Philippines Discussion Notes


Action 3.1 Develop land policy and the regulatory framework



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Action 3.1 Develop land policy and the regulatory framework


  1. The Department of Environment and Natural Resources has sought to address the problem of land insecurity through its Land Administration Project. This project seeks to develop a land policy and regulatory framework together with a consensus-building program for systematic land titling programs and awareness of community rights, roles, and responsibilities in the adjudication process for tenure rights and land boundaries, as well as implementing guidelines, standards, and procedures for property valuation. The project has been more successful in urban than in rural areas and in the area of valuation, as opposed to titling. While significant progress has been achieved, the overall needs still remain to be filled.


Action 3.2 Develop a special mechanism to adjudicate conflicting land claims


  1. Such administrative measures alone cannot resolve conflicting claims when they are aggravated by a sense of social injustice and when competing claims are equally legitimate. To resolve such issues will require a much better understanding of property rights and land tenure in Mindanao. It will also require a special mechanism to adjudicate and mediate such competing claims possibly coupled with a compensatory fund to compensate those who have been unduly dispossessed of their properties through ignorance of the law, inadequate knowledge of actual land values, and/or sheer threat of physical violence. The Philippines could potentially learn from the experiences of Uganda and South Africa in establishing commissions to clarify property rights, mediate disputes, and restitute land to or compensate those who have been forcibly displaced.


Policy Area 4: Improving Governance in Mindanao


  1. There have been many attempts in the past to improve the quality of governance in ARMM, but the results have not lived up to expectations. The recent “Maguindanao Massacre” points to a phenomenon of state failure at the local level given the employment of the powers of local government for sheer personal/family gain and the use of such powers in suppressing a rival political clan. There needs to be greater vigilance by the national Government on the use of such powers, particularly by well-known warlords in ARMM, exacting greater accountability from them in the use of public resources. Among the measures that can be undertaken to enhance local good governance in ARMM and other conflict affected areas are the following:


Action 4.1 Ensure clean, honest and free elections


  1. Declare that the President will not support any candidate for the ARMM Regional Governor position in the next ARMM election to be held in 2011. Instruct the Department of the Interior and Local Government and the Department of National Defense to collaborate with the Commission on Elections to ensure that an honest and free regional election is held. This will ensure that the umbilical cord of the political patronage system built in the past between the national political leadership and the ARMM leaders is effectively cut. In turn, this will allow the national leadership to exact greater accountability from ARMM leaders.


Action 4.2 Audit the ARMM budget


  1. Direct the Commission on Audit to lead a consolidated team, with representatives from all concerned government agencies and backed by sufficient security personnel, to undertake an audit of the regional government’s receipts and expenditures. This audit is necessary (i) to establish the baseline on the state of the fiscal position of the regional government before the next one is installed; and (ii) to establish clear terms of fiscal accountability for the incoming administration.51


Action 4.3 Ensure greater transparency in budgetary allocations


  1. Initiate transparency in the release of public funds by the national Government to the ARMM Regional Government as well as to LGUs. These may include wider dissemination of Department of Budget and Management websites announcing internal revenue allotment releases to local media, and supporting the formation or strengthening the capacity of local budget monitoring bodies by civil society organizations, academe, and the media.


Action 4.4 Implement performance-based incentives schemes for LGUs


  1. Create a system of incentives for LGUs practicing good governance, such as full-time presence of local officials in their respective municipality/province and transparent and accountable use of LGU budgetary resources, such as the processes implemented under the community-driven development (CDD) programs.


Action 4.5 Dismantle private armies and return policing to the police


  1. Immediately start dismantling the private armies of local politicians and enforce stricter guidelines on the issuance of permits to carry firearms (particularly high powered ones by civilians). Arrest and prosecute those who violate laws on the carrying of deadly weapons. Revoke Executive Order (EO) No. 546, issued in July 2006, authorizing the police to use “Civilian Volunteer Organizations” (CVOs), supposedly unarmed (but in fact often armed) security volunteers as force multipliers against “rebel” groups. Allocate more resources to the police so that they are better able to fulfill their mandate.


References
Abinales, Patricio N. 2000. Making Mindanao: Cotabato and Davao in the Formation of the Philippine Nation-State. Quezon City, Ateneo de Manila University Press.

Colletta, Nat. 2010. The Search for a Durable Solution: Armed Conflict and Forced Displacement in Mindanao, Philippines. Unpublished paper submitted to the WB-OM.

Dy, Rolando. 2004. Rural Growth and Development Revisited (Why and How can Mindanao be an Integral Component). Unpublished paper submitted to the WB-OM.

______and Fermin Adriano. 2006. Assessment of Mindanao’s Potential for Growth and Development and Linkage with the Mindanao Trust Funds’ Reconstruction and Development Project (MTF-RDP). Unpublished paper submitted to the WB-OM.

Foundation for Rural Institutions, Economics and Development . 2002. Mindanao Social Assessment of Conflict-Affected Areas. Unpublished paper submitted to the WB-OM.

Internal Displacement Monitoring Centre.

Kamlian, Jamail A. 2007. “Survey of Feuding Families and Clans in Selected Provinces of Mindanao” in Wilfredo Magno Torres III, ed. 2007. Rido: Clan Feuding and Conflict Management in Mindanao, Makati City: The Asia Foundation.

National Statistics Office. 2010. “Philippines: IDP Return Still Hampered by Insecurity and Lack of Assistance”. www.internal-displacement.org.

National Statistical Coordination Board.

World Bank. 2003. Human Development for Peace and Prosperity in the Autonomous Region in Muslim Mindanao. Pasig City: WB-OM.

World Bank. 2010a. Behind the Veil of Conflict: Moving Toward Economic Integration for Sustained Development and Peace in Mindanao. Philippines Country Management Unit.

World Bank. 2010b. “Fostering More Inclusive Growth”, Report No. 49482-PH, HD and PREM Units.



Note prepared by:
Fermin Adriano and Mark Woodward (EASPS)

The World Bank


ANNEX

Triggers of Current Destabilization
Evolution of the ARMM under the Arroyo Administration. Since taking office, the Arroyo Administration pursued a two-pronged strategy vis-à-vis Moro separatists. With respect to groups linked to international terrorism – the Abu Sayaf Group and Jemaah Islamiyah – as well as the kidnap-for-ransom (KFR) syndicates operating in Central and Southwestern Mindanao, the Government continued to pursue a military solution. However, for the Moro National Liberation Front (MNLF) and the Moro Islamic Liberation Front (MILF), which renounced terrorism as an instrument to pursue their goals, the Government pursued peace negotiations. In 2001, as part of the continuing compliance with the 1996 Final Peace Agreement (FPA) with the MNLF, Republic Act No. 9054 was passed with the purpose of conducting another plebiscite to determine which among the provinces originally claimed by the MNLF would like to be included in the ARMM. However, the “yes” vote won only in two additional areas: Marawi City in Lanao del Norte, and Basilan (except for its capital city of Isabela). They, together with the original provinces of Maguindanao, Lanao del Sur, Sulu and Tawi-Tawi, now constituted an “expanded ARMM”. An ARMM election was held in 2004 and a new set of political leaders, not affiliated with the MNLF, won. They were led by traditional Muslim political leaders with the son of the powerful Ampatuan patriarch of the Maguindanao province, Zaldy Ampatuan, elected as ARMM Governor. This has had a marginalizing effect on the MNLF which had provided leadership to the Muslim armed struggle in the 70s and 80s. The Ampatuan clan was closely allied with the Arroyo Administration, thereby leading many Moros to believe that Moro interests in ARMM were subordinated to those of the national Government.
Memorandum of Agreement on Ancestral Domain (MOA-AD). The peace negotiations with the MILF broke down in August 2008 when the signing of the Memorandum of Agreement on Ancestral Domain (MOA-AD) by the Government and Moro Islamic Liberation Front (MILF) negotiating panels was aborted. The MOA-AD proposed the creation of a “Bangsamoro Juridical Entity” (BJE) which would have expanded the territory of the present ARMM to include municipalities where Muslims are the majority as part of the Muslims’ “ancestral domain”. While the territories included in the BJE are significantly smaller than the original list included in the 1976 Tripoli Agreement and the former Special Zones for Peace and Development (SZOPAD), Christian political leaders and groups in Mindanao protested the inclusion of additional territories to the current ARMM. A temporary restraining order (TRO) was issued by the Philippine Supreme Court to prevent the document from being signed and, later, it declared that the MOA-AD was unconstitutional.
Some more radical elements within the MILF viewed the non-signing of the MOA-AD as a demonstration of the Government’s insincerity. Without any apparent directive from the MILF Central Committee, simultaneous attacks on civilian targets were launched in the provinces of Lanao del Norte, North Cotabato, Sarangani and Sultan Kudarat. The killing of civilians combined with the massive negative public reactions generated by the MOA-AD resulted in the abandonment by the national leadership of the MOA-AD and prompted punitive military operations against the so-called MILF “rogue” commanders. More than half a million civilians were displaced by the hostilities. Eventually (in July 2009) both the Government and the MILF suspended their military operations.
The suspension of hostilities made it possible for the Government to resume informal talks with the MILF panel after reconstituting its negotiating panel. Late last year, the two panels met and agreed to form an International Contact Group (ICG), composed of three foreign government partners (UK, Japan and Turkey) and four international non-government organizations, to act as “observers” when negotiations resume. They also agreed to include a “Civilian Protection Component” to the International Monitoring Team (IMT) to protect non-combatants and internally displaced persons whenever armed hostilities break out between government troops and MILF rebels.
The Maguindanao Massacre. With the peace situation still remaining explosive in parts of ARMM and the Central Mindanao provinces, the instability in the region was accentuated by the “Maguindanao Massacre” that occurred in November 2009. The ‘Maguindanao Massacre” involved the brutal killing of 57 unarmed civilians composed of scores of journalists and relatives and supporters of a rival political clan of the powerful Ampatuan family, the Mangudadatu clan. The crime was allegedly committed by one of Maguindanao Governor Andal Ampatuan’s sons and the family’s private armies. The closeness of the Ampatuan clan to the then incumbent President, the vicious manner in which the killings were perpetrated, and the existence of armed civilians serving as private armies of powerful families in Mindanao brought to the fore the numerous sources and complexities of conflict and instability in Mindanao.
The incident demonstrated that “warlordism” in Mindanao exists not by mere accident but through a system of patronage nurtured by the national political leadership which relied on local warlords to deliver votes for administration candidates come election time. Powerful clans solidify their political and economic control of local resources through the formation of private armies which protect them from their political rivals or, in some instances, are used to physically eliminate political competitors. And in a socio-political milieu wherein the practice of “rido” is endemic, warlordism and the tacit support of the national political leadership for certain warlords52 by virtue of being a political ally is a major contributory factor to persistent instability in the region.


  1. GOOD GOVERNANCE


PHILIPPINES Discussion Note No. 22

Governance

Energizing the Governance Reform Agenda
The reputation and legacy of the government will be largely determined by its record on improving governance and reducing corruption. Reform is possible. A strong regulatory and institutional framework for good governance and anti-corruption is in place. The country’s active civil society and media are strengths that can be leveraged. And bright spots – such as procurement reform – demonstrate that positive change can be achieved when sound laws are combined with strong institutional backing and meaningful civil society participation. This can be a template for reform in other sectors. The government will have a number of options open to it to address governance problems. An appropriate strategy would be to build credibility and public confidence through “quick wins” in the short-term to lay the foundation for longer-term change. The main priorities for reform are: (i) legal and regulatory tightening of executive discretion in budgeting and financial management; (ii) freedom of information and institutionalization of social accountability measures to strengthen civil society and community participation in governance; and (iii) strengthening the capacity and accountability of independent agencies charged with overseeing public sector performance, particularly the Office of the Ombudsman, the Commission on Audit and the Civil Service Commission.
A. The Philippines Today: Progress and Challenges

Figure 1: Percentage of respondents who believe corruption negatively affects economic growth

Source: World Bank Global Poll 2008
There is strong public demand for good governance in the Philippines. A recent Social Weather Stations poll indicated that the two issues that most concern the public are hunger and corruption. A poll of world opinion makers conducted by the World Bank in 2008 showed that respondents in the Philippines were the only ones among those polled in East Asia who identified “improving governance” as the most important means to generate faster growth in their own country.


  1. The governance challenges are neither new nor unknown. The government’s own 2004-2009 Medium-Term Philippines Development Plan acknowledged that “graft and corruption are increasingly viewed as threats to the sustained growth and development of the country…the culture of corruption in the country breeds the vicious cycles of poverty and underdevelopment.” This statement remains valid today. Corruption diverts public resources and denies the poor access to schools, health care and other basic services. The impact of public investments is diluted and public confidence in the government eroded when funds are siphoned off by corrupt intermediaries.




  1. Corruption is just one aspect of broader governance challenges. The 2009 Philippine Human Development Report attributes the country’s slow progress in human development to perverse incentives that the weak public sector institutions create for the public officials who formulate and implement government policies. A 2004 World Bank study of the impact of corruption on service delivery, for instance, concluded that declines in corruption indexes are correlated with improvements in social indicators.0


Key Governance Challenges
Executive control over the budget


  1. The President of the Philippines has very wide discretionary powers over the budget. The President may veto a line-item in an appropriation, revenue or tariff bill. On an annual basis, successive Presidents have used this power to selectively veto a number of items inserted by legislators into the executive budget proposal. More importantly, the President has the prerogative whether or not to disburse funds appropriated by Congress and reallocate unspent balances as “savings.” In 2008, for instance, an estimated PHP 38 billion was realigned from the government’s overall “savings” to various agencies, in contravention of what was indicated in either the Executive’s original budget proposal or the General Appropriations Act as authorized by Congress.0 It is virtually impossible, even for the Commission on Audit, to know exactly from which parts of which agencies’ budget these “savings” were generated to fund the government’s “realigned” priorities.



  1. The President has multiple forms of discretionary funds, including some of the Special Purpose Funds (SPFs). In 2010, SPFs represent 57 percent of the national budget. Although most of these are automatic payments for items such as debt service, transfer to Local Government Units (Internal Revenue Allotment) and pension benefits for retired public servants, they include some funds with significant allocations over which the President’s Office has a high level of discretion and limited public reporting and accountability obligations.




  1. In 2008, highly discretionary portions of the SPFs amounted to PHP 58 billion.0 When combined with “savings”, the total highly discretionary budget equaled approximately PHP 90 billion, more than the appropriations that year for the Departments of National Defense, Justice, Labor & Employment and Health combined.0 In 2010, highly discretionary SPFs alone increased to an estimated PHP 114 billion (see Figure 2), or more than the Departments of Agriculture, Agrarian Reform, Environment & Natural Resources, Social Welfare & Development and Transport & Communications combined. Use of SPFs is not accounted to Congress. The Commission on Audit has difficulty accessing documentation to ensure the funds are appropriately used. Included among the SPFs is the Priority Development Assistance Fund (PDAF), which, although small as a proportion of the budget, represents important leverage for the President over Congress. Figure 2 depicts the evolution of discretionary SPFs, including the PDAF.0




  1. Presidential discretion over budget disbursement – including the PDAF – increases executive control and asserts the importance of Presidential patronage to Congress. This undermines Congress’ motivation to monitor executive performance, facilitating abuse of power and lack of accountability. Spending agencies, for example, are required to submit quarterly financial progress reports to Congress, the Department of Budget and Management, and the Commission on Audit.0 In reality this is rarely done properly, yet Congress does not hold them to account. Many agencies also consistently fail to resolve adverse audit findings, but with Congress not taking action, agency budgets remain unaffected.0


Executive control over bureaucratic appointments


  1. The independence of the civil service is undermined by considerable Presidential prerogative over appointments. With the power to appoint down to the Director level, the President has the direct authority to select more than 10,000 officials.0 This creates instability, uncertainty and volatility in the execution of government policy. In practice, this power is not exercised over all government agencies, but has the biggest impact when political appointees are placed in senior positions in agencies with regulatory, judicial and quasi-judicial functions. The appointment power also provides scope for prioritizing political criteria over merit. It has been estimated, for instance, that more than half of all undersecretaries and assistant secretaries in the civil service do not meet the mandated selection criteria.0


Agency capture


  1. Despite the perception that corruption is widespread in the Philippines’ public sector, the degree to which politicization and rent-seeking has permeated the bureaucracy appears to vary across agencies. The Bureau of Internal Revenue and the Department of Public Works and Highways, for example, have consistently ranked among the most corrupt agencies in public opinion surveys and seem to have allowed outside vested interests to collude with elements inside to run a variety of sophisticated rent-seeking schemes. Various investigative reports suggest that other institutions such as the Department of Agriculture and the Department of Transportation and Communications have also been subject to capture by outside forces for rent-seeking opportunities. An investigative report on corruption in the construction of the Ninoy Aquino International Airport Terminal 3 (NAIA3), for instance, shows how the Department of Transportation and Communications was captured by rent-seekers to bend regulatory decisions in their favor.0


Weak procedural constraints over executive action


  1. Given the limited nature of Congressional monitoring and the capture of certain government departments by vested interests, strong oversight agencies are required as a check on executive abuse of power. And yet the Office of the Ombudsman, the Civil Service Commission and the Commission on Audit suffer from technical deficiencies, a lack of accountability and political interference to be truly effective watch dogs of potential wrongdoings in the public sector.


Prospects for Reform


  1. Reforms to fix these problems have been proposed for many years but have been hampered by the absence of incentives for change. However, change that challenges vested interests is possible. Reforms during the Ramos era to open up competition in key industries, such as telecommunications, were initially rejected by those who previously held monopoly power. However, when competition created a larger market that ultimately generated greater business opportunities for all, opposition dissolved.





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