Countries and Regions

	Table of Contents
p. 5 of 20 BACK | NEXT I. Country Performance Assessment A. Economic Performance Assessment B. Poverty Assessment C. Assessment of Socio-Environmental Performance D. Governance: Sound Development Management E. Implementation Assessment II. Country Operational Strategy III. Sector Strategies IV. Subregional Economic Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - Philippines : I. Country Performance Assessment

---

D. Governance: Sound Development Management

15. Governance, particularly corruption in public functioning, is still a major concern. The major governance issues in the Philippines are:

1. tackling corruption;
2. improving efficiency, transparency and accountability in public sector functioning;
3. strengthening the decentralization and devolution process;
4. enhanced participation of civil society in policy making and public investment decisions; and
5. improvement of peace and development, especially in the Southern Philippines.

The Government has recently adopted a comprehensive approach towards improving governance as described in the Ten Point Jump Start Anticorruption Program. The Program addresses major concerns including economic governance, political governance, and administrative governance. Economic governance will encompass better economic management, speedier privatization, and better regulation. Political governance will comprise furthering the devolution process, introducing greater transparency and consistency in government decision-making and eliminating graft and corruption. Better administrative governance will be attained through:

• re-engineering and streamlining the bureaucracy;
• enhancing public service for better public satisfaction;
• establishing performance indicators and benchmark standards to judge efficiency of government performance;
• expanding use of information and communication technology; and
• sustaining an ethical bureaucracy.

Targets have, however, not been set, which could be construed as a weakness in the strategy.

16. The Government considers corruption a major concern, a factor which has prompted it to emphasize good governance as an important pillar on which it rests its development efforts. Efforts to eradicate corruption from the public sector focus on the effective implementation of existing initiatives and pursuit of reforms towards reducing opportunities for corruption. These efforts include:

1. deregulating and privatizing public functions;
2. increasing transparency and public oversight of Government and public sector functioning;
3. pursuing vigorously efforts to root out corruption from those agencies and public processes such as procurement where they mainly exist, through improved audit and other special measures;
4. enabling better judicial functioning and equitable access to the legal system; and
5. reforming agencies which have particularly high interaction with the public such as the police.

17. Public sector functioning can be improved through measures such as simplification of procedures, adoption of strategic planning and performance-based management systems, civil service reform, and deregulation and privatization. The Philippines has made considerable progress in privatization. Apart from telecommunications, electricity distribution and water supply in Metro Manila have been privatized. The Government has embarked on a restructuring program in several other areas such as the NFA, power generation, and railways. Improved public regulation must, however, keep pace with privatization. Transparency and accountability will continue to improve with progress in the functioning of institutions such as the Commission on Audit (COA) and the Ombudsman.

18. Although considerable progress in devolution has been made since the 1991 Local Government Code, the process is incomplete and problems have surfaced. These relate to inconsistencies in pay structures between local government personnel and devolved staffs, lack of institutional and financial capacities of local government units (LGUs), complaints about inadequate revenue allotments from the national Government, and overlap in the functions of the different levels of local government. There is also a major problem in the smooth transfer of funds, including donor assistance, from the national to local government levels (see also para. 25 below).

19. The Government has initiated frequent consultations with the private sector on issues relating to economic policy and private sector participation through mechanisms such as the joint public-private business councils. The public sector is increasingly opening itself up to participation by civil society groups such as the non-government organizations (NGOs) and people's organizations (POs). Most major Government programs are now developed with the participation of NGOs and POs.

20. The Government had embarked on a major peace and development initiative in the Southern Philippines following the peace settlement with the Moro National Liberation Front (MNLF). However, the peace and development process is yet to gather momentum and has again run into serious difficulties in recent months with the renewed conflict in Mindanao. Poor capacities amongst LGU staff in general, the multiplicity of government institutions and the lack of transparency and accountability in the management of public funds, all contribute to a loss of government resources. These are compounded by overlapping functions of such institutions and the low qualification levels of such staff. Amidst these challenges, renewed efforts towards relief and rehabilitation are being undertaken, under a more comprehensive development framework for Mindanao.

21. Recently, the Philippines has been named by the G-7’s Financial Action Task Force (FATF) as one of 15 countries and territories in the world that remain non-cooperative in the fight against money laundering. This is primarily caused by continuation of Philippine deposit secrecy laws that prevent even the central bank from effectively supervising the sector.

Back C. Assessment of Socio-Environmental Performance	Next E. Implementation Assessment