Regulatory Governance in the Philippines: A Profile Ledivina V' Carino et al

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Regulatory Governance in the Philippines A
Profile Ledivina V. Carino et al
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Outline

• Introduction to Philippine concept of regulatory
  governance
• Constitutional and legal framework
• Institutional framework
• Regulatory mechanisms at work
• Research agenda

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The Philippines a Brief Socio-Economic Profile

• The Philippines economic system has evolved from
  the countrys long experience of colonial rule.
• 1950s Filipino First Policy aimed to achieve
  economic independence.
• Significant deregulation, liberalisation and
  aggressive privatisation since 1980s

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The Philippine Economy
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Regulatory Governance

• Definition How regulation and competition are
  managed to achieve societal goals
• View of regulatory governance
• Not a monopoly of the state
• Control, influence, incentives, enabling,
  facilitating
• Change of context of doing business
• Devolution / Globalisation

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The Legal Framework

• The 1987 Constitution and the entry of the
  Philippines into the World Trade Organisation
  often complementary, sometimes conflicting.
• The 1987 Constitution is very nationalistic as
  had been articulated by earlier Constitutions.
• It has provisions in (limited) support of free
  enterprise.

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Aims of Regulatory Governance

• For economic growth
• To encourage private enterprise
• For countrys integrity as a sovereign state and
  as a democracy
• In the service of poverty alleviation and other
  issues of the public interest

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The Nationalistic Constitutional Framework

• protect Filipino enterprises against unfair
  foreign competition and trade practices (Sec.1)
• encourage the formation and operation of
  enterprises whose capital is wholly owned by
  Filipinos (Par. 1, Sec. 10)

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The Nationalistic Constitutional Framework

• The State shall develop a self-reliant and
  independent national economy effectively
  controlled by Filipinos.
• regulate and exercise authority over foreign
  investments (Par. 3, Sec. 10)
• preference to qualified Filipinos in the granting
  of rights, privileges, and concessions (Par. 2,
  Sec. 10)

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The Nationalistic Constitutional Framework

• promote the preferential use of Filipino labour,
  domestic materials and locally produced goods
  (sec. 12)
• Limit participation of foreign investors in board
  and may not be executives of public utilities
• Limit practice of profession except as prescribed
  by law

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The Nationalistic Constitutional Framework

• Nationality-indifferent and market-oriented
  policies have burden of proof of not contravening
  the Constitution.
• Examples
• Luzon Petrochemical site (1990)
• Manila Hotel (1997)
• Phil Shipyard (2000)

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Constitutionally Limited Support to Free
Enterprise

• The State recognises the indispensable role of
  the private sector, encourages private enterprise
  and provides incentives to needed investments.
• BUT State may intervene in the economy
• To promote distributive justice
• When common good so demands

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Laws Regulating the Economy

• Regulate the conduct of business
• Restrict entry and competition
• Devolve regulation

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Laws Regulating the Conduct of Business

• a socially conscious, free market that regulates
  itself
• encourage the widest participation of ownership
• enhance the democratisation of wealth
• ensure fairness and transparency

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Laws Regulating the Conduct of Business

• Incentives for investments (except security,
  health and morals and constitutional bans)
• Deregulation in banking, telecoms, transportation
• Trade liberalisation (ex. Retail trade)
• Commitments to WTO (ex. money laundering law)

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Laws Restricting Entry and Competition

• nationalistic restrictions
• Safeguard Measures Act (RA 8800)
• non-nationalistic restrictions
• public utility franchising
• monopoly rights given to public enterprises
• licensing, and rules to remove barriers to
  competition

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Law Devolving Regulation

• Devolved areas Health, agriculture, social
  welfare, environment
• Others explicitly granted agricultural lands,
  zoning, local transport
• Business licenses and permits
• For comfort and convenience of inhabitants
• Local Government Code of 1991 (RA 7160)

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Institutional Framework

• Legislative Involvement in Regulation
• House of Representatives Legislative Franchises
  Trade and Industry Banks and Financial
  Intermediaries Economic Affairs and a special
  committee on entrepreneurship development.
• Senate Economic Affairs Trade and Commerce
  Public Services and Banks and Financial
  Institutions
• The Judiciary
• Checks and balances The E-VAT Law

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The Regulatory Agencies

• 19 government agencies primarily in economic
  regulation
• Balance of involvement and independence
• Governing body collegial? Qualifications?
• Autonomy where in admnistrative system?
• Fiscal autonomy and accountability
• Appeal from decisions

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Banking and Finance

• Bangko Sentral ng Pilipinas (BSP, the new Central
  Bank)
• Securities and Exchange Commission (SEC)
• Philippine Deposit Insurance Corporation (PDIC)
• Office of the Insurance Commissioner (OIC)

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Trade and Commerce

• Department of Trade and Industry (DTI)
• Bureau of Product Standards (BPS)
• Bureau of Trade Regulation and Consumer
  Protection (BTRCP)
• Board of Investments (BOI)
• Tariff Commission (TC)

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Water Utilities

• National Water Resources Board (NWRB)
• Metropolitan Waterworks and Sewerage System-
  Regulatory Office (MWSS-RO)

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Energy

• Department of Energy (DOE)
• Energy Regulatory Commission (ERC)

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Transport and Communications

• Civil Aeronautics Board (CAB)
• Maritime Industry Authority (MARINA)
• Land Transportation Franchising and Regulatory
  Board (LTFRB)
• Air Transportation Office (ATO)
• National Telecommunications Commission (NTC)

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Labor Sector

• Philippine Overseas Employment Administration
  (POEA)
• Occupational Health and Safety Center (OSHC)

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Organizational Status
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Governing Bodies
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Membership of Boards/Commissions

• Terms of Office BSP, SEC, PDIC, ERC and BOI have
  terms fixed by law
• Qualifications
• generally relate to recognized competence in
  an academic field
• conflict of interest

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Fiscal Autonomy

• independent from the outside control
  re-management of financial resources
• PDIC
• BSP
• dependent on annual government appropriations

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System of Review over Decisions of Regulatory
Agencies
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Accountability

• To State audit of finances and performance
• To regulated
• To clients and public at large
• As civil servants

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Challenges of Regulatory Governance

• Overlapping jurisdictions and divergent views of
  the public interest (ex. Cement importation)
• Self-regulatory mechanisms
• Independence of the regulators

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Overlapping Jurisdictions The Case of the
Cement Industry

• jurisdiction over the imposition of safeguard
  measures
• definition of public interest from different
  perspectives
• nationalism amidst globalization

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Self-Regulating Organisation

• Philippine Stock Exchange (PSE)
• the composition of the board
• the exchange must be de-mutualised
• Philippine Council for NGO Certification (PCNC)

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Independence of Regulators

• MWSS-RO case
• the RO has no legal character
• ROs relation to the Concessionaires
• ROs powers and functions

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Research Agenda

• Philosophical and Ethical Underpinnings
• Nationalism vs Globalisation
• Corruption and Regulation
• Challenges of Regulatory Governance

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Challenges to Regulatory Governance

• Regulation and Competition Policy
• Political Economy of Regulation (Power sector)
• Privatisation and Regulation (MWSS Regulatory
  Office)
• Regulation and Access of the Poor (Telecoms)
• Regulation by local government or the private
  sector

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