In Search of Development Equitably Enjoyed by All

i

, Vol. XII' No.,4 .......

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In Search

July*August 1994

ISSN 0115-9097

1

of

Development Equitably Enjoyed

by All

o More

oov..oo.o,

Efficient

Form

8

$ectoral Concerns In $treamllnlng the Bureaucracy

The Philippines is slowly emerging from the social ruins caused by decades of economic mismanagement and political dictatorship. The government can now afford to think about national goals and expand on them, suggesting that new opportunltles besides mere survival may now indeed be open.

The question, however, is whether the people have genuine choices. How can they tell whether the programs and policies taken ostensibly In their behalf will actually contribute to their welfare? What does welfare mean, after all?

The concept of human development has been advanced precisely to answer these and similar questions.

Human development is the process of enabling people to have wider choices, It means expanding those capabilities that enable them to live a full life as human beings. Its most important dimensions are a person's physical sur-

viva], health, level of knowledge, livelihood or income, and political dom. These are the minimum needs that must be fulfilled.

freebasic

In assessingany measure, the people must ask fundar_ental quesPa g e

2

Development is usuallyequated Humandevalopment, acoordingtohim, isanabling witheconomic large=.The 1992-1998 peopletahavewiderchoicesandprovidingthemwiththe MediumTermPhilippineDevelopment minimumbasic needslike physicalsurvival,health, P/an,Iorinstance, aJms reranannualGNP education, livelihood, andpolitical freedom soihatthey growthrateof 7.5 percent,a per capitaincomeof canfullypenicipate inthedevelopment process.

Human US$1,000,ande reduction inthe incidence ofpoverty development findsrealization in theMTPDPas people from40 percent to30 percentin1998. empowerment.

Thesetargets, however, meananything to People empewerment succeeds whenpeople are thosewhohavetoscrimp eachdonot dayinorderto havea deoentmeal,muchlesshaveaccesstabasichealthcare oppropriatelyinformedofthevariousgovemmantdedsions and education, andpolicies.

Afterall, successful participation in the Cometothinkofit.Economic growthshould not development process ispremised onanunderstanding of stopat figuresandtargeta.Itshould,in fact,guarantee theissuesat hand.Thisiswheretheflowofinformation thewelfareof_arycitizen.Atthevetyleast, itshouldbe betweenthe governmentendthe publicbecomes fat bythepeoplewhoaretheobjectofdevelopment, important.Andthisis wherethe massmediaplaysa "Whetdoespeople'swelfaremeanafterall,' crucialrole(seastoriesonpages6-7). asksDr.Emmanuel deDiusoftheUPSchoolofEconomics 'Lean and mean"couldverywelldescribe a andtheleadwd_ ofthsPhilippine Human Development bureaucracy that is relatively smallbuteffective in its I_pert(PHDR),ajointpublication oftheUniledNations delivery of services tothepeople.Thisisthegoverning _velopmantPro_'ammeandthe Philippine Human prindpleinthevariousframework papersprepared bya _vdopmontNetwork.

The leadarticlein thisissueof studyteamin lookingat the =us of streamlining the theDRNIsliftedkernthatreport, bureaucracy (seepages8-0). _

DEVELOPMENTRESEARCHNEW=

July-August1994

t

In Search oF Development "'"

GOOD

f,oo,p_¢¢1

The Philippines has, historically, had a headstart in public education and health. Therefore, it performs relatively well on literacy, educational attainment, and longevity when compared with other countries. More recently, however, the country has simply been living off its historical capital and reputation.

Pressed by budgetary limits, on onehand, andby the need to serve a rapidly growing population, on theother, the quality of public education has declined. Access to high school and college education -- especially quality education, most of which is provided by private schools -- is distributed quite unequally. Simi-

tions: Has it helped us and our children to live more secure and healthier lives? Does it allow us to learn more about what is going on in our communityandsociety?Doesitmakeusmore productiveandpermitustoearnbetter incomesorlivelihood?Doesitincrease our community's political influence over its leaders? Does it expand the role of people and their organizations in choosing, implementing, and overseeing projects?

START.POOR FOLLOW-UP

Imperativesfor Development _IIIL

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O

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IIIIIIIII I

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There should be more determined efforts to revive the economy and follow a sustainable growth path.

If growth averages only 3-4 percent a year, the conditions of the poor are bound to worsen. The key areas for economic survival are aggressive promotion of foreign and returning Filipino capital, a moderate relaxation of monetaey targets, and financing for focused and targeted social expenditures, The government must seriously consider thepossibility of shifting its infrastructure priorities from Luzon to Mindanao and the Visayas.

Fhere are still serious questions on whether growth can be revived and sustained, and at what cost. The government continues to suffer from a fiscal crisis.

It is heavily in debt, and there are no quick and painless fixes to the crisis, but the government must stress the following: reduction of waste and the bureaucracy, improvement of collection of existing

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taxes, and theuseofprivateinvestmentsandforeign aid for infrastructure and utilities, O

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difficulties because of recessions and a drift inbudgetaryprioritiesforhealth.

As a result, government priorities in the health program have become misplaced, emphasizingtertiaryrather than primary health care, cure rather than prevention.

For all this, the services of doctors and health personnelfailed toreach the rural areas.

In addition, the family planning programhasonlyrecentlybeenrevived and has much to catch up with.

Malnutritionamongchildrencontinues to be high for lower income groups.

The health situation is now being complicatedbythedevolutionofhealth activities to local goVernments without

tween labor, management, and government must be strengthened for industrial peace, productivity, and price stability.

Agriculture and rural development must be stressed through improvement in rural infrastructure (including irrigation) and technical assistance.

Poverty alleviation measures must be provided to the most vulnerable of the poor. Preference must be given to programs that are decentralized, area-based, and participatory.

Aside from the aggregate targets of reducing total poverty incidence from 40 to 30 percent by 1998, verifiable targets are needed in the provision of health services, access to and use of clean water, sanitary toilets, and hospitals and doctors in rural areas.

The budgetand official development assistance (ODA) going to social services must be reviewed. The budget allocation for social and priority human development services should be kept to at least 20 percent while that from ODA be raised to the same level from 11.4 percent in 1991. Concrete revenues and intersectoral

To sustain growth, government must quickly address the problem of overvaluation of the peso which is jeopardizing the fate of manufacturing and exports. Domestic and foreign investments must be directed to infrastructure and utilities. The tariff structure must be further refined. Cooperation beii

larly, the provision and sanitation servicesof public has methealth with

i

O

opportunities for raising and intrasectoral alloca-

tion should be explored.

Amounts used for tertiary education may be gradually reduced over three years by 50 percent or more, ( and the savings may be used to improve the :quality of primary and secondary education and to expand access to primary health care. The remaining budget for !lll_

i

i

:: :: iiigi::_ie efiec:ts:o

eres:Jdeitt

Tliird Human D,welopme,tt ceitter; Others in photo

.....:

DEVELOPMENTRESEARCHNEWS

In Search o_ Deve[6pment k_o,.

Pa_3

July-August 1994

experience shows, if the future merely repeats past patterns of growth, then the_)oor are unlikely to benefit. What is needed is not simply growth but a radical change in the nature of growth: toward more use of labor, less penalties to agriculture and industries related to agriculture, and a greater emphasis on regional development.

...

Public resources are eaten up by debtservice payments. Therefore, governmentcannotundertakeboldinitiatives, especially in infrastructure and social services, for fear that its indebtedness may expand further. The unrealism of past IMF fiscal and-monetary targets has contributed to the

The environment suffers in both periods of economic growth and fail-

should participate as far as possible in running their own affairs and take a direct hand in selecting their representatives. Elections that guarantee the right of suffrage, opportunities for election, and implementation of results are indispensable requirements, though still insufficient.

Compared to some richer courttries, the Philippines is more politically developed. But although formal institutions of democ-

failure of recoveries,

racy and channels for people's participation exist, there are formidable obstacles to genuine people's participation. Among these are the political dominance of a socioeconomic elite, absence of genuine party-politics and preponderance of an uninformed, intimidated, and dependent electorate. These factots trivialize the electoral system and rob it of its potential as an instrument of change.

There are more ominous signs for the longterm. Because the problem of macroeconomic financing is unresolved, many programs seeking to promote deep-going structural reforms and to arrest the erosion of the country'scompetitiveness simply lack credibility. These are either jeopardized by public resistance, or are implemented under circumstances that ensure the least success. Without a consensus on a competirive exchange rate, for example, programs to reduce tariffs are bound to lead to import surges, which will lead to ultimate resistance. The social safety nets that will build confidence in such measures are not in place,

ure. When economic growth occurs, it is built on an unsustainable extraction and use of resources (e.g., denuded forests and polluted streams).

But when it fails, poverty and population growth make unsupportable demands on the environment.

Public response

Besidesvotingin elections, people can and should participate in governance in other ways. People's organizations (POs) and non-government organizations (NGOs)are important channels of participation on a sustained and regular basis through lobbying and protest to change policies, direct im-

Viewed from within, poor growth performance means that poverty has remained high and the poor have grown in absolute number. But even slow

to the magnitude and urgency of the environmental crisis islackhister. This is reflected in the scarcity of research and information and in the lack of

plementation of their own programs and projects, and monitoring the activities of the government.

growth has not prevented the rich from increasing their share of incomes, whether in periods of boom or bust.

Inequality in income has increased, and recent economic growth has benefited mostly the highly urban areas,

political will to address the crisis that threatens the various ecosystems,

By providing for the participation of POs and NGOs, the Local Government Code, its defects notwithstanding, is a potentially powerful channel for regular people's participation if it can overcome the resistance

PECPLI; AND POLITICS The most complex and contentious area of human development is the political sphere. Ideally, people

Poverty can be relieved if the average income can get going. But, as ]

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and suspicion

of local political leaders. _

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DEVELOPMENTRESEARCHNEWS

July-Au!ust 1994

In educe tion, the government has succeeded in enrolling almost every Filipino child in the first grade and has recently implemented tile Free High School Law to make secondary education accessible to all.

How the Regions Fare

Education

• in

,., ,,._ ,__

mild

HC

vary. In 1990, the NCR had tile highest per capita income (P28,273).

In the regions, however, figures Meanwhile, those of the seven regions region having the lowest (P4,675). Such inequality among regions is not solely in revenues income.

The are terms at fouroffigures only,or with tile Bicol gap across regions exists in terms of their education and health indicators, too (Table 1).

al "l

Once

F irst, the good news. The Philippines ranks higher than countries such as Thailand and Indonesia in terms of education and health indicators. Ninety-three percent of its adultsareliterate.Mortalityratesfrom '1981to1989, especially among infants, declined significantly. On the average,

GLARING INEQUALITY

the human capital performance looks good. The sad news? Neither health nor education is accessible to all.

Inequality exists across regions and income classes,

despite the minimal increase in its per capita public expenditures.

The numberofhouseholdsusingsafewater likewise rose. By 1991, many barangay health stations and municipal health

On the whole, more "proximate" indicatorsofhumancapitalsuchaslife expectancy and infant mortality rates improved through the years; so did the government's delivery of primary health care services in the late 1980s

centers "Without social intervention," according to Dr. Edita Tan, professor at the UP School of Economics and member of the PIDS Board of

Nations Development Programme and the Human Development Network (Philippines), Dr. Tan takes a look at how the government fared in equalizing access to different facilities -- [or so-called human capital,e.g., health hnd education. The chapter highlights the areas where policymakers should focus their programs.

education

and

health

dotted

_

7 _

Life expectancy (1990)

Infant rnortafity (per 1,000 live births)

Child mortality rate (O-4years)

68.4 66.0 61,3 68.0 67.1 64.0 65.0 66,9 61.3 54.4 58.8 57.4 54.4 64.6

21.9 11.8 69.6 25.2 51.1 32.8 33.7 20.3 50.2 15.9 55.6 34.2 54.2 35.3

8,9 7.4 18.5 7.3 14.3 15.0 11.4 6,9 15.4 9,6 18.0 8_4 20.5 12.0

NCR Ilocos CagayanValley C. Luzon S. Tagalog Bicol W, Visayas C.Visayas E.Visayas W. Mindanao N. Mindanao S. Mindanao (3.Mindanao Philippines

Source: Table

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?..aof C_e PhllipplneHumanDevelopmentRepott,

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Tabl= 1 ialndEducation Indioators by Regions, 1988-1991

Region

I II IIi iV V Vl VII VIII IX X XI XII

Regions that are better off income-wise tend to have better health performance.

Take for instance the number of underweight children as

the countrysides.

_lth :

Trustees," discrepancy in poverty and wealth perpetuates across genera tions, reinforcing the common notion that the rich become richer, and the poor, poorer." In a chapter on human capital in the Philippine Human D evelopment Report1994,apublicationoftheUnited

more, metropolitan NCR leadstheotherregionsinhumancapital performance.

In 1990, the region had the lowest poverty incidence (22.6%), the highest life expectancy rate (68.4 years), and the highest number of schooling years among residents (9.7 years).

.....

"

itst

..

Literacy rate (1990)

Yearsof schooling (1988)

99.1 95.8 91.3 97.8 96.8 95.3 93.0 91.0 89.8 81.3 92.9 91.9 83.0 03.s

9.7 7.7 7.3 7.7 7.5 6.9 7.0 6,5 6,5 6.0 7.5 7.3 6.6 7.5

1994,p, 59. i

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DEVELOPMENTRESEARCHNEWS

July.Au_ust 1994

One of the pillars of a true democracy is freedom of the press. In government, this is expressed in three ways -- openness and transparency in government information, freedom of media from censorship, and privatization of media facilities, Government's

commitment

to

It is a good sign that there are programs and even advertisements with messages that help mold good values. However, in the guise of press freedom, the more important function of social responsibility, truth and accuracy have sometimes been sacrificed for the sake of profit motivation, sensationalism and commercialism.

mean, however, that media and gov -1' ernment cannot work together.

Government needs media to inform the people of its programs and policies. On the other hand, the media needs the government as its biggest source of news and stories.

freedom of the press was affirmed by

There is so much to be desired in

Press Undersecretary Honesto Isleta in a workshop attended by media practitioners from the private and the government sectors held on April 22-24 at the Taal Vista Hotel. A follow-up activity of a project jointly undertaken by PIDS and The Asia Foundation, "Enhancing Government-Media Relations for Partnership in Development" aims to smoothen the information dissemi-

the improvement of media today.

Isberto talked of the professionalization among the ranks of reporters and desk editors, market pressures and the ability of the viewing public to evaluate and react to media. "Information is so important in our lives, yet we do not even bother to think about it," he inferred.

nation process from the government to the public through the mass media,

GETTING MORE AWARE The media industry has been growing since 1986. At present, there are at least 36 national and 285 local dailies with a combined readership of about 5.8 million. Moreover, there are 40 magazines, 83 comics, 357 radio stations, 63"IV stations and about 866 cinema houses. All these produce an enormous volume of information, rapping at every household's door. This just shows how much people have grown aware of what goes on around

THE ADVERSARIAL MEDIA Cooperative and harmonious government-media relations are "big words," according to Ramon Isberto of the Interpress Service as he surveyed the topic from the private sector pointof-view, It is in media's culture to look at things differently. People in government handlingpublicinformation want to project the government's side and have their arguments forcefully expressed. On the other hand, media people try to go beyond, beneath and behind the arguments. In most cases, media end up with stories that do not conform or match the wishes of the government.

Here is a classic example of a common interest (to inform people) viewed differently.

When people vie for access to media to have power (information is power), things become quite messy and difficult. It does not

INDIVIDUALISM VERSUS COMMUNITARfANISM How

does

the media

in the

Philippines, with its liberal notion of( freedom of the press, respond to demands and expectations for it to have a social and civic conscience and to help in the country's development?

This is a dilemma, according to Pamela Hollie, Resident Representative of The Asia Foundation, usually faced by the media in countries that have the liberal approach framework to press freedom but exist in the context of a communitarian society.

them over the years.

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So the PeopleMayKnow:

IMPROVINGthe LINES of COMMUNICATION

between GOVERNMENT andMEDIA |

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DEVELOPMENTRESEARCHNEWS

Information

is needed

July-August 1994

in

T h e

analyzing and projecting socioeconomic development.

The 1993-1998

Va

Iu e

OF

ment Plan (MTPDP), for instance, is not plucked out of thin air. It is based on facts and figures periodically Medium-Term Philippine Develop-Information gathered, processed, and analyzed.

Among

the sources of informa-

quarterly, semestral and annual national accounts prepared by the National Statistical Coordination Board

(N,c..; .,e

..,

IN U EVELOPMENT

.=..,

L A N N iN G

, and Expenditure Survey prepared by the National Statistics Office; sectoral indicators gathered and processed by the different government agencies such as labor, trade, agricultural and industrial statistics; and secondary indicatorslike consumer investment plans. trends, businessand The process of relying on these data for economic planning and policymaking is called "environmental scanning." It involves an analysis of the country's past performance relarive to its targets and to the performance of neighboring countries.

Thus, the targets of the current MTPDP accounted for the performance in the period 1986-1992, including the structural and policy reforms implemented to make the economy more open and liberal, LOOKING BACK

During the past seven years, the economy went through a cycle of high and low growths.

After two successire years of negative growth, the country recovered in 1986, growing at 4.2 percent, and then peaking at 7.7 percent in 1988. Strong investment, importation, and government pumppriming activities sparked the growth - iLduring this period.

In the succeeding years, however, economic growth considerably slowed down, reaching rockbottom at 0.4 percent in 1991 due to unexpected ,,

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Excerpts firm the _ presented by Hon. Cidito F. Habito, NEDA DirectorGeneral and Socioeconomic Planning Secretary at the joint PIDS-Asia Foundation Consultative Wor_hop with Media Practitioners on "Enhancing GovernmentMedia Relations for Partnership in Development," 23 April 1994, Tagaytay City; ! ' external factors (natural disasters) and the own weaknesses of the economy, Economic growth averaged at 3.6 percent annually between 1987 and 1992, short of the 6.5 percent target of the 1987-1992 MTPDP. The sluggish growth has inevitably resulted in a mediocre per

strategy to eradicate poverty "by equipping the people with economic instruments that will enable them to meet their needs and pursue their own aspirafions.'Togetherwithglobalcompetitiveness as the twin objective of the Plan, human development will chart a road map in the planning process toward a vision of what is best for the

capita GNP which stood at only $730 in 1990. Between 1965 and 1990, the

country

and its people.

Philippines had the lowest annual per capita GNP growth rate in the ASEAN region.

Moreover, poverty has remained widespread - 44.2 percent in 1985, 40.2 percent in 1988, and 40.7 percent in 1991. Income distribution is likewise skewed, as more than half of the country's income flows to the richest 20 percent of the population,

Such vision is what has come to be known as "Philippines 2000/' the Ramos administration's allencompassing program of development. Cynics would call it a wishful thinking, but holding on to that vision now when high economic growth is happening intheAsia-Pacificregionis something we should not miss.

WHAT WENT WRONG?

MORE THAN SETTING TARGETS

These indicators imply a depressed stateofhumandevelopment in the country.

Thus, the MTPDP coined "people empowerment," as the

Given empowering

the broad directions of the people and achieving _

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DEVELOPMENTRESEARCHNEWS

in many wrong places," |lBu|ging this is how Prof.

Jose Endriga scribed the present Philippine bureaucand Dr. Ma. Concepcion Alfiler deracy during a consultation meeting with representatives from different sectors when they presented the prelim-

July.August 1994

Trimming Government into a

MoreEfficient Form

inary resul ts of their draft report on the size of the Philippine bureaucracy. The output of the meeting basically provides a systematic view to guide public servants and bureaucrats, an alternative to past responses that simply say government performance canbeimprovedbyincreasingnational budget and salary, or by instilling discipline,

regular employee the government,

While it does not appear bloated on a macro level, "bulges" in the bureaucracy can be seen in Metro Manila's having 20 percent of the total government personnel, excessive personnel in certain occupational classes, departments with too many casuals, the presence of 'floating' and 'frozen' employees, and too many administrative vis-a-vis technical positions.

To address these deterrents, guidelines for a Centralized Incentives Fund were proposed. For instance, the fund's implementation will be decentralized to individual agencies, and general guidelines on the fund's use

To reduce these bulges in the bureaucracy, several measures were suggested. The implementation of the attrition

law,

current

retirement

schemes and various de-loading schemes, were the less drastic measures suggested. Also proposed were the re-deployment across sectors and the enactment of a statute to set the overall limit of personnel, to plan strategic expansion and personnel reallocation, and to actasa review and monitoring system, The bureaucracy's streamlining, however, does not end with its reduction to a desirable size. Equally important is the capability to retain people and get them to perform at expected

levels.

To motivate personnel, aProductivity-Based Incentives Scheme acrossgovernmentwasproposed.

The incentives scheme would augment the

benefits

offered by

The establishment of such an incentives scheme, however, faces two major deterrents. One is the lack of regular funding for this purpose, and second, the absence of a performance rating scheme to define and assess acceptablemeasuresofemployeeoutput.

"", Streamlining

does

not end with reduction to a

desirable size.

Equally important is the capability to retain (people)... and get them to perform at expected levels."

will be set by a Personnel Compensation Development Committee that will recommend the levels of expenditures for personnel costs and monitor the statusof the fund.

The proposal of an incentives scheme generated several comments from theaudience.

Notably, incentives should be made with government's long-term objectives in mind. It was proposed that (1) incentives should be

made in terms of clusters of agencies and groups of professions; (2) the quality of decision-making and targeting by civil servants at higher positions be included in the criteria of the incentives scheme;(3)meritincreasesbeincluded to further motivate employees;and (4) salary scales be increased.

DEVOLUTION AS A COMMON CONCERN Theimplications of devolution on theprocessofstreamlining aremore than simply the transfer of personnel from the central government to the local government, according to Dr. Elena Panganiban.

Devolution affect streamlining

is said to directly in that it (1) brings

aboutde-bureaucratizati0nby encouraging privatization and' non-government organization (NGO) and local government unit (LGU) involvement; (2) gives equal power to LGUs despite differences in capabilities; (3)highlights the needs and resources of LGUs; (4) empowers LGUs (general-purpose units operating within limited areas with permanent jurisdictional boundades); and (5) teaches self-reliance, i.e., localgovernmentunitsevolve theirown style of management and other initiatires.

In the light of devolution, the national government's role should therefore be to assist, support and facilitatethetasksofLGUs.Nationalgovernmentshould also put emphasis on de-concentrationand delegation togive( local government more access to national government agencies stationed in their areas, and provide them with ample opportunity to address local concerns.

DEVELOPMENT RESEARCH NEWS

July-August 1994

I

Dr. Panganiban also suggested thatthe Depa_h_ent of Interiorand Local Government(DILG)anditssupervisory authorityshouldbereorientedandrecast.

Ill

Sectorat Concerns in Streamlining the Bureaucracy

DILG's functions should support the development of institutional training methods where DILG must systema tize, coordinate and synchronize NGA (NationalGovernmentAgency)activities in local government. 14srole should help strengthen professional associationsand thedifferentleaguesoflocalgovernment that can serve as syndicates to protect their peers.

. ONSClENCEANDTECHNOLOGY velopment, or STAND 2000--the S & T component of Philippines Dr. jose Magpantay noted in 2fKl0--hasunclearprescriptionson his draft paper the roles and howtheemergingtechnologiescan problemsth_besettheS&Tsector, be effectively utilized to increase Heidentifiedareaswherethe sector the output of some of the country's has remained unresponsive to "sunrise" industries. development goals.

In a nutshell, Dr. Magpantay Among thecurrentproblems described the government's interare: (1) the low compensation vention in S & T as "too little (29% schemeforscientistsandengineers of the national budget), too late, in the academe, particularly those with too much expectations (i.e, covered by the govemmenVs Sal- the country is expected to be a ary Standardization Low; (2) iso- newly-industrializing country by lation from the international sci- 2000)/' entific community (due to lack of local journals and communication Lean and Mean facilities, among others); (3) low morale in the scientific commuThere are two options for nity due to lack of government streamlining the S & T sector. The support for Research and Devel- first is to create a lean and mean opment; and (4) lack of a healthy principal S & T body tasked only partnership between the S & T with the first and second levels of sectorand the industry sector.

S & T activitiesin theareasof basic industries and high technologies.

S & T's poor economic sig- Other functions should be left to nals come from two causes. First, the universities, industryandother thestructurallinkagesbetween the government agencies. knowledge-productiongroupand the economic-production group The secondoptionprescribes areweak.Plansshouldbemadeto anactualstreamliningoftheDOST. getthetwogroupscloser.Research It also requires the DOST to "enshould be made accessible to its courage" the setting up of R & D prospective users, institutes in various industries.

Other suggestions put forward are: (1) the creation of competitive situationswhereinlocalgovernmentunits compete for more resources and better programs; (2) realignment of DILG's functions to assist LGUs in relation to the Local Government Code; (3) redirection of national government's role toareaswheregovernmentissupposed to be supportive and where it is supposed to render direct service like in health and agrarian reform; and (4) the transfer of assets to accompany the transfer of functions from a national government agency to a local government.

AUDITING AND FINANCIAL MANAGEMENT REFORMS Dr. Amelia Ancog and Ms. Imelda Rodriguez illustrated that the need to fully utilize government's lirai ted resources makes it necessary to implement auditing reforms and schemesforaccountabilityofcivilservants. These include technical supervision over the accounting offices, camplete control of budget commissions and of auditing functions of non-government entities that receive subsidies from government.

Second, the government attemptstocovera verylargearea in S & T despite its very small re, sources. Its scope must be made appropriate to the size of its resources,

Still, reforms in the financial management system are needed. Reasons for such reforms are: (1) to give

Other Side of the Coin A number of comments on Dr. Magpantay's recommendations were raised. The first concerns cost, losses and setbacks that

Also, the Science and Tech'

noIogy Agenda for National De-

c=, Pago

,1 0

Trimming Government... _;o,,p_9

and shiftingfromcomplianceofmainly obsolete rules to determine whether the agency has accomplished its functions as mandated by the law.

.....

agency heads more direct control over expenditures; (2) to facilitate giving financial information for guidance and use of various agencies; and (3) to ensure the effectiveness and independence of the General Auditing office (GAO) and audit of government accounts, One proposed change is that audit emphasis must move from compliance audit to financial and comprehensive audit. The proposed change would include dealing with issues of economy, efficiency and effectiveness,

Post-audit was also proposed over pre-audit. Pre-audit and post-audit mainly differ in the time of audit.

However, pre-audit interferes with an agency's prerogatives and as such, should be done away with. With postaudit, management is compelled to discharge its responsibilities without relying on the decisions of auditors.

Post-audit makes it easier to adopt the proposal of withdrawing resident auditors from government agencies,

served

Ancog and Rodriguez also obthat internal auditing as IIIII

Sectora]

Concerns

...

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....

III

drastic reforms within DOST such as stepped-up interagency participation, budgetexpansion, re-directionandderegulation,

canbeencounteredduetothestruc-

ON TAX AND CUSTOMS

tural changes in the S & T sector.

Thereis no assurance that the gains will outweigh the cost of change,

ADMINISTRATION

Second,

when

be harder to coordinate. Therefore, decisionmakingand resource all(>cation will be more difficult,

FISCAL RELATIONS The discussion on fiscal relations was presented by Dr. Rosario Manasan in relation to two principles.

First, the nature of the goods and services provided and theextentof geographic spill-over of benefit/cost should be the underlying criteria on whether a public good should be provided by the central government or by thelocalgovemment. i1,1,

There have been reforms implemented in customs and tax policies such as liberalization of trade, low and uniform tariffs, and minimum trade controls. There are also reforms taken in administrative practices to reduce incidences of technical smuggling and corruption. However, there remains a wide gap between policiesand pracrice.

one devolves

and decentralizes, the linkages between the researchers and users, and among sectors will be more complicated. Information will also

practiced by some agencies may be more successful in installing an adequatecontrolsystem.

Nonetheless, the validation and implications of this require another study.

"There have been

reforms in customs and tax policies.., However, there remains a wide gap between policies and practice."

Third, conflict may brew because of differences in culture--between and among research and development groups, and service delivery and policymaking organizations, leadingtosomelossinproductivity,

In their paper, Drs. Bienvenido Alanoand Erlinda Medalla noted how customs and tax policies inadvertedly

Fourth, the proposal requires accompanying changes in some areas. Itmaybebetter toconsiderless

diverge from national objectives, particularly,exportprograms.Forinstance, imposing varying tariffs can also be a cause of corruption and smuggling, i|ll|l

i.ml

i

H

One of these existing policies is the use of the Home Consumption Value (HCV) as a customs valuation system in thePhilippines.

Although the Bureau of Customs (BOC) prefers the use of the HCV because it reduces incidences of technical smugglingandundervaluation, the system has its dark side.

The HCV, unfortunately, distorts the country's protection structure and increases the costs of doing business locally.

Taxing Issues On tax administration, two of themajorissues tobeaddressed are ,.,.H..

H

,

,

, ,..

,

,

DEVELOPMENTRE ;EARCHNEWS

11

July-Autust 1994

lJ IIIII

_ ...........................

Quuliti_ Dedred in ,Se_i¢o PtoclA_rs (H= high._L= low; M - moderate _ Public

Confusion due to the fiscal imbalance of certain LGUs following devolution should be resolved by en-

Private Third

pabkSectorstrenoth s _abllity

H

L

M

Ability to handle Issuesoutside cenJTal m_lon (e,g., affirmative action) immunity to favoritism

H H

L M

M

L

H

M

M L

H H

M M

L L M

H H H

M M L

M

H

M

H

M L :

L

M'

H

M L M

L L L

H ' H, , , H

Private SectorStrengths Ability to re_pond to rapidlychanging Ability tOInnovate Tendencyto replicatesuccess Tendency to abandon the obsolete Willingness to take rls_ Ability to generate capital Profe_sslonalexpertlso

circumstances

or foiled

•

Ablllty to capture economles

of scale

ThlrdSector*strength$ Ability to roach diverse populoflor'_ Compassion and commitment HollstIc treotrnont of problems Ability togenerate trust

suring that LGUs are given adequate resources to finance the activities given to them. This financing should be related to expenditure needs.

L,

The second principle asks what should be done with ten trally-financed, national public goods where local delivery or production is required.

Local production of centrallyfinanced, national public goods is hinged on a strong local presence to deliver these goods, and on the rela five

Page

'POs. NGOs, etc, 2

....

,

==1

IIN

how to eradicate corruption and updaterevenuecollectionprocedures.The roots of the problems can be traced to the low wages of tax agents and the power of these agents over taxpayers, leading sometimes to illegal transactions.

A few of their recommendations were: simplify the tax code, reduce discretion in tax exceptions, and make regulations more transparent.

Drs. Alano and Medalla also recommended that steps be taken to professionalize the Bureau of Internal Revenue (BIR) and BOC employees, Stringent hiring and firing policies should be imposed, compensation should be based on performance, anda training program (which may require the creation of a tax college) should be created, Finally, the authors were optimistic about the computerization prorgramofboththeBIRandBOCasoneof the means to fight corruption, as long as it is supported by top-management officials,

I

IIIII

II IIIII

I

12

I

I

ON TRADE, INDUSTRY, TOURISM AND ECONOMIC DIPLOMACY How can the Department of Trade and Industry (DTI), Department of Tourism (DOT) and the Department of Foreign Affairs (DFA) help achieve the Medium Term Philippine Development Plan (MTPDP) objectives in trade, industry, tourism and economic diplomacy? This is the main question Drs. Melito Salazar and Epictetus Patalinghugattemptedtoresolveintheir draft framework paper. In so doing, the authors also presented options on how toinstitutechangesinthesethreeagencies in line with the MTPDP's thrusts, In trade and industry, the gayernment's priority is to provide the services that will help private enterprises become more efficient and productive and, thus, compete globally, According to the authors, the current scope and level of governance in this area is wanting in terms of cost efficiency and accountability.

Thus, government must define the scope and extent of its industrial policy and, at times, intervene--be it economic inter-

I|1111

J

vention such as controlling prices or implementing policies for consumer protection. This is to correct market failures.

Private

Matters

The private sector must be involved primarily in tourism promotionanddevelopment.Thepublicsector, on theotherhand, should provide the complementaryinformation needed.

Similarly, the production of goods and services is purely the function of the private sector. Gayernment's role should only be timited to the collection, dissemination and provision of information on overseas and domestic market conditions, new policies of foreign governments, futuretrendsofother countries' economies, and the acquisitionanddisseminationofnew technologies, on top of its policymakingand program development functions. _,:v Page

12

DEVELOPMENTRESEARCHNEWS

Trimming Government...

12

July-August1994

processes, and removes extraneous|mpositions, creating conditions for sustaining movements.

r_omPa.,_ 11

costliness of maintaining a dedicated vertically- integrated structure to support production and delivery, Bynature, publicgoodsrequire that they be provided with some degreeofuniformityacrosspoliticaljurisdiction, i.e., uniformity is desirable, Therefore, while some LGUs ask for local autonomy, this should not be the case with public goods.

The fundamental goal in governmen t streamliningis the determination of the optimal role of government intervention.

It must be guided by the following:Wheretheprivatesectorand NGOscanperformeffectively, govenamerit should limit its role to establishing and maintaining policy, rules and regulations and administering public fundswithoutnecessarilyundertaking the desired activities,

Sectoral Concerns ... _;o,,P,_ 11

,

Besides the private-public sector interface, the agencies concerned should also have defined roles in the nationallevel vis-a-vis thelocal levels.

Forinstance, LGUsarethemoreappropriatecreatorsofindustry-specificpolicies for their areas, whiledomestictourism activities are the responsibility of the private sector in specific municipal|ties and cities, not of LGUs. Setting the Stage

The number of personnel volved must be directly compared deto the budget, according to Dr. Manasan.

The Department

of Agriculture,

for ex-

"The central issue in reforming the bureaucracy

tionis

which thatDTI'sthe main should implies be to provide policyfunction framework rather than extension services;

Government, as a principle, should only operate where the private sector, LGUs and NGOs are unable to

pects be linked together for internal consistency.

Along this line, they also saw the need for greater collaboration between DTI and the DFA in economic

the devolved budget: only budget given to the Internal Revenue to LGUs for devolu-

from 1991 to 1993.

OVERALL PRINCIPLES The discussionongeneralprinciples on streamlining dwelt on appropriate institutional arrangements for government to accomplish its national development goals. The central issue in reforming the bureaucracy is the effectiveness of government's performance in achieving Streamlining is a tool tonational accomplishgoals. this goal.

facilitation, which requires DTI to step up its advocacy and information dissere|nation activities; and integration, which suggests that all areas and as-

effectively respond, even with proper policy and public financing, and where the cost of national government intervent|on is less than the cost of nonintervention.

LPonce i_l ,,,. ,.,, ,,- ,,. ,..-'

diplomacy

programs.

SATaparan

,=.,,-=-%

_ -- -- -. _ .........

n'

_"

.:'

I

__ I

ZI

_¢.

| Pdwte

i B_tSul_ltolaubllc.f_ctor

I

Policy manageme,nt

."

Regulation

I I : I II i

l¢nforcementofequlty

the right way to satisfy public expectations and policy decisions.

I

Preventionofdlscrtmlnatlcm Pmvenfionofexploltatiocl

Promotion ofsocial coheslon Economic tasks

B_tSuttodtoPrlvate_,acfor

I I I

'.

InvQstmenttasks

Promomionofself-suffi¢iency BestSuttedtoThlrdSector(POs, NGOSoetc.)

s_,ltas_ Tasks thatmqulm voluntBer labor ,

'

Tasks thatgenerate lit'deprofit

PromoilOctoflndMdualresponsiblllty

Pmmolicmof_'ommunlly pfomo,.,o_o,_...m,_.,tto wa,ar_ofott_rs ",....

,,..,

rn'ra II

E E

I I

| D i D _"

E E E E I

I D I i I=..

E I D I 1= = E i | D II

I

E

I |

I

E ,

D I m.

I

Proli]genemtion

I I _" i I _,,.

_4

(Next issue: On agriculture, agrarian reform and naturalresources, andon health, labor and education.)

Timks B_t Sult_l to Eaoh S_.tor (E ,,,elfe©tlve;I. Ineffe_]vo;D - dependoon context)

Institutional changesare therefore targeted to preserve, choose or enhance capabilities of government in doing the right thing at the right time in

Streamlining redefines scope and focus; redirects work effort to essential tasks and points of strategic intervention, simplifies operational

DTI, is guided by three concepts: focus,

effectiveness of government's performance."

ample, augmentation funds toshould LGUs provide for the devolved personnel. However, there wereclarifications regarding (1) it is not the LGUs; and (2) Allotment given

is the

ThestructureproposedbyDrs. Salazar and Patalinghug, specially for

o o O I O -, o -...

E

D I

i s i E I E D E I E L .. _,J

I I I |

DEVELOPMENTRESEARCHNEWS

13

July-August 1994

TheValueof InFormation... fToe,P,_mr7

global competitiveness under the MTPDP, macroeconomicindicatorsare set based on three factors: (1) the aspirations for the medium term as enunciated by the President; (2) the resources available; and (3) the programs and projects envisioned by the people, The set6ng of targets is an iterarive and dynamic process which starts with quantifying the economic objectives such as the attainment of per capita income of at least $1,000 and the reduction of poverty to only 30 percent by 1998.

Growth

targets are derived

The setting of targets is only the initial stage. Using a bottom-up and top-downplanningapproach, thegovernment seeks inputs for plan formulation from various sectors through consultations and other fora. Agencies are also instructed to draft their own plans andinvestmentprograms.These documents are then consolidated into a single draft. Thereafter, severalmore revisions are done based on new inputs and recommendations,

Thus far, the biggest obstacle to government's initiatives is generating support to open the economy toward global competitiveness.

Some sectors, fearing foreign competition, have disapproved of government's moves to liberalize trade and investment. The country's apparent unpreparedness to adopt critical reforms is largely rooted in the misbelief that the only way to grow is by closing the economy and sheltering domestic firms from competition. Ironically, the "battle" for such reforms are fought in the newspapers and not in the proper venue where a rational solution would have been

CONCERTED EFFORTSNOW

arrived at much easier.

ing a macroeconomic model and then submitted to concerned agencies for validation or revision. While growth of the economy is the overriding con* sideration, stabilization is ensured as well.Hence ,insettingmacroeconomic targets, it is agreed that (1) inflation

A successful implementation of the MTPDP will depend on the consistency of its policies, programs, and activities. There are at least two broad measures that are essential in administering the plan: the "facilitating" role

In the light of these difficulties, the government looks to mass media as a potent partner in marshaling support for development goals, as well as in cultivating desired attitudes and practices through responsible handling of information.Thesetaskstakemorethan

rate will not exceed single-digit levels; (2) consolidated public sector deficit to GNP ratio will be decreasing and set at less than 3 percent of the GNP; and (3) external account will not reflect an

of the government (as distinguished from "regulating" role) and private sector investment and participation to intensify revenue-generation and economic activities.

How the Regions

services be.

_o_ Page 5

Fare

us-

unsustainablecurrentaccountgapand a very high financing gap.

"'"

.........

one indicator. Richer regions such as the NCR have lesser children weighing below 90 percent of the normal weight, Residents in urban areas, too, seek more medical attention than do their rural counterparts. It isin regions ith large rural areas where most vernment midwives rather than doctors predominate. On the other hand, more expectant mothers in the urban areas prefer to seek doctors' ill

.11

.

i

than do the rural mothers-to-

just reporting the news.These entailan appreciation of the issues and holding fast to what we believe is good for the Filipinos as a nation. OSalcedo b'_

Amonggraduates, theinequality across income groups is equally apparent. Only 2.9 percent of high Enrollment rates also show school graduates and 0.7 percent of disparity across regions. The variance college graduates come from the is most glaring at the secondary and poorest 10 percent. In contrast, 20.4 tertiary levels. In 1987, for instance, percentand36.8percentofhighschool the rate for the high school level ranged and college graduates, respectively, from 47.7 percent (Region IX) to 102.8 come from the top 10 percent of the percent I (NCR). At the college level, income class. The implication of such the range was wider, from 14.3 percent figures dawns when one remembers, for Region IV to 97.2 percent for NCR. and as studies have proven, that it is thebettereducated, well-paidworkers who have better nutrition and access ITheenrollmentfiguresincluderepeatersto health facilities. sothat the figure of 100 percent does not imply thatallschool-agechildrenareactuallyenrolled. _ Page 16 ................

DEVELOPMENTRESEARCHNEWS

14

July-August1994

i • Improving

the Lines

largely depends together,

'

on how people

work

FromP,_ a ..........

Hollie said that the concept of press freedom originated from the United States as a basic right to guaranteeanopportunityforallpeople to be heard. Consequently, the press became adversary to those restrictions whichkeptindividualsinacivilsociety from expressing their opinions. This western framework of the freedomof the press is based on ultimate freedom that guarantees the protection and expression of an individual's rights. In developing countries, meanwhile, the approach is communitarian where individuals are part of a community and the survival of that community

Foreign press also ignores' development news because of the element of distance. As one gets farther

In the Philippines, a problem arises when the individualistic appreach to press freedom which is largely couched on Western ideas overshadowsthecommunitarianneeds

from the community, the less likely one talks about what is important to that community.

of an Asian society, Communitarianism does not translate in the foreign press. Judging from a broad experience in the Washington Post and the New York Times, Holliesaidthattheforeignpress normally writes about development in "apure, free-standingway--something governments do: either they develop, theydon'tdevelop, or theyhave trouble developing,"butit"does not quite grasp how the elements of society pull together to create development."

basically two things that concern the pressin the Philippines today: quality of information and access to sources of information.

It is not a question of goodorbadnews;itisratheraquestion of getting the right information understood by everyone.

Hollie

believes

that

there

are

Hence, it is important that the press and the government have good relations, especially in countries where development is a goal that is attainable only if people work together. OSalcedo E1

SUGGESTIONS/ACTION PLAN A.

for GOVERNMENT

PROBLEMS/BOTTLENECKS

e Review media policies/regulations and the government information system/structure

A.

• institutionalize the policy of transparency/openness . set up a communication management information system . set up a mechanism for having responsible spokespersons, other than Secretaries/ Undersecretaries •Support the passage of the Tatad Bill on Professionalizing Government Information Officers (GIOs)

of MEDIA

vis-a-vis government

o • • • •

Accessibility to information Accuracy and quality of information Credibility of source Timeliness/immediacy of information Availability of communication facilities/amenities (room, fax, telephone, computer) • Openness/transparency oWorking relationship (i.e., favoritism, poor coordination/communication gap) B.

of GOVERNMENT

B.

• Sustain a Professionalization Program for GIOs and media via trainings, seminars, educational programs in foreign/local institutions •Conduct regular orientation programs on emerging development issues •Strengthen the enforcement of sanctions on erring media as well as recognition of outstanding media practitioners •Hold continuous dialogues between GIOs and media that include heads of government/agencies and the media gatekeepers, i.e., editors .and publishers

vis-a-vis media

• Inaccurate reporting • Some unethical practices of some media in getting information • Misleading reportage • Biased coverage, i.e., selective • "Bandwagon" attitude/"pack" journalism • Sensationalism • Envelopmental journalism r_

for MEDIA

tiI

•

c

_1 Ir_ i!

i

i_i nri

DEVELOPMENTRESEARCHNEWI

, ;.........

15

July-Aulust 1994

II............

, .................

I II 11 I Tab_. 1 rils_ribution of Government F.xpendlture In Soolal 8ervioee, 0ebt 8ervioe end Defense, 1970-1992 . :. ' Total Social Debt Government Services Education Health Service Defense Year Expenditures" Share_ Shard" Shareb Shareb Shareb (%) (%) (%) (%) (%) (%) 1970 1080 1985 1086 1987 1088 1989 1990 1901 1092

9.7 15.6 13.4 la.a 23,1 21,1 10,0 21.2 20,7

34.8 20.8 19,8 18.3 17.7 18.5 19.1 19.2 17.6, 20,6

28.0 10.7 14.0 13.0 11.0 13.1 13.5 13.1 11.4 12.2

5.6 3.7 4.1 3.1 2.6 3.3 3.9 3.1 3.1 3.0

6.0 9.4 24.5 24.5 45.1 42.5 41.2 41.6 41.1 36,4

15.2 15_1 13.1 10.1 8,1 10.0 9.8 8.9 8.5 8.0

"Asa percentageof GNP. hasa percentageof totalgovernmentexpenditures, Source:Table20 of the PhilippineHumanDevelopmentReport,1994,p. 56.

[r_ p,_, 4

....

Initially, POs and NGOs have been concerned with stressing their autonomy and differentiating their activities from those of the government.

Lobbyingandprotest, though negative, have been their most visible forms of "participation."

The many alternative programs they have implemented remain limited in scope and will ultimatelybeunsustainableunlesssupported by larger policy changes. The efforts of POs and

efforts,

NGOs must be .supported by government, ei ........... ther because the latter has become responsive enough to desire cooperation, or because the fomler have won a meas-

".iF.iO_2.: ' Incomeln_qutl_ly

ure of

political

cation will take care of themselves.

The inequality in human development has a distinctly geographical dimension, even more than what is manifestedbasedongender.TheSouth, especially Regions IX, X, XI, and XII, has been historically underserved by government, and this shows in the statistics. These regions can be ranked among those with low levels of human

Several observations can be drawn: First, it is important to resume growthinincome.Butthisgrowflamust be of a different kind, one whose benefitsaremoreequitablydistributed across various sectors and regions of the country.

Second, the extreme

' '

5z_

development Basically,

......... s,.t

however,

little

change unless policies change; and for this to occur, the countTy's politics must change toward more participation, in-

5_.8

14.3 14.3

Poorest 40 %

Service through Research Support Philippines 2000

Riche;t20 %

[II 1985131988[] 1991I

_ i1,

Source:Flgure 7 of p. 31 i

will

volving especially the marginalized sectors in making decisions that affect them. b'7"al

o

politics with extra_,.,,r,,,r.amen,a,_ ac_t;

evenly

GROWI'H FORALL

lo

Wer.Hence, tile portance for s and NGOs to combine electoral

•

improving income is achieved, some of the problems in heal th and edu-

pate in and benefit from distributed rapid growth.

6o ;o F _ ,Io _ 3o _ 2o ___

inequality in income. To some extent, this means that if the goal of

Notall problemsin human development may be solved by attaining rapid economic growth.

Many marginal sectors will remain too ill-equipped -in terms of education, skills, social and economic infrastructure - to partici-

tivities and program implementation cannot be over-emphasized.

Ill a sum, what the present period calls for is a "mainstreaming" of all development

In Search of Development ...

disparity in access to education, health, and nutrition is primarily related to the

i

the Phtllpplne Human Development

|

i

Report. 1994,

i

ii

q

ii