1、Regulatory Governance in the Philippines Lessons for Policy and Institutional Reform1Ledivina V. Cario2The Philippines was one of the first developing countries to liberalize its economy, as part of the structural adjustment loan packages it accepted in the 1980s to avert economic collapse. Thus ent
2、ering neo-liberalism under the gun, as it were, it has put a complex framework in place. In the midst of the first moves towards trade liberalization and privatization, it drafted a constitution that continued the nationalistic philosophy of all previous basic laws, reserving to Filipinos vital area
3、s of the economy and shielding them from the onslaught of the emerging globalization. It continues to have debates on basic questions about the economic framework. Issues deemed resolved may be resurrected with a new Supreme Court decision, a new legislative proposal, a new decision by a regulator,
4、a new move to privatize or create a new regulator. In this situation, any institutionalization is difficult and regulatory governance is a critical problem. Though classified as a middle-income country, the Philippines is still grappling with unconscionable poverty and inequality. Fully one-third of
5、 the population fell under the official poverty line in 2000 (PIDS). There is great inequality in income with the highest quintile having 36.6 percent share of the income in 1997, while the lowest quintile only had 2.28 percent. (ADB 2001) Even poverty is unequally distributed. Only 8.7 percent of t
6、he National Capital Region population is poor, compared to 55.4 percent in Bicol and 62.8 percent in the Autonomous Region of Muslim Mindanao. While NCR had improved considerably from its 1985 poverty condition (23.0 %), Bicol had improved much less (from 60.5% in 1985) and ARMM had actually worsene
7、d in the 15 years under democratic regimes (46.8% in ARMM). Clearly the production and dispersal of economic benefits should remain top priority. Yet, there are some aspects of governance where the Philippines can claim some degree of advancement. From the decentralization movement of the 1960s that
8、 was stifled by the martial law of the 1970s and early 1980s, the country took the plunge towards stronger decentralization at the turn of the 1990s, earlier than most other developing countries. It has a multitude of citizen groups involved in local and national affairs despite the repression of th
9、e 1970s, and their commitment burst into full flower in the People Power Revolution of 1986. Besides, the Philippines is home to the first public administration college in Asia. The National College of Public Administration and Governance, University of the Philippines has pledged to improve all asp
10、ects of governance since it opened in 1952. Unwilling to be fenced into the study of the civil service alone, its courses have always been full of “the politics and administration of” this program, and “the formulation and implementation” of that policy. It has also regarded the discipline as 1Paper
11、 presented at the International Workshop of the Centre for Regulation and Competition, University of Manchester, UK, June 22-24, 2005. Revised draft as of 6/19/05. 2University Professor of Public Administration, National College of Public Administration and Governance, University of the Philippines,
12、 and project head, CRC Regulatory Governance Research, Center for Policy and Executive Development, NCPAG-UP. 2“governance for the public interest,” a definition that has two implications vital to this study. The first is the inclusion of all institutions which purport to deliver public service, exp
13、anding its confines to civil society and private firms participating in governance. The second means that the impact of public services on the poor plays a great role in it. However, NCPAG had paid more attention to delivery of services, and had largely left regulation to lawyers and economists. On
14、a darker side, Philippine corruption may be at lower depths than when the College pioneered in the study of negative bureaucratic behavior in Asia in 1975. It was not called regulatory capture then, but the research brought to light the pernicious partnership of the regulator and the regulated, igno
15、ring the public interest. Given this background, it was thus exciting for us when the UP-NCPAG Center for Policy and Executive Development (CPED) joined the UM-IDPM Centre for Regulation and Competition in a partnership for research in regulation, competition and regulatory governance. This could fi
16、ll a gap in our body of research while being able to contribute to an international research agenda. From the array of issues for research, we at CPED chose topics to which we could contribute lessons for policy and institutional reform, whether as role models, or even as negative examples, and ofte
17、n, as both, in varying degrees. We thought that because of the Philippines early entry into neo-liberalism, privatization and globalization, we could provide cautionary tales as well as ways forward. We also recognized that since as country and college we have some degree of advancement in decentral
18、ization and civil society participation, we could infuse those research fields with the critical questions of regulatory governance. What we wanted to learn about Philippine regulatory governance cut a wide swath, and we had to tame our appetites to bite only those that were most urgent to our count
19、ry, chewable in terms of our inclinations and competencies, and productive of further studies, so that this could begin a long-term commitment to examine regulation and competition and assess how regulatory governance has proceeded in the Philippines. The CPED-NCPAG CRC program consists of nine sepa
20、rate research projects. It was guided by the CRCs fundamental idea that “improved policies and institutions of regulation and competition will contribute to achieving more efficient markets and better development” (CRC 2004: 5). Development is broadly defined to encompass economic growth, poverty re
21、duction and improved quality of life. The research was also cognizant of the environment of the governance and policy issue, and attempted to include, whenever possible, not only factors in the economy but also in politics, social structure, culture, history, and international commitments and pressu
22、res. The program included the following subprojects: 1. A general overview setting out the philosophies underlying regulation and the legal and institutional framework, including issues raised by the dual philosophy and multiplicity of modes of regulatory governance (Cario 2004) 2. Two studies on th
23、e electric power industry. The first examined one hundred years of regulation of the Philippine electricity industry, why and how regulation has changed over that period, and the implications of these changes on the public interest and governance (Mendoza 2003). The 3second is an analysis of the pol
24、itical, legal and public management issues surrounding the reform of the power sector (Baylon 2005). 3. Two studies on the reform of other utilities. The first focuses on water regulation after the then-biggest water services privatization in the world, the political and legal issues surrounding the
25、 concession agreements received by the two winning private firms, the weak regulatory framework and the effects of these on the access of poor communities to affordable safe water (Cuaresma 2003, 2005). The second studies universal access policies on information and communication technologies (ICT)
26、following the deregulation of the telecommunications industry (Alampay 2005). 4. An analysis of the performance of the agency both developing and regulating Philippine ports (Basilio 2005)35. A case study of regulatory capture that extends beyond the Philippines and involves top officials of two cou
27、ntries and several government agencies and private sector firms (Briones and Gamboa 2005). 6. A study of local regulatory governance following devolution, tracing changes made by local officials to regulate and promote economic development and business in their jurisdictions (Legaspi 2005). 7. A stu
28、dy of ethical trading and other regulatory mechanisms implemented by the private sector and civil society as alternative or complement to state regulation (Cario and Heeks 2004). The research program of the Center for Regulation and Competition (CRC) rests on three main pillars: analyses of the poli
29、cy framework that conditions and produces economic reforms; the effectiveness of policy response, which examines the ways in which regulation and competition policies have developed, and their defects; and finally policy performance, which involves the examination of structures and processes of impl
30、ementation, policy delivery and policy outcomes. The CPED program was classified under the CRC Theme “Institutional Change in Regulatory Governance.” As such, it is expected to contribute primarily to the third pillar. However, since some of our studies touch on the first two pillars also, this synt
31、hesis paper takes a more comprehensive approach, as illustrated in the following diagram: FRAMEWORK guides RESPONSE -leads to PERFORMANCE The overall Policy Framework sets the goals of regulation. These are operationalized in the Policy Response and Performance specific to the sector or case studied
32、. These two pillars are analyzed in terms of policy theory or implementation success/failure. The first covers whether or not the policy as enunciated can substantively lead to the desired outcomes and impact (theory failure or success). The second is the area of regulatory governance. It assesses i
33、f the implementation of a policy (theoretically vigorous or not) can and would lead to desired outcomes (implementation failure or success). These would suggest the policy recommendations to be made, i.e., if the policy should be reformulated, or if aspects of regulatory governance must be reformed.
34、 3In a narrow sense, the study of the Philippine Ports Authority is not part of the CPED project. It came to our attention only when it was submitted to the international conference NCPAG-UP and CRC held in Manila in 2003. We have since incorporated it into our purview as it complements our team eff
35、orts in terms of sector, regulatory mode, and constraints on performance. 4This paper attempts a synthesis of the projects CPED undertook under the CRC research program. As such, it is limited to the industries and mechanisms the CPED team intensively studied and cannot claim to be a comprehensive s
36、tudy even just of the Philippine situation. The main sources of information are the findings of the projects as well as available literature relevant to the selected industries. Nevertheless, it provides insights into a wide array of regulatory modes. As such, we hope it can be regarded as a good so
37、urce of lessons for later policy and institutional reform. The Policy Framework The Philippines, like other developing countries, is reforming its regulatory scheme under the dual philosophy of nationalism and liberalization. These are meant to be complementary goals but may conflict in certain case
38、s. The nationalistic philosophy comes out of oppressive colonial experiences and the desire of Filipinos to be masters of their own country. This may lead to higher standards for goods carrying the Philippine name, give priority to issues that address Philippine needs or uphold protectionism, anathe
39、ma to the efficiency of markets. Two cases illustrate the complexity of the policy framework. In a cement importation controversy, two Philippine regulators invoked nationalism, one in seeking a provisional tariff as a safeguard measure to protect Filipino producers, the other in branding them a car
40、tel and in insisting on lower-priced imports to protect Filipino consumers. In the Manila Hotel privatization, after losing the bidding, a Filipino company matched the bid of the winning foreign firm and argued successfully before the Supreme Court that the Hotel is a national patrimony that should
41、remain in Filipino hands. Yet the Philippines has also embraced neo-liberalism, is a founding member of WTO, and has enacted as many as twenty laws since the mid-1980s to promote competition and market efficiency. Notably, it repealed the Retail Trade Nationalization Law of 1954, aimed at protecting
42、 small Filipino convenience stores from the incursion of Chinese retailers. “Succumbing to the strong winds of trade liberalization” (Catindig 2001: 2-3), the repeal opened the door not so much to Chinese dreaded in the 1950s (many of whom have since gained Filipino citizenship) but to global compan
43、ies wanting a foothold in Asia. Laws now allow greater foreign participation in all but two dwindling Negative Lists.4Monetary reform has been instituted, air and water transportation opened up, and tariff reformed to reverse the countrys long history of protectionism and import substitution. The el
44、ectric power industry has been restructured, telecommunications deregulated, and water services privatized. Reforms have shifted the locus of regulation from central offices to local governments, civil society and the private sector. Policy Responses In assessing the policy responses, we first ident
45、ified the policy in question and, if possible, determined the reasons for its elements. Then we searched for the theoretical connections between the policy and the desired outcomes. 4List A consists of sectors reserved to Filipinos by the Constitution, and List B, sectors related to security, health
46、 and morals, and protection of local industries. 5Successive Philippine governments enacted laws to enable the country to attain its goals, taking into consideration the opportunities and constraints of globalization and the demands of its Constitutions nationalistic philosophy. These have been brou
47、ght about through four types of laws: Laws to further liberalize the entry of foreign investments and goods into the country,5 Laws to mitigate the effects of globalization,6 Laws to develop specific industrial sectors, and Laws to strengthen the regulation of other sectors, including those that hav
48、e been privatized, deregulated and devolved. Among the industries we studied, perhaps it is the electric power reform that was most explicit and conscious about the relationship of its package to the development of competition. It broke up the industry into four distinct sub-sectors: transmission an
49、d distribution, both of which have the character of public utilities and are natural monopolies; and generation and supply, which are to be open to competition, being “only affected with public interest.” The first two are subject to regulation, while the latter two have been deregulated (Mendoza 2003). However, the law itself seems to have vitiated some of the competitive thrusts of the reform. This appears due to pressures exerted on decision makers during the formulation of the Electric Power Industry Regulation Act (EPIRA). First, international financ
