare the ground for the multisectoral planning. Members of the group ought to come from the major stakeholders of LED and should be conversant with the language of enterprise and investment. This Business Development Group can metamorphose later on into a full-fledged Local Economic Development Authority (LEDA). The role of the LEDA would be to oversee the implementation of the Local Economic Development Agenda and orchestrate the efforts of the LED stakeholders. The specific objectives of the LEDA would be to:7 1. Identify internal or indigenous resources for LED and utilize these 2. Coordinate the efforts of LGU offices and major stakeholders around an agreed upon vision of LED and the Local Economic Agenda

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3. Promote small and medium sized business and the creation of an entrepreneurial culture within the LGU and outside 4. Promote the municipality/city/province to facilitate investments and job generation 5. Identify the most vulnerable groups, ascertain their needs, and mobilize support for the poor’s micro enterprises 6. Provide initial business development services to start-ups and later link them and more mature businesses with sources of financing, technical, and managerial know-how 7. Serve as the center for business information about the LGU, fielding inquiries from prospective investors and job-seekers, and facilitating the entry and applications of investors. Specific Philippine Context and Experiences: DILG MC No. 2002-107 Organization and/or Strengthening of Local Small and Medium Enterprise Development Councils (SMEDCs) Marikina City is one of the first LGUs in the country to establish its own LEDA The Dapitan City – Dipolog City – Katipunan – Roxas and Manukan local governments in Zamboanga del Norte have made the SMEDCs the “home”of their LED effort as have a number of LGUs in the Autonomous Region in Muslim Mindanao (ARMM)

◗ CREATING AND IMPROVING AN ENVIRONMENT FRIENDLY TO WOULD-BE INVESTORS8 The strategy involves attracting direct investment into the locality from elsewhere in the country and from other countries. Investors can be foreign companies, domestic companies, and overseas Filipino workers wanting to establish businesses for themselves or for their families upon their return. They can be large manufacturing and service companies or small and medium-scale businesses. Attracting large manufacturing and service sector employers into communities is one of the most difficult, frustrating, and risky of all LED strategies. This is partly because there are far fewer

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investors than communities trying to attract them. Also, many communities are prepared to offer massive incentives to inward investors. Foreign direct investors often prefer greenfields and edgeof-the-town sites. Greenfields refer to factories and offices being built on land that until then has not been developed.9 These factories and offices often build with investors in mind. Greenfields are usually agricultural lands, park lands, and open spaces at the periphery of towns, cities, and metropolises that are converted for industrial and commercial use. All over the world, greenfields are under tremendous pressure from urban expansion and conversion. To accommodate export processing zones and industrial sites, communities often over-ride their planning policies in order to attract investment. This brings with it environmental problems like air and water pollution and solid waste problems. It also contributes to urban sprawl, traffic, and transportation problems. The challenge is to defend greenfields against indiscriminate and wanton conversion and urbanization. There are several ways to do this, among which are: Establishing agricultural protection zones The LGU can restrict and reserve certain lands for agricultural use through local zoning ordinances. Examples of lands qualified for agricultural protection zoning are those that are extremely productive and that have benefited from huge investments like irrigation and farm support facilities. Open space zoning Open space zoning is an LGU tool used to protect open space. Examples in the Philippines are attempts to enforce easement regulations along riverbanks and seashores. The Pasig River Rehabilitation Project and the Marikina River Park come to mind. As the experience of these project show, this strategy has social consequences, primarily resulting from the resettlement of thousands of informal settlers.

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Greenways Greenways are corridors of protected open space managed for conservation and recreation purposes. Greenways follow the contours or boundaries of natural land and water features and they serve as buffers or links between populated areas and nature reserves, parks, and areas of cultural and historical significance. Greenways halt urban sprawl and provide spaces for recreation and promenade for urban dwellers. The effort to attract and more importantly, retain large foreign locators in pre-established and new industrial parks and zones in the Philippines and all over the world have generally not taken off. They have also been less successful in ensuring that Local Economic Development is sustainable in the long run. A major reason is the minimal linkages that these parks and zones establish with the host community because of the mismatches in the skill, technology and raw material requirements of the foreign locators with the human and natural resource endowments of the host community. The locators also source their raw materials from elsewhere in the world, and in numerous occasions, the plant becomes a mere assembly facility. In other cases, the plant produces only a few parts/modules and not the complete product, thereby negating the possibility of significant technology transfer. Communities that succeeded in attracting, retaining, and benefiting from industrial parks/zones were those that relied on their â&#x20AC;&#x153;indigenousâ&#x20AC;?resources for the promotion of these parks and zones. The prudent thing to do therefore, is to carefully consider the costs and benefits of attracting inward investors. There are issues inward investors review when deciding on a location for their businesses. Some of these are a stable macro-economic climate, a stable political and regulatory environment, market access and open competition, and a welcoming environment. Inward investors also consider manageable regulation and taxation systems, incentive schemes, available sites, and appropriate, available, and reliable utilities and transportation. They also review the availability of

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skilled workforce, local suppliers and resources; appropriate education, training and research facilities and good quality of life, especially when they bring in expatriates. When success is achieved, the benefits can be great. Besides direct employment and an increase in the tax base and indirect employment, there are potential gains to the local community through the upgrading of skills of the workforce, increases in wages, and opportunities for local SMEs that supply and buy from these investors. Inward investment strategies are likely to be most successful when: They form a small part of a broad LED strategy The community has the appropriate hard and soft infrastructure in place or available to support the likely investments Targeted investments fit the competitive advantage of the receiving community. Normally a sector/cluster approach is likely to be most successful Marketing strategies are carefully prepared; budgets are appropriate; and follow-up procedures are in place Incentive programs that are varied but not excessive are considered, e.g., funding to help local workers to upgrade their skills Staff involved in attracting strategic investors have an understanding of investment needs and what their community has to offer Opportunities for local businesses are optimized through thorough after-care programs. This means that when a new investor is attracted to a community every opportunity is taken, on an ongoing basis, to encourage the investor to source their supplies locally, enabling supply chain advantages to be exploited locally. This is most successfully achieved through developing an investor after care program. These programs are aimed at ensuring investors are happy and that they are given every opportunity to source their inputs from the local community.

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Possible LGU Initiatives (Programs and Projects): 1. Investing in physical (hard) infrastructure to improve the built environment. This can be done by: Building or improving key access roads Improving the railway for the transport of goods and people Developing, improving, and/or expanding the local airport Developing, improving, and/or expanding the local port Developing, improving, and/or expanding industrial sites and buildings Developing, improving, and/or expanding commercial sites and buildings (for shops and offices) Increasing the availability of industrial and potable water Improving and/or expanding the sewerage disposal system Improving and expanding the telecommunications systems Improving and expanding the energy systems and Enhancing the town center/business district through preservation and restoration of heritage sites, beautification, cleanliness and solid waste management projects. 2. Developing a case for investment. Doing this would entail: Developing a professional investment portfolio Data banking of business information and opportunities and Marketing and promotional activities. 3. Provision of incentive schemes by: Providing fiscal incentives like exemptions or deductions in local taxes paid and initial subsidies to promote micro, small, and medium-sized enterprises and Providing non-fiscal incentives like investor care and investor facilitation services and streamlined process for obtaining business permits and other local licenses.

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4. Ensuring a stable peace and order situation which can be done through the following means: Installation of crime prevention equipment like video cameras Starting an emergency hotline Increasing police visibility in crowded and most frequented areas Installation of a community intelligence and security system and Clearing of critical sidewalks to facilitate pedestrian movement, traffic build-ups, and opportunities for corruption. 5. Developing industrial estates, business or science parks This type of activity is normally undertaken by the private sector because investing in servicing sites with water, electricity, and sewerage and building advance factory units (where no tenant has yet been identified) are expensive and risky. However mayors and city managers can pave the way by establishing a demand for such a facility and encouraging an enabling environment within the local authority. 6. Encouraging investment into growth nodes Another strategy is to identify specific areas within a city where certain types of businesses will be encouraged to locate. A growth node may then act as the center for planned growth and employment. 7. Encouraging investment into corridors These are similar to nodes but here growth is encouraged to expand from an area of promising economic activity towards a more challenging area. By encouraging incremental investment, the aim is to develop an active growth corridor linking richer and poorer areas, thereby ensuring that growth benefits the poor.

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Specific Philippine Context and Experiences:

Kalakalan 20 (R.A. 6810) Magna Carta for Small Enterprises (R.A. 6977) An Act Providing Assistance to Women Entrepreneurs (R.A. 7882) The Omnibus Investment Code (E.O. 226). Dalan sa Kauswagan: A Road Project of San Carlos City, Negros Occidental Bohol’s Investment Promotion Program The Investment and Promotion Program of Tigaon in Camarines Sur Breaking Financial Barriers in San Fernando, Pampanga Cebu’s Economic Miracle Mariculture Park of the Island Garden City of Samal

◗ RETAINING AND ENCOURAGING EXISTING BUSINESS TO GROW10 While the previous strategy concerns attracting domestic and external businessmen to pour their investments into the area, this next set of strategies concentrates on keeping those that have located their businesses within the locality. This set also recognizes that most economic activity in the locality is likely to be generated by small and medium sized businesses that are already established in the province, city, or municipality. It encourages existing businesses in the area to stay and grow. Possible LGU Initiatives (Programs and Projects): 1. Establishing open, ongoing, and constructive relationships with business and industry associations It is vital that LGUs establish open, ongoing, and constructive relationships with business or industry associations like the local Chamber of Commerce, groups of entrepreneurs, and even

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individual businesses. Ongoing linkages and open communication ensure that the LGU leaders are informed of issues and developments facing the business community as well as their needs. This notwithstanding, LGUs have to take care that their pro-active stance is not viewed as “meddling” or “undue government interference”in private sector affairs. It is important that LGU leaders steer clear of disputes within the Chamber of Commerce or industry association such as election of officers. LGUs must also guard that the one-to-one relationship they establish with individual entrepreneurs does not degenerate into shaping the playing field for the sole benefit of one or a few players. 2. Business retention visits and surveys By visiting and surveying a firm, the local leadership and the LEDA are able to identify its problems, gauge its performance, whether it is expanding or not, and determine its needs and sources of inputs. The local leadership may be able to persuade them to source more inputs locally. These visits can forestall a business from leaving the area. Business retention visits and surveys as well as the various assistance that the LGUs can facilitate or provide can be targeted to particular industries, e.g., tourism. 3. Technical assistance This can include broad based management and marketing programs, training in quality and environmental standards, and advice through more specialized export training or research and development support. What the LGU can do here is to broker the provision of accredited, demandled, technical assistance, paid for on a fee-for-service basis. Often these services are provided through one-stop business service centers, business resource centers run by universities, by foreign technical assistance, and by national government agencies like the Technical Education Skills and Development Authority (TESDA), the Technology Livelihood and Resource Center (TLRC), and the Department of Science and Technology (DOST). 4. Financial advice and assistance A difficult and ever present problem for businesses is to access capital. The LGU can serve as gobetween between government financial institutions like the Development Bank of the Philippines (DBP) and private lending institutions. An appropriate financial support program will be able to give advice and training on financial planning, access to capital and credit etc. In some cases, the LGU 62

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may establish small grant or loan programs to encourage small businesses to invest in modern technology. Great care should be taken with financing schemes run by LGUs for whatever purpose. Safeguards must be put in place to ensure fairness in the selection of borrowers and to avoid fostering dependency and laxity among the local enterprises. 5. Public procurement policies and "buy local" campaigns The local government, public sector organizations and larger local businesses can make their contracts more accessible to local companies. This has to be done with laws that ensure fair practices, transparency, and accountability in the procurement process. Initiatives can include adjusting the size of contracts so that smaller companies may bid; encouraging and accepting bids from groups of local companies; holding procurement events for local businesses; and publishing local business competency directories. 6. Work simplification and reduction of red rape The amount of permits and approvals that businesses need to obtain, and the time it takes to obtain them, are not only expensive and time consuming, they can also be a disincentive to register into the formal economy. A good place to start is to review existing regulations and laws, consult with stakeholders and develop a remedial plan. This involves re-engineering internal local government processes and lobbying to reduce bureaucracy in other government areas. A program to minimize the complexity, costs and bureaucracy associated with approval processes will improve the competitiveness of the area. 7. Provision of sites and premises Since LGUs and the national government are often the owners of industrial and commercial land and buildings, they can use these to encourage business investment and expansion. A good understanding of the local property market should enable LGUs to plan for growth. However, funding such hard infrastructure investments is a challenge. Rents and sales should provide a market return for LGUs. The option of private sector intervention or partnership should always be examined to ensure the best use of LGU resources.

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8. Big brother/sister-small brother/sister relationship The LGU can facilitate the linkages of larger firms with smaller enterprises into “Big brother/sisterSmall brother/sister” relationships. The relationships usually involve producers and suppliers, contractors and sub-contractors. Big brother/sister and small brother/sister relationships involve the transfer of managerial skills, technology, and machinery from the larger firm to the smaller enterprise to establish synergy and upgrade the latter’s standards to the level required by the former. Big brother/sister-Small brother/sister set-ups take their inspiration from the hugely successful Japanese keiretsu and the principles of Total Quality Management (TQM). Where a number of smaller enterprises are linked up to a larger firm in varying supply relationship, the larger firm can be described as an anchor grounding and coordinating the activities of the smaller units. This is often seen in the relationship between a large food processing facility and the surrounding contract growers and farmers. Specific Philippine Context and Experiences:

Kalakalan 20 (R.A. 6810) Magna Carta for Small Enterprises (R.A. 6977) An Act Providing Assistance to Women Entrepreneurs (R.A. 7882) The Omnibus Investment Code (E.O. 226) Jewelry Production and Promotion in Meycauayan, Bulacan Cebu’s Economic Miracle

ENCOURAGING NEW ENTERPRISES11 Encouraging new enterprises involves providing advice, technical support, information and resources to help individuals set up their own businesses in the form of sole traders, partnerships, cooperatives, and community enterprises.

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Possible LGU Initiatives (Programs and Projects): 1. Provision of finance for new businesses Micro enterprise financial support is key to enabling businesses to start up as they usually cannot access traditional lending institutions. Micro enterprise financing is a specialized area, and experiences in this area are well documented. There are many examples of largely private successful micro enterprise support institutions, all of which need some money to start with but can become self-sustaining after some time through revolving funds. LGUs normally become involved in these schemes by meeting with micro enterprise institutions to assess forms of support needed and areas and ways of collaboration. It is not advisable for LGUs to be involved in microfinance schemes as they generally do not have the skills and resources to do this. Their role is to identify needs and encourage institutions and private sector players to intervene. 2. Provisions of micro and managed workspace This strategy provides places on and from which small businesses can trade. These places are usually located in areas with a potentially large customer base. Besides the proximity to the market, these workspaces allow small businesses to share office services, equipment and security and allow them access to business support and advice. Micro and managed workspaces help small businesses overcome the stresses of start-up and growth through the provision of various forms of targeted business development and support like coaching, mentoring, and advice in finance, marketing, and management skills. The end goal is to minimize failure rate of start-ups and optimize the development of businesses, especially those with huge potentials for growth and impact on employment. 3. Providing technical advice on business management Someone establishing a business for the first time needs to know how to produce his or her product. They must also understand finance, business planning, marketing, some aspects of the law including employment, taxation, safety at work, environmental legislation and so on. The provision of training and support in these areas meets a basic need and can be provided through

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one-stop shops or independent advisers. As in most areas of technical assistance, it is better for the LGU to enable the provision of these services by the private sector rather than provide them itself, again an issue of skills and resources. Charging for these services can be difficult, and some agencies give a limited number of consultations and then make modest charges thereafter. 4. Supporting the establishment and implementation of formal and informal business networks like industry associations People learn from each other. Networks facilitate learning. Active involvement in business networking is also important for developing a customer base, acquiring intelligence for expanding businesses as well as developing collaborative relationships with businesses in the same sector. 5. Conducting business mentoring programs Good practice suggests that by linking new and small business owners with established businesses, significant benefits can result for both businesses. These need not be formal networks. In addition, informal networks of mentors and new businesses can create further benefits by developing supplier linkages, establishing critical mass for specialist training and so on. The LGU can establish corporate volunteers program where large corporations can assign some of their personnel to mentor small and medium enterprises in critical business skills like planning, product development, quality control, developing a customer orientation, marketing, and after sales customer service. 6. Investment in soft infrastructure This strategy involves investing in the improvement of the commercial environment for businesses. The programs and projects that the LGU can adopt under this strategy are: Â&#x20AC; Enabling or providing skills training. In communities where enterprise has not been a key priority, enterprise training can be provided. There is an almost universal need for information technology (IT) skills training. E-commerce is the wave of the future. Wherever possible this should be linked to education programs in schools. The provision of skills training should be demand-led, i.e. training should be provided in response to the needs of the enterprises.

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Providing increased business focused education and access to education. Schools ought to better prepare young people for the world of work. Programs can include: work ethic, information technology, basic entrepreneurship education and sector studies where students can study key business sectors of importance to their communities. Meanwhile adult literacy is a major problem that needs to be addressed through LED education and outreach programs. Supporting research and development. This can be done through collaborative projects between businesses and institutions of higher learning. A local research fund can be established and a graduate placement program implemented, so new graduates can pass on their skills to local businesses. Providing business advisory services. Depending on budgets, this service can start with one person who points people in the right direction (e.g., to lenders and institutions providing skills training). Clear sign posting is the key to good business advisory services. “One-stop shops”are an effective way of providing technical and financial support. Effective one-stop shops are usually housed in one building where local businesses may access all technical support they need. The building can also house all LGU and national agencies involved in regulating businesses. Access to capital and finance. The one-stop shop can provide budding enterprises with information and direction to potential sources of finance. Supporting the development of business and trade associations. This is a basic institution building process that can bring considerable benefits to the business community and LED efforts. Ideally all provinces and cities should have a number of business organizations including Chambers of Commerce, Boards of Trade etc. Also more specific groups can be supported such as town center promotion groups, sector activities such as a tourism marketing group, an exporters’ club, and a young entrepreneur’s association. Most are likely to initially need some “pump-priming” funding (i.e., initial funding to get the scheme started) and capacity building support.

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Improving delivery of local government services to businesses. This is a key area as businesses are not only the drivers of the local economy but they are also potential ambassadors. A happy business person is the best promoter for investments in the area. All aspects of regulations, taxation, and licensing are candidates for review to minimize cost, time, and frustration for businesses, not to mention opportunities for corruption, while maintaining appropriate necessary environmental and related standards. Social inclusion strategies. The initial thrust should be to establish who and where the most vulnerable communities are, and then develop strategies to include them. These strategies can include, for example, education and skills training for ethnic minority communities, helping women into/back to work, encouraging the recruitment of disabled people into the workplace, and encouraging social activities for the very young and elderly citizens. Crime prevention measures. These can include everything from introducing “good citizenship” classes into the school curriculum to developing after-school activities to keep young people busy. Other initiatives include drug free zones, curfews at night, training of barangay tanods (volunteer peacekeepers), and community intelligence networks. Specific Philippine Context and Experiences:

Kalakalan 20 (R.A. 6810) Magna Carta for Small Enterprises (R.A. 6977) An Act Providing Assistance to Women Entrepreneurs (R.A. 7882) The Omnibus Investment Code (E.O. 226). The City Livelihood Assistance Program of Pagadian City Ylang-ylang Oil Industry Development in Anao, Tarlac

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◗ CREATING AN ENVIRONMENT FAVORABLE TO COOPERATIVES Cooperatives can be important drivers of local economic growth. To harness their potentials for LED, LGUs must first understand the nature and principles of cooperatives to effectively work with them. They need to understand their mandates in relation to cooperatives as stated in the Local Government Code and the Cooperative Development Code. As a start, the LGUs can help cooperatives by improving processes in the issuance of licenses and other business-related permits. They can simplify the accreditation processes for civil society and private sector organizations to enable cooperatives to participate in local governance. LGUs can also explore the possibility of setting up an appropriate structure to support cooperatives like a Municipal Cooperative Office, a Local Cooperative Council, and a Cooperative Resource Center. Specific Philippine Context and Experiences: Pushing Development through Cooperativism in Bulacan Ylang-ylang Oil Industry Development in Anao, Tarlac The City Livelihood Assistance Program of Pagadian City

◗ CLUSTER AND/OR SECTOR DEVELOPMENT12 Recent studies have shown that businesses do not develop in isolation but in clusters, and often these clusters arise from a distinctive resource, physical and human, from unique demand conditions, and from the presence of supportive industries, institutions, and policies. This being so, LGU efforts should focus on identifying and supporting emergent and fast-growing clusters of enterprise and shepherding them to serve larger and larger markets. Cluster development means that LED initiatives are concentrated on encouraging and supporting inter-firm collaboration, institutional development and support in targeted business sectors. These sectors are those that offer the most local economic development potential.

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Possible LGU Initiatives (Programs and Projects): 1. Developing broker and network agencies Special attention can be paid to encourage local people engaged in the same cluster to meet together to enable business development opportunities. This can include encouraging local fishermen and fish processors to meet and exchange ideas on improving facilities and adding more value to their products, so they would all benefit. Another example could be to start a craft network. The network can jointly market their goods, and then start inter-trading with each other, building synergies in the process. 2. Supporting joint research Institutions of higher learning can undertake research that can benefit everyone in the cluster. One example of this would be to undertake research on minimizing losses from post-harvest losses of agricultural products. 3. Developing cluster focused public procurement and local purchasing agreements The public sector is often the largest buyer in a city, and as such, there are opportunities to enable local businesses to participate in public biddings more easily. It is often difficult for small businesses, in a cluster or not, to bid for large government contracts. A cluster initiative here can include developing a food supplier network to supply government catering needs. A logical cluster development initiative is to encourage suppliers of basic food products to enter into some form of food processing. Cluster development activities can then move on to transportation, storage and packaging of food products. From there it is likely businesses can start retailing and producing processed foods for the private sector. 4. Providing cluster specific information One of the most effective ways of developing a cluster is to gather information about businesses and institutional support systems in the cluster and then share them. Thereafter, with a small amount of effort, supplier linkages can be developed.

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5. Developing cluster related marketing efforts Once a cluster has been identified and it starts developing, there are opportunities to promote it and attract supporting investment as well as promoting external business opportunities for cluster members. 6. Developing demand-led skills and education training programs Clusters have common needs. When a number of businesses express their needs, it is more likely that training or education will be provided. A lone voice is not likely to be taken seriously. Specific Philippine Context and Experiences: DILG MC No. 2002-09 Implementation of the LGU-Cluster Development Approach Project (LGU-CLAP) as a Strategy in the Adoption of One-Village, One-Product Movement Ylang-ylang Oil Industry Development in Anao, Tarlac Jewelry Production and Promotion in Meycauayan, Bulacan

◗ AREA TARGETING FOR REGENERATION AND DEVELOPMENT13 Area targeting means that strategies are developed to address specific site or small area LED issues. While most LED initiatives can be targeted at specific locations, “area targeting”examines a specific area within a municipality to address a specific territorial problem such as a redundant factory, declining shopping area, slum, etc. These areas need special attention and measures. Regeneration strategies are targeted at communities that have normally suffered from structural change, perhaps a major industry closing or a rural area in decline or a town center suffering from neglect and crime. The implementation of effective regeneration programs and the tackling of social and economic disadvantage represent two of the major challenges facing contemporary policy makers. Regeneration strategies go some way to meet these challenges. They use all the tools available but because an area is in need of regeneration, specific, community focused and often highly targeted policy responses are usually needed. S E RV I C E D E L I V E RY W I T H I M P A C T: R E S O U R C E B O O K S F O R L O C A L G O V E R N M E N T

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Regeneration strategies are likely to be the most challenging, the most expensive, and most prolonged program that an LGU is likely to undertake. Possible LGU Initiatives (Programs and Projects): 1. Town center enhancement schemes These can include a wide range of initiatives including developing a business partnership, marketing the town center, undertaking surveys and upgrading the physical environment, and targeting investment, etc. A vital and vibrant town center is the heart of an areaâ&#x20AC;&#x2122;s ability to become competitive. 2. Derelict site reclamation programs Many traditional industries were housed on large sites. They occupied large buildings and frequently, sites were considerably contaminated. As a first step in most regeneration programs major issues need to be tackled. Decisions need to be made on whether buildings can be effectively reused, how much contamination needs to be cleared and what after-use programs need to be established. None of this is easy or cheap. But contaminated sites, besides being a danger to local communities, are never likely to be bought by reputable employers. A comprehensive brownfield reclamation program needs to be established within the LED strategy to address this. Brownfield is a general term used for sites that have been developed in the past for industrial and military uses, which may or may not have been contaminated by military and industrial wastes. Brownfield development is often a recourse for communities to maintain tax revenue and employment after the departure of the original locator or investor. But it can be very costly and entails a number of activities. These include an initial survey of sites, identification of the severity of pollution, identification of ownership, prioritizing reclamation, finding funds for it, developing after-use programs and ensuring that regulatory systems encourage reclamation.

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3. Adaptation of disused buildings In some instances redundant buildings are still adaptable for further use such as for a managed workspace that can be owned by either the public or private sector. Some buildings may benefit from splitting into smaller workspaces. Some of the most historic buildings are often the hardest to reclaim. However, this should not stop efforts to save all buildings of historic or architectural importance. 4. Industrial and commercial site preparation In most regeneration programs there will be a need to develop some land for incoming and expanding businesses. To accommodate these most effectively, it is better to have some sites serviced with basic infrastructure at the outset. If this is not possible, there should at least be some assessment of the likely costs and the time needed to install basic infrastructure. Since the costs are likely to be significant, partnerships with the private sector are most desirable. 5. Retraining of redundant workers This is a serious problem in communities that are undergoing structural readjustment. The likely target populations will be older men and women who have clearly defined skills sets. The challenge is to ensure that skills trainings are provided on a demand-led basis. 6. Job search and employment outreach Redundant workers often encounter difficulties finding a new job. This is due to their lack of basic job search skills. Public employment service offices (PESOs) such as those that the Department of Labor and Employment are promoting among LGUs can be very effective in helping them find job opportunities. They also benefit new graduates and new entrants to the workforce. The PESOs can offer services from seminars on building personal confidence, resume writing, interview skills to projects matching the unemployed with potential employers.

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7. Street scene enhancement programs Rapid improvements can be made with programs to improve the street scene. These may include closing streets to traffic and installing pedestrian friendly street furniture, planting trees and installing new pavements. More modest schemes include painting shops, installing attractive street lighting and benches, encouraging shop owners to install more attractive overnight shutters, and sponsoring hanging basket competitions. Local businesses can be encouraged to pay for some of these initiatives. 8. Public park and play provision In addition to improving the environment, improved parks and play facilities are likely to reduce the risk of juvenile delinquency, smoking, and drug addiction. In crowded areas, LGUs may designate certain areas as traffic free zones where children can play safely. 9. Entrepreneurship training and SME support programs The city's mainstream programs can be adjusted to meet specific needs of vulnerable groups like women. Local delivery of services can also be helpful. 10. Community confidence building This can cover many projects such as promoting local success stories, encouraging the community to develop its own newsletter, and developing the arts and domestic crafts. 11. Crime and safety measures These measures include a wide range of activities from increased policing, installation of closed circuit television, increased bus services at night, neighborhood watch schemes, and street lighting projects.

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Specific Philippine Context and Experiences: DILG MC No. 2002-81: Creation of Local Culture and the Arts Council DILG MC No. 95-162: Inventory of LGU Tourism, Culture & the Arts Councils DILG MC No. 2001-19: Solid Waste Management Program Implementation of Republic Act No. 9003 otherwise known as the Ecological Solid Waste Management Act 2000 DILG MC No. 2001-38: Addendum to DILG MC 2001-19 Re-Implementation of Republic Act 9003, otherwise known as the Ecological Solid Waste Management Act of 2000 DILG MC No. 2001-48: Inventory of All Solid Waste Disposal Facilities and Sites in LGU Marikina City Manila City

◗ TARGETING DISADVANTAGED GROUPS14 Targeting disadvantaged groups involves designing programs and projects addressing the needs of vulnerable and marginalized groups such as ethnic minority groups, the urban poor, women, redundant workers, the long-term unemployed, and out-of-school youths. Possible LGU Initiatives (Programs and Projects): 1. Language training This is a key issue where there are groups of foreign workers and minority communities. Outreach programs are often successful here. 2. Skills retraining and job placement programs Skills retraining should be done following a demand led approach. It is a waste of time and resources retraining individuals in skill areas for which there is no or little employment opportunities.

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3. Raising educational achievement This is usually an issue for an entire city, but specific communities may be in need of extra support. 4. Enterprise training Many disadvantaged groups have both high unemployment and a large proportion of workers in the informal sector. Basic training in terms of business management, finance and marketing can have a significant impact on these communities. If as the statistics show that less than ten percent (10%) of rural household heads had enterprise as an option, then there exist opportunities for farmers, farm workers, and rural residents to start farm-related and off-farm enterprises to supplement the low income derived from agricultural work. LGUs can assist entrepreneurial rural folks find and take advantage of opportunities in businesses such as food processing, handicraft making, sewing, etc. 5. Women into employment and self-employment programs This includes confidence building projects, crĂ¨ches, and after-school clubs. 6. Micro enterprise lending programs This addresses the need of disadvantaged groups to start and continue enterprises of their own. 7. Work experience and teacher/pupil placement schemes These schemes involve students working for short periods of time in businesses to gain work experience and a work ethic. Teachers can also do this by giving students a better understanding of workplace requirements. 8. Developing mentor programs Mentor programs can be done informally. More experienced business people mentor upstarts in the basics of starting and sustaining an enterprise.

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9. Health and wellness awareness programs It is usually the most disadvantaged that suffer from poor health and unsanitary living conditions. Poor health affects an individual’s and a community’s productivity. Health awareness programs can target specific, high-risk communities such as those at risk for water-borne and mosquito-borne diseases such as malaria and Japanese encephalitis. 10. Development of community resource centers The purpose of these centers is to gather and coordinate information and services to meet the needs of a local community. Since transport is often a problem, and since many individuals do not like to go into “official looking” buildings, community centers can provide an ideal place to meet local needs. Buildings do not need to be sophisticated; the most important element is to make sure the people are customer-friendly and have an understanding of the services that are available. Services can include everything from health care, education services, business advice, and play areas for children. In the Philippines, barangay halls, health centers, and day care centers often serve these functions. Specific Philippine Context and Experiences: R.A. 8425: The Social Reform and Poverty Alleviation Act DILG MC No. 2001-109, Initial Areas for Action in the Implementation of Programs on Poverty Reduction and Local Economic Transformation DILG MC No. 2001-105: Designation of Local Poverty Reduction Program Action Officers and the Functions of the LPRAO DILG MC No. 2001-172, Guidelines on Poverty Reduction Program for Local Governments Joint (DILG, DBM, NCRFW) MC No. 2001-01.Guidelines for Integrating Gender and Development (GAD) in the Local Planning and Budgeting System through the Formulation of GAD Plans DILG MC No. 2002-163. Creation of Local Council for Women The City Livelihood Assistance Program of Pagadian City The Lingap Tanaw Program of Naujan

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◗ ALLIANCE BUILDING WITH THE PRIVATE SECTOR AND/OR OTHER LGUS The cluster approach not only applies to businesses but also among LGUs and between LGUs and the private sector. Possible LGU Initiatives (Programs and Projects): 1. Common facilities like roads, hospitals, colleges and universities, research and training facilities, post-harvest, solid waste management, water supply and sanitation. 2. Environmental conservation programs like protection of watersheds, coastal resources, and other natural resources vital for sustainable development. 3. Area products and tourism marketing campaigns by bundling the different sites into a common package tour. 4. Joint venture arrangements with the private sector like Build Operate-Transfer arrangements for roads, city and municipal ports, housing projects. Specific Philippine Context and Experiences: DILG MC No. 2001-109, Initial Areas for Action in the Implementation of Programs on Poverty Reduction and Local Economic Transformation DILG MC No. 2002-09 Implementation of the LGU-Cluster Development Approach Project (LGU-CLAP) as a Strategy in the Adoption of One-Village, One-Product Movement DILG MC No. 2002-48: Local Economic Transformation Program for Local Governments Investment Program of Bohol Pigcawayan-Alamada-Libungan-Midsayap-Aleosan (PALMA) Complex common heavy equipment project for infrastructure development

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â?&#x2122; Ineffective LED Strategies that LGUS Should Avoid Unfortunately there are countless examples of strategies and projects that have failed to achieve local economic development. Some of these are: Expensive untargeted foreign direct investment marketing campaigns Untargeted foreign direct investment marketing campaigns are a waste of human and financial resources. Crafting a message meant for all and sundry is communicating with no one. It also comes across as indecisive. Segment the market. Know the type of investors you wish to attract, identify their needs, motives, and preferences, and position the LGU accordingly. Supply-led training programs Supply-led training programs, as the name implies, are driven by the providerâ&#x20AC;&#x2122;s perceptions of what businesses need and what donors are willing and want to fund. In contrast, demand led programs are those that employers have expressed a need for. Supply-led training programs run the danger of training people in skills for which employment is scarce or even non-existent. With their nose on the market, business persons know better than bureaucrats what skills their employees should have and should develop. Excessive reliance on grant-led investments Grant-led investments hamper the development of the discipline required to compete in the market. There are few incentives to channel them to the most efficient and effective uses because they come cheaply or for free. Grant-led investments are most useful in functional areas where social returns are high but the payback periods are longer, such as human resource development, education, and social services.

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Over generous financial incentives for inward investors Over generous financial incentives for inward investors consist of tax rebates, special import permits with exemptions from or reduction of normal duties, protection against competition, and preferential credit arrangements. While these incentives may attract investors in the short-run, these can lead to protectionism with its negative effects of laxity and inefficiency and overall decline in industry competitiveness. These not only deprive the LGU of revenue but can also breed considerable resentment among local businesses that do not enjoy the same benefits. Business retention subsidies Paying firms to stay in the area despite the fact that the financial viability of their operations is at risk sends a wrong signal to the business sector. It encourages firms to become inefficient and to delay â&#x20AC;&#x153;biting the bulletâ&#x20AC;? or to fix their operations. Relying on "low road" techniques like cheap labor and capital Cheap labor and capital can reap rewards in the short-term but in the long run, the strategy is unsustainable. Other countries, provinces, and cities can lower their labor costs, causing competition to become a race to the bottom rather than a stimulus to reach for the top. Cheap labor ultimately causes unrest and often leads to the use of child labor. Instead of reducing cost, the aim of enterprises is to create greater social and economic value through productivity-enhancing measures like provision for better education, incentives for continuous innovation, and the creative use of technology. Early in its development, Singapore compelled companies to innovate by mandating an automatic increase in wages every year. Government conceived, controlled and directed financing strategies, e.g., credit rationing for certain sectors and industries Historically, credit rationing has never worked. Despite the Agri-Agra law directing banks to lend a portion of their portfolio to Philippine agriculture, the sector remains starved of financing, despite the obvious high demand. The reasons for this state of affairs range from the unique risks faced by farmers, e.g., susceptibility to the elements, the fluid and uncertain property rights

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regime caused by well-meaning land reform programs to the incentive structure for rural lending. Rather than credit rationing, governmentâ&#x20AC;&#x2122;s time is better spent getting the â&#x20AC;&#x153;incentivesâ&#x20AC;? right rather than issuing laws that are difficult to enforce in the first place. Credit cannot be made to flow by decree anymore than one can order the water to flow uphill. One has to inquire whether the traditional banking sector with its large overhead is the institution best positioned to deliver financing to farmers. There is also the matter of increasing investor and lender confidence in the sector by improving the credit-worthiness of farmers. Government agencies implementing retail credit projects The record of government agencies directly implementing credit projects in the field is dismal, to say the least. Government is not a credible lender. It is bedeviled by concerns other than straightforward business objectives. Regular changes in leadership do not give it the stability required of a financing institution. If government is to be involved in lending projects, it should at the most act as a wholesaler, never a retailer of credit. Supply-led credit programs offering loans at below cost-recovery rates Supply-led credit programs offering loans at below cost-recovery rates are unsustainable. They encourage non-repayment and risky behavior on the part of both retailers and borrowers. For obvious reasons, people pay the most expensive loans first, and since the loans come cheaply, they are liable to use it for less productive purposes. The supply-led credit programs of the 1970s made the rural banks lazy in mobilizing savings and lax in approving loan applications. Studies have also shown that the loans went to the richer farmers than to the poorer ones, thereby aggravating an already iniquitous situation.

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â?&#x2122; CAPACITY BUILDING PROCESS FOR LGU-FACILITATED LED LGUs need to develop their capacity to facilitate and see the LED process through. The effective capacity building for LED follows a four-stage process: 1. Establishing consensus among and between LGUs and the stakeholders about the need to improve the local economic situation and economic-related local governance. 2. Improving the institutional capacity and strengthening organizations to undertake local economic development initiatives. 3. Improving LGU economic development-related systems, structures, mechanisms, and procedures. 4. Institutionalizing capacity through assessment and incorporation of lessons.

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ISSUES AND RECOMMENDATIONS REGARDING LED IMPLEMENTATION

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his chapter deals with issues in LED implementation and corresponding recommendations. The issues are those facing micro enterprises, small and medium enterprises, and LGUs. LGUs face a number of constraints in implementing LED. These constraints are: financial, technicalmanagerial, lack of political will and commitment, lack of sustainability of LED efforts, insufficient support systems for LED, conflicts between national and local governments, and inter-local cooperation.

❙ Micro enterprises Nine out of ten enterprises in the country are micro enterprises run by an estimated 4.7 million entrepreneurs. Of this number, thirty percent (30%) of them are in growth-oriented micro enterprises while seventy percent (70%) are in so-called survival or livelihood activities such as vending, raising animals, and farming. Micro enterprises need financing. Those in growth enterprises require skills in product costing, development, and marketing. Those in the informal economy require security of tenure and protection from harassment and mulcting law enforcers.

❙ Small and Medium Enterprises Many of the SMEs in the Philippines are relatively young. A 1989 ADB-ERDC study showed that “while small and medium entrepreneurs were more highly educated than the average person in the society (community) they come from, they are in clear need of technical training in such areas as accounting, financial analysis and product design preparation.” 15

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There is also the issue of global competitiveness. SMEs are apprehensive of the adverse effects of trade and investment liberalization, resulting in the free flow of trade and investment across national borders. In an open market, only the big corporations are expected to survive due to their ability to access market information and technical and management know-how. The following are recommended measures on SME development: Facilitate access to sources of funds by simplifying tedious credit requirements Assure access and transfer of appropriate technology through the establishment of adequate support structures and creation and promotion of an environment conducive to the viability of SMEs Intensify and expand programs for training in entrepreneurship Conduct periodic review of government incentives to ensure their responsiveness to the SME sector Promote linkages between large and small enterprises by encouraging establishment of common service facilities Encourage private sector partnership through joint ventures and equity investments

❙ Local Government Units The ability of LGUs to perform its many roles to promote LED is affected by a number of constraints: financial, technical, political, policy, the insufficiency of support systems, and the difficulty in getting LGUs to cooperate among themselves and between them and the central government.

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â&#x2014;&#x2014; FINANCIAL CONSTRAINTS Dependence on the Internal Revenue Allotment (IRA) Many LGUs, especially municipal governments in the rural areas classified from fourth to sixth class, are heavily dependent on the Internal Revenue Allotment (IRA) for their continued operation. With the IRA spent on personnel services (PS) and daily operations, there is practically nothing left for locally funded projects that would promote local economic development. This has also prevented LGUs from putting up the required equity in foreign-assisted projects (FAPs) and from financing studies required by grant and loan facilities like feasibility studies. Financial constraints or barriers can be addressed by the two broad strategies of increasing income and reducing cost. In the next chapter, the Municipality of San Fernando in Pampanga shows how an LGU can combine these two strategies to get itself out of the red. Limited tax base and business activity Rural-based LGUs cannot generate large revenues even with the broader taxing powers granted them by the Local Government Code because of a small and narrow tax base and limited business activity in the area. The problem is compounded by out-migration (the so-called brain and brawn drain) from the poorer areas to the more urbanized towns and cities. Retention by the national government of the more profitable sources of taxes The national government still retains the more profitable sources of taxes such as income taxes, customs duties, transportation levies and franchises. Lack of financial support for devolved functions LGUs continue to struggle to finance functions and facilities devolved to them by the Local Government Code. The lack of financial support from the central government has overloaded the LGUsâ&#x20AC;&#x2122; limited budget.

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IRA sharing formula The sharing formula for the IRA works to the disadvantage of LGUs with small populations and land area. Provinces also get equal shares with cities despite the former being saddled with the management of provincial hospitals.

◗ TECHNICAL AND MANAGEMENT CONSTRAINTS Limited technical capacity within the LGU and in their area Many LGUs have limited internal technical capacity to plan and implement development programs and projects. The lack of financially and technically qualified contractors in the area has made them reluctant to avail of credit facilities such as the LGU Private Infrastructure Development Facility of the Land Bank of the Philippines. In the next chapter, San Carlos City in Negros Occidental shows how LGUs can surmount the perennial lack of technical capacity in the locality. Limited managerial capacity LGU-owned economic enterprises like public markets, slaughterhouses, and/or conference/lodging facilities are not managed efficiently because of the lack of professional, competent, and highly trained managers. Lack of administrative support personnel like financial and monitoring staff have also affected the LGU’s capacity to absorb grant and loan proceeds. Aside from slow releases by national government offices and agencies like the Bureau of Treasury, Department of Budget and Management, and the Municipal Development Fund Office (MDFO), disbursements of many foreign assisted projects where LGUs have substantial participation are held up because of the LGUs’ delayed submission of the required monthly physical accomplishment reports and final audited reports.

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◗ LACK OF POLITICAL WILL AND COMMITMENT While a number of LGUs have well prepared and sound economic plans, many of these remain unimplemented. Many projects remain on paper because the local chief executives do not want to implement them because of political considerations. Projects with long-term impact are shelved in favor of short-term, highly visible projects.

◗ LACK OF SUSTAINABILITY OF LOCAL ECONOMIC DEVELOPMENT PROGRAMS AND INITIATIVES Short-term limits Constitutional provisions limiting the terms of elected local government officials to three years threaten the sustainability of local economic development programs and initiatives. For a firstterm elected local chief executive, it is said that the first year is usually a time of learning and adjustment, the second year, for starting projects, and the third is for preparations for the next election. With hardly any time to warm their seats and elections looming large even after the previous one has just been concluded, local officials prioritize the implementation of highly-visible projects with immediate results over longer-gestating ones that may have lasting impact. Uncertainty over the next set of local officials also prompts investors to adopt a wait-and-see attitude a year before local and national elections. Changing set of local officials Sharing of resources between and among participating local units in the program is difficult to sustain because of the changing set of elective officials. Political partisanship and the lack of continuity of plans and programs However worthy, plans, economic programs and initiatives started by one administration are often discontinued or shelved by its rival once the latter gains power. “Political partisanship”at the local level also affects the accreditation, participation of NGOs, POs, or cooperatives, and the

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private sector in local governance. Partnerships between the LGU, civil society, and the private sector are jeopardized by the change in local political leadership. Political patronage The operational effectiveness and efficiency of the LGUâ&#x20AC;&#x2122;s economic enterprises are affected by the need to reward members and followers of the winning party or cabal. Casuals are hired and unqualified party hacks are appointed to managerial positions. Lack of funds and capability of LGUs Though beneficiaries acknowledge the positive impact of the subprojects, concerns remain about their sustainability because of the lack of funds, if not the capability of LGUs for infrastructure operation and maintenance, and the lack of social preparation to ensure project sustainability/ownership.

â&#x2014;&#x2014; INSUFFICIENT SUPPORT SYSTEMS FOR LOCAL ECONOMIC DEVELOPMENT Lack of resources in the Department of Trade and Industry (DTI) Despite its mandate to provide the necessary support system to local bodies, field reports indicate that DTI does not extend the needed assistance to many LGUs because of its lack of human resources in the field. Provincial offices do not have enough staff to link up with LGUs in the preparation of project feasibility studies, baseline studies, marketing, promotion of products, managerial & entrepreneurial skills development and in the conduct of fora and seminars on investments opportunities. DTI is constrained by the lack of resources at the regional and provincial levels to engage in a far more active and sustained effort in economic promotional activities.

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Be this as it may, the DTI and the LGUs can partner with each to work around this problem, as the Municipality of Tigaon in Camarines Sur demonstrated, discussed in the next chapter. Lack of well-established linkages between NEDA and the LGUs NEDA through its regional development staff and offices also provides technical assistance to LGUs in the area of local development planning and investment programming. The extension of such kind of assistance is wanting. NEDAâ&#x20AC;&#x2122;s technical people are located at the regional centers. The agency does not have well-established linkages with local government units at the provincial/city/ municipal levels. Lack of coordination among different agencies offering related or similar services Different national government agencies operate in the same jurisdiction offering related or similar services such as credit, infrastructure, enterprise development assistance, etc. Lack of coordination among these agencies, duplication in the services offered, and at times competing programs and services cause confusion among the LGUs and dissipate scarce resources. Examples are the conflicts arising from the implementation of the Integrated Protected Resource Area (IPRA), National Integrated Protected Area System (NIPAS), and the Community-Based Forest Management (CBFM) within project areas under the jurisdiction of the National Commission on Indigenous People (NCIP). The issuance of land tenure instruments within project areas, which have been transferred to the NCIP by the IPRA law, was deferred due to the absence of clear guidelines on the working relationship between NCIP and DENR in these areas. The involvement of multisectoral stakeholders representing various interests slowed decision making on various aspects of project implementation due to mismatch of counterpart resources, varying perspectives and expectations, and different levels of capacity among stakeholders. Effective stakeholder participation need not be so elusive if the LGU is determined to get everyone on board. In the next chapter, the Municipality of Irosin in Sorsogon during the term of Mayor Eddie Dorotan is presented as a model for social participation, cooperation, and coordination among the different government, non-government, and peopleâ&#x20AC;&#x2122;s organizations in the locality. S E RV I C E D E L I V E RY W I T H I M P A C T: R E S O U R C E B O O K S F O R L O C A L G O V E R N M E N T

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◗ CONFLICTS BETWEEN THE NATIONAL AND LOCAL GOVERNMENTS Existing Government of the Philippines (GOP) policies that limit grants to LGUs to fifty percent (50%) of the total infrastructure cost has hampered the implementation of projects involving costsharing arrangements between the national government and the LGUs. One example is the Infrastructure for Rural Productivity Enhancement Sector Project (InFRES). LGUs are also awaiting the final turnover of completed civil works projects to them by the national government. LGUs and the national government, specifically the Department of Public Works and Highways (DPWH), are at odds over which agency will ultimately be responsible for the country’s roads. LGUs are also batting for a reclassification of roads from the present system based on jurisdiction (national, provincial, city/municipal, barangay) to purpose (collection roads, line haul roads, and distribution roads).

◗ INTER-LOCAL COOPERATION AMONG LOCAL GOVERNMENTS Clustered development and inter-local cooperation among local governments have not taken off as expected for the following reasons: Changing set of local government officials Problems of leadership (who should assume the leadership in the local area? Who should assume the lead role for economic planning among the cooperating local governments? Should the local government that has more financial resources assume the lead role?) Concerns that less financially capable local governments would not be on equal footing with those of richer local governments in terms of decision-making. Local political rivalries (inter-local cooperation is hampered by local political rivalries and factionalism)

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GOOD PRACTICES IN PROMOTING LOCAL ECONOMIC DEVELOPMENT

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The following are eight good practices in promoting Local Economic Development (LED). There are certainly many more but these were chosen to illustrate the use of the different LED strategies discussed in the previous chapter.

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FORMULATING AND IMPLEMENTING A COMPREHENSIVE LOCAL DEVELOPMENT PROGRAM : IROSIN, SORSOGON

Contact Information Office of the Municipal Mayor Irosin, Sorsogon Tel: (056) 804-5021

The Irosin experience is an exemplar in stakeholder participation in the formulation, implementation, monitoring, and evaluation of the Local Economic Agenda. It illustrates the five steps of the Planning Process for LGUfacilitated LED and embodies all principles of and the factors for successful Local Economic Development.

PROFILE Irosin is one of the municipalities of the province of Sorsogon. It has 28 barangays spread over irregular, rolling to mountainous terrain. Its land area of 15,880 hectares is devoted mainly to agriculture. Irosin is the main producer of rice, citrus fruits and abaca in the province. Coconut, vegetables, cassava and sweet potatoes are also major products. Its population in 1994 was about 40,000. Agriculture employs almost seventy percent (70%) of its workforce.

SITUATION PRIOR TO THE PROGRAM Before 1992, Irosin was a depressed fifth-class municipality burdened by a festering Communist rebellion. It was infamous as a center for â&#x20AC;&#x153;juetengâ&#x20AC;?(or numbers game). Wealth was concentrated in a few landowners and Chinese entrepreneurs, while the underprivileged majority earned small, seasonal incomes from farming. Malnutrition afflicted seventy percent (70%) of schoolchildren in 1992.

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Irosin, Sorsogon

DESCRIPTION OF THE PROGRAM/STRATEGY The situation started to change with the election of Eddie Dorotan as Mayor in 1992. Mayor Dorotan spearheaded the Irosin Integrated Area Development Program (IAD). The program incorporated a wide range of interventions, not just infrastructure or economic projects, for the holistic development of the area and the community. The IAD sprung from a Multi-Sectoral Development Planning Workshop that Mayor Dorotan convened immediately upon assuming office to map out the vision, mission and development strategy of the municipality. The workshop set the overall framework and direction for the implementation of the IAD program which was translated into the local development plan for 1992-1995. The plan addressed the problems of poverty, powerlessness and poor access to basic services through the key strategies of livelihood promotion through agrarian reform, environmental development and agro-based industrialization; people empowerment through strengthening and networking of the POs, NGOs and cooperatives; and improvement of basic services in health, social welfare, and public works. The program was participatory in nature with coordinated efforts from POs, NGOs, cooperatives, the LGU and national line agencies at all of the program’s stages – from planning to implementation to evaluation. The participatory process made the municipality’s entire citizenry stakeholders and allowed a high level of integration among players not usually achieved in other local development plans. The major beneficiaries were the farmers who comprised the majority of Irosin’s population. The program reconciled the often competing demands of social equity, economic growth and environmental protection, thus mobilizing support from multiple constituencies. Government and non-government actors were empowered to pursue their mandates and programs within the context of creating synergy for local development.

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Irosin, Sorsogon

HOW WAS THE PLANNING PROCESS DONE? The mayor kept track of the program through a year-round planning, implementation, monitoring and evaluation (PIME) cycle: January Meetings with different line agency and local departments to evaluate the previous year’s performance and plan for the year ahead. Mayor Dorotan gave his annual Ulat sa Bayan or “State of the Town Address”with the outputs of the meetings as bases. February to December Monthly coordinators’ meeting with all line agency heads, barangay chairpersons and even heads of support agencies like the fire department, police, etc. Monthly meetings were also held with various local bodies such as the Municipal Agrarian Reform Council (MARC), Local Health Board (LHB) and Local School Board (LSB). This promoted inter-agency coordination. June Planning for the next year started. July Project proposals of the different departments and agencies were finished.· The DBM informed the municipality of its IRA for the following year. The Mayor knew how much money was available and how much was still required.

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Irosin, Sorsogon

August The Municipal Budget Office received agency/department budget proposals. October The Sanggunian Bayan (SB) received the consolidated budget proposals for the formal budget hearings and eventual passage of the appropriations ordinance.

HOW WAS FUNDING FOR IROSIN’S IAD PROGRAM OBTAINED? Funds were mobilized from various sources to finance the IAD program: Mayor Dorotan convinced then DAR Secretary Ernesto Garilao to declare the entire municipality of Irosin as an agrarian reform community (ARC). As an ARC, Irosin was able to access PhP30 million in DAR resource allocations from 1992 to 1996. Funds were sourced from the Countryside Development Fund of Albay Congressman Bonifacio Gillego as well as from contributions of various senators such as Raul Roco and Gloria MacapagalArroyo. A Dutch funding agency, CEBEMO, contributed PhP10 million for the promotion of agri-based industrialization. The Department of Social Welfare and Development (DSWD) allocated PhP1 million each to three barangays in Irosin in connection with its CIDSS project. The municipal government’s IRA and other local resources were other sources of funds. Mayor Dorotan was successful in raising local revenues from an overdraft of PhP740,000 in 1992 to P23 million in 1997. The increase was largely due to more efficient and honest fiscal management as well as a new Municipal Tax Code which improved revenue mobilization.

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Irosin, Sorsogon

HOW WAS PEOPLE’S PARTICIPATION INSTITUTIONALIZED IN THE IAD PROGRAM? People’s participation was a core principle underlying the IAD program. The Multi-Sectoral Development Planning Workshop set the stage for continuing participation and consultation with the people throughout Mayor Dorotan’s term. Monthly meetings were regularly convened with concerned agencies/departments and local special bodies. The ordinary citizen was involved in activities such as “clean-up day”every Wednesday and “exercise day”every Friday. A broad range of training was provided to improve the capability of POs and cooperatives in value formation, leadership, basic management, finance and accounting, and various livelihood skills. The People’s Center, a building which now houses the offices of NGOs, POs and cooperatives was constructed as part of the municipal government’s commitment to NGO/PO participation.

WHAT WERE THE RESULTS OF THE PROGRAM? Within the period 1992 to 1997, Irosin was transformed from a depressed, insurgency ridden-5th-class municipality to a progressive, peaceful 4th class municipality that emphasized social equity, social participation, and environmental sustainability. The Irosin IAD program was a Galing Pook awardee in 1994, while Mayor Dorotan was awarded the Outstanding Young Filipino Award for Community Development in 1995.

Source: Joel Pagsanghan, “Irosin Integrated Area Development: A Best Practice in Agricultural Development,” in Local Governments in the Philippines: Four Best Practices in Service Delivery, ed. by Fernando T. Aldaba et al., Ateneo Center for Social Policy and Public Affairs, 1998.

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THE LINGAP TANAW PROGRAM: NAUJAN, ORIENTAL MINDORO

The Lingap Tanaw program is distinguished by its investment in so-called soft infrastructure, targeting certain disadvantaged groups through credit and micro enterprise support, and by implementing LED with stakeholder participation.

PROFILE

Contact Information Office of the Municipal Mayor Naujan, Oriental Mindoro Telefax: (043) 208-3479

Naujan has the largest land area among all the municipalities in the province of Oriental Mindoro. It also has the second largest population with 75,726 in 1996. Its total area of 52,800 hectares is devoted largely to agriculture, with palay accounting for sixty one percent (61%) of the total agricultural area. Other crops cultivated in the municipality are citrus, coconut, corn, bananas, coffee and black pepper. Naujan became a first class municipality in 1996.

SITUATION PRIOR TO THE PROGRAM The lack of social, educational and health facilities was a real problem for the municipality. Medical services could not reach many of the rural barangays and were badly in need of improvement. Drinking water was obtained from underground sources. Toilet facilities were inadequate. There was a shortage of dwelling units. The number of high schools for students was inadequate. The delivery of services was hampered by the lack of professional human resources and trained volunteers.

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Naujan, Oriental Mindoro

DESCRIPTION OF THE STRATEGY/PROGRAM Lingap Tanaw (Caring View) program was conceptualized, planned and implemented by the municipal government of Naujan under the administration of Mayor Nelson Melgar. Its strategy was to reach out and link with former residents of Naujan and involve them in the development effort of the municipal government. The linkaging efforts led to the founding of the Mindoro Assistance for Human Advancement Through Linkages (MAHAL, Inc.), a non-government organization that provided assistance to the community. The mayor was one of the incorporators of the NGO.

THE PROGRAM HAD THE FOLLOWING COMPONENTS Lingap sa Barangay This component was aimed at improving the economic conditions of the barangays by providing opportunities for residents to start livelihood projects as a means to generate additional income. It also attempted to build the capacities of barangays through the provision of financial, managerial, technical and marketing assistance by the municipal government in cooperation with MAHAL, Inc., which managed the project. The component included the establishment of a community-based information system (CBIS) using the minimum basic needs (MBN) approach as a planning tool.

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Naujan, Oriental Mindoro

Micro enterprise development and financial assistance The program adopted the micro enterprise development approach in the implementation of the livelihood program. Its long-term objective was to develop the capabilities of the POs to plan and manage their own livelihood program. Members of the associations and cooperatives recognized by MAHAL and the municipal government received financial assistance in the form of loans. These were paid back through the associations. Both MAHAL and the POs put up counterpart funds equivalent to thirty percent (30%) of the municipal fund accessed. Kalusugan Sa Barangay Health education and services were provided to the barangays through this component. Project activities included training of barangay health workers on the use of herbal medicines, medical response to common epidemics, implementation of a family planning campaign program, monitoring and ocular visitations, and the active promotion of herbal medicines. The municipal government linked up with the Department of Health (DOH) and Plan International. It bought a mobile clinic from a grant it received from Plan International. The Lingap Tanaw Klinika This component was managed jointly by the municipal government and the Naujan Women’s Club and various groups of Naujeños living outside the town. The program addressed the need for a local clinic in the town. At that time, one had to go to Calapan, which is 32 kilometers away from Naujan, for a medical consultation. Doctors were offered incentives to practice in Naujan including free office space, lower fees without any imposed deductions from the municipal government, and a nurse-secretary who would be paid by the Women’s Club.

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HOW WAS THE PROGRAM MANAGED? The municipal government created a coordinating and monitoring body (COMB) to coordinate and monitor the program components and project activities of the Lingap Tanaw program. Representatives from the LGU, NGA, NGOs, and POs were members of the COMB.

WHAT WERE THE RESULTS OF THE LINGAP TANAW PROGRAM? Institutionalization of peopleâ&#x20AC;&#x2122;s participation Lingap Tanaw was able to institutionalize people participation in barangay planning. Barangays have also gained capabilities in gathering and analyzing information necessary to planning, networking, project implementation, monitoring and evaluation. Expansion of assets and sources of income Individual beneficiaries were able to gain additional sources of income. One PO was able to acquire a 3.6 hectare land which it paid for from rentals of a thresher it purchased. A core housing project for 27 families was put up in the acquired land. Another PO was able to establish a revolving fund used for loans were given to members. Expansion of service area through the MBN approach The Kalusugan sa Barangay program reached fifty five (55) out of the seventy (70) barangays in Naujan using the MBN approach.

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Naujan, Oriental Mindoro

Establishment of a community hospital The Klinika program was able to serve 1,240 patients after its first year of operation. The program was able to convince medical doctors to practice in Naujan instead of in Calapan, the provincial capital. A community hospital was also established.

WHAT WERE THE ISSUES FACED BY THE PROGRAM? The sustainability of Lingap Tanaw was threatened when a new administration took over in 1998. It had priorities other than the program. The Municipal staff members who had been involved in the program were assigned to other projects. Moreover, the collaboration between MAHAL and the municipal government weakened.

Source: â&#x20AC;&#x153;The Lingap Tanaw Program of Naujan,â&#x20AC;? The Changing Role of the Local Governments under a Decentralized State: Some Cases in Philippine Local Governance, Perla E. Legaspi. 2001.

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INVESTMENT PROMOTION PROGRAM: PROVINCE OF BOHOL Bohol illustrated a number of LED principles and strategies: effective Contact Information stakeholder participation and mobilization both within and outside the Office of the Provincial province; sound and realistic competitive assessment resulting in a clear Governor investment direction and LED strategies; the establishment of a Local Bohol Province Economic Development group, (i.e., BIPC and the Livelihood Promotion Tel: (038) 411-3300 Fax: (038) 411-4821 Unit); the development of a professional investment portfolio; an effective Website: investment marketing campaign; an incentive scheme for would be investors; www.bohol.gov.ph and the pursuit of growth with equity, sustainability and cultural responsiveness as shown in the importance given to both inward investors and existing businesses.

PROFILE Bohol, the tenth largest island in the country, is located between Cebu and Leyte islands in the Visayas. It is the second most populous province in Region VII with nearly a million residents in 1995.

SITUATION PRIOR TO THE PROGRAM Poverty and lack of opportunities in the province have forced many young Boholanos to seek greener pastures in the more developed regions of the country and in foreign lands. With population as a criterion for computing the IRA, provinces experiencing out-migration like Bohol are not likely to see their share in national taxes grow as rapidly as others.

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Bohol

DESCRIPTION OF THE PROGRAM/STRATEGY The provincial leadership under former Governor Rene Relampagos initiated the Bohol Investment Promotion Program (BIPP). The overall objective of the program was to promote Bohol as an investment and tourist destination. The strategies that would lead to the achievement of the objectives were: The provision of timely and appropriate business and financial advice to the province and municipalities Involvement of citizens in policy formulation on investment promotion; and The establishment and maintenance of an information base critical to the formulation of policies and technical assistance. The Investment Promotion Program had the following components: Framework for Investment Promotion Consultation workshops were held to determine the types of investments the communities and local government preferred given the strengths and weaknesses of the province. The product of the workshops was the Framework for Investment Promotion. Three sectors were considered the drivers of the province’s economic growth, namely: Eco-cultural tourism, agro-industrialization and light manufacturing. The Bohol Investment Promotion Center (BIPC) The Governor created a Bohol Investment Promotion Team (BIPT), which later became the Bohol Investment Promotion Center (BIPC). The BIPC facilitated immediate assistance to investors in setting up their projects and facilities in the province.

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Bohol

The Livelihood Promotion Unit The Livelihood Promotion Unit was created under the BIPC in March 2000, as the provincial governmentâ&#x20AC;&#x2122;s way of responding to the livelihood needs of small existing and would-be entrepreneurs. The unit established linkages with national line agencies and NGOs, initiated the establishment of a databank, conducted multi-sectoral convergence workshops on livelihood and eco-tourism development, and launched an annual traditional food festival and business matching for village-based food processors. The Bohol Investment Code The Bohol Investment Code was drafted to provide a guide on fiscal and non-fiscal incentives available to investors.

HOW WAS THE PROGRAM FINANCED? The program was financed from various sources and had a budget of PhP280 million in 1999.

HOW DID CIVIL SOCIETY AND THE PRIVATE SECTOR PARTICIPATE IN THE PROGRAM? The series of workshops were attended by various sectors in the province, including NGOs, POs, cooperatives, and the private sector. Governor Rene Relampagos also formed the multi-sectoral Bohol Investment Promotion Advisory Group (IPAG). The IPAG met once a month and was frequently called upon to represent the province in meetings and events relating to investment promotion.

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Bohol

WHAT WERE THE RESULTS OF THE BOHOL INVESTMENT PROMOTION PROGRAM? By 1999, there were seven local governments, 19 prospective investors, 25 provincial leaders, and about 5000 information seekers who directly benefited from the program. From 1998 to 2001, 20 projects were targeted as long-term beneficiaries of the program. The projects were expected to generate PhP2.5 billion in investments and 3000 jobs. An increasing number of investors have registered with the BIPC. There were 10 in 1997; 14 in 1998; and 19 in 1999. The gathering of some 500 Boholanos around the world in 1999 generated a monthly dollar remittance of $3.5 million through the PNB Bohol branch, a big increase over the average monthly remittance of PhP1 million previously. The program has been replicated in the provinces of Palawan, Negros Oreintal, Siquijor, Ilocos Sur, and Northern Samar.

Source: “Investment Promotion Program: Province of Bohol,” Kaban Galing: Transforming the Local Economy, 2001 edition.

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A MUNICIPALITY’S INVESTMENT AND PROMOTION PROGRAM: TIGAON, CAMARINES SUR On a smaller scale, Tigaon attempted what Bohol did with certain additions. Contact Information Office of the Municipal Mayor Tigaon, Camarines Sur Telefax: (054) 452-3127

First, its investment promotion program was a joint undertaking between a national government agency (DTI) and the municipal government. Second, its investment promotion was anchored on a land use plan with a specific area targeted to be the driver of LED, the central business district.

PROFILE Tigaon is located in the eastern part of the province of Camarines Sur. It has 23 barangays and an estimated population of 43,500 in 2000. Basically an agricultural town, Tigaon’s produce includes palay, corn, coconut, vegetables, fish and other marine products. The town used to be known internationally as a producer of high quality abaca fiber. However, the supply of the fiber has declined over the years.

SITUATION PRIOR TO THE PROGRAM In 1993, the town’s economy was moving slowly, if not stagnant. There were few commercial establishments and no commercial banks to facilitate business transactions in the area.

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Tigaon, Camarines Sur

DESCRIPTION OF THE PROGRAM/STRATEGY The Municipal Trade and Industry Investment Board Through the advice of the DTI, the municipal government created the Municipal Trade and Investment Board. This served as the mechanism for program implementation. The board was chaired by the mayor and had the Municipal Planning and Development Officer (MPDO) as secretary. Representatives from the DTI, the Public Attorney’s Office (PAO), the Philippine National Bank (PNB) and the State Prosecutor assigned in Tigaon sat on the Board or served as technical advisers. The Investment Code The Sangguniang Bayan passed an Investment Code that spelled out the types of business enterprises eligible for incentives and the kinds of incentives and privileges to be given. The Code gave priority to labor generating enterprises, enterprises established in less developed areas of the municipality as determined by the Investment Board, manufacturing enterprises which uses new locally available materials, manufacturing or processing plants, tourism-oriented, service oriented and pioneering enterprises and power and water resource development enterprises. The Investment Forum Prospective investors, including businessmen from Naga City and other parts of the Bicol Region and Metro Manila, owners of idle lots classified as commercial land in the town’s poblacion, and foreigners were invited to the forum. The head of the German Investment Group was the forum’s Guest of Honor. Representatives from financial institutions such as the DBP, LBP and PNB also attended the forum to respond to queries of prospective investors who had problems in getting financing.

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The Central Business District Plan At the start of the program, the MPDO prepared a socio-economic profile of the municipality as a basis for determining strengths and potentials of the area. The following year, the municipal government came up with its comprehensive land use plan. The plan allocated land area for commercial, residential, industrial, agricultural, institutional and other special uses. The plan also classified areas for conservation and protection, settlement, and infrastructure. At the center of the plan is the Central Business District (CBD) that would serve as the focal point of trade, cultural, entertainment and government activity in the area. Tigaon’s strategic location made it a good CBD site for the third district of Camarines Sur, which is the seat of the third district government center. The CBD plan had the following components: warehouses food terminal cold storage facilities bus terminal commercial center The Municipal Livelihood Council The Municipal Livelihood Council was established through an executive order. This was in line with the municipality’s thrust to promote socio-economic development in the area through the implementation of livelihood projects that would generate income for the community residents.

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Tigaon, Camarines Sur

HOW WAS THE PROGRAM FINANCED? The municipal government of Tigaon allocated around PhP150,000 for the investment promotion program. This was apparently insufficient particularly in the conduct of a series of investment fora to attract prospective investors.

WHAT WERE THE RESULTS OF THE PROGRAM? As a result of the investment forum, several business establishments were put up in the municipality. However, these were just small commercial establishments.

WHAT WERE THE CHALLENGES ENCOUNTERED? Lack of infrastructure facilities Tigaon lacked infrastructure facilities. Commercial banks, hotels, restaurants, office spaces and a presentable public market edifice were absent, discouraging businessmen from setting up larger economic enterprises in the area. Competition from other municipalities The nearby town of Goa had many establishments and was a factor in discouraging businessmen from pouring more investments in Tigaon. Also, unlike those in Goa, lot owners in Tigaon were not very receptive to the idea of putting up commercial buildings on their land. Source: â&#x20AC;&#x153;The Business and Investment Program of Tigaon,â&#x20AC;? The Changing Role of the Local Governments Under a Decentralized State: Some Cases in Philippine Local Governance, Perla E. Legaspi, 2001.

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“DALAN SA KAUSWAGAN” PROJECT: SAN CARLOS CITY, NEGROS OCCIDENTAL

Contact Information Office of the City Mayor San Carlos City F.C. Ledesma Ave., San Carlos City, Negros Occidental Tel: (034) 312-5112 Fax: (034) 312-5113 Email: scc-no@mozcom.com Website: www.sancarloscity.gov.ph

San Carlos City’s LED strategy sought to create an environment conducive to local economic development by expanding physical access to hitherto remote portions of the city. It is an example of the creative and local procurement of labor and equipment needed by the project.

PROFILE

San Carlos City in Negros Occidental is located in the northeastern part of Negros Island. It is strategically located with respect to four of the most important regional centers of the so-called PANACEA (Panay, Negros and Cebu area) islands of the Visayas. The city is central to the Cebu-NegrosGuimaras-Panay growth corridor envisioned to spur socio-economic development for the four Western and Central Visayas islands. The city had a population of 101,429 in 1995. It has 18 barangays, six of which are urban; two coastal; two in nearby Refugio island; and eight mountain/upland barangays. Majority of its land area, (67%) of 42,186 hectares, is devoted to agriculture and its dominant crops include sugarcane, rice, corn, coconut, legumes, vegetables and root crops, fruit trees, coffee and ipil-ipil. More than twenty-one (21%) percent of the city’s land area has been classified as protected forest area.

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San Carlos City, Negros Occidental

SITUATION PRIOR TO THE PROJECT Residents of upland barangays of the cityâ&#x20AC;&#x2122;s upland barangays had to endure long, arduous trips to bring their produce to the poblacion. The absence of good roads also made it difficult for government to deliver needed services to the far-flung communities.

DESCRIPTION OF THE PROJECT/STRATEGY When Mayor Rogelio Debulgado assumed office in 1992, a series of consultations with barangay officials drew the consensus that only through the construction of an all-weather gravel road could the traditional problems of the communities be strategically addressed. Even then, there was skepticism about the feasibility of constructing such a road given that parts of the proposed road (about 3 km.) were steep and made of solid rock. When finished, the road network would have a total distance of 42 kilometers, covering five of the cityâ&#x20AC;&#x2122;s eight upland barangays. The road would comprise an integral part of the Negros Cross-Island Link, a flagship project of the national government that sought to reduce the distance between Bacolod and San Carlos cities from 146 km to 86 km and cut travel time in half.

HOW WAS THE PROJECT FINANCED? San Carlos City utilized its budget surplus amounting to more than PhP50 million to finance the project. In 1996, when the entire stretch of the road network had became passable, then President Ramos committed PhP100 million from his discretionary funds for the cementing of a large stretch of the road. This was followed by various contributions from Congress: PhP5 million from the Countryside Development Fund (CDF) of Rep. Julio Ledesma of the first district of Negros Occidental for cementing

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of the road; PhP8.3 million from the Countryside Development Fund of Sen. Alberto Romulo for bridge construction across a stretch of the road; and PhP1 million from the CDF of then Sen. Gloria MacapagalArroyo for dynamite blasting of a road stretch that still needed widening. The city government also signed an agreement with the European-funded Agrarian Support Project of the Department of Agrarian Reform (DAR) for the financing of an auxiliary nine-kilometer gravel road for agrarian reform beneficiaries that fed into the main road.

HOW WAS THE PROJECT IMPLEMENTED? Direct administration of the project To minimize costs and possible loss of funds due to graft and corruption, the city government decided to implement the infrastructure project by itself. The City Engineering Office (CEO) was upgraded in terms of personnel and equipment. The CEO staff was beefed up and the city government decided to procure some of the equipment needed. The officials believed that the purchase would be beneficial to the city because the equipment could be used in future infrastructure projects and could be leased out to private contractors, other LGUs and even to the DPWH for income generation. Leasing of equipment The city government also decided to lease the other heavy equipment that could not be purchased. This deviated from the usual practice authorized by the Commission on Audit (COA), which was the purchase of equipment or the contracting out of projects. New guidelines were developed by regional COA personnel as leasing was a new arrangement.

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San Carlos City, Negros Occidental

Contracting an engineering consultant Recognizing its technical limitations, the city government contracted the engineering design of the project to a private engineering firm that submitted the winning bid for the work. Negotiating a reduction in the contract price, more than half was trimmed from the bid amount, realizing additional savings for the project. The engineering contract provided for a strategic “technology transfer”provision whereby the contractor would consciously transfer its expertise in engineering design to the local engineers. Project management Mayor Debulgado exercised general supervision and control over the project. The City Engineer’s Office (CEO) devised the Program of Work based on the design and the recommendation of the engineering consultant. The Planning and Development Office monitored the project and provided the Mayor regular reports in consultation with the Project Engineer. The city council enacted ordinances such as appropriations and equipment leasing guidelines necessary to the project. Regular meetings between the city officials and the consultant were held to identify emerging problems such as project slippage. Towards the middle of the project, through the transfer of technology, technical monitoring and evaluation were taken over by the CEO. Barangay participation Barangay officials assisted in securing right-of-way agreements with affected landowners and became de facto extensions of the mayor’s office in monitoring the project and assuring the proper utilization of labor. They also provided suggestions on necessary deviations in the approved engineering plan, based on actual concerns raised by their respective constituencies. Regular consultations were held between barangay officials, the mayor and project engineer to explore local concerns to the fullest.

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Employment of local human resources A total of 2000 residents were hired as laborers at PhP200 daily, comparably higher than Metro Manila rates at the time of the project. The net effect was that city resources remained in the hands of residents, with the money presumably circulating within the city and spurring further economic activity.

WHAT WERE THE RESULTS OF THE PROJECT? Increased agricultural production About 15,000 hectares, covering five of the city’s upland barangays, are now being serviced by the road network. The road improved farmers’access to essential farm inputs, while at the same time allowed city agricultural extension workers to service the hinterlands, bringing with them new technologies and support services. The road also improved access of farmers to new and larger markets for their products. These factors have spurred greater production, increasing average yields per crop and even increases in land area planted. Because of better production, farmers’ incomes increased. Also, the road reduced transport costs for the farmers’ products. Increased Economic Activity Market day activities, a strong indicator of rural economies, have improved substantially and the volume of trade has increased. Commerce and trade to and from the city have also improved. Public transport has expanded its routes with the rise in the volume of travels.

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San Carlos City, Negros Occidental

Improved Service Delivery

More sitios have been given access to electricity as well as clean water. The City Health Office has been serving an increasing number of patients. Increase in school enrollment prompting additional requests for classrooms and educational facilities. The City Social Welfare and Health Office increased the volume of its livelihood assistance to qualified beneficiaries. The City Agricultural Office has assisted more farmers in crop diversification and improving their yield of traditional crops such as rice and corn. Peace and order have markedly improved in the upland areas with the drop in rebel-related incidents. Environmental Impact Because of the road network, the City has been able to more effectively implement its environmental management program. As a result of improved access to the uplands, the City Agricultural Office has been very active in implementing an ambitious reforestation program for the Negros Forest Reserve, as well as aggressive tree-planting along the whole road route.

Source: Alan G. Alegre, “Dalan sa Kauswagan Road Project of San Carlos City, Negros Occidental: A Case Study in Growth-Inducing Infrastructure,” Local Governments in the Philippines: Four Best Practices in Service Delivery, ed. by Fernando T. Aldaba et. al., Ateneo Center for Social Policy and Public Affairs, 1998.

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BREAKING FINANCIAL BARRIERS: SAN FERNANDO, PAMPANGA

Contact Information Office of the City Mayor San Fernando City, Pampanga Tel: (045) 961-2424 Fax: (045) 961-5022

San Fernando, Pampanga is a good example of how the local economy can be brought back on track after being derailed by a natural calamity. The significant lesson is the re-tooling of the LGU to become more efficient in increasing its internally generated revenues. Viability allowed the LGU to invest in hard infrastructure and inspired local and external businessmen to start and expand their businesses in San Fernando.

PROFILE San Fernando is the capital of the province of Pampanga. It is also the center of Region III, Central Luzon. The municipality has 34 barangays and had a population of 198,110 in 1998. The larger part (38%) of its total land area of 6,834 hectares is devoted to agriculture. San Fernando is predominantly a residential-commercial town. It has about 4,000 commercial and industrial establishments in the area such as banks, lending institutions, hotels, garment factories, and supermarkets and groceries. San Fernando is a first class municipality.

SITUATION PRIOR TO THE PROGRAM San Fernando was among many Pampanga municipalities adversely affected by the eruption of Mt. Pinatubo and the lahar flows and flooding that followed. In 1995, it had a fund overdraft of nearly PhP17 million and was deep in debt. San Fernando owed private contractors of various infrastructure projects some PhP8 million and had unpaid electricity, telephone, and water bills amounting to PhP8 million. It failed to remit to the national government some PhP35 million of shared taxes.

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San Fernando, Pampanga

DESCRIPTION OF THE PROGRAM/STRATEGY To address its dire fiscal situation, the municipal government under Mayor Rey Aquino started the “Breaking Financial Barriers” program in 1996. The main thrust of the program was to generate more financial resources for the municipal government to pay its outstanding obligations and to finance programs and projects aimed at realizing its six-point mission statement. The six elements of the mission statement are:

Conversion of the town into a component city Rehabilitation of the barangays adversely affected by lahar and flooding Industrialization of the agricultural sector and other “traditional industries” Development of more industrial and commercial establishments Maintenance of a clean and healthy environment for the citizens Creation of an atmosphere of peace and a sense of unity among the citizens

The Breaking Financial Barriers Strategy adopted a two-pronged approach of: Reducing municipal expenditure and enhancing efficiency and Improving tax collection

WHAT COST-SAVING AND EFFICIENCY ENHANCING MEASURES DID SAN FERNANDO ADOPT? To reduce expenditures and to increase efficiency, Mayor Rey Aquino adopted the following measures: Termination of the services of more than 200 casuals whose services were no longer needed Regulation of the use of water, electricity, telephone, and office supplies

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Installation of a bundy clock and monitoring in most offices Computerization and networking of systems on accounting and finance, civil registry system, payroll and personnel system, real property taxes and business licenses; and Creation of a Special Project Operations Unit under the Office of the Municipal Engineer to implement infrastructure projects at cost lower than those of the DPWH

HOW DID SAN FERNANDO INCREASE TAX COLLECTION? San Fernando improved the collection of taxes through a number of measures: Creation of a special unit, the Tax Enforcement Unit, in the Municipal Treasurer’s Office to intensify the collection of taxes. The unit has three sections: cash, assessment, and inspection. Its staff came from the different departments of the bureaucracy. Tax mapping A survey of individuals and establishments doing business or engaged in trade in the municipality was done. The survey resulted in a databank of taxpayers that classified the list of establishments and identified which establishment was paying the right amount of municipal taxes. Regular dialogues with the business sector Mayor Rey Aquino held regular dialogues with the business sector to discuss the problems and concerns affecting the business sector. He also solicited suggestion on how the operations of the municipality can be improved further.

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San Fernando, Pampanga

Recognition rites for the Top Fifty taxpayers Every year during his term, the municipal government honored the top fifty taxpayers in January in public recognition rites.

WHAT WERE THE CHALLENGES FACED BY THE PROGRAM? San Fernando faced many challenges in the implementation of its program. Changes in the systems and procedures drew resistance from members of the local bureaucracy. The municipal government was also criticized because of the termination of employees. Resistance faded when the employees adjusted to the changes. Initially, there was also strong resistance to the tax mapping from the community, most especially from the business sector. Private contractors who did not welcome the creation of the Special Project Operations Unit also criticized the municipal government. The Unit lessened the market for their services.

WHAT WERE THE RESULTS OF BREAKING FINANCIAL BARRIERS? By the end of 1997, San Fernando’s financial operation was no longer in the red. The creation of a Special Operations Unit was supposed to have reduced the cost of infrastructure by as much as thirty percent (30%). Savings generated and the improved tax revenues allowed the municipal government to acquire new heavy equipment worth PhP6 million. These were used for accomplishing various infrastructure projects amounting to more than PhP7 million.

Source: “The Municipality of San Fernando: Breaking Financial Barriers,” The Changing Role of the Local Government Under a Decentralized State: Some Cases in Philippine Local Governance, Perla E. Legaspi, 2001.

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THE CITY LIVELIHOOD ASSISTANCE PROGRAM: PAGADIAN CITY, ZAMBOANGA DEL SUR

Contact Information Office of the City Mayor Pagadian City Telefax: (062) 214-1986

Pagadian City targeted disadvantaged sectors (e.g., farmers and fisherfolk) in its City Livelihood Assistance Program.

PROFILE

Pagadian was the former capital town of the province of Zamboanga del Sur. It was converted into a chartered city in 1969 by virtue of R. A. 5478. The city’s economy is basically agricultural, with about fifty-five percent (55%) of its land area of 33,380 hectares devoted to agriculture and thirty-seven percent (37%) to forestry. Pagadian’s population in 1998 was about 137, 223.

SITUATION PRIOR TO THE PROGRAM Rice, corn and coconut were planted in approximately 18,000 hectares of the city’s land. Despite the large hectarage planted, production had not met the requirements of the city’s populace due to the “underutilization of the cropping potentials of the vast rainfed portions of the agricultural land.” The low fishery output had likewise been attributed to “poor storage, distribution and marketing systems.”

DESCRIPTION OF THE PROGRAM Recognizing the role of the agricultural sector in the economy, the city government decided to make it the driving force for the city’s development. The city government, under

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Pagadian City, Zamboanga del Sur

the leadership of the late Mayor Benjamin Arao, decided to adopt some strategies that would increase agricultural output. The strategies included:

Production of high value crops, livestock and timber trees provision of infrastructure support services provision of capital or loans to farmers and fisherfolk adoption of the “Plant Now Pay Later” scheme

These strategies were consolidated under the City Livelihood Development Assistance Program or CILDAP. As of this writing, CILDAP has undergone two phases. The city government under the administration of Mayor Joaquin Pajares, launched CILDAP Phase II in response to the clamor of the non-agricultural cooperatives to participate in the program. Under Phase II, qualified non-agricultural cooperatives such as consumer, credit, and multi-purpose cooperatives could avail of soft loans of up to PhP100,000. The program provided a package of technologies to the farmers. It included the provision of loans, part of which was in the form of farm inputs such as barbwires and fertilizers. CILDAP had three components: Infrastructure Development Agricultural Development Cooperative Development

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Pagadian City, Zamboanga del Sur

HOW WAS THE CITY LIVELIHOOD ASSISTANCE PROGRAM (CILDAP) MANAGED? The city administration created the CILDAP management committee to serve as an advisory body on the technical, administrative and supervisory aspects of all projects. The committee also assisted in the general implementation of the program. Its involvement included approval of the purchase of farm inputs and stocks by a cooperative’s member-borrower and collection of loan repayments from the cooperative treasurer. The committee met monthly to discuss general operations, plans, problems, loan applications and other issues and problems related to the program. It also kept records of CILDAP fund transactions and loan payments for programming of loan funds to a cooperative.

WHAT WERE THE RESULTS OF CILDAP? Reforestation of denuded areas Through the “Plant Now, Pay Later scheme” of the program, almost 30,000 mango seedlings, 574 marang seedlings, and 15 durian seedlings, which the city government acquired as DA loan or by direct purchase, were distributed to farmers. The objective was to reforest watershed and forest areas of the city while providing income to farmers. Cooperative development Since its inception, the program has reached out to a large number of farmers and fisherfolk through the cooperatives. Ninety-one (91) cooperatives and 1, 629 farmers have availed of loans, which involved the cultivation of 1,021 hectares. This represents about 5.7% of the total land area planted with rice, corn and coconut.

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Pagadian City, Zamboanga del Sur

Support facilities and services The program has been able to establish some support facilities and services for the farmers and fisherfolk. The city government has established its plant nursery and fish hatchery for tilapia. It has put up a training center for farmers. It has constructed 15 mini water reservoirs to provide continuous supply of water to the farmers. The reservoirs can also serve as fishponds. Infrastructure facilities As of 1999, around ninety percent (90%) of all city roads have been concreted. Drainage systems and spillways have also been improved resulting in improvements in farm productivity. Agricultural development Part of the program implementation is the provision of improved farming technology to the farmers. The sloping agricultural land technology or SALT was provided under CILDAP Phase II. Under Phase I, the City Agriculturist Office (CAO) had acquired 12 Brahman bulls, swine, goats, and chickens to upgrade breeding stock and increase farm productivity.

WHAT WERE THE ISSUES FACED BY THE PROGRAM? Loan repayment Maximum rate of loan repayment was around 68%. Repayment rate in other sectors did not even reach 50 percent. Repayment of loans to fisherfolk for purchase of bancas (boats) was a problem.

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Institutionalization of cooperatives Problems such as behavior, competence, passive attitude, resistance to change and lack of management capability of cooperative officials have affected the operation of some cooperatives. Marketing of produce and products The cooperatives are envisioned to be the marketing arm of the farmers and fisherfolk. Being young organizations, however, they are not yet technically and financially capable of marketing the products of their members to other provinces.

Source: â&#x20AC;&#x2DC;The City Livelihood Development Assistance Program of Pagadian City,â&#x20AC;? The Changing Role of the Local Government Under a Decentralized State: Some Cases in Philippine Local Governance, Perla E. Legaspi, 2001.

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PUSHING DEVELOPMENT THROUGH COOPERATIVISM: PROVINCE OF BULACAN Bulacanâ&#x20AC;&#x2122;s local economic development is anchored on its local enterprises and cooperatives. The province is a model of starting with indigenous entrepreneurs, supporting and promoting sector or cluster development, encouraging new local enterprises, and targeting disadvantaged groups.

PROFILE Bulacan is a first class province in the Central Luzon region. It has 24 municipalities and 568 barangays. It has a total land area of 2,638 square kilometers.

Contact Information Office of the Provincial Governor Capitol Compound, Malolos, Bulacan Telefax: (044) 791-0208 Email: governor@mozcom.com Website: www.bulacan.gov.ph

DESCRIPTION OF THE PROGRAM The Kaunlaran sa Pagkakaisa Program or KPP (Development Through Unity Program) was launched in August 1986 to revitalize the cooperative movement in Bulacan. Its direct beneficiaries included farmers engaged in rice, poultry, livestock, fruit and vegetable production; fishermen engaged in small to medium scale aquaculture production and shore fishing; women engaged in food processing, sari-sari store operations, sewing and fashion accessory production; small entrepreneurs engaged in cottage industries and medium scale manufacturing; and skilled workers engaged in or operating their own repair shops, furniture manufacturing, metalworking, pyrotechnic production, goldsmith operation, etc.

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Bulacan

The Program had the following components: Training Cooperative leaders and managers were given training on coop and financial management, accounting and bookkeeping. Cooperatives were also assisted in generating more capital through savings mobilization. Environmental Protection The program was concerned with tree planting and cleanliness, waste management, dredging of creeks, resuscitation of dying rivers, and the utilization of Bulacan’s natural resources and pollution prevention.

WHO OR WHAT OFFICE MANAGED THE PROGRAM? The program was managed and supervised by the Provincial Cooperative and Entrepreneurial Development Office (PCEDO), a department directly under the provincial governor. The Bulacan provincial government linked with other sectors and agencies in the implementation of the program. The DTI conducted training for the KPP’s beneficiaries, found markets for the cooperative’s products, and provided technical assistance in program development and operation. The Land Bank of the Philippines, the National Manpower and Youth Council, the Department of Agriculture, the Department of Agrarian Reform, Department of Environment and Natural Resources, the Cooperative Development Authority, and the Department of the Interior and Local Government provided financial and technical assistance.

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Bulacan

HOW WAS THE PROGRAM FINANCED? Financial and technical assistance was provided by the Land Bank of the Philippines; National Manpower and Youth Council; Department of Agriculture; Department of Agrarian Reform; Department of Environment and Natural Resources; Cooperative Development Authority and Department of the Interior and Local Government. The DTI conducted trainings for the KPPâ&#x20AC;&#x2122;s beneficiaries, found markets for the cooperativesâ&#x20AC;&#x2122; products, and provided technical assistance in program development and operation.

WHAT WERE THE RESULTS OF THE PROGRAM? Increase in the number of cooperatives The number of registered cooperatives in the province increased by sixty-five percent (65%). Increase in the total assets of the cooperatives From 1985-1993, total assets of the cooperatives increased from PhP24.2 million to PhP1.2 billion, attesting to the capability of cooperatives to mobilize savings and build up capital. Increase in loans Income generated by the cooperatives supported its credit programs. From 1986 to 1992, production loans amounted to PhP2.5 billion, providential loans totaled PhP125 million while emergency loans amounted to PhP94 million.

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Increase in sales In 1993, cooperatives engaged in the sale of agricultural products earned a total of PhP450 million. Coops engaged in the supply of production inputs had total sales amounting to PhP193 million for the same year. Seventy-nine (79) food and non-food coops earned a gross income of PhP41 million. Promotion of gender equity By 1993, there were 26 women’s cooperatives, nine of which were KPP-funded. More women took positions of leadership in the cooperatives including those of chairperson, board member, treasurer and secretary. Reduction in poverty incidence Average family income in the province increased to PhP7,869 in 1991 from P3,436 in 1985. On the other hand, poverty incidence decreased from 21% in 1985 to 17.9% in 1991.

Source: “Pushing Development through Cooperativism” Kaban Galing: Transforming the Local Economy, 2001 edition.

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CHAPTER

REFERENCES AND TOOLS

CHAPTER

❙ REFERENCES ◗ CONFERENCE PROCEEDINGS

Marcia Feria Miranda. “LGU, Inc. Developing Local Economies by Sustaining Local Enterprises.” Punla sa Tao Foundation. Paper presented at the Roundtable Discussion on “Enhancing the Role of Local Government Units (LGUs) in Local Economic Development (LED),” Astoria Hotel, Pasig City, 28-29 May 2002.

◗ JOURNALS “Economic Focus: Finding your niche: The discovery of poor countries’ industrial strengths is a matter of trial and error.” In The Economist. March 1-7, 2003, p.70

◗ CASEBOOKS Joel Pagsanghan. “Irosin Integrated Area Development: A Best Practice in Agricultural Development,” in Local Governments in the Philippines: Four Best Practices in Service Delivery, ed. by Fernando T. Aldaba et al. Ateneo Center for Social Policy and Public Affairs. Quezon City. 1998. Perla E. Legaspi. “The Lingap Tanaw Program of Naujan.” in The Changing Role of the Local Governments under a Decentralized State: Some Cases in Philippine Local Governance. n.p., 2001. “Investment Promotion Program: Province of Bohol.” in Kaban Galing: Transforming the Local Economy, edited by Simon Peter Gregorio, n.p., n.d. 2001 edition.

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Perla E. Legaspi . “The Business and Investment Program of Tigaon.” The Changing Role of the Local Governments Under a Decentralized State: Some Cases in Philippine Local Governance. n.p., 2001. Alan G. Alegre, “Dalan sa Kauswagan Road Project of San Carlos City, Negros Occidental: A Case Study in Growth-Inducing Infrastructure” Local Governments in the Philippines: Four Best Practices in Service Delivery, ed. by Fernando T. Aldaba et. al., Ateneo Center for Social Policy and Public Affairs. Quezon City. 1998. Perla E. Legaspi. “The Municipality of San Fernando: Breaking Financial Barriers.” The Changing Role of the Local Government Under a Decentralized State: Some Cases in Philippine Local Governance. n.p. . 2001. Perla E. Legaspi. ‘The City Livelihood Development Assistance Program of Pagadian City.” The Changing Role of the Local Government Under a Decentralized State: Some Cases in Philippine Local Governance. n.p., 2001. “Pushing Development through Cooperativism” Kaban Galing: Transforming the Local Economy. edited by Simon Peter Gregorio, n.p.,2001.

◗ LIST OF REFERENCE MATERIALS ON LOCAL ECONOMIC AND ENTERPRISE DEVELOPMENT Asian Development Bank (ADB) 1. FGU Consulting, Improvement of SME Development Policies and Programs: Philippines, ADB, 1990. Scope: Macro-economic issues; industrial structure; impact of past policies on SME development; current policy; disincentives for SMEs; recommendations; financing issues; linkage mechanism issues; existing linkages; legislation for linkage mechanism; recommendations for a linkage mechanism

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2. Business Development Services: A Framework for Analysis, ADB, 1996 3. Good Practices in Marketing for Micro and Small Enterprise Products: Cases from Latin America, ADB, 1999 Asian Institute of Management (AIM) 1. Ramon Mercado Lim, A Reorientation of the Assistance Strategies of the Small and Medium Scale Enterprises / A Review and Assessment of the TLRC, AIM-Management Research Report, Masters in Development Management, 1991 Scope: Analysis of SME internal and external environment; SME problems and needs; analysis of SME opportunities and threats; review of TLRC organizational structure and SME assistance strategies; recommendations for TLRC SME strategic instruction 2. Victoria S. Licuanan, “Management Development and Training for SMEs: Prospects for Regional Cooperation and Collaboration,” The Asian Manager Magazine, June 1989 Scope: Proposes increased regional cooperative focusing on management development and training through exchange of experiences, training materials, training methodologies and training perspective and prospective collaboration in SME research 3. Victor S. Limlingan, “Legal Structures to Liberalize Markets: The Philippine Experience,” The Asian Manager Magazine, 1990 Scope: Liberalizing local markets; elimination/Streamlining the bureaucracy through RA 6810 Kalakalan 20

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4. Tarrin Nimmanahae Minah, “Organizing for Entrepreneurship,” The Asian Manager Magazine, March 1990 Scope: Organizational aspects that encourage entrepreneurship in/on large companies 5. Quintin Tan, “Growing Pains of SMEs in the Philippines,” The Asian Manager Magazine, September 1997 Scope: Discussed the contribution of informal sectors, CBBs, cottages industries to the economy as well as SME needs and problems; government assistance and programs for SMEs and the problems of implementation and resulting policy changes; identifies the learnings gained in policy making and implementation. 6. Brua Koppel, APO-IEDP Seminar on Structural Adjustment and Policy Reform: Impacts on Small and Medium Enterprises in Asian Economics, APO-IEDP, 1990 Scope: Resource Papers on: Structural Adjustment Policy Reform and Impact on SMEs in Asian Economic Experience; Issues and Lessons on SMEs in Asian Economics; Developing Government/Private Sector Coordination for SME Promotion in Periods of Economic Adjustment. Discussion of issues on: Relationship between Policy Reform and SMEs; Relationship between Macroeconomic Policy Reform and Sector Policies; Macro-micro Private Sector Dialogues, Policy Reform and SMEs Bureau of Rural Workers (BRW), SEA Consultants, Inc. 1. BRW, Promotion of Rural Employment thru Self-Employment and Entrepreneurship Development (PRESEED) Program, BRW, 1997 Scope: Ways on how to help the rural workers through the initial provision of technical and financial assistance/resources to enable them to generate and operate self-sustaining enterprises in the countryside 138

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Department of the Interior and Local Government (DILG) 1. Local Government Development Foundation and Federation of Canadian Municipalities, Dissemination of Best practices in Local Governance, LOGODEF, 2001 Scope: Presents research findings of best practices study; profiles 36 agencies and institutions included in the study; includes case studies of local governance dissemination programs Department of Labor and Employment (DOLE) 1. Mario Lamberte, Impact of Special Credit and Guarantee Programs for SMEs on Employment and Productivity, DOLE Scope: Exhibit of SMEs access to bank credit; SME lending and guarantee programs and its impact on employment and productivity Department of Trade and Industry (DTI) 1. Small Business Handbook, BSMBD, 1996 Scope: Shaping the climate for SMEs; Situationer: SMEs in the Philippines; growing Philippine SMEs; features; facing the future 2. Programs and Services for Cottage, Small and Medium Enterprises, BSMBD, October 1993 (updated) Scope: A compilation of the different agencies involved in assisting the small business sector in the following areas: Technology/Production; Marketing; Training; Regulatory/Incentives; Institutional Development

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3. Priority Industry of the following sectors: a. Electronics b. Metals c. Leathergoods d. Carrageenan and seaweeds e. Garments and Textiles f. Processed Food g. Furniture h. Marine Products i. Holiday DĂŠcor j. Decorative Ceramics k. Footwear l. Basketware m. Jewelry n. Information Technology Service o. Construction Service p. Professional Consultancy Service DTI-BETP Philtins, 1997 (updated) Scope: Industry profile; export performance; top industry exporter; industry association activities/projects for industry promotion Development Academy of the Philippines (DAP) 1. Salem Sethuraman, Technology and Small Enterprise Development Scope: Technological change in SE; factors constraining technological change at the enterprise level; policies to promote research and development in SE

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2. John Petrof, Small Enterprises and Economic Development Scope: Development-related problems and small business; imports and small enterprises; small enterprises and the government 3. S. Theocharides and A. Tolentino, Integrated Strategies for Small Enterprise Development: A Policy Paper, ILO Scope: Enabling policy environment; economic and business potentialities; strengthening existing small enterprises 4. Measuring Good Governance in the Philippines, ed. by Magdalena L. Mendoza Development Bank of the Philippines (DBP) 1. RH & H Consult, Ramboll Hanneman and Hojlun, Sectoral Studies on: a. Canned Preserved Fish b. Spinning & Weaving c. Canned/Preserved Fruits and Vegetables d. Cocoa, Chocolate and Sugar Confectionery e. Electrical Appliances and Housewares f. Veneer and Plywood g. Plastic Products h. Fabricated Metals

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Cross Subsectoral Issues and Concerns, DBP, 1994 Scope: Framework of the subsector; industrial and market structure; supply and end structure; environmental issues; training-related issues; macroeconomic setting; SWOT analysis; product/market strategies; recommendations and action; plans; summaries of analysis of the 8s sectors; external conditions; strategy for breaking the deadlock; cross subsectoral and relationship linkages; product/market strategies of the 8 subsectors Local Government Academy (LGA) 1. Kaban Galing: Striving for Local Governance, No. 1, 2001 Edition Scope: Presents cases focused mainly on the internal systems, processes, and procedures that underpin an LGUâ&#x20AC;&#x2122;s day-to-day operations and its delivery of basic services. 2. Kaban Galing: Managing the Environment, No.2, 2001 Edition Scope: Presents cases of how LGUs have managed different ecosystems of air, water, land and built environment. 3. Kaban Galing: Transforming the Local Economy, No. 3, 2001 Edition Scope: Presents cases on how local governments can finance economic transformation; solve debt problems and produce a surplus; transform local economies through infrastructure development; develop indigenous industries; and use sustainable integrated area development.

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4. Kaban Galing: Promoting Excellence in Urban Governance, No.5, 2001 Edition Scope: Presents internally focused studies that look within the LGU itself, its processes and procedures. Initiatives on actual programs implemented by the LGUs are showcased. National Economic and Development Authority (NEDA) 1. Center for Advanced Philippine Studies, Impact Assessment of National Livelihood Program: Main Report (Vol. I), NEDA, May 1993 Scope: Overview of livelihood program; survey of both beneficiaries and providers of livelihood programs; impact of livelihood programs Philippine Chamber of Commerce & Industry (PCCI) 1. Juanita C. Viray and Gilbert M. Llanto, Development and Growth of SMEs, Confederation of Asia-Pacific Chambers of Commerce and Industry, 1993. Scope: Recommendations for SME development including: human resource development; technological capability development; infrastructural and advisory services; financial assistance; marketing and market development; fiscal assistance; administrative simplification; and rationalization of macro policies. 2. Macro Policies and Interventions for Small Enterprise in the Philippines, Appropriate Technology International and International Development Research Center, .1991 Scope: Structure of SE and the impact of the macro-policy environment; recommendations on: trade & industrial policy; monetary and credit policy; fiscal policy; labor policy; and regulatory policy.

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3. Gwendolyn R. Tecson, The Effects of Trade and Industrialization Policy on SE: Analysis and Proposals for Legislative Action Scope: Situation of SE; Philippine trade and industrial policy environment and Micro, Cottage, Small and Medium Enterprise (MCSME) growth; impact of specific macroeconomic policies on SMEs; and policy suggestions for legislative action. 4. Mario B. Lamberto, Small Enterprise Promotion Policy and Legislative Agency: Focus on Monetary Policy, Finance and Credit Program Scope: Assessment of current monetary and credit policies; assessment of bills pending in Congress; policy recommendations and legislative agenda 5. Milwida M. Guevarra, Fiscal Policy on the Development of Small Enterprises â&#x20AC;&#x201C; An Assessment and Proposals for Policy Directions Scope: Problem and its setting; taxation and SE; expenditure policies to promote the growth of SEs 6. Dante B. Canlas, Labor Policies and their Impacts on Cottage, Small and Medium-Scale Enterprises Scope: Distribution of firms by size; employment generation by class size; labor costs; minimum wage legislation; human resource development programs 7. Direct Regulatory Control Policies and Their Role in Small Enterprise Development in the Philippines: Analysis and Recommendations Scope: Overall assessment of direct regulatory controls; recommendations; review of existing laws & regulations; decentralization and deregulation; simplification of procedures

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Philippine Institute for Development Studies (PIDS) 1. Ma. Lucila Lapos, Growth & Dynamics of Small and Microenterprises: Does Finance Matter? (Working Paper), PIDS, August 1991 Scope: Definition of microenterprise; Phil. Experience in microenterprise development; government policies and programs; financial and technical assistance 2. Richard L. Meyer, Supporting Rural Non-Farm Enterprises: What can be Learned from Donor Programs?, PIDS, 1992 Scope: Donor experiences; sustainability of donor programs; role of small-scale enterprises 3. Cesar G. Saldana, Denise B. Pineda, Gilbert M. Llanto, and F. C. Gunaru, Liberalization in Directed Credit Programs for SMEs. Scope: Alternative development financing; policies for SMEs; features of directed SME Credit Programs; capacity of PFI to Finance SME Growth Small Enterprise Research and Development Foundation (SERDEF)/ University of the Philippines - Institute for Small Scale Industries (UPISSI) 1. UPISSI, A Study on Financial Intermediation for Small and Medium Enterprises in 7 Regions of the Philippines, 1992 Scope: Survey of financial institutions lending policies and schemes; financial management; practices of SMEs

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2. UPISSI, Impact Study for the Project Development of Entrepreneurs for Cottage, Small and Medium Industries, 1990 Scope: Specific target groups were identified in developing the section growth of the CSMI sector 3. UPISSI, A Study on Capital/Labor Ratios and Financial Ratios of Small and Medium Industries, 1982 Scope: Data on capital/labor ratios and financial ratios of SMEs for IGLF survey results showing financial ratios by area, by asset size and by industry groups University of Asia & the Pacific (UA&P) 1. R. Quesada and Joseph Sy-changco, Sources of Credit for Small Business and the Informal Sector, UA & P Scope: Government guarantee programs; the role of NGOs and PVOs 2. Cottage, Small and Medium-Scale Business Lingering Issues and Prospects Under the New Government. Scope: Growth and equity; financial sourcing; subcontracting; sourcing of raw materials; institutional exports 3. Eight Major Issues Facing Small Business in the Philippines, UA&P Scope: Removal of sales tax exemptions; alleged anomalies in government purchases from cottage producers; difficulties in securing financial assistance; limits to tax exemptions on raw materials imported by registered cottage producers; lack of common service facilities; problems of technology transfer; confusion about what is "small" business; government intervention in marketing 146

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4. R. Quesada, The State of Small and Medium-Scale Business in the Philippines, UA&P Scope: 5 options for large Firms and SMEs; influx of SMEs 5. R. Quesada and Enrico Basilio, Opportunities in APEC for Philippine SMEs, UA&P Scope: Impact of APEC on SMEs; APEC SME Action 6. R. Quesada and Francis Xavier Vicente, Kalakalan 20: Is it Worth the Debate?, UA&P Scope: The components; the Italian Model 7. R. Quesada, E. Basilio et al, Evaluation of the Impact of the Small and Medium Enterprise Credit (SMEC) Projects on its SME Beneficiaries in the Countryside, PBSP, 1004 Scope: Effectivity of the financing project to SME development 8. E. L. Basilio and J. M. Chua, Telecommunications SMEs and Regional Development (Parts I & II), Economic Policy Papers, UA&P, 1997 Scope: SMEs and regional development; barriers to SME growth; economic impact of telecommunication on SME & regional development; slow roll out of landlines; interconnection issue; pricing; servicing of unprofitable areas; cloning; adapting to technological development; remembering the regions

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9. Enrico L. Basilio, Can Our SMEs be Globally Competitive? (A Look at the Proposed Bills on SMEs), UA&P, 1995 Scope: Review of the following Philippine Bills: SB 1283 –Amendment to RA 6977; HB 2737 – Reorganizing GFSME; HB 4805 – SMEX Bill; HB 1217, 2472 & 2566; Reestablishment of Kalakalan 20 UP School of Economics 1. G. Tecson, L. Valconel and C. Nunez, “The Role of Small and Medium Scale Industries in the Industrial Development of the Philippines,” The Role of Small and Medium Scale Manufacturing Industries in Industrial Development Experience of Selected Asian Countries, Economic and Development Resource Center/ Asian Development Bank, 1990, pp. 313-423. Scope: Contribution of SMIs to output growth and employment generation; external constraint to SMI development; the functioning of SMIs; evaluation of SMI; Performance: success and failure; existing SMI-promotion policies; policy recommendations University of the Philippines Library System 1. Perla E. Legaspi, The Changing Role of the Local Governments Under a Decentralized State: Some Cases in Philippine Local Governance, 2001 Scope: Enabling role of local governments; the local government code; selected local government experiences 2. Perla E. Legaspi, “The Role of LGUs in the Management of Fisheries/Aquatic Resources: Some Policy Issues and Proposals,” Local Government in the Philippines, A Book of Readings, Vol. II, ed. by Proserpina Domingo Tapales, Jocelyn C. Curesma, Wilhelmina L. Labo

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Scope: Codal provisions pertinent to the management of fisheries/aquatic resources; managing fisheries/aquatic resources at the local level, problems encountered in codal implementation 3. Perla E. Legaspi et al, Local economic promotion in the Philippines, Local Government Center and German International Foundation for International Development, 1996 Scope: Overview of local government in the Philippines; local government and economic promotion; local experiences in economic promotion 4. United Nations Center for Regional Development, Local Governance and Local Economic Development: Capability-Building, ed. by Josefina S. Edralin, 1996 Scope: Findings of a research project on Local Government and the new Community Governance; case studies on intermediate-sized or secondary cities in Asia (found in countries of China, Indonesia, Malaysia, Philippines, Sri Lanka) and Latin America (Argentina and Brazil) 5. Local Governments in the Philippines: Four Best practices in Service delivery, Ateneo Center for Social Policy and Public Affairs, 1998 Scope: Case studies of LGU experiences in service delivery 6. Rolando M. Acosta et al, Local Government Capacity Building Handbook, Local Government Development Foundation and Bureau of Local Government Supervision, DILG, 1991 Scope: Decentralization and local government capability building; designing/packaging/negotiating local government capability project; project implementation; developing local government capability indicators

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7. Fernando C. Fajardo, Population and Development Integration in Local Planning, Integrated Population and Development Planning Project, NEDA, 1994 8. Cesar B. Umali Jr., Pathways to Decentralization: A Decade of LRM Project Innovations in PeopleCentered Development, NEDA, 1991 9. Decentralization: Examining and Maximizing Decentralization Efforts of the Philippine Government, NEDA, 1990 10. Gilberto M. Llanto, Making Rural Credit Work: Lessons from the Local Resource Management Project, NEDA 11. Industrial Metabolism: Restructuring for Sustainable Development, ed. by Robert U. Ayres and Udo E. Simonis, United Nations Press, 1994 World Bank 1. LED: A Primer 2. Pamphlet on Strategic Planning Process 3. The Role of Local Economic Development Agencies 4. Guidelines in Drawing up a Terms of Reference for Information Collection for a LED Strategy 5. Doing a Competitive Assessment: The Approach of the Club du Sahel and the Municipal Development Program

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ENDNOTES 1http://www.parul-led.or.id/e_overview.htm 2Takes off from the discussion in http://www.worldbank.org/urban/led/implementing.html 3Economic Focus: Finding your niche: The discovery of poor countries' industrial strengths is a matter of trial and error," in The Economist, March 1-7, 2003, p.70 4Takes off from the discussion in http://www.worldbank.org/urban/led/planning.html 5Local Economic Transformation Program and Local Solid Waste Management Program. Bureau of Local Government Development - Department of the Interior and Local Government 2002. p.40. 6 Takes off from the discussion in http://www.worldbank.org/urban/led/promoting.html 7Takes off from the discussion in http://www.worldbank.org/html/fpd/urban/led/glossary.html 8Takes off from the discussion in http://www.worldbank.org/urban/led/local_business.html 9Takes off from the discussion in http://www.worldbank.org/urban/led/new_enterprises.html 10Takes off from the discussion in http://www.worldbank.org/urban/led/cluster.html 11Takes off from the discussion in http://www.worldbank.org/urban/led/area_targeting.html

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12Takes off from the discussion in http://www.worldbank.org/urban/led/disadvantaged.html 13Marcia Feria Miranda. "LGU, Inc. Developing Local Economies by Sustaining Local Enterprises." Punla sa Tao Foundation. Paper presented at the Roundtable Discussion on "Enhancing the Role of Local Government Units (LGUs) in Local Economic Development (LED)," Astoria Hotel, Pasig City, 28-29 May 2002.

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