Bernardo M. Villegas
Articles  >> more topics
Institution Building Is The Key

             A recent poll among business leaders revealed that 52% of the respondents are still bearish about the Philippine business environment, expecting full recovery from the pandemic to take two more years to happen. This goes against expectations of international organizations like the World Bank and the Asian Development Bank that the growth of Philippine GDP will among the highest in the Indo-Pacific region in the next two to three years, together with India and Vietnam.  These institutions expect our GDP to grow at the 6 to 7% growth rate that had systematically been attained during two Administrations (2011 to 2019) just before the pandemic.  Despite very obvious differences between the two former Presidents, i.e., Noynoy Aquino and Rodrigo Duterte, annual GDP growth was sustained at 6 to 7% during the last decade because both of them appointed the best and brightest to key positions in their respective Cabinets.  Since President Marcos Jr. also has some of the most competent, honest and experienced members in his Cabinet, I expect the 6 to 7% growth to be the minimum that our economy will register for the six-year term of the present Administration.  Despite the ongoing global economic crisis, this average growth rate can be attained through the continued large remittances from OFWs, double-digit growth rates of the BPO-IT sector, the strong rebound of domestic tourism and increased Foreign Direct Investments (FDIs) which from day one President Marcos Jr. has been aggressively promoting, thanks to an improved climate fostered by the amendment of the Public Service Act (PSA) that now allows 100%  foreign  ownership of infrastructures in telecom and transport (e.g. airports, seaports, railways, etc.)

            The upside is that our GDP can grow at a faster rate of 8 to 10 % if the present Administration can respond to the 2022 CEO Survey which emphasized the need to take concrete steps against corruption. The respondents to the Survey were disappointed that “anticorruption initiatives were not laid out during the President’s State of the Nation Address.”  The Survey showed that 67% of the respondents believe that the government should give more priority to fighting corruption than to attracting FDIs.  These business executives have been disheartened by what they saw in the last Administration:  undocumented health spending and misallocated  health-care funds and procurement of outdated equipment.  Let me add the relapse to crony capitalism reminiscent of the martial law years.  If these concerns are addressed by the present Administration, the billions of pesos that can be saved from the leakages resulting from corruption can add at least two percentage points to GDP growth.

            The President can learn some lessons from what has occurred in the Bureau of Customs (BoC) over last the few years, even under the less than optimal conditions of the Duterte Administration.  Thanks to the efforts of a private sector initiative led by the Institute for Corporate Directors (ICD) and the Institute for Solidarity Asia (ISA) whose leadership until he was appointed to the present Cabinet was under current DTI Secretary Alfredo Pascual, the BoC—that used to be one the more corrupt institutions in the Philippines—has undergone a transformation in core values such as professionalism, integrity and accountability.  The BoC has been surprising everyone with record increases in its collections.  For example, for the month of August 2022, the BoC surpassed its target collection for the 8th consecutive time during the current year.  It collected 34 % more than its target of P58.8 billion for the month of August 2022.   All of its 17 ports surpassed their respective targets.  This outstanding performance of the BoC, under the leadership of Commissioner Yogi Filemon Ruiz, is attributed to intensified collection efforts, streamlining, digitalizing and modernization of its systems, coupled with the improving revenues resulting in higher volume of imports.  I am sure that Secretary Pascual—with his experience in ICD and ISA—can work closely with the President to replicate this success in good governance in other government agencies. Prospects for higher revenues are also bright in the Bureau of Internal Revenues (BIR) as digitalization-savvy BIR Commissioner, Lilia C. Guillermo, has announced that it is her objective to make a hundred percent of taxpayers electronically filing and paying their taxes.   It may also be pointed out that the ICD and ISA are working closely with Local Government Units—such as La Union, Bataan, Iloilo and a few others—to improve good governance and reduce corruption at the LGU level.  From my own personal experience, I can cite the city of Pasig and the province of Batangas as other examples of good governance.

            The Founder of ICD and ISA is Dr. Jess Estanislao, former Secretary of Finance under the Administration of the late Corazon Aquino.   In his recently published pamphlet, “A Perspective on Dream PH:  Philippines 2040s, Let Us Get There”, he outlined a very comprehensive approach to improving governance at all levels of Philippine society.  He emphasizes that we cannot continue giving the default answer, “let government do it.”  Let the Congress pass a law; let the President and Congress set up new institutions that would address the numerous demands for transparency, accountability, fairness and responsibility in carrying out several government functions, particularly those tainted by graft and other corrupt practices; let us elect a President who could act as a knight in shining armor to banish all evil and all evil doers!

            Indeed, the Government is indispensable.  We can never give up on government.  Its role is irreplaceable in promoting the common good.  It has to set clear strategic priorities for the country and in mobilizing resources to provide critical public facilities and other much needed infrastructures.  The list of essential Government functions is a long one, and there can be no substitute for government.  Jess points out, however, that the Government is not a monolith.  Nor does it function in a vacuum.  Other than the President, the Congress and the Supreme Court, there are many different government agencies and  local government units.  In addition, the Government necessarily has to work with non-governmental players in various sectors of society, and especially the economy, and ultimately with individual private citizens.  There is no way we can attain the good governance needed for socio-economic progress without working with the many instrumentalities of government and the public sector.

            From the positive experiences of ICD and ISA for more than a decade, Jess highlights the critical importance of institution building, the key to long-term sustainable and equitable development.  There has been no lack of formulation of a vision among our leaders and of the setting up of priorities.  The missing link has been the sustained institutional strengthening and transformation program on the part of the many institutions in both the public and private sectors.  This process calls for aligning the institutional transformation roadmap with the country’s strategic priorities and delivering substantive contributions towards meeting those national priorities. More importantly, every institution seeks the transformation of those individuals who work there into their ultimate governance assets, while at the same time attaining higher levels of productivity and efficacy through continuing improvement of both their internal and external value chains.

            As has already happened with the Bureau of Customs with the cooperation of ICD and ISA and much before in the Central Bank of the Philippines, we can say that there are already institutions in both the public and private sectors that have accomplished this transformation process.  They have already proven that within a few years (from three to five years), they had “transformed” themselves from corruption-ridden agencies to some of the most improved in transparency and professionalism.  Jess speaks from experience when he optimistically asserts:  “Transformation:  it can be done, yes, right here in PH. The task ahead is to scale their number up:  their ‘tribe’ must be made to increase, so we reach a critical mass for the institutional strengthening process to become inexorable and irreversible in the Philippines.”  Let us hope and pray that, despite continuing doubts and reservations among those who did not vote for him, President Ferdinand Marcos Jr. will have the resolve and perseverance to follow the advice of Dr. Jesus Estanislao and the people who are behind the Institute for Corporate Directors and Institute for Solidarity Asia.   For comments, my email address is bernardo.villegas@uap.asia.