LGUs: Link in sustainable development and inclusive growth toward AEC (Business Mirror (Philippines))

column-Henry J. Schumacher-Asean-EU PerspectiveREALITY is that devolution, otherwise known as administrative decentralization, has placed the destiny of local government units (LGUs) largely in the hands of their elected local officials and not in the national government’s. 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 code further encourages LGUs to enter into joint ventures and business partnerships with the private sector, including as build-operate-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.

Three-year election cycle: Bad for development

The reasoning was a triennial election cycle would prevent these professional politicians from amassing too much personal political power. But the framers had not reckoned with the duplicity of certain local politicians. These politicians, instead, worked within the Constitution to subvert its noble aims. The result was the demise of the special caste of professional politicians and its replacement by the special caste of professional political families that plague us today.

But the biggest losers in the current triennial election cycle are Filipinos wherever they are in this country. The three-year term limit usually means the winning side has no motivation to plan for anything longer than three years since there is no assurance they’ll win the next election. The absence of administrative continuity hinders long-term planning and makes it inadvisable for local development stakeholders not to look beyond the next election, argues Michael Henry Ll. Yusingco in his piece, The Folly of Triennial Local Elections in the Philippines.

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 in 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 member-states. ECCP also backs the National Competitive 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. Raeuber underscored ECCP’s interest 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.

These three LGU leagues were created by the local government code. They assist LGUs adopt best practices, foster links with 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 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.

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