Effects of Globalization in Philippine Public Administration Submitted

Effects of Globalization in Philippine Public Administration Submitted to: Professor Marilyn Lim Reported and Submitted by: Marie Grace Z. Gomez and Claro Emmanuel M. Lavado September 24, 2011 PUP OUS MPA 629 Trends and Issues in Public Administration LOGO

Globalization Class participation – “Meaning of Globalization” Play Video

What is globalization? v Increased and intensified flows between countries of goods, services, capital, ideas, information and people, which produce national cross-border integration of a number of economic, social and cultural activities. v An increased global integration and interdependence; v Has a multidimensional character: economic, political, social and cultural; v Characterized by unprecedented rapid flows of goods and services; private capital; circulation of ideas and tendencies; and v Emergence of new social and political movements.

Drivers of Globalization v Trade and investment liberalization policies v Technological innovation and the reduction in communication and transportation costs v Entrepreneurship v Global social networks

Challenges of PA in Globalizing the World 1. 2. 3. 4. 5. 6. Alleviation of poverty and inequality Advancement of human rights and democracy Protection of the environment and sustainable development Mobility of workers and migration Demographic trends: ageing population and impact of HIV/AIDS Bridging the digital divide

Impact of globalization 1. Affects the role and functioning of the State 2. Re-designing the State 3. Reinventing the Government

Impact of globalization 1. Affects the role and functioning of the State a. Role in domestic and international governance b. Multi-layered governance

Impact of globalization 2. Re-designing the State a. Privatization and deregulation b. Market-like mechanisms c. Decentralization d. Debucratization

Impact of globalization 3. Reinventing the Government a. Let the managers manage b. Empowering citizens c. New responsibility mechanisms d. Introducing business principles into public affairs e. Downplaying the concept of “public service” f. Promoting professional ethics in the public sphere g. Performance management h. Performance budgeting

Public’s View on the pros and cons of globalization Class participation – “Is Globalization is good or bad” Play Video

Philippines’ Response to Globalization Timelines 1949 to 1960: Protective Era Response Implication Imposed Import and Foreign exchange controls due to sever Balance of Payments (BOP) crisis dwindling foreign exchange reserves. Bias against export production prevented local industries from advancing and achieving comparative advantage and economies of scale in producing world market

Philippines’ Response to Globalization Timelines 1960 s: Period of Decontrol Response BSP launched decontrol program, calling for the gradual removal of import and foreign exchange controls RA 6158 or Investment Incentives Act which offers incentives to local and foreign investors who would venture into preferred areas of investments Creation of BOI mandated Implication Inability of exports to expand inhibited the growth of industrial employment

Philippines’ Response to Globalization Timeline s 1970 s Response Implication RA 6135 or Export Incentives Act in 1970 providing additional incentives to export producers Generated employment because BOI-registered exporters are allowed to deduct the total cost of direct labor and local raw materials used in export production from their taxable income Devaluation of the Phil Peso policy Peso-dollar exchange rate gradually went up 1972, Simplification of the Tariff and Customs Code, establishment of export processing zones and industrial estates, General Agreement on Tariffs and Trade (GATT), strengthening and Drew favorable reception from electronics and garments firms which are heavily dependent on imported materials Exodus of mostly blue-collar

Philippines’ Response to Globalization Timelines 1980 s Response Adopted Structural adjustment program (SAP) Implication Export and manufacture of semi-conductors and garment gained prominence 1986, EO 226 or Simplified laws and Omnibus Investments provided income tax Code holiday

Timelin es Philippines’ Response to Globalization Response 1990 s RA 7042 Foreign Investment Act and onwards Implication Liberalized the existing regulations (i. e. , for those not included in the Foreign Investment Negative List) • Exports grew 1970 - US$1. 1 B 1980 - US$5. 8 B 1990 US$8. 2 B 1992, full foreign exchange 1994 – US$13. 4 B liberalization - Aimed to create a • Human capital and technologyfavorable macroeconomic intensive goods grew environment that will accelerate • Rise of homeworkers, thus, the process of bringing Philippine Labor Code included conditions -based industries as well as for subcontracting workers Filipinos to the forefront of • Rise of OFWs competitiveness in the world • Incidence of Child work market EO 470 lowered the maximum tariff rate to 50%

Responses and Effects of Globalization to Philippines

Now, let us move forward to vital facts….

Global GDP vs Philippines GDP over the years

ASEAN Countries Association of Southeast Asian Nations

Where we are today WEF Global Competitiveness Report • Rank: • No. 85 / 139 (2010) No. 7 of 8 in ASEAN IFC Doing Business Survey • Rank: • No. 148 / 183 (2011) No. 8 of 8 in ASEAN IMD World Competitiveness Report • Rank: • No. 41/59 (2011) No. 5 of 5 in ASEAN Future. Brand’s Country Brand Index • Rank: • No. 65 / 110 No. 14 of 17 in Asia Pacific No. 75/ 139 (2011)

Our Target WEF Global Competitiveness Report • Rank: • No. 85 / 139 (2010) No. 7 of 8 in ASEAN IFC Doing Business Survey • Rank: • No. 148 / 183 (2010) No. 8 of 8 in ASEAN IMD World Competitiveness Report • Rank: • No. 41/59 (2011) No. 5 of 5 in ASEAN Future. Brand’s Country Brand Index • Rank: • No. 65 / 110 No. 14 of 17 in Asia Pacific No. 30 or higher by 2016 No. 50 or higher by 2016 No. 20 or higher by 2016 No. 30 or higher by 2016

The impact we would like to see v Increase FDI from US$1. 7 B in 2010 to annually _______ by 2016 * v Increase exports from US$ 63. 3 B (2010) ** to US$ 120. 40 B v GDP Growth of 7 - 8%*** Sources: *NSCB (Breakdown: 2010 Baseline - US$ 51. 39 (goods) US$ 12. 27(services) 2016 Target - US$ 91. 5 B (goods) & US$ 28. 9 B (services) ** Chapter 3 Phil Development Plan (Competitive Industry Sector ) *** NEDA Targets

The impact we would like to see v Generate 1 million new local jobs per year **** v Lower Poverty Incidence from 26. 5 % in 2009 to 16. 6 % in 2015. v Shrink class D (62%) and class E (29%) and expand class C from (8. 6%) Sources: **** p. 25, Phil. Labor and Employment Plan 2011 -2016

Where we stand in international metrics … OUR CHALLENGE

WEF – Global Competitiveness PHILIPPINES vs ASEAN 2008 -2010 Over-all rankings COUNTRIES 2010 2009 2008 3 3 5 MALAYSIA 26 24 21 BRUNEI DARUSSALAM 28 32 39 THAILAND 38 36 34 VIETNAM 44 59 54 75 55 70 PHILIPPINES 85 87 71 CAMBODIA 109 110 109 SINGAPORE INDONESIA l Other ASEAN Countries not included in the Survey: Laos & Myanmar

WEF – Global Competitiveness Report RED Bottom 20% (111 th – 139 th) 25 indicators PURPLE Ranked 21 - 40% (83 rd – 110 th) 37 indicators ORANGE Ranked 41 – 50% (69 th – 82 nd) BLACK Ranked 49% or higher (1 st– 81 st) 20 indicators 29 indicators 111 indicators

Priority Areas based on WEF Survey INDICATORS RANKING AGENCIES CONCERNED 2010 2011 1 st pillar: Institutions 1. 03 Diversion of public funds 1. 04 Public trust of politicians 135 134 127 128 1. 05 Irregular payments and bribes 1. 06 Judicial independence 128 111 119 102 1. 07 Favoritism in decisions of government officials 1. 08 Wastefulness of government spending 131 118 DBM, Ombudsman, COA Ombudsman, Multi. Sectoral Anti-Corruption Council, Congress, Senate, LGUs Ombudsman, CSC, COA DOJ, Courts, Supreme Court Cabinet 118 109 DBM, COA, NEDA, OP

Priority Areas based on WEF Survey INDICATORS 1 st pillar: Institutions 1. 09 Burden of government regulation 1. 10 Efficiency of legal framework in settling disputes 1. 11 Efficiency of legal framework in challenging regulations 1. 12 Transparency of government policymaking 1. 13 Business costs of terrorism 1. 17 Ethical behavior of firms RANKING AGENCIES CONCERNED 2010 2011 126 122 126 115 116 118 123 120 126 129 130 118 DBM, NEDA, OP DOJ, Courts, Supreme Courts, Ombudsman, Sandiganbayan DOJ, Courts, Supreme Court Cabinet, NEDA DND, DILG DOLE, DTI, SEC, PEZA, BOI, Private Sector

Priority Areas based on WEF Survey INDICATORS RANKING AGENCIES CONCERNED 2010 2011 2 nd pillar: Infrastructure 2. 01 Quality of overall infrastructure 2. 02 Quality of roads 2. 04 Quality of port infrastructure 2. 05 Quality of air transport infrastructure 113 114 131 112 113 100 123 115 DPWH, DOTC, PPA DOTC 117 119 DOH 3 rd pillar: Macroeconomic environment 4 th pillar: Health and primary education 4. 04 Tuberculosis incidence*

Priority Areas based on WEF Survey INDICATORS RANKING AGENCIES CONCERNED 2010 2011 5 th pillar: Higher education and training 5. 04 Quality of math and science education 6 th pillar: Market efficiency 6. 06 Number of procedures required to start a business* 6. 07 Time required to start a business* 6. 13 Burden of customs procedures 112 115 Dep. ED, DOST, private sector 128 134 DTI, DILG, LGUs 120 129 112 128 DTI, DILG, LGUs DOF, BOC

Priority Areas based on WEF Survey INDICATORS RANKING AGENCIES CONCERNED 2010 2011 7 th pillar: Labor market efficiency 7. 04 Hiring and firing practices 7. 05 Redundancy costs* 116 114 113 118 DOLE-NWPC 112 90 NTC, DOTC, Private Sector 8 th pillar: Financial market development 9 th pillar: Technological readiness 9. 04 Internet users*

Priority Areas based on WEF Survey INDICATORS RANKING AGENCIES CONCERNED 2010 2011 10 th pillar: Market size 11 th pillar: Business sophistication 12 th pillar: Innovation 12. 05 Government procurement of advanced tech products 129 126 ?

IFC WB – DOING BUSINESS SURVEY PHILIPPINES’ 3 -YEAR TREND Over-all Ranking 2011 148 2010 144 2009 140

WB - IFC’s Doing Business Survey: Philippines vs ASEAN* 3 -year trend COUNTRIES 2011 2010 2009 1 1 1 THAILAND 19 12 13 MALAYSIA 21 23 20 VIETNAM 78 93 92 BRUNEI DARUSSALAM 112 96 88 INDONESIA 121 122 129 147 148 145 144 135 140 SINGAPORE CAMBODIA PHILIPPINES * Other ASEAN Countries not included in the Survey: Laos & Myanmar

IFC – Doing Business Survey INDICATORS RED Bottom 20% (146 th – 183 rd) PURPLE Ranked 21 – 40% (109 th – 145 th) ORANGE BLACK Ranked 41 – 50% (91 st – 108 th) Ranked 49% or higher (1 st – 90 th) 3 indicators 4 indicators 1 indicator 9 indicators

DOING BUSINESS REPORT 2011 (out of 183 economies) INDICATORS OVER-ALL RANKING Starting a business Dealing with construction permits Employing workers Registering property Getting credit Protecting investors Paying taxes Trading across borders Enforcing contracts Closing a business PHL BRN CAM IDN MYS SGP THA VNM 148 156 112 133 74 147 170 146 121 155 60 21 113 108 1 4 2 19 95 12 78 100 62 102 128 132 124 61 183 116 120 22 52 117 89 74 57 118 98 116 44 130 47 60 1 4 23 37 15 6 2 4 1 19 72 12 91 12 43 15 173 124 63 118 153 159 42 183 154 142 59 55 13 2 25 46 31 124

Priority Areas based on IFC Survey INDICATORS OVER-ALL RANKING Starting a business RANKING CONCERNED AGENCIES 148 156 Dealing with construction permits 156 Closing a business 153 DTI, DILG, SEC, BIR, etc DTI, LGUs DTI, DILG, SEC, BIR, etc

Working Groups 1. 2. 3. 4. 5. 6. 7. Education and Competitive Human Resources (Dep. Ed) Balanced Scorecard System (CSC, DAP, NGA) Infrastructure for Competitiveness (DOTC / DPWH) Open Skies Ro-Ro / Inter-Modal Transport System Public-Private Partnerships Luzon Logistics Hub Transaction Costs and Flows (DTI/DILG) BPLS - Business Permits and Licensing System PBR - Philippine Business Registry Import and Export Clearance Process / Single Window (BOC) Energy Costs and Availability (DOE) Transparency in Budget Delivery (DBM) * Priority areas under PIP program with Millenium Challenge Corp

Special projects Country Tourism Brand Creation of a new, unified country tourism brand campaign covering advertising, public relations, events, social marketing and new media for both international and domestic audiences Renovation of airports Airports are the most visible “destination” for travellers which can leave a lasting impression at both arrival and departure stages of a trip. There is an urgent need to fix both NAIA and Mactan, renovating and modernizing the interiors and improving airport processes to make travel a more pleasant experience. Other airport projects can follow Upgrade of Roxas Boulevard-to-Intramuros stretch Roxas Boulevard, Luneta Park, and Intramuros remain one of the most visited tourist destinations in Manila and are considered iconic, signature visitor sites. There is a need to restore the area to its former glory

Aside from the public administration challenges mentioned, … There is a new global challenge that the world is faced with….

Impact of Global Warming or Climate change to Human Health (Show PPT) … DOLE’s proactive response is Green Productivity Initiatives

The Singapore’s Phenomenon The Man Who Defined Singapore Lee Kuan Yew Prime Minister of Singapore 1965 - 1990

v Founder of modern Singapore v Led Singapore for 31 years (19651990); Britisheducated lawyer v Now 87 yrs. old, he turned Singapore from a resource-poor, malaria island into a modern financial center v Singapore, as of 2009, although very small, has a wealth fund of between $200 to $300 Billion – an indicator of the country’s progress

The Beginnings of Singapore under Lee Kuan Yew Looking back…. . Expelled from the Federation of Malaysia in 1965 Became a republic on August 9, 1965 Beset with pressing problems (1965 -79) Unemployment Housing Education Lack of Natural Resources

Lee Kuan Yew : An Authoritarian Leader v Controlled the country tightly through the People’s Action Party v Restricted civil liberties v Leashed the press / free speech v Trampled on dissidents v Stunted entrepreneurship and creativity in its citizens v Vigorously fought graft and corruption.

Lee’s key social reform campaigns v Do not chew gums v Do not spit on public places v Do not throw garbage from rooftops v Speak good English v Smile v Mate and Multiply – as part of plan to create first-world citizens within its first world-world infrastructure

Lee’s gigantic efforts to build Singapore v Promoted manufacturing sector v Industrial sector estates were set up v Attracted foreign investment through tax incentives v Ship servicing at the ports promoted

Lee’s gigantic efforts to build Singapore Invited big oil companies (Shell and ESSO ) to establish oil refineries in Singapore, which in the mid ‘ 70 s became the largest oilrefining center in the world Invested heavily on the educational system that adopted English as medium of instruction. Emphasized practical training to develop a competent workforce well-suited for the industry

Lee’s gigantic efforts to build Singapore The 1980’s and 1990’s v Unemployment rate fell from 10% to 3% v GDP growth averaging at 8% v Upgrading to higher technology industries v Changi airport opened in 1981; Singapore Airline Became a Major airline v Port of Singapore became the world’s busiest port

Lee’s gigantic efforts to build Singapore Service and tourism industries grew immediately Promoted public housing that have larger and higher standard apartments with better amenities. 90% of the population lives in apartments Excellent transportation system

Singapore Flyer, Marina Bay Super Tall Solar Trees, Bay South Lion Fountain, Downtown Singapore

Singapore City Modern Apartment Changi Airport

In 1990, Lee Kuan Yew passed the reins of government to his handpicked successor, Goh Chok Tong and continues to retain a fair amount of influence over the present administration of his son, Lee Hsien Loong.

Under Mr. Lee’s two successors Individualism gained more breathing room Ban on chewing gum relaxed Night clubs, once invisible, throb into the wee hours Casinos have been opened More open and consultative style of leadership Political / electoral reforms being instituted

The loosening up in Singapore has Lee Kuan Yew’s full support. He says: “ I think we have to go in whatever direction world conditions dictate if we are to survive and to be part of this modern world. If we are not connected to this modern world, we are dead. We’ll go back to the fishing village we once were. ”

Conclusion Every nation must continually go with the flow of the world’s changing times so as not be left behind. But to be continuously progressive with the changing world, strong conscientious political will is necessary coupled with its productive citizens.

Thank you