Bernardo M. Villegas
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A Boon to Good Governance

           The creation of institutions is one way to guarantee that the present rating of the Philippines as investment grade will be sustained beyond the present political leadership.  For example, having a completely independent and professional Central Bank, as we already have, will assure macroeconomic stability and a well run banking system, whoever is elected President in 2016.  Among the other institutions that have been recently established in which I am pinning a great deal of hope is the Arangkada Philippines Forum that is an initiative of the foreign chambers of commerce in the Philippines.  Thanks to the leadership of the American Chamber of Commerce, the various foreign chambers of commerce have established a very effective feedback mechanism that assesses the efficiency and effectiveness of various government agencies in delivering on their goals and targets.  Arangkada Philippines was first published and released to the press in December 2010 at the Department of Trade and Industry with DTI Secretary Gregory Domingo, Board of Investments Managing Head Cristino Panlilio, and Philippine Economic Zone Authority Director-General Lilia de Lima.  The 40-page document contained 471 recommendations meant to make the Philippines an attractive site for investments.  Soon it became available digitally on www.arangkadaphilippines.com.  It could be used by the entire public to monitor the successes and failures of the key government agencies directly charged with sustainable and inclusive economic development.

          Thanks to the perseverance of the leaders of the various foreign chambers, Arangkada Philippines became a veritable "to do" checklist for key departments of the government and a periodic monitoring device of the performances of these agencies on which the public and private sectors could agree.  On January 26, 2012, Arangkada held its First Anniversary Forum and released the First Anniversary Assessment, which evaluated progress in completing all 471 recommendations in the 2010 document.  The advocacy coordinated some 40 experts--senior consultants, former public officials, business executives, and academics--who rated 462 of the 471 recommendations based on the six-star rating system. Then last February 26, 2013, the Second Anniversary Assessment was held at the Makati Shangri-La at which the accomplishments and failures in 2012 were evaluated.  The process of institutionalization is well on its way.  Foreign chambers are here to stay and future Governments should expect to be evaluated in a similar fashion.  Recommendation 1 in 2012, for example,  read as follows:  "Double the GDP growth rate to 9% by a clear long-term industry policy."  The Government got kudos from Arangkada for a reasonably good performance.   Such "substantial progress" elicited the following comments:  "The growth of the Philippine economy at 6.6% surpassed expectations, following 7.6% in 2012 and 3.9% in 2011.  Growth in 2012 came in spite of global economic weakness and was the highest of the large ASEAN economies."

          In contrast, Arangkada minced no words in criticizing the lackluster performance under Recommendation 3, which was that FDI should be targeted to reach over $US 7 billion a year in three to four years:  "Net FDI remained below $2 billion per annum in 2012, as the Philippines continued to receive much lower inflows than Indonesia, Malaysia, Singapore, Thailand and Vietnam in the ASEAN group."  There was, however, a positive twist to the report when Arangkada recognized a possible problem with data reporting:  "With much higher approval levels for the country's 12 Investment Promotion Agencies (IPAs), according to Board of Investments (BOI) data, there appears to be more FDI than measured by the Bangko Sentral ng Pilipinas (BSP), the Philippine Central Bank. By contrast, the Philippine Stock Exchange (PSE) caught fire in 2012 rising 44.5% since the beginning of 2012 on the strength of foreign fund managers growing optimism for the Philippine economic growth story, including steady upgrades by rating agencies, but adding to peso appreciation.  Almost $4 billion net foreign portfolio investment flowed in during 2012."  This assessment is an example of the balanced views that a non-political group can contribute to the monitoring process, as distinguished from the usually self-serving praises from government officials or hypercritical opinions expressed by the opposition or militant groups that always focus on the half-empty glass.

          The Arangkada evaluation goes beyond constructive criticism.  It also comes out with practical solutions to perceived problems.  For example, the comments concerning Recommendation 5 (Adequate funds should be made available for international promotion), do get down to brass tacks:  "Aggressive overseas promotion remains weak.  There is nothing comparable for the Philippines to the slick CNN ads of Indonesia's IPA.  The Department of Tourism (DOT) launched its 'More Fun in the Philippines' campaign, but its National Tourism Development Plan has not been released over 12 months after final draft.  Overseas investment missions focus on Japan, which has a strong presence in manufacturing.  Inbound business missions doubled in 2012 to 25 from 12.  The PPP Center promoted the LRT-2 South Extension project in Northeast Asia and Europe.....The Administration has engaged a major international public relations firm but with a small budget."

            The Second Anniversary Assessment has 243 pages of detailed evaluation of the pluses and minuses in such key result areas as agribusiness, infrastructure, logistic, tourism, IT and business process outsourcing, business costs, labor, legislation, etc.  Hundreds of thought leaders from the academe, business sector, NGOs, Church officials, public officials from the various levels of government and international agencies were involved in the feedback and evaluation process.  This cycle will be repeated year in and year out and will put a very healthy pressure on government officials to deliver on their promises and to be especially careful in avoiding lapses in good governance.  Thanks to the Arangkada, the national leaders who will be elected in 2016 will have less leeway to be corrupt and inefficient.  For this reason, not only should all men and women of good will contribute whatever they can to perfect the Arangkada process through the years.  Other groups doing  similar works of evaluation, such as the Makati Business Club, Institute for Solidarity Asia, the Global Competitiveness Council, local versions of the Transparency International, the Management Association of the Philippines, etc.  should target specific government agencies, such as Customs, for very close monitoring.  For comments, my email address is bernardo.villegas@uap.asia.