LGUs/Business/Civil Society: Partners in sustainable development and inclusive growth

We had exciting discussions in Cebu last Friday addressing the above subject and how to channel investments to the Visayas for job generation. It became clear that much more interaction has to happen between local governments and the private sector. Why?

Reality is that devolution, otherwise known as administrative decentralization, has placed the destiny of LGUs largely in the hands of their elected local officials and not in the national government. The Local Government Code devolves to LGUs the administration of five basic services: agriculture, health, social welfare, maintenance of public works and highways and environmental protection.

The code urges LGUs to be self-reliant and allows them to discharge the functions and responsibilities of national agencies and offices devolved to them. It also provides the policy context for the formation of entrepreneurial LGUs. The codefurther encourages LGUs to enter into joint ventures and business partnerships with the private sector, including as buildoperate-transfer deals and bond floats. It allows LGUs to do this to develop local enterprises that improve income, boost rural industrialization and enhance the economic status of Filipinos.

In the discussions it became obvious that in many parts of the Visayas the dialogue between the LGUs and the private sector regarding the development of infrastructure needed for business and investment attraction is not happening. Everybody felt that – with the election fever getting higher – this is a good time to dialogue with LGUs and the LGU candidates running for election in 2016.

The reasoning was that the triennial election cycle is bad for long-term planning by businessmen and investors. For the local and foreign investors to look more closely at investing beyond the present investment centers in the Central Luzon and Cebu it is essential that LGUs start thinking long-term, creating a business environment which allows business to come in and invest.

This realization helped trigger the move last May by the European Chamber of Commerce of the Philippines (ECCP) to launch the first in the series of LGU-Business Forums involving the League of Provinces of the Philippines; the League of Cities of the Philippines and the League of Municipalities of the Philippines. The idea behind this move is to allow businesses and LGUs to adopt a collaborative mode in solving problems and to jointly arrive at win-win solutions that promote sustainable and inclusive growth in the LGUs, which consist of 80 provinces, 122 cities, 1,512 municipalities and over 42,000 barangays.

Among the concerns raised by ECCP during the first forum were red tape in business permits and approval; integrity issues; vague policies and regulations, and penalties and fees imposed by LGUs on businesses.Red tape is of special concern to investors. Complaints are rare when LGU business registration processes are transparent, fast, and honest. When the processes aren’t, investors complain of red tape and LGU violations of national policies.

For several years, ECCP has supported programs that measure and rank cities

based on their competitiveness. These programs seek to encourage more cities to improve their business services and become more investor-friendly. These programs are slowly showing positive results. The Philippines, however, still appears to be more inefficient than most members of the ASEAN-6 (Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore and Thailand), or the six original ASEAN memberstates. ECCP alsobacks the National Competitiveness Council in addressing LGU competitiveness.

The chamber believes that once every citizen can be reached by government and can interact with LGUs, competitiveness will definitely improve.

Investment areas ECCP looks to promote include water, energy, infrastructure, health, tourism, manufacturing, agriculture to food production supply chains, and waste management.ECCP’s interest is in exploring areas where private business can work together with the LGU leagues and other LGU organizations to speed-up solutions to key business and LGU concerns.

The three LGU leagues were created by the local government code. They assist LGUs adopt best practices, foster linkswith international and local organizations, and collaborate and supplement national government programs.

ECCP has worked closely with the three leagues since January 2014 in the Integrity for Jobs (I4J) program cosponsored by the European Union and the Konrad Adenauer Stiftung involving three provinces, three cities and three municipalities as models, eventually to be cascaded nationwide as best practices. The I4J discussions in Cebu last week developed avenues for mid- to long-term cooperation between the three parties: LGUs, private sector and civil society, understanding clearly that more dialogue and cooperation is needed to achieve inclusive growth by developing business and investment strategies that clearly go beyond the 3-year elections of LGU officials.