Philippines: Strengthening Institutions for an Improved Investment Climate

Sovereign Project | 43399-012

Summary

ADB has long supported reforms in the Philippine investment and business climate through knowledge products, TA, policy-based lending, and investment projects. The investment climate was one of four broad policy reform areas covered by the DPSP, which supported the government's efforts to reduce the transaction costs in business regulation and improve infrastructure policy. A TA project attached to subprogram 1 of the DPSP produced options for regulatory review and studies on the farmer to supermarket supply chain, investment incentives, competition policy, and the difficulties experienced by the youth in their transition from school to work, among other analytical reports. The P3F developed under the DPSP specified policy measures for the government to implement in 2009 2011, to sustain the policy dialogue on the investment climate and further advance reforms (Appendix 2).

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Project Name Strengthening Institutions for an Improved Investment Climate
Project Number 43399-012
Country Philippines
Project Status Closed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 7870-PHI: Strengthening Institutions for an Improved Investment Climate
Japan Fund for Poverty Reduction US$ 1.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Partnerships
Private sector development
Sector / Subsector

Industry and trade - Industry and trade sector development

Public sector management - Economic affairs management

Gender Equity and Mainstreaming Effective gender mainstreaming
Description ADB has long supported reforms in the Philippine investment and business climate through knowledge products, TA, policy-based lending, and investment projects. The investment climate was one of four broad policy reform areas covered by the DPSP, which supported the government's efforts to reduce the transaction costs in business regulation and improve infrastructure policy. A TA project attached to subprogram 1 of the DPSP produced options for regulatory review and studies on the farmer to supermarket supply chain, investment incentives, competition policy, and the difficulties experienced by the youth in their transition from school to work, among other analytical reports. The P3F developed under the DPSP specified policy measures for the government to implement in 2009 2011, to sustain the policy dialogue on the investment climate and further advance reforms (Appendix 2). A key P3F policy measure was the development and implementation of a national strategy for regulatory impact assessment (RIA) in government. The RIA is a systematic and transparent process of drafting and reviewing business regulations. The DPSP yielded several key lessons: (i) the investment climate needs to undergo deeper reform, (ii) the investment climate should be viewed more broadly to include an enabling environment where businesses can operate competitively, (iii) the investment climate should also include investment in human capital, and (iv) stakeholders must participate in drawing up programs and monitoring reforms.
Project Rationale and Linkage to Country/Regional Strategy The proposed TA will build on past ADB assistance to the sector and keep up the government's broader reform momentum, to create an enabling environment for businesses to operate competitively, generate employment, and reduce poverty. The TA will provide technical input and assistance in implementing policy measures under the P3F, such as the RIA, and in formulating and implementing related policies prioritized in PDP, 2011 2016 such as the policies for the development of capacity to encourage competition, enforce efficient taxation, create jobs, and develop skills. The proposed TA will also support the National Competitiveness Council (NCC), a public private forum at the Department of Trade and Industry (DTI), in promoting competitiveness. The design of the program is tightly linked to the recommendations in ADB's draft country partnership strategy, which emphasize the need to lower the regulatory costs to business, strengthen competition policy, make tax policy more efficient, generate more employment, and develop skills and research and development.
Impact The impact of the TA will be to support improvements in the business climate so that businesses can operate competitively
Project Outcome
Description of Outcome The outcome will be key policy measures under the P3F of the DPSP and new policy priorities under PDP, 2011 2016.
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

The TA will have three components: (i) competition policy and regulatory efficiency, (ii) policies to lower the transaction costs of doing business, and (iii) employment generation.

The TA will have three components: (i) competition policy and regulatory efficiency, (ii) policies to lower the transaction costs of doing business, and (iii) employment generation.

Status of Implementation Progress (Outputs, Activities, and Issues)

The activities of the TA continued to revolve around the Regulatory Impact Assessment (RIA) of the Department of Labor and Employment (DOLE) and the Department of Tourism (DOT).

1. The RIA review teams in DOLE and DOT continue to prepare the preliminary impact assessments of the pilot regulations. In the updates of the technical working groups (TWG) the following were highlighted:

The DOLE recommended training for the teams particularly in policy in analysis. The TWG recommended conducting training on policy development and analysis; including cost benefit analysis, options analysis, risk analysis and monitoring and evaluation. This will be done in October 2012.

On the part of DOT, there was consensus the TWG to review and finalize the guidelines for RIA such that there is shared understanding of the process and concepts. Likewise, the process should interface with the DOT process of policy development and review.

2. The technical working groups of both DOLE and DOT agreed to conduct the RIA regional advocacy seminars for Northern and Southern Luzon.

As of end of Feb 2013, the DOLE RIA TWG discussed the status of the diagnostics for RIA capacity building of the DOLE agencies. It was agreed that the diagnostics will be completed and the TWG shall identify critical issues that will subjected to RIA. Likewise, the body was briefed on the new technical assistance on employment facilitation for inclusive growth (EFIG) and the plan to establish a center for analytics.

Work acitivites for last quarter of 2013:

Finalization of DOT RIA manual and primer

Revise DOT RIA manual and coordinate additional comments from ADB and DOT.

Coordinate meetings with BLE the meeting with LGUs of My First Job Pilots.

DOT training on cost benefit analysis and organize the training.

Guidelines for the management of the Center for Analytics for Output 1 of EFIG and assist in the formulation of the guidelines.

Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design Economic efficiency will be promoted in two ways. First, the National Economic and Development Authority (NEDA) will be assisted in institutionalizing a regulatory review process in government to improve regulatory transparency, lower the costs to business of complying with regulations, and minimize the anticompetitive effects of proposed regulations on the business community. NEDA will be helped in building public awareness of RIA, achieving consensus among key stakeholders on the key principles of the RIA process, and developing an action plan for regulatory review, including a time frame for establishing an office of better regulatory practice in the national government. Line ministries will carry out pilot RIA programs and undertake RIAs on proposed legislation and regulations, under the TA. NEDA and the DTI will also be assisted in designing a budgetary performance-based incentives program to reduce red tape in national and regional government. Another output of this component will include a survey of 140 enterprises representing the non agriculture sector to estimate the costs to business of complying with regulations.
During Project Implementation This component will support the implementation of activities and reforms to lower the administrative or transaction costs of doing business. This will be done in three ways. First, ADB will work with DTI and the NCC to implement the business licensing simplification program in LGUs. The assistance will extend to advocacy of the reforms and the establishment of a monitoring and evaluation framework to track the reforms. Second, ADB will assist NCC in prioritizing key policy constraints on competitiveness and finding ways of addressing the constraints effectively. Third, assistance will be provided in assessing tax policies that impede or promote skills development and innovation in the economy.
Business Opportunities
Consulting Services Under Component 1 four international consultants will be hired for a total of 14 person-months namely; Competition Policy Expert (2 pms); Competition Policy Economist (2 pms); Strategic Regulatory Expert (5 pms); Regulatory Expert (5 pms). Under Component 2 1 internatinal expert and one national consultant will be hired, 1 pm and 10 pms respectively.Finally under Component 3, four international consultants will be hired for a total of 15 person-months and one national consultant (statistician) for 8 months namely, labor market information systems expert, public employment programs expert, tourism sector expert, business process outsourcing expert, statistician and project management coordinator).
Procurement Under Component 1 four international consultants will be hired for a total of 14 person-months namely; Competition Policy Expert (2 pms); Competition Policy Economist (2 pms); Strategic Regulatory Expert (5 pms); Regulatory Expert (5 pms). Under Component 2 1 internatinal expert and one national consultant will be hired, 1 pm and 10 pms respectively.Finally under Component 3, four international consultants will be hired for a total of 15 person-months and one national consultant (statistician) for 8 months namely, labor market information systems expert, public employment programs expert, tourism sector expert, business process outsourcing expert, statistician and project management coordinator).
Responsible ADB Officer Kelly Bird
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, SERD
Executing Agencies
National Economic & Development Authority7th Floor, NEDA Building
Amber Avenue, Pasig City
Metro Manila, Philippines
Department of Labor and EmploymentMuralla St. cor. Gen. Luna St.Intramuros
1002 Manila, Philippines
Timetable
Concept Clearance 04 May 2010
Fact Finding 05 Feb 2010 to 30 Aug 2010
MRM -
Approval 26 Sep 2011
Last Review Mission -
PDS Creation Date 16 Mar 2010
Last PDS Update 30 Sep 2013

TA 7870-PHI

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
26 Sep 2011 26 Oct 2011 26 Oct 2011 31 Jan 2014 31 May 2015 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
0.00 1,000,000.00 200,000.00 0.00 0.00 0.00 1,200,000.00 26 Sep 2011 925,486.75
Title Document Type Document Date
Strengthening Institutions for an Improved Investment Climate Technical Assistance Reports Sep 2011

Safeguard Documents

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Evaluation Documents

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