I Vol. Xll _o.3 , _, .,......... May-June1994 ISSN0115-9097 I

a n innovative approach to regional development planning is

Regional behlg pioneered in this part of the globe. The approach,called regional cross-border cooperation, adopts outward-look-big, transnational solutions to domestic concerns like depressed

CrossBorder regions, inequitable distribution of growth, and urban core-pe-II ripheryrelationshipproblems. It wasbrought to forewhen China,

through economic relations with neighboring countries, attained

Cooperation high econon_ic growfl_ ra tes. I ts underlyb_g con cep ts crystallized

• when Sh_gapore h_itiated cooperative ties with Johore, a southern. state of Malaysia, and the islands of Riau h_ Indonesia to form the

Shlgapore-Johore-Riau (SIJORI) Growth Trimlgle. Since then,Asiancountries have increasingly tried to replicate regional cross-bor-der cooperation, also known as the growth area or growth triangleapproach.

Regional cross-border cooperation hasspread throughout Asia.Economic cooperation between Hong Kong, Taipei and SouthernChina has intensified h_ what is known as the Soutl_ern China

Growth Triangle. Eco1_omic cooperation h_ the Democratic Peo-ple's Republic of Korea, Jilhl in China and Siberia i.n Russia isknown as the Tureen Delta growth area. There is the Yellow SeaEconomic Zone (the coast of Bohai in China, and western andnorth-eastern Kyushu and Yamaguichi in Japan), and the North

I IIII ASEAN Growth Triangle (northern Malaysia, northern SumatraANICETOM.SOBREPE A in Indonesia, and southern Thailand).

....... In the mainstream ofgrowth area developments, the Philippi.nesisnow activelyinvolvedh_ thepromotion of the BruneiDaruss_mn-•h_donesia-Malaysia-Philippin es East ASEANGrowth Area (BIMP-

EAGA). 2

,,,_ Buildingsupportive_ucturesandmaximizingresources,financial,Institutional,dataandhuman-amtherecurringthemesofthisDRNissue,"Noqo_Cyisanisland"istiemessagere_c.d irlour,sped.teatime'Regior_alCross-BorderCooperation: I N S I D E

ANew,_i_eneioninRegionalPlanning."WrittenbyDeputyDirector-GeneralAnicetoM,SobrepehaoftheNationalE_nornic,andDevelopmentAuthority(NEDA),thearticleshowshowcounthesinAsiaexplorewaysandrne_l!ofresolvingdomesticdevelopmentproblemsviamutuallyagreed-uponandbeneficialschemesofcrossing_6dlinkingboundaries.Ingeneral,Soloreper_awritesabouttherationale,frameworkandstrategiesofthenewE6nceptand.inparticular,presentsthePhilippines'involvementInbuildingsupportivestructuresforsaid PHI LNET: Lo cal an d Icorcept_'v_ughtheBIMP-EAGA. Internofionol Networks I

Give¢lgovernment'slimitedresources,whatprojectsshouldthePolicy,TrainingandTechnicalAssistance Within Re ac h 6 iFacility(PTTAF)support,throughfunding,inordertostrengthenthecapabilitiesofvariousgovernmentagenciesInman_llngthedevelopmentprocess?$otheparttdpantsInarecentprioritizat_onworkshopmulled...seepage11.

'RaisingFundsforBasicHumanNeeds"echoestheneedforgovernmenttosetprioritiesandmaximizeitsrescurcestobeabletoservethebasichumanneedsofit_populationmuchbetter.Inarelatedvein,thearticle Roising Fun ds for Bosicon'GovernmentInformationOflicersaSPartnersinDevelopment"pointsouttheneedtomaximizetherolethat Hum on Nee ds 8thiskey_lFnentofgovernmenthumanresourceshouldplayintheprocessofdevelopment,

'Meadwl_lle,IOoldngathowashiftinthe!reportsvaluationsystemwouldaffectpublicrevenuesistackledon,<

roo_acloserandaninternationallevel,anetworknowprovideseasya_.sesstodataresources_d throughoutothercountriesaswell,,Linkingupresources,countriesandinstitutions,

.... NetworksWithinReach." Workshop ! I3

"=_91

But what is the Growth Area or Growth Trianglt_ Approach? _ U n d a m e n t a [ p r o b [ e rn s i nWhat are its hallmarks?

r- L,L ." __ JL J. e __ inAsia:The Rationale: Alternative to Trading Blocs Terminga [racing otoc

Recent transformations in the foreign trade policies of Euro-pean and Western countries as manifested in the recent emer- Insufficient volume of trade among Asian coun.gence of trading blocs such as the European Community (EC) tries. For a trading bloc to succeed, there has to existand the North American FreeTrade Agreement (NAFrA) have a large volume of trade. However. trading amongAsian countries, despite a rapid increase in recentfreed these countries from restrictions that isolated them from years, remains limited. Their major markets for ex-one another for years. In the process, developing Asian coun- ports and sources of imports remain to be the Unitedtries have increasingly become concerned about the impacts States and Europe.these changes would have on Asian exports and capital in- Differencesin trade policies. DevelopingAsianflows. The formation of the EC and NAF'I'A therefore created a countrieshavediverseeconomicsystemsmakingtheneed for counterpart Asia-Pacific groupings in a form that had coordination of trade practices and regulations diffi-to be different to trading blocs because of fundamental prob- cult.lems(seeboxatright).Whathasresultedarevariousproposals Similar factor endowments. The lack ofcomplementarityamong the commoditiesproducedfor alternative ways to group Asian countries, by Asiannationsbroughtabout by similaritiesintheir

factor endowmentsexplain,to a certain extent, theGrowth Areas: A Conceptual Framework limited volume of trade among them and the con-

A growth area or growth triangle is a transnational economic straints in trade relations.zone spread over large yet defined neighboring areas covering Geographical features. MostEC and NAFTAmem-three ormore countries. In thezone, theresource endowments ber nations have landlocked borders while Asian

countries are separated by natural sea borders,of each member country are tapped based on comparative thereby increasing the cost of transportation andadvantage to spur overall external trade and investment.In communicationand magnifyingthe problemsof inad-recentyears, President FidelV. Ramoshad expanded thegrowth equate infrastructure.triangle concept to include economic cooperation not only by Political considerations. Asian developing coun-geographically proximate areas but more so, by areas which tries havediversepolitical interests,historicalback-have"linkages of opportunity, transportation and communica- groundsand socio-economicsystems,raisingapos-tion, tourism, and cultural and ethnic commonality." sible difficulty in getting political commitment and

The development activities in the growth triangle are prima- policy coordination.rily implemented by sub-national government units. In termsof utilization of foreign capital, the participants of the growth IIm IItriangle are classified either as recipient or investing groups.Recipient groups are countries or regions of countries whichcomplementtheinflowofforeigninvestmentsbyofferingland, many rounds of discussions and years of preparation. Thi_

labor, and other natural resources while investing groups are allows a country to form several growth triangles and tes_(those which provide capital, technology, management skills, various kinds of regional cooperation. China, Malaysia, andand at times, access to foreign markets. Indonesia have triangles established almost simultaneously.

The areas covered in a growth triangle need not be major Wider scope of trade. Trading blocs focus on internal mar-urban centers. In fact, the approach provides underdeveloped kets of countries within blocs while growth areas are export-regionswithinacountryanopportunitytobenefitfromstronger oriented and may consider even markets external to the area.linkages with a nearby developed urban center of another This allows member countries to expand trade further.country. Attractiveness to foreign investment. The non-exclusivist

arrangements of growth areas allow them to derive economicAdvantages benefits from non-member countries. Possible benefits include

Economic cooperation in the form of the growth area ap- greater tradeand attractiveness to foreign investments. Coun-preach can thereupon overcome the fundamental problems tries outside of a growth area can participate and benefit fromassociated with the formation of a trading bloc in Asia and, at such area's increased trade by investing there.the same time, offer the following advantages:

Lesser economic and political risk. Trading blocs require The BIMP-EAGAnationwide institutional arrangements; growth triangles usu- The BIMP-EAGA's groundwork was laid when in Octoberally involve only contiguous parts of a country, confining 1992, President Ramos raised the concept to the heads ofeconomic and political risk to those areas. But the benefits of a government of the East ASEAN nations in Brunei Darussalam,successful growth area can easily be replicated in othor parts of and durh_ghis state visits to Malaysia and Indonesia. Malaysiana coun try. Prime Minister Mahathir, Indonesian President Soeharto and

Lower organization cost. Because growth triangles may theSultan of Brunei endorsed the proposed economic coopera-encompass only some parts of a country, it can be established tion and together with President Ramos launched the BIMP*at relatively lower costs and within a shorter period of time as EAGA last 26 March 1994 during the Inaugural Ministerialcompared to a formal trading bloc which usually involves Meeting of participating countries in Davao City.

Operationalizing one of the key strategies of the 1994-1998 recommendations of the ADB study and the tourism develop _Mindanao DevelopmentFramework, the BIMP_EAGA strength- ment plans of each country. This activity will be spearheadedens the direct global trade and economic links of Mindanao by the Malaysian government.with, primarily, East ASEAN. Expansion of fisheries cooperation. With the Philippines

taking the lead in this activity, a meeting of public and privatesector representatives of the fisheries sector from the BIMP-EAGA has been scheduled on 23-24 Jm_e 1994 to assess the

status of the industry and discuss possible joint ventures.Sea linkages, transport, and shipping. Indonesia, being the

lead country for this activity, shall organize a meeting betweenport and shipping authorities and the priva te sector par ticipat-hag countries to discuss possibilities under this activity.

Coverage. The BIMP-EAGAcoversBruneiDarussalam;theprovinceso1_NorthSulawesi,EastandWestKalimantaninIndo-nesia;and.S_abah, Sarawak,and Labuanin Malaysia;and Success FactorsMindanaoin the Philippines. Coveragemaybe modified. For Initial assessment of the economic structure and resource

instance,SOuthernPalawanshowedstronginterestinthe BIMP- endowmentsamongparticipath_gcountriesin theBIMP-EAGAEAGAbecauseit complimentsPalawan'sexistinggeographicandculturalties. indicate great potentials for success. The presence of economic

compleinentarities, strong cultural affinities, parallel develop-_ institutionalmechanism,Eachmembercountryshallestablish ment policies, and vigilant private sector participation area HighLevel Council under the chairmanship of a Minister. The factors that can contribute to the success of the BIMP-EAGA.mec'ha.nismtf0rconsultationsbetweer_theparticipatingcountriesinthe BIMF_-EAGAshallbe the meetingof Ministersand Senior Economic comp] eme ntari ties. l_e member nations canben-Officialstobe set onagreeddatesandvenues.Thereshall beno efit from one another's strengths and potentials. Brunei canoverallsectetarlatand instead,each countryshalldesignatea offer investible capital and petroleum resources whichMinistryor._gencywhichshall serveas the focalpointfor Informa-tionexchangeandcoordinationof programsrelatedto the BIMP- Mindanao ancl East Indonesia lack. East Malaysia can provideEAGA. forest-based products and extensive land areas needed by

InthePhilippines,MemorandumCircular(MC) No.83 provides, Brunei. Mhldanao's organized university and hospital systemsthe actionagendafor the operationalizationof the BIMP-EAGA. and food processing products can benefit Brunei, East Indone-While the member.agenciesof the PhilippineHigh Level Councilhave yet to be identified, MC No. 83 already specified which sia, and East Malaysia, while East Indonesia's more ac]vancedagenciesal'e responsiblein facilitatingthe developmentof the communication satellites may be useful for East Malaysia,BIMP-EAGA. The MIndanao Economic DevelopmentCouncil Brunei, andMindanao.(MEDCo)is beingeyed as the institutionthat will serve as the Strong cultural affinities. Similarities in language and cul-country's focal point for the coordinationof BIMP-EAGA'simple-mentation, tural backgrounds can foster mutual understanding and close

business relationships among the growth area's population.P_tentialfields of cooperation. The BIMP..EAGApromotes The regions within the BIMP-EAGA have a long tradition of

closecooperationin thetollowmgareas: (a) tr,ansportation,and trade and family links. Thus, even before its establishment,shippingservices;(b)fisheries;(c) jointtourisnldevelopment;(d)iagriculturelandhorticulture;(e) energyexplorationand develop, economicinteractions among theregions cover,_d in the BIMP-ment;(f) edvironmentalprotectionand management;(g) forestry EAGA have already been taking place.andtimberproducts;(h) humanresourcesdevelopment;(i) indus- Parallel Development Policies. The member nations have

trY;natural(j) institution-building;resourcesdevelopment;(k)joint(m)servlces;InfrastructUreand(n)netw°rkS;tradeand(]) congruent policies that can further strengthen their solidarity.investment. The governments of the nations involved have adopted liber-

Details of these joint undertakingswill be laid down in an alization policies which provide a conducive trade environ-InvestigativeStudysponsoredbythe Asian OevelbpmentBank, ment. Such cooperation is also fully supported by Indonesia,Thestudywillspecifyareas forpublicand,privatesectoreconomiccooperationwhichwillmutuallybenefitBIMP-EAGAmember;court- Malaysia, and the Philippines which have been pursuh_g pro-tries, and identifyprogramsand projectsto enhancesynergistic grams to spread development aw_iy from their respective ur-

growth in t_e,.area's economy, ban cores, such as the island of Java, Semenanjung, and MetroManila, respectively.

Vigilant private sector participation. This is the most vitalfactor that can lead to the success of the BIMP-EAGA. Greaterdetails are discussed in the next section.

Priority ActivitiesEven before the results of the ADB study are completed,.four Private Sector Initiatives

critical activities have been identified under the BIMP-EAGA: Long before the establishment of the BIMP-EAGA, the prbExpansion of air linkages. An air service system will be vale sector of the participating regions in Indonesia and the

established to promote, develop and enhance trade in the Philipphles have been engaging in collaborative activities.growth area with Brunei Darussalam as the center of air link- From 1977 to 1990, the Chamber of Commerce of Davao Cityages and as the lead country for this activity, has entered in to sisterhood pacts with its counterparts in North

Joint tourism development. The conduct of a separate study and South Sulawesi in Indonesia. In 1:)86, the I_hilippines andleading to a Joint Tourism Master Plan for the EAGA will be Indonesiasigned aMemqrandum of Understandingfocused onimplemented. This Master Plan shall be consistent with the trading activities between Davao and Manado. 4

i • .=

' "............ --- " ......... IIIMII I[

Business encounters between Malaysian and Filipino busi- Socio-Political Sensitivities. The relationships among thenessmen were held during Prime Minister Mahathir's visit to nationalgovernments of some of the countries are rather vola-Davao City to discuss possible investment opportunities in tile with issues, for instance, like.the unsettled claim on Sabah,hldustry, agri-business, and tourism. The discussionsled to the illegal immigrants, piracies, claims on overlapping authority,signing ofaMemorandum ofAgreementbetweem Ekran Bershad and the Muslim autonomy, raising tensions among the BIMP-of Malaysia and the Department of Tourism (DOT) for the EAGA countries.development of the Samal island Tourism Estate.

In October 1993, Over a hundred East ASEAN businessmen Conclusions

participated in the Mindanao Business Conference in Davao The Philippines' involvement in trans-border cooperationCity. In anticipation of the formal establishment of the BIMP_ through the BIMP-EAGA has a number of positive implica-EAGA, the East ASEAN Business Council (EABC)Preparatory tions. For the country as a whole, it opens new markets andCommittee has also been organized, sources of raw materials that will accelerate the growth of the

So significant was the private sector participation in the macroeconomy. For Mindanao, in particular, the BIMP-EAGABIMP-EAGA that it was agreed during the Davao Ministerial makes the island's potential tourist destinations more accessi-Meeting that the development of the BIMP-EAGA should be ble to visitors from the ASEAN and makes it a more attractiveprimarily market-driven and private sectorqed. The govern- site for investments in industry and tourism. Most of all, it hasment's role would only be to facilitate the involvement of rapidly globalized the orientation of the Mindanao economy.

private sectors to implement joint projects and programs by Similar undertakings can likewise be forged in North Luzon(nurturing an environment conducive to investments, with Taipei, Hongkong, and China. The pre-conditions for

lucrative and mutually beneficial economic interactions existPotential Constraints among these countries through complementarities in factor

In Spite of its bright prospects, the planners of the BIMP- endowments and geographical proximity. Although the cul-EAGA should continually be aware of the following problems _ral linkages of the Filipinos with these regions are probablywhid_ may hinder the growth area's development, not as strong as that with the BIMP-EAGA, existing ties be-

With the exception of tween the Chinese and Filipino-Chinese nonetheless can beBrunet, the three other regions are almost at a similar phase of regarded as an advantage.development, with each region having no dear lead in capital The Philippines should therefore seize the opportunities thatendowment, the main source of development funding, the growth triangle approach offers if it is to prime itself toward

It can be argued, however, that sources of capital need not and realize its vision of becoming a Newly-Industrializingcome from parties geographically located within the growth Country by the year 2000. _area since what matters is BIMP-EAGA's capability to attractthe necessary foreign investments from different sources tosupport its economic endeavors. REFERENCES

Institutional problems. The multiplicity of government ac- Hoey, Tan Stew. "Growth Triangles as a Regional _elopraenttots involved in the BIMP-EAGA (four national governments Strategy," Borneo Review. Sabah: Institute for l_velopment

Studies, 1993.and more than ten pr0vincial/state governments) may lead to

delays in the decision-making process. Except at the ASEAN Regional Development Coordination Staff (RDCS)._.bokinglevel, existing relations and contacts between countries are all Beyond the Northern Borders:Luzon North East/_ian Growtl,bilateralones.Thus, theabsenceofexistinginstitutionalmecha- " Area (A Concept Paper). Philippines: NEDA, 19_4_nisrns linking all the regions in the BIMP-EAGA between and

among governments and the private sector can lead to a crea- . Briefing Materials on the Brunei D&ussalam-tion ofnewstructures, therebyaddinglayersin thegovernment Indonesia-Malaysia-Philippines East ASEAN (_ owth Area,bureaucracies of the participating countries, undated.

In the Philippines, this is not much of a problem because ofthe enactment of the 1991 Local Government Code which Salleh, ismael Muhd. East ASEAN Growth Area (EA_J.4)-

provides the local government units in Mindanao greater au- Concepts, Challenges and Opportunities. Malaysi_ !nstitutetonomy in their involvement in the BIMP-EAGA. Further, the of Strategic and International Study, undated..iestablishment of MEDCo has installed the proper institutionalmechanismforthePhilippinegovernment'sengagementinthe Sobrepefia, Aniceto M. Memorandum to National E_onomic andBIMP-EAGA. Development Authority (NEDA) Director-Genial Cielito F.

Accessibility and People Mobility. Since the regions of the Habito on the "Report on the inaugural Mlnist_ial MeetingBIMP-EAGA are not contiguous, movement of goods and for the East ASEAN Growth Area (EAGA),"D_vaoCity,23-services is not as fluid as desired. Differences in immigration 26 March 1994.

policies and the lack of transport procedures constrain the Tang, Min and Myo Thant. GrozothTriangles: Conceptual issuesmovements of labor and people across borders, and Operatlo,al Problems. Asian Development B_nk,

However, the air transport problem has already been eased - undated.to a great extent -by the opening of commercial flights betweenDavao and Manado and Zamboanga and Labuan.

i i

GlOsT o0,o o=oo''o=o"ooo'asPartnersinricers who gathered in Pagsanjan, fact, is the first of the communicationLaguna late last year, drove home one planner's ten principles on media plan-point: today, GIOs no longer view ning. The rest relate information

DEVELOPMENTwiththetargetaudience, theagen-reactors of news about the bureau- cy's resources and goals, and the(:racy or their agencies. For some- appropriate media. The list alsotime now, GIOs have emerged as underscores the crucial role ofchange agents, too, and therefore part- global trends require GIOs to re-examine such communication keywords as feed-nets in development, their perspectives, attitudes, and skills," back mechanisms and source credibility

The PIDS-Asia Foundation-sponsored according to Dr. FlorangelRosario-Braid, (see box below).workshop on "Enhancing Government- President of the Asian Institute of Jour-Media Relations for Partnership in De- nalism and one of the workshop's guest ImprovingMedia Relationsvelopment" was attended by GIOs from speakers. One of the issues underscored Dr. Fermin Adriano, aManila Chroni-13 agencies. It was, in part, an evaluation is the advent of modern communication cle columnist and the University of theofthestateofgovernmentinformationin technologies. "Information managers Pliilippines-Los Bafios Vice-Chancellor,the country and, as the workshop aimed, must find ways to tap the new technolo- gave a state-of-the-art review of the Phil-on GIO-media relations, gies as means to catalyze change in soci- ipphle mass media. O_e of the current

Amidstcallsforchangein certainprac* ety," she suggested, major concerns, he said, is its oligarchictices of both the media and the govern- While Dr. Braid outlined the traditional nature.

mentinformation system and an exchange roles of GIOs, she also presented a bird's He also cited the use of newspapers byof suggestions on how to effect such eye-view of the new fields and current interest groups more as a power basechanges, the participants also raised cru- issues in government information, than as a bushless venture. Such possi-cial issues. Topics discussed ranged from Meanwhile, Dr. Cesar Mercado, Plan- bilities, heargues, mayhaveimplicationstheoreticalprinciples (such as thebasics ner/Progrmnmer of the Development on the messages brought to the public.in media planning) to some of the reali- Training and Communication Planning- For instance, one can question whethertiesin the nineties (such as the problems United Nations Development Pro- the interests of publishers may have anon the flow of information), gramme, discussed the basic information effect on reporters' orientations and/or

principles and shared practical insights loyalty.Adaptingto Changes on modem information management. Nevertheless, media's role in the coun-

• Today's fast-changing socio-economic- "Information is to humans as fertilizer try's development, according toAdriano,politicalenvironmentdemandsthatgov- is to plants. Information notonly develops is essential. GIOs, thus, need to knowernment information programs be aperson'sattitude, knowledge, andskills.proactive."Newdevelopmentthrustsand It also reflects the attitude, knowledge , 6

lO,COmmunira_ p_ni_iples

k InformatiOn.isto humansas fertlizeristoplants.Lnformationnotonlydevelopsbut reflectsaswellthe, ; • + , ,,

, attitudes,,knowledge,aridskillsof anagency.i|1'. ;Packageinformationwilh|i_..agencys resourcesin mind.Thecountry'smostsucces_ulgovemment

¢_aigqs didnot_qce_donmessagealonebuttoalargeextent,onthe resourcesthatwereavailable_to_:thecampai_ers_

III. Id_Bttf_,,yoMrt=geta_ce; throughresearch.IV. Relatetheinformatl_mintendedfordisseminationtotheproblemsofyourtargetaudience,V. 'Concretizemessages;makethemspecifictOsustainaudienceinterest,VI, Knoww_heltto usemast,mediaandwhentoturntofolkmedia,

VIi. Differenttypesof chamlelsareeffectivetoi"differentpurposes.Massmediais effectiveincreatinglawarenessandknowedge;groupcommunk;=icn,in changing.attitudesand skills.

Vl!!, T,hemoresensesaffectedbya channel_e moreeffectivethechannel'_i'e_i '_I_,moreeffectivethecommunicaion.

)tl_e.moreeffectivethecommunica;ion.

[[__] researcher Network of Networks computer hosts or to"=_ 5 at the Phil- Discussed during a anyIntemethostinthehow to reach their different publics . ippinelnsti- recentPulong-Saliksikan world.given themassmedia'schallengesand ('""'_ _tute for De- sa PIDS, PhilNet is a ..File Transfer. Users

innovations, velopment Studies nationwidenetworkof can copy files such asAlong this line, Dr. Adriano sug- might, on a typical day, computersthatallows computer programs

gested three guidelines for GIOs: (1) need to locate and computeruserswithin and documents that

advocate truth and transparency in copy data at several the country to commu- are publicly availabledealing with the media; (2) ascertain universities and gov- nicatewitheachother, in computer sites allthat agencies' policy pronouncements ernment offices. He thereby greatly facili- over the world.are consistent with policy actions; mid might need to obtain taring information ex- [] I iif o 1 m a t i o n(3) offer seminars for reporters on de-velopment issues and on the mandate copies of related for- chang eforinstitutions Searches and Re-and vision of respective agencies, eign studies. He may and fields that utilize trieval. Users can lo-

latermonitordevelop- research, cate files to download

Reaffirming Common Goals ments in a field he is PhiINet also has a or can find specificin-interested in. gateway toInternet-a formation throughCapping the workshop were two

group discussions that produced the But what if on this globalnetworkofcom- search and retrievalfollowing outputs: (1) proposed com- typical day of typical puters connecting the softwares.municationplansforthePHILIPPINES tasks, this researcher variouslocalnetworks [] ElectronicMail.Us-2000program, (2) proposed actions to remains at the office of participating coun- ers can, through aaddress the problems in government- instead of going out to tries. Internet serves mailbox system, pri-media relations, the field as, given the millions of users vately exchange rues-

Earlier in the seminar, Dr. Serafin workload, he would worldwide and inter- sages at no cost. Ex-

Talisayon of the National Security typically do? Dreadof connects close to two perts can correspondCouncil presented the PHILIPPINES the smog and traffic at million computer net- with their colleagues2000program, detailingtheconditions EDSA? This is un- works, for updateson thede-for its success, strategies, and specific likely, velopments in theirtargets by the year 2000. In his talk, Dr. More plausibly, that Fast Service specific fields.Talisayoncalledtheprogram"awake- day would exemplify PhilNet offers nu- []MailingLists. Users

up call." the markedly facili- merous services that can, again through theHe said: "The rationale for PHILIP- tated and altered can speed up the work mailbox system, ex-

PINES 2000is this: kulelatna tayo (we workstyle PIDS could of any office: change/testideaswithare already far behind). We should have, ifitsubscribed to []Remote Login. Us- eachotherand keepinhavest_ted [theprogram] along time a new communication ers can loginto any of contact as a homog*ago. This is our wake-up call. If in thepast we failed to heed the call, we networkcalledPhilNet, the major Philippine enous group.cannot afford to ignore its urgency thistime," he said.

In the end, the GIOs expressed their _ W_ ]_I1!] • _IHreadiness to take up the challenge. From

the comments and reactions, it was PHILNET"apparent that the seminar kindled a []strong feeling to pursue a common

mission: development as envisioned. L rl r_, A L A N D 'To these GIOs, they do have a definiteplace and responsibility in thecoun- | N T I="R N AT I IZl N A Ltry'sdevelopment efforts. SAT._ N E Z W rl _ K

_ On-line Confer- Announcementsences. Users can moni-tor developments in _

_ _.,...,..,J.,.-.J • • _ _- • • --- _ _ • _ _specificfields'Thenet- ("_"_ . Beginning January 1904, the Philippine Institute forwork categorizes an- _ Development Studies (PIDS) phased out twoof itsnouncements, discus- 2 regular publication series: the PIDS Working Papersigns and similar rel- , Series and the Monograph Series. Meanwhile two newj

evant information by _ outlets for the various PIDS research projects wereintroduced: the PIDS Discussion Paper Series and ther

topic. [ _-=-=-=-= ,_ J PIDS Research Paper Series.-J The PIDS Discussion Paper Series featurespreliminary studies by the PIDS research staff and -_

Beginnings _ other researchers. The studies are unedited,Phi]Net dates its be- direct connection to J unreviewed, and are meantfor Immedlatebut limited _

-_ circulation in order to elicit comments on how studies _

girmings to a Memo- the US), , was con- ._ could further be refined. Eventually, thestudies may _- be published in their final version, under any of the

randum of Agreement nected inMarch 1994. J other PIDS' regular publication outlets.signed by the Depart- _ The PIDS Research Paper Series features thement of Science and Linking Up " studies by the PIDS research staff and other research- _.r

t _j _ ere that have been edited and reviewed by an internalTechnology (DOST) •Institutions can link :_.._ .j

publications review committee and by externalDnNovember 25, 1993 up to PhilNet as either _ referees.Studiesthatwerepublishedas Discussion"to support the Indus- primary or secondary _ Papers may later be published as Research Papers A

trialResearchFounda- nodes. Primary nodes _ with awider circulation.

tion (IRF) in building have •direct access to _.... _.... _. _.. _ _.... _the local communica- Internet, and there-

tion network, fore, have the respon- tions may later apply f_ " " " _ " " _ " _ _ " " " _ _ " " " _ "_I_Two phases were sibility to accommo- as •donor subscribers _ _sss WORLDCONGRESSOF

- needed to implement date secondary nodes, to lower subscription d_ THEECONOMETRICSOCIETY _"_PhilNet.Phaselestab- In addition, primary costs of academic and _ ANNOUNCEMENTANDCALLFORPAPERS

J _1

lished an electronic nodesmustoperate24 research institutions. _ The Seventh World Congress of the Econometric

mail link between the hours a day, seven To date, the following _ Society will be held at Keio University in Tokyo, Japanon August 22-29, 1995.

AteneodeManilaUni- days a week. They institutions arelinked j Economists,includingthosewhoarepresentlynotversityandparticipat- must have dial-in line through PhilNet: _ membersoftheEconometricSociety,areinvitedtoing institutions, supportand acompu- []Advanced Sci- _ submit by 31 January 1995, papers for possible-_ presentation at the Congress. It is hoped that papersA teneo is the local ter storage capacity ence and Technology .-J presented atthe Congress will represent a broad

gateway to Internet that meet Philnet Institute (DOST); _ spectrum of applied and theoretical economics and 4-._ econometrics.

nd it collects, then • specifications. - []Ateneo de Ma- .J TheProgramCo-Chalrmenare:istributes the local Secondary nodes, on nila University; _ Prof.DavidM.Kreps Prof.KennethF.Wallis _

Graduate School of Business Dept..of Economicsand international mail the other hand, are ,,De La Salle Uni- .J Stanford University University of Warwick _

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I1-1_111_1_1111111 _

I 'n September 1990, the United Nations both government and. donorg was only P798 • of. oi_ly 11.4 percent of total official devel-organized a gathering attended by 71 miflion or 65.4 percent of the total resource opmentdisl_ursen_ents. On a global basis,

world leaders and over 100 government need. Given the government's weak fiscal donors are being asked toallot 20 percentrepresentatives. It'was the largest gather-, position, there is an urgent need to look for of their ODA to the social sector.ing ever on a single subject: child develop- innovative ways.to mobilize more resourcesmerit. The world leaders set broad social for the social sector. Setting Priorities Right

and human goals- something everyone at The government could raise additionalthat time thought was "building a castle in Traditional Souices of Financing resources for the s6cial sector if it sets its

the air." Government revenues may come from, prioritiesright, ManasanandLlanto'sstudyToday, according to Mr. Keshab tax and non-tax sources. Taxes are the prin- challenged. The rapid expansion.ofaggre-

Mathema, Representative. of the United cipal source of government income. Non- gate govermnentexpenditurein 1986-1993Nations Children's Fund (UNICEb-'3-Phil- " tax revenues come as grants, user charges, is a misleading indicator of the growth ofippines, during a jointly-sponsored PIDS- income from public sector enterprises and government during the period. Net ofUNICEF forum, those goals have been" proceeds from privatization, debt service, total government expendi-adopted by over 150 countries around the Reforms in the tax system during the last ture actually remained fairly stable at 13.5world, including the Philippines. half of the 1980s led to a significant ira- percent of GNP in 1975-1993. Per capita

In the Philippines, President Ramos reit- provement in the country's tax effort. De- government expenditure net of debt serv-crates the commitment of former President spite this, the country continues to lag be- ice in real terms was lower in 1992 (P1,733)

Aquino to achieve these goals through the hind th e performance of many Asian coun- than in 1981 (P2,031). In effect, debt service

Philippines Plan of Action for Children tries, hampered the government's capacity tc_(PPAC) for the year 2000. The PPAC has There are, however, ways to collect more provide services to the people.seven major goals and 20 supplemental funds, without raising the rates of existing Next to debt service, general public ad-goals all related to children's health, educa- taxes or imposing new taxes, so finds a ministration (GPA) is the second fastesttion, water and sanitation, and nutrition. UNICEF-commissioned study led by PIDS growing major item in the government

Researc[_ Fellows, Dr.Rosario Manasan and budget. In 1986-1993, expenditure on gen-Statistics Tell All Dr. Gilbert Llanto. eral public administration was equal to

While most of the cotmtry's human de- First, assuming that the margin of error in two percent of GNP. If the budget of GPAvelopment indicators registered significant theestimated evasion level is 50 percent and .was pegged at its 1975-1985 level, (1.4 per-improvements in the 1970s and the 1980s, that the government is able to collect 5(i) • cent Of GNP) or set at a level similar tothese have been slow to come by since then. percent of the amount of taxes evaded, PI 7.6 Tha i]and (1.2 percent of GNP), the govern-

Infant mortality rate hovered between 59 billion can be raised, yearly from the indi- ment cou.ld have saved an annual amountto 57 per 1,000 live births in 1980 and 1990, vidual income tax and VAT alone. ranging from PZ5 billion to P10.2 billion.

respectively, due to the prevalence of dis- Second, the revenue potential of user Government expenditure on nationaleases caused by the slow decline in the charges or the fees that the government defense and peace and order combinedfertility rate, poor environmental sanita- exacts from pt'ivate sector beneficiaries of ' declined from 3.5 percent of GNP in 1975tion, and infant/child malnutrition, publicly-provided goods and services has to 1.9 percent of GNP in 1993. Relative to

Current population growth rate at 2.4 yet to be fu.lly explored. The share of user other Asian countries, this budget alloca-

percent is one of the highest in Asia. charges to total national ,government rev- tion is the lowest, yet, it is still threetime,_As of 1990, only 80 percent of the popu- enues has continuously declined from 15.3 larger than the national budget for health.1

lation had ak:cess to safe water and 0nly 70 percent in 1976 to 5.8 percent in 1992, largely Likewise, someP4 billion could be savedpercent had access to sanitary toilets, due to tl'le government's failure to adjust yearly if the fiscal incentive package of the

From 1989-1990, 14 percent of pre-school user charges to reflect cllanges in the cost of Board of Investments (BOI) were limitedchildren were underweight, 11_6 percent producing goods and services.. "toexports. Net Ol__erating loss carryoverstunted, and ._ine percent wasted. Third, the potential income from the gov- and accelerated, deprcx:iation should be

Dropout rate in the prin'lary grades is ernment's privatization program is expected prov.ided to all firms to allow the Philip-high and approximately 1.5 million chil- to generate some P3.2 billion yearly in the pines.to remain competitive with otherdren are notin school. There are no eleme_/- next five years if the government's divest- countries in the region in drawing foreign

tary schools in about one-fourth of all ment program is accelerated. " direct investment_ Similarly, the P0.8 bil-barangays in the country and most of the And fourth, the allocation ratio for health, lion spent yearly in explicit and implicitexisting ones are inadequate. Although the education, and other social development subsidy to the National Food" Authority1990 tens'us reported a 93.5 percent literacy projects cou Id be raised from its 1991 level 12 c_rate, a survey found more than a quarter of .......................................................................................................................................the_ poF, ulation to be functional illiterates. ._ii:::.i_i_i.;_iii_i_!ii:._:.ili_;a_06p__:_/in_ii:_ox:_:r_:_ii__'0_::!_e::_i_;_;i_(_i_!_i_9_iiii!!::::..:

i;?_ifiiii_i:Rl_ii_#_i_e_i::iI_bli_:l_61_C_:!-afi_l_::8_ge*::::fl_*_{t_jYi_2':___ ::DJ_i:.::iR_#_.ri01M_#_i_in:i_ntl:.iiOi_:_::iii::::::ii::On the policy level, the government com- ':;iiii;Gj;li{_!!:i_E_1*_i:::._ii_ii_i_::iiii_::iii::_i:i_::_iiii_-;i!:i:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::ii=_.::.==!:.:_:_:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::

mitted to prioritize social and human de-velopment goals as seen in its adoption of

the PPAC 2OOOand the thrusts spelled out FlaisingFu nctsin the Medium-Term Deveh)pment Plan, •1993-1998. But the most evident constraint

is financing. For instance, in 1993 the esti- i .mated amount of funding available from

:::: ::.... " ': _ ': ::::_i i i '.. . " '.........:::::::::::_ ' "...... i'.: ,'..::"::.':::::::

,..............................................................................................................

_`_:_:_.::._i_ii!_!ii.iiii_ii.iiiiiiii!._ii!i_iiiii_iii!iiiiiiiiiiiii_ii_iiii_iii_iiiii_:,_:i:!'i'.ii'!iii.................._._:_i:.;;;_.:__:::_::::::_:_:_:::_::_:::::::_:_:_:::_:_:_:_:_:_::_i_i_i_i_i_i_i_i_i_i_i_i_i_i_i_iii_i_i_i_ii:iiiii_iii;_ii_ii_!i_ii:i!i_i!i_!:_!i!_i::!!_.................................................................................................................

forBasicHumanNe.eds

W valuation method (should the

hat happens if the

country's valuation . pre-inspection process be

procedure shifts from the Home OPTIONS phased out) and red uced trans-Consumption Value (HCV) to a action cost of importing are"transaction-based" system? In three of these reasons.to he.the PIDS Pulong-Salfxsikan on Non-price factors and resultsMay 27, 1994, PIDS Researcher s II II _ 'qlk iF" of the estimations made by Dr.

Dr. Erlinda Medalla and Ms. H _ V Medalla establish the Transac-Loreli deDios, tackledthisques- tion Value system's superioritytion on customs and trade, giv- over the HCV method. Theiring proofs that a shift in the estimates also showed that the

system will incur the govern- revenue losses the governmentment revenue losses that are would incur with a shift fromlower than what is feared, the HCV to the Transaction

The presentors revealed find- The HCV is defined as the studied the weighted BOC/IV Value system in the forth of ei-ings from a paper on the HCV "domesticwholesalepriceofthe ratiosofcommoditiesandfound ther the invoice value, or the ex-

method they co-wrote with same goods that are being ira- that ratios vary widely among port price, will not be as large'asPIDS Research Associate ported into the Philippines as groups. Some goods, such as what was previously feared.Rafaelita Aldaba. well as sold in the domestic food items, have low ratios - The invoice value (W)is th 4

market in the country of ori- that is, BOC assessed values are amount derived from the ira-

The ValuationIssue gin." In using the HCV method, lower than what the importers port declarations of the buyer.Many importers have corn- Bureau of Customs valuators claim to have paid. Otheritelns, The export price (EP) is "the

plained about the nuisance ef- determine the duties charged such as manufactured goods anaount the exporter charges re-feet of the HCV, the valuation to imported goods based on the classified by materials, have gardless of the buyer." Revenuesystem currently in use in the sum of what is called the "fair high discrepancies between the losses that come with a shiftcountry. The pre-inspection market value" (an HCV con- HCVs and the invoice values, frorntheHCVtotheIVortlaeEPphase that goods have to go cept), plus (1) freight and other Estimates showed that HCV's are summarized in Table 1. The

through (which costs time), and charges and fees, and (2) insur- higher valuation base for some table shows the low and highthe uncertainty as to how much ance. goods can impose additional elasticities to differentiate the

government-appointed immediate itnpact from thevaluators .will price goods III I III1_ longer term.

(which might even be higher Table 1. Summary of the Revenue Impact Losses due to a shift are esti-than the amount declared on of the Change in Valuation Method mated to hover between 2.1 andthe invoice), are a hassle to any 4.7 percent for the first year,business. The number of appeal and then decreases throughand protest cases filed with the time. This, however, does notBureau of Customs_SGS Import mean actual revenue losses wil

' be incurred after the first year.Valuation Classification Com- e) -6.2% -215"_,t0' 5.2%mittee attests to this. ' ' The change merely compares

Another inconvenience of the revenue with HCV and revenue

HCV is experienced by foreign- with a shift to IV or EP.ers investing in the Philippines *simple average, weightecl by the number of months. For the first two months, the

for the first time. Foreigners e = elasticity, referring to a measure of a percentage change in imports zero elasticity assumption ishave to acquaint themselves with respect to a percentage change in pr.ces, applkx], yielding an estimate ofwith the HCV system since the III I around 2.6 percent to 6.5 per-Philippines is the only nation cent revenue loss. For the next

that still adopts it. From the importers' point of taxes .,mevenh/, thereby bring- two months, the revenue lossesview, theHCVsystemcanmean ing a distortive effect on the will be from around 2.5 to 6.2

The Nuances higher assessed values for their country's protection stru.cture, percent. The figures will beImport duties should, ideally, imports - higher than the Trans- This may either discourage fur- lower for the rest of the year. (It

be based on the market value of action Value - since, as man- ther importation or protect cer- is still possible that these valuesthe goods paid by the importer dated in an Executive Order, tain import-substitutes, are still overestimated since- i.e., the Transaction Value. The valuators always choose the there are non-price factors asso-Transaction Value, however, highest estimate available. Effecton Government's ciated with the shift in the sys-

cannot guarantee the govern- Dr. Medalla looked at effects Revenues tem that can lead to more posi-

ment that importers do not of the HCV. Assuming that the hnporterscite several reasons tive revenue figt, res). SAT.tI_Jfalsely declare their goods' val- true Transaction Value is ap- why they opt for the Transac-ues in an attempt tO incur lower proximated by the invoice value tion Value system. Increasedtaxes. The HCV supposedly (i.e., the value declared in im- trade facilitation, less uncer-counteracts this. porters' invoices), Dr. Medalla tainty and arbitrariness in the

•. } ••:......:...:: .

V arious project proposals were presented for possible f_nding under the ,6 _Policy, Training and Technical Assistance Facility (PTrAF) Project during mr, 2 J .J J _ A A __J _ .J .J J _ _ A _

the Project's Prioritization Workshop held early this year. PTTAF is a six-year _ To r4ntstm its o_jEClXW_s,trl'TAF EW,LU-project implemented by the National Economic and Development Authority .2 ates GOP project proposals for funding

/

(NEDA) through the Philippine Institute for Development Studies (PIDS) as local _ based on four priority areas:J

executing agency. It is funded by the Canadian International Development Agency _(CIDA). Its objective is to strengthen selected Government of the Philippines (GOP) _ * Expansion of research and informa- -Jinstitutions' capabilities in the management of self-sustaining socio-economic and _ tion base for development policy for- •d J

administrative policies and reform programs for development. _ mulation and institutional reform. .JAs such, the PTTAF Project considers and evaluates GOP project proposals based J

on whether the project creates a broad impact throughout the government and J • Increased capacity to formulate devel- jforms sustainable linkages between Canadian and Philippine regional organiza- _ opment policies and to undertake insti- .2tions. Projects eligible for support include: J tutional reform. J

l .2

a) conduct of research studies on development policies and institutional reform; _

b)development or maintenance of economic models; _ * Improvement of institutional strut-c) skill-training supportive of improved governance; and "J tures, systems and coordinating mocha- "JA

d)seminars, study tours, technical assistance and university based training of . nisms, A

GOP personnel. _Key government agencies which presented proposals included the: Tariff Com- J * Establishment of a core of effective J/ .J

mission, the NEDA, the Department of Budget and Management (DBM), the Civil W development-oriented managers. {Service Commission (CSC), the Commission on Audit (COA), the PIDS and the J"ql / / / d / _ / / / /.J .J / _ / / / _

Department of Finance (DOF). The Senate also submitted proposals. GEM. (_

PTTAF

PrioritizationWorkshop

NEDA Planning with Secio-Economic Policy Analysis l"aritf Commission

* Development of Short-Term Planning * Deregulation of Industries * Framing Responses for TariffForecasting Models * Streamlining of Bureaucracy Reform Programs

* Preparatory Activities for the DBMOperationalization of the * SPPBS, Budgetting Area COA DOFSynchronized Planning, Pro- * Bureaucracy Streamlining * Policy Review and * Reform of Income Taxation ingrammJng and Budgetting * Government Manpower Professionalization of Audit the PhilippinesSystem Information System Services through Research and

* Review of Linkages Between * Integrated Government Training PIDSRegional Pinnning Retirement System * Philippine Environmenta 1and Investment Programming * Establishment of a DataBase on CS C Economics Research

* National Urban Policy Budget Rules and Regulation * Graduate Scholarship ProgramFormulation in Public Management for Gov-

* Framework Development for Senate ernment Middle Managers andIntegration of Physical * Budget Reforms and Capacity Top Executives (GSSPM)

Build ing for Fiscal

Phlllppin Institute f r Developm nt 8tudl sNEDA sa Makati Building /'i _,106 Am rs Io Street, Legaspl Villag /

1229 Makati, M tro Manila, Philippines L STAMP

Vol, X_I No. 3 May-June 1994

i i Lml' i i i

EDITORIAL BOARD

Dr. Ponciano S. Intal, Jr.President

Dr. Marie B, LamberteVice-President

Ms. Jennifer P.T, LigutonDirector for Research Information

Mr. Marie .C.FeranilDire_or for Project

Services and Development

Ms, Andrea S, AgcaoiliDirector for Opera tions and Finance

Arty, Roque A. SoriosoLegaiCounsel

STAFFill • ill IL i gi |l I II I I

RAISINGFUNDS... ISSUES...• Jennifer P.T. Liguton

8 _ 9 Editor-in-CiTief

(NFA) may be reallocated to other uses 'i;'Lf_'_,,',rand Sanitation Lezyt B. Ponceconsidering that the. NFA has not been Water supply coverage improved from issue Editorvery effective in stabilizingthepriceofpalay 59 to 80 percent of the population from 1980and rice, and in reaching a substantial to 1990 except in 1986-1987 due to CorazonP, Desuasid0,

number of farmers and consumers, underinvestment by the Department of Odette M. Salc:edo,Manasan and Llanto believe "there are Public Works and Highways. Suzy D, Taparan,

•ways of increasing financial .resources to In 1991, the MWSS serviced a population Jane C. Alcantara . andmeet the requirements of the social sector." of 938 million but only 42 percent of the Genna _. ManaogBesides the traditional sources, there are MWSS daily water supply generated rev- Contributing Editor$also possibilities in.intersectoral and enue. A five percent reduction in waterintrasectoral budgeting reallocation.These losses alone would translate to P388 mil- ValentinaV. Tolentinoartdalso include cost •saving, cost shifting, and lion additional revenues for MWSS. Anne P. Cleofasquality enhancement measures to ensure Meanwhile, the Local Water Utilities Au- Exchange

that existing resources are used pr0duc- thority (LWUA) finances water districtsNecita Z. Aquino, Delia S, Romero,

tively.in terms of beneficiary coverage and (WDs) which are exempted from the pay- Galicano A. Godes andcost-efficient operations. MLS. _ ment of income and franchise taxes, duties Fedefico [3. Ulzame

and real property taxes, However, LWUA's Circulation and Subscriptioncollection rate of loan repayment from WDswas only 40 percent in 1992, indicating that LBPonce

a lot needs to be done in improving its Lay-outandDesignfinancial performance. MLS. ql_

.. , ,, L;7 , '_