NEDA BICOL ON LINE - REGIONAL DEVELOPMENT AGENDA - TECHNICAL NOTE (Promoting Global Competitiveness)

   The Philippines dropped from 40th place to 43rd in the 2009 World Competitiveness Yearbook released by the International Institute for Management Development (IMD). The yearbook uses criteria classified into four categories: economic performance, government efficiency, business efficiency and infrastructure. Another report prepared by the World Economic Forum showed that the Philippines dropped from 71st to 87th place in global competitiveness index. The Global Competitiveness Report 2009-2010 cited corruption as the biggest problem for the Philippines, followed by an inefficient bureaucracy, inadequate infrastructure, policy instability, access to financing and tax regulation.

   The Philippines ranked low in government and business efficiency, traced to corruption, inability to adopt and optimize the use of technology, and weak local government units (LGUs). It was also attributed to low productivity and poor compliance with local international standards. The country also scored very low in international investments, public finance, business legislation, infrastructure and education.

   Doing business in the region is costly due to cumbersome regulatory systems and inadequate infrastructure facilities. Manufacturing firms are discouraged by the high power cost in the region. Supply of electricity is unreliable, with unannounced and unscheduled brownouts experienced throughout the region. Transportation facilities in the region remain inadequate. Communication facilities are concentrated in urban areas.

   Business is also saddled with the cost of insurgency. Cell site towers have been bombed by the New People’s Army (NPA) because of the refusal of cellular companies to pay revolutionary tax. Telephone companies incur losses due to cable wire theft. A mini hydro electric power plant being constructed by a private company in Catanduanes was raided by NPA rebels forcing the workers to stop construction work.

   LGU income generating capability is also low. Most LGUs in the region depend heavily on the Internal Revenue Allotment to finance their projects. These municipalities cannot undertake development projects to attract investments.

   Labor productivity in the region is also the lowest in Luzon. Agricultural productivity is low and is attributed to lack of farm-to-market roads, inefficient marketing system, difficulty in accessing credit, and frequency of typhoons.

   Funding for product research and development is not sufficient. Moreover, results are not effectively disseminated, transferred, and utilized. Mineral resources abound in the region, but the mining industry is constrained by anti-mining groups. The region has rich fishing grounds, but fish processing industries remain small scale. Micro, small, and medium enterprises comprise more than 99 percent of the region’s business establishments. Most of them do not have access to financing.



   The Regional Development Council has undertaken steps to enhance the region’s competitiveness. It created the Regional Investment Promotion Committee to promote local and foreign investments in the region. The RDC also reactivated the Regional Productivity Committee to increase productivity levels in the region. The RPC organized the Philippine Quality and Productivity Movement Bicol chapter. It is a multi-sectoral organization whose mission is to advocate quality and productivity among regional stakeholders for economic development. The RDC also strengthened the Bicol Project Development Committee to assist LGUs in preparing project proposals and feasibility studies for submission to funding donors. Since most of the LGUs depend heavily on their IRA share to finance local projects, the BPDC aims to improve their capability to source funds for their projects.

Desired Situation

   As a key development goal, the country aims to improve its world competitiveness ranking. Being one of the least affected countries in Southeast Asia by the global economic slowdown, the country must be ready for the economic rebound in 2010. Bicol region aims to be globally competitive. Specifically, the following scenario is envisioned:

   All LGUs have internet access and maintain their own interactive website. Bicol products are advertised and sold online. Tourist destinations are being featured in international cable TV programs and published online and in international print media.

   Management procedures in the public and private sectors conform to global standards. All government procedures are reasonable, efficient, and transparent.

   Each LGU has an investment promotion center. Business and investment procedures are simplified to reduce the cost of doing business. All LGUs are investor friendly.

   Infrastructure facilities throughout the region are adequate. Inter-modal and multi-modal transport systems are efficient. Web-based communication facilities are available in every LGU.

   Product research and development activities are conducted. Each state university and college specializes in a specific R&D area. The results of R&D activities are widely disseminated and utilized. New products that are distinctly Bicol and can compete in the global market are developed on a continuing basis. World class productivity improvement technologies in agriculture, industry, and services are adopted.

Strategic Interventions

Government agencies shall complete the rationalization program to streamline and improve the bureaucracy. Local government units shall implement programs to achieve world class performance. To ensure transparency of transactions, the e-governance program shall be institutionalized in government offices handling business related processes. All government agencies, LGUs, credit and financial institutions, private sector organizations, and civil society groups shall develop and maintain interactive websites. Improving the flow of business transactions is one way of reducing the cost of doing business in the region.

Corruption in the public and private sectors shall be eliminated. This shall be done through an active collaboration among the government, civil society and business groups. Anti red tape measures shall be strictly enforced. Anti-corruption measures shall be strictly enforced. Automated procurement and customs procedures shall be developed and adopted. The cost of insurgency, which has become an additional burden to investors and business groups in the region, shall be eliminated. All security agencies in the region shall ensure that infrastructure facilities are spared from the threat of insurgents and bandits.

Establishing business procedures shall be transparent, simplified and streamlined. This shall be done by ensuring consistency of business regulations between the national and local government levels. These procedures shall be posted on the web. The ongoing efforts of the National Economic Research and Business Assistance Center shall be sustained. Each LGU shall establish an investment promotion center. Incentive packages shall be harmonized and procedures for application for incentives shall be streamlined. The use of information technology and automated processes in business permits and licensing, real property tax assessment, treasury operations, and help-desk services shall be maximized. A strong legal framework for the protection of intellectual property shall be advocated.

The RDC shall sustain the activities of the RIPC, RPC, and BPDC to promote investments, quality and productivity, and project development capability of all LGUs. In the private sector, the bayanihan for productivity program or the Big Brother Small Brother Program shall be institutionalized.

Both government and private institutions shall aim for international standards certification. To provide a mechanism for sharing of management expertise between the public and private sector, a system of cross-posting between senior public and private sector officials shall be developed and institutionalized.

A modern and efficient infrastructure network shall improve the productivity and competitiveness of the agriculture, fishery, trade, tourism and other industrial and service sectors. High impact infrastructure projects that enhance the region’s competitiveness shall be prioritized. These projects include the Bicol International Airport, diversion roads, toll highways, bus rapid transit systems, high speed trains, and world-class RORO port facilities. The open sky policy and the ship building industry shall be promoted. Other infrastructure projects in support of agriculture, fishery, manufacturing and tourism shall also be implemented. These include access roads and bridges, irrigation, drainage and water supply systems, and post harvest facilities.

The digital infrastructure network shall be expanded to cover all LGUs. Internet facilities shall be established in all LGUs. To maximize the coverage of cellular phone services, cell sites of different providers shall be integrated. Security for these communication facilities shall be provided. Value added services of telecommunication companies shall be provided to all LGUs.

A continuous supply of electricity shall be ensured. Renewable sources of energy shall be developed to achieve energy independence. This green growth strategy will enhance the competitiveness of the region and will ensure sustainable development. Power rates shall be reduced by improving the efficiency of the energy sector.

The Bicol International Airport will be completed before 2020 to open the region to international tourists and investors. Procedures for the entry and exit of investors shall be simplified. This shall be done in coordination with the Bureau of Immigration and the regional chapter of the Philippine Chamber of Commerce and Industry. Procedures for the entry and exit of goods at the airport shall also be simplified.

Research and development for products and services that are uniquely Bicol and globally competitive shall be carried out on a continuing basis. State universities and colleges shall be centers for R&D and shall be encouraged to specialize in specific products or services. Positions specifically for R&D shall be created, instead of the current practice of an instruction-research-extension function of persons occupying academic positions. Specific R&D activities shall be aligned with the region’s priority economic growth sectors and emerging global industries. Productivity and quality improvement technologies shall be the focus of R&D. Studies shall also be conducted on cross-country comparisons of the Philippines with competitors. Results of R&D activities shall be widely disseminated in all forms of media (internet, print, and broadcast) to be easily accessible. Information sharing among stakeholders shall be conducted regularly. Extension services shall be improved to provide access to technology breakthroughs and world-class technologies.

Easy access of MSMEs to financing shall be facilitated by disseminating information on government and private financing programs. Credit worthiness of MSMEs shall be enhanced with the assistance of business groups. Additional funds for export promotion under the Philippine Export Development Plan shall be tapped. The region shall advocate for the amendment of the agri-agra law to channel more funds for productivity improvement projects of farmers, fishers, and agrarian reform beneficiaries.

Vocational, technical and college courses shall be revised to match the region’s priority economic growth sectors, i.e., agriculture and fishery, trade, transport and communication, tourism, and manufacturing. Skills shall be upgraded through the on-the-job trainings and job placement services.

Aside from the region’s priority economic growth sectors, emerging global industries include cyber services and information technology, medical tourism, hotel and restaurant management, and semiconductors/electronics. The curricula of vocational, technical and college courses shall be aligned with these emerging fields. On-the-job trainings and job placement services shall be coordinated with private sector companies.

Implementation of infrastructure projects shall be done with community participation so that the people will have a sense of ownership of infrastructure projects in their locality. Clustering of LGUs shall be promoted to make them more capable of fund sourcing and implementation of big infrastructure projects. This strategy could ensure effective coordination among towns and cities, avoid duplication of programs and projects, and speed up delivery of public and private sector services.