Vol. 1 March 2017

Rationalizing GOCCs: The Case of the Merger of the Land Bank of the Philippines and the Development Bank of the Philippines Maria Fe Villamejor-Mendoza, PhD

Reactor’s Note Locating the LBP-DBP merger in the context of regional financial integration Lucio Blanco Pitlo III

Assessing fiscal data openness in local governments in the Philippines Erwin A. Alampay, Pauline Bautista, and Raphael Montes

Reactor’s Note Learning from the Korean Narrative in Open Governance: A Reaction to “Harnessing Open Data for Fiscal Transparency in Local Governments in the Philippines” Jinky Joy dela Cruz

Synergies: Production, Marketing, and Promotion of Philippine and Korean Television Series Josefina M. C. Santos

Reactors’ Note Contemporary Production Processes: Restructuring our Understanding of Philippine Teleseryes vis-a-vis Koreanovelas Jose Wendell P. Capili, PhD

The HanPil (한필) Occasional Papers on Korea and the Philippines is published electronically by the University of the Philippines Korea Research Center. All papers included in the current volume underwent a single-blind peer review process. The HanPil will be published annually.

Copyright © 2017 by the UP KRC and authors

All rights reserved, except that authorization is given herewith to academic institutions and educators to reproduce articles herein for academic use as long as appropriate credit is given both to the authors and to this publication.

The views expressed in each paper are those of the authors of the paper. They do not necessarily represent or reflect the views of the UP KRC, its Editorial Committee, or of the University of the Philippines.

ISSN 2546-0234 (Online) ISSN 2546-0226 (Print)

The papers were prepared for the research project of the Korea Research Center at University of the Philippines (UP KRC) supported by the Academy of Korean Studies Grant (AKS-2015-INC-2230012). Earlier version of the papers was presented at the 7th Biennial Conference of the Korean Studies Association of Southeast Asia (KoSASA) held at Novotel, Araneta Center, Cubao, Quezon City on September 28-30, 2016.

UP Korea Research Center Editorial Committee Eduardo T. Gonzalez, PhD Aldrin P. Lee, PhD Kyungmin Bae Pamela Jacar

UP Korea Research Center Address: 3F South Wing Quezon Hall, University Avenue, University of the Philippines, Diliman, Quezon City, Philippines Tel : +63 2 981 8500 loc 2543 Email : [email protected]

Vol. 1 March 2017

TABLE OF CONTENTS

Foreword

Rationalizing GOCCs: The Case of the Merger of the Land Bank 1 of the Philippines and the Development Bank of the Philippines Maria Fe Villamejor-Mendoza, PhD

Reactor’s Note 35 Locating the LBP-DBP merger in the context of regional financial integration Lucio Blanco Pitlo III

Assessing fiscal data openness in local governments in the Philippines 47 Erwin A. Alampay, Pauline Bautista, and Raphael Montes

Reactor’s Note Learning from the Korean Narrative in Open Governance: 93 A Reaction to “Harnessing Open Data for Fiscal Transparency in Local Governments in the Philippines” Jinky Joy dela Cruz

Synergies: Production, Marketing, and Promotion of Philippine and 102 Korean Television Series Josefina M. C. Santos

Reactors’ Note Contemporary Production Processes: Restructuring our 137 Understanding of Philippine Teleseryes vis-a-vis Koreanovelas Jose Wendell P. Capili, PhD

Notes about Contributors 143

Foreword

It is my pleasure to introduce this first edition of the “HanPil (한필): Occasional Papers on Korea and the Philippines”. Although not a regularly issued publication, Occasional Papers will be a standard feature of the UP Korea Research Center to keep the scholarly public in touch with developments which relate to Philippine-Korean relations.

These Occasional Papers bring together research carried out by academic authors from the University of the Philippines at Diliman. They are largely case studies offering fresh perspectives about a diverse set of topics for which both Korea and the Philippines share common grounds: organizational reform of financial institutions, the crucial role of unified communications technology at subnational levels, and the rise of a particular genre of Filipino drama that takes its lead directly from Korean soap opera. The papers were the outcome of a research project undertaken under a seed program grant given by the Korean Studies Promotion Service of the Academy of Korean Studies centered around two themes: public policy in Korea and the Philippines, and the social impact of Korean cultural products in the Philippines. They were initially presented at the 1st UP KRC Workshop and Roundtable, “Continuity and Progress of Korean Studies in the Philippines”, and subsequently at the 7th Korean Studies Association of Southeast Asia (KoSASA) conference, “Glocalisation of Korean Studies: Strategic Cooperation in Research and Education between Southeast Asia and Korea” hosted by UP and held on September 28-30, 2016 at Novotel Araneta. All three papers went through a single-blind review process.

You may wonder why the main papers are not in the mold of contemporary comparative research. Instead, the articles on banking and ICT focus solely on the Philippine situation, while the paper on the drama series happens to refer to Korean production mainly as the inspiration, if not progenitor, of a particular Philippine telenovela. The actual comparisons with Korea come by way of the reactors’ notes. The use of outright comparison was avoided, not because of hesitation in drawing parallels, but out of respect for the uniqueness of contexts. Just as looking through a pair of eyeglasses changes the way we see a thing, so using Korea as a framework for understanding the Philippines at the very start may unnecessarily alter the manner we frame the economic, social or cultural circumstances in the Philippines. Thus the authors went straight to the heart of their “Philippine” arguments, spending no or little time on seeing them from a Korean lens, which subsequently was supplied by the reactors. In this way, the

comparisons, coming after the fact, serve to provide the contrasts and similarities between the two countries in a much more analytically forceful way.

The launch of the Occasional Papers is a major step in the effort of the UP KRC to broaden interest in and understanding of South Korea in the economic, social and cultural fields. We believe that publications are an ideal vehicle to capture the diverse scholarly interests of Korean Studies enthusiasts in UP and other higher educational institutions. These Occasional Papers, as well as other forthcoming UP KRC publications, can be openly accessed online, and will likewise be made available in printed form on demand. We look forward to your feedback and comments, using our contact address at [email protected].

This inaugural issue owes much to many people. We thank first of all the authors and reactors for their scholarly contributions. Thanks are due to the AKS-KSPS program, for its wholehearted support. We likewise acknowledge the Korea Research Institute of the University of New South Wales, from whose initial guidance we benefitted immensely. I would also like to add my thanks to my colleagues, Aldrin Lee and Kyungmin Bae, who drew up the parameters of these papers. Ms Bae, in particular, was the key figure behind the demanding collaborative processes which lie behind this project. We owe much, too, to the anonymous referees who vetted the papers. Last but not least, I wish to thank Pamela Jacar, our energetic administrative assistant at the UP KRC office.

Eduardo T. Gonzalez, PhD Director UP Korea Research Center

Rationalizing GOCCs: The Case of the Merger of the Land Bank of the Philippines and the Development Bank of the Philippines

Maria Fe Villamejor-Mendoza, PhD* National College of Public Administration and Governance University of the Philippines, Diliman

ABSTRACT One of the recent reform initiatives of the Philippine government on state-owned enterprises (SOEs) or government owned or controlled corporations (GOCCs) in local parlance, is the proposed disposition of two major government financial institutions (GFIs) in the country, e.g., the merger of the Development Bank of the Philippines (DBP) and the Land Bank of the Philippines (LBP). The merger was predicated on what the Governance Commission for GOCCs (GCG), the central advisory, monitoring, and oversight body for GOCCs believed as the duplication or overlapping functions of both banks. Such consideration is one of the standards for implementing a merger (Sec. 5) under R.A. 10149 or the “GOCC Governance Act of 2011” mainly in order that the “corporate form of organization through which government carries out activities is utilized judiciously” (Sec. 2). This case study thus interrogates the rationale, implications, challenges and lessons of this GOCC reform initiative. Merging two giant GFIs in the country is unprecedented in the GOCC sector because in the past, the preferred dispositive modes were privatization, abolition and regularization. It also briefly revisits and anchors analyses on recent (macro) reforms on the GOCC sector, from 2001-present.

KEYWORDS: Dispositive action, merger of GOCCs/GFIs, LBP, DBP, public enterprise reform

１ OVERVIEW

The Philippine public enterprise sector (PES) or the government owned and/or controlled corporations (GOCCs) in local parlance, has been created to be potent tools for development. They are supposed to perform governmental/development and proprietary/business functions and be in areas, which are pioneering in nature, where the investment required is large and the gestation period is long. In the commanding heights of the State, they have been almost everywhere, e.g., in industries related to financing, public utilities, agricultural development and trading, even in agricultural development, social, civic, educational and scientific endeavors, and gaming and gambling (Mendoza 2007). These have led to observations that the sector has been crowding out the private sector, has been financial millstones and venues for corruption and abuses, and has become irrelevant without any performance to speak of (Mendoza, 2007). Over the years, reforms have been in place to rationalize and reengineer, instill financial discipline, and make GOCCs more accountable and performing One of these recent reforms is the proposed disposition of two major government financial institutions (GFIs) in the country, i.e. the merger of the Development Bank of the Philippines (DBP) and the Land Bank of the Philippines (LBP). The merger was predicated on what the Governance Commission for GOCCs (GCG), the central advisory, monitoring, and oversight body for GOCCs believed as the duplication or overlapping functions of both banks. Such consideration is one of the standards for implementing a merger (Sec. 5) under R.A. 10149 or the “GOCC Governance Act of 2011” mainly in order that the “corporate form of organization through which government carries out activities is utilized judiciously” (Sec. 2). With the perceived duplication seemingly rectified, the intended merger with the LBP as the surviving entity will create the second largest universal bank in the country in terms of total assets and deposits, and 4th in terms of loans and capitalization. The GCG further expects that such dispositive action will provide a more stable and stronger base for development financing (GCG 2016 Press Release) in order that LBP will contribute more significantly to economic development and inclusive growth in the Philippines. President Aquino III approved the merger proposal through Executive Order 198 s. 2016. Procedurally though, the approved merger

２ has to go through the due diligence and other checks by the Bangko Sentral ng Pilipinas (Central Bank of the Philippines), the country’s regulator of banks, and the Philippine Deposit Insurance Corporation (PDIC). In addition, the new administration under President Duterte does not approve of the merger and would work for the repeal of the said EO. Against these backdrops, this research will examine the rationale, implications, challenges and lessons of this GOCC reform initiative. Merging two giant GFIs in the country is unprecedented in the GOCC sector because in the past, the preferred dispositive modes were privatization, abolition and regularization. It will also briefly revisit and anchor analyses on recent (macro) reforms on the GOCC sector, from 2001-present.

NATURE, PROBLEMS AND CHALLENGES OF PHILIPPINE GOCCS

State-owned enterprises (SOEs), public enterprises (PEs) or government- owned and/or controlled corporations (GOCCs) in Philippine terminology are defined in PD 2029 (1986) and restated in AO 59 (1988) as:

…stock or non-stock corporations…performing governmental or proprietary functions, which is directly chartered by special law or if organized under the general corporation law is owned or controlled by government directly or indirectly through a parent or subsidiary corporation, to the extent of at least a majority of its outstanding capital stock or its outstanding voting capital stock. GOCCs perform both developmental (public) and proprietary (enterprise) functions. Doing both poses problems in its nature, direction and effects. GOCCs presuppose a mix of conflicting functions, which regular agencies may not be problematic about. Thus, they face unique governance challenges that make the path to reform even more difficult than a regular government agency or the private sector.

PEs are institutions that presuppose a mix of ‘public’ and ‘enterprise’ dimensions which seek to place within the same organization the character of a business organization and that of national policy (Fernandez and Sicherl, 1981). They are bastardized organs of the State

３ which unfortunately can neither optimize self-interest nor fully serve the public interest (Sherwood, n.d.) because they perform business functions but at the same time are entrusted with certain socially-relevant goals (Tabbada and Baylon, 1991). As such, they have multiple and oftentimes-conflicting objectives (e.g., proprietary and development, profit and service), are subject to excessive political interference, and lack transparency, accountability and productivity (Mendoza, 1995). They also often acquire bad habits: burdensome bureaucracy; confused objectives; directors owing responsibility not to the public but to the state or ministry or even to individuals within government or a political party (Bati, 2005). They have been organized and operated because of actual or presumed weaknesses or failures of the market. Particularly during the “commanding heights” era, they were created to provide certain activities, which are pioneering in nature, especially where the investment required is large and the gestation period is long (Tabbada, 1989). Prior to 1972 (Martial Law period), they were formed to respond to long-established strategic needs such as the following:

1) Rehabilitation and restructuring after the war; 2) Those requiring large scale indivisible investments; 3) A basic industry that provides high forward linkages; 4) There is public sentiment to keep the industry free from foreign control because of its impact in the economy; and 5) The private sector is unwilling or unable to put up the capital to establish the industry (Tabbada, 1989; Alvendia 1991).

Later, GOCCs became “major arenas for the consolidation of economic and political power” (Dytianquin, 1985). They were also abused and used as “laundry services and tools to transfer public resources to the hands of cronies and the private few” (Briones, 1985). As of 2009-2010, the GOCCs accounted for a significant percentage of the assets, liabilities and expenses of the government. Expenditures were some twenty-eight percent (28%) of the national government. GOCC assets were some P5.557 trillion vis-à-vis the national government’s P2.879 trillion. They also account for 91 percent of the total inter-agency receivables of the national government (Drilon, 2011). The GOCCs are also widely perceived as mismanaged, with salaries of its top executives higher than their private sector counterparts or of the President of the Republic, but with less accountability for performance

４ and results (Senate, 2005 as cited in Mendoza, 2007). In recent years, there have been various reports about high-ranking officers of GOCCs being charged with graft for misappropriation of government resources, dispensation of bloated salaries, unauthorized purchase of assets, and abuse of power (Senate Hearing 2010).

RECENT REFORMS: TRANSFORMATION TO NEW PARADIGM IN GOCC GOVERNANCE?

Over the years, the Philippine government has pursued reforms in the GOCC sector. These reforms were to put in place a comprehensive regulatory framework, implement the privatization, consolidation and abolition of some GOCCs, as well as strengthen government’s oversight functions over GOCCs (Department of Budget and Management, 2011). These were likewise aimed to reshape, redefine, and redirect the sector, ensure financial discipline, guide the creation/definition of GOCCs, disposition, compensation, performance evaluation and audit, and privatization (Mendoza, 2007). Despite these reforms, the GOCCs and their executives have remained embroiled in scandals after scandals involving graft for misappropriation of government resources, dispensation of bloated salaries, unauthorized purchase of assets, and abuse of power among others. These seeming unconscionable abuses and the mismanagement of the PES led to the enactment of RA 10149, otherwise known as the GOCC Governance Act of 2011. RA 10149 aims to provide greater transparency, periodic disclosure and evaluation of operations and finances, creation of appropriate remuneration schemes, and clear separation between the regulatory and proprietary activities of GOCCs. It was also intended to promote financial viability and fiscal discipline in GOCCs and strengthen the role of the state in its governance and management to make them more responsive to the needs of public interest (RA 10149). The Act underscored the need to enhance the ability of GOCCs to act as stewards of the people’s resources by adhering to the highest standards of corporate governance and thus put an end to issues such as weak board governance, lack of transparency and accountability, incoherent disclosure practices, poor oversight and multiple and conflicting mandates (Governance Commission for GOCCs 2011). At the heart of the Act lie structural reforms designed to steer GOCCs towards

５ responsible, transparent and accountable governance as the foundation for delivering sustainable and breakthrough results (Governance Commission for GOCCs 2014). The marked transformative value of the Act is the creation of the Governance Commission for GOCCs (GCG) within the Office of the President, to serve as “the central advisory, monitoring, and oversight body with authority to formulate, implement and coordinate policies” over the GOCC sector. The GCG is also supposed to evaluate, classify, streamline the GOCCs, promote merit and fitness and extract accountability. In the past, these reform initiatives were enshrined in different statutes, guidelines and oversight bodies. Since 2011, these were all entrusted in one central body, for better planning, direction and evaluation. Among others, the Act also introduced the Fit and Proper Rule in determining who are qualified to become members of the Board, CEO and officers of GOCCs with due regard to one’s integrity, experience, education, training and competence (Sec. 16). GOCC officers are expected to serve as fiduciaries of the State and always act in the best interest of the GOCC (Sec. 19 and 21). Thus, they are expected the highest standard of extraordinary diligence in their fiduciary duties as officers. They should maintain a term of one year, unless sooner removed for cause (Sec. 17, RA 10149). These improvements from past reforms underpin the need for criteria and higher qualification standards for GOCC officials. They should not only be competent and qualified; they should also be morally fit and prudent in their spending.

RATIONALIZING THE GFIs: THE CASE OF THE MERGER OF THE LBP AND DBP

One of the most recent reform initiatives in the GOCC sector is the proposed dispositioni of two major government financial institutions (GFIs) in the country, i.e. the merger of the Development Bank of the Philippines (DBP) and the Land Bank of the Philippines (LBP or LandBank). Both banks are performing well so why make such a decision to merge? What were the precipitating factors or triggers for the reform measure? Were there other considerations that raised the need for a review other than the provision of the GCG Act to rationalize, merge, or privatize GOCCs? What were the complications and challenges of this

６ merger? What lessons may we learn to guide future reform efforts in the public enterprise sector?

The GFIs Involved: LBP and DBP A Government Financial Institution (GFI) is defined as:

“a financial institution in which the Government directly or indirectly owns majority of the capital stock and which are either registered with or directly supervised by the Bangko Sentral ng Pilipinas“ (EO 24. Prescribing Rules to Govern the Compensation of the Board of Directors/Trustees of GOCCs s. 2011)

Within the government financial institutions lay two of the country’s biggest lending institutions created not only as commercial banks but also to serve development objectives such as providing services to the people through loans, investments and insurances. While most banks perform basic financial services to a clientele that ranges from private individuals to big corporations, the LBP and the DBP cater to the needs of those who belong to the agriculture sector as well as small businesses.

Land Bank of the Philippines (LBP) The Land Bank of the Philippines (LBP) was established through the Republic Act 3844 or the Agricultural Land Reform Code, under the administration of President Diosdado Macapagal in 1963. Its mandate included financing the acquisition and distribution of agricultural estates for division and resale to small landholders as well as the purchase of the landholding by the agricultural lessee. In 1988, R.A. No. 6657 designated LBP as the financial intermediary for the Comprehensive Agrarian Reform Program (CARP), and also mandated it to prioritize its role in the CARP for its operations (Land Bank of the Philippines, 2014) At present, LBP performs its mandated dual function in the financial system. Aside from it being a commercial bank, LBP prioritizes the development of the country’s rural areas, and caters to the needs of agriculture-related projects and small and medium enterprises, among others (Land Bank of the Philippines, 2014).

Development Bank of the Philippines (DBP) DBP was created pursuant to “The 1986 Revised Charter Of The Development Bank Of The Philippines” (E.O. No. 81) with the primary purpose of providing banking services for the medium and long-term

７ needs of small/medium enterprises (SMEs) in the agricultural and industrial sector, particularly those operating in the countryside. DBP has experienced several transformations from 1935 to present. These include from being the coordinator and manager of government trust funds when it was the National Loan and Investment Board (NLIB) in 1935; to harnessing of government resources as the Agricultural and Industrial Bank (AIB) in 1939; to being the distributor of credit facilities for the development of agriculture, commerce and industry, and focal unit for the reconstruction of properties damaged by the war when it was the Rehabilitation Finance Corporation (RFC), created in RA 85 s.1947; to the present as it caters to the needs of the present generation, centered on the acceleration of efforts for sustainable national growth and development (Development Bank of the Philippines, 2010). At present, DBP is classified as both a development financial institution and thrift bank which provides for the needs of small and medium agricultural and industrial infrastructures (Development Bank of the Philippines, 2015). It also prioritizes the development of several areas like: production infrastructure, social infrastructure, distribution infrastructure and environmental management (Development Bank of the Philippines, 2015). From 2012 to 2014, both the LBP and DBP have been performing well financially. As shown in Fig. 1, both GFIs have posted steady increases in total comprehensive income (TCI) and have topped the robust financial performers in GOCCs. Fig. 2 meanwhile shows an 80-85% increase in the loans granted to priority areas by both banks in 2014 compared to 2011. Loans were granted to small farmers and fisherfolk, micro, small and medium enterprises (MSMEs), manufacturing and infrastructure projects, etc. In addition, relative to other (private) banks in the country, both GFIs rank fairly well in terms of assets, loans, deposits and capital (Table 1). As of 2014, LBP was fourth in the first three criteria (to Banco De Oro [BDO], Bank of the Philippine Islands [BPI] and Metropolitan Bank and Trust Company [MetroBank] [www.philippinesplus.org.com]). In terms of capitalization, LBP ranked fifth. The DBP, meanwhile, is 9th overall, except for assets where it ranked 6th (Table 1). Thus, in general, both banks were not losing, nor suffering from bad loans portfolio, nor being perceived as inefficient. But why merge?

８ Table 1. Financial Highlights of GFIs, 2012-2014

Source: Government Commission for GOCCs, 2014

９ Figure 1. Loan Portfolio of LBP and DBP, 2014

Source: Government Commission for GOCCs, 2014

Table 2. Pre-merger, Post-merger Data according to Assets, Loans, Deposits and Capital, 2014 Level and Industry Rank in terms of Assets, Loans, Deposits and Capital Pre-Merger Post-Merger DBP Landbank P Billion Rank P Billion Rank P Billion Rank

Assets 476.3 6th 1,051.3 4th 1,527.6 3rd

Loans 143.1 9th 405.3 4th 548.4 4th

Deposits 293.8 9th 914.2 4th 1,208.0 2nd

Capital 36.2 10th 75.2 5th 111.4 4th Source: DBP and LBP

１０ The Need to Merge: Legal and other Bases Prior to the proposed GCG merger proposal, the House of Representatives approved House Bill 5755 during its third and final reading on 25 May 2015 (Cayabyab, 2015). HB 5755 is “An Act Authorizing the Merger of the Development Bank of the Philippines and the Land Bank of the Philippines, with the Land Bank of the Philippines as the Surviving Entity.” Principally authored by Representative Sonny Collantes, it seeks to rationalize the financial operations of the LBP and DBP, as well as establish and safeguard their competitiveness in the local and international business markets. Also, it gives the LBP, as the surviving entity, the authority to exercise the powers and privileges of DBP under its 1986 Revised Charter. With regard to the employees and working personnel who would be affected by the merger, the bill also provides for a separation and retirement benefit program (Cayabyab, 2015). The Bill was transmitted and received by the Senate three days after its approval in the House of Representatives. (Cayabyab, House passes DBP, LBL merger bill, 2015). However, it was stalled because of the seeming lack of support and approval from the Senate and the administration (Delavin, 2015).

Rationale: Duplication/Overlaps On February 4, 2016, or a semester after, former President Benigno Aquino III signed Executive Order (EO) No. 198, which authorizes the merger of the two banks (de Vera B. , 2016). EO 198 was primarily predicated on the President’s control of the entire executive branch, wherein GOCCs are part of (Section 17 Article VII, 1987 Philippine Constitution). It also recognized the role of the Governance Commission for GOCCs in ascertaining whether GOCCs have to be merged, abolished, regularized or privatized. It also adopted the GCG’s recommendation that it is to the best interest of the State to merge LBP and DBP because

1) The functions of DBP and LBP duplicate and/or unnecessarily overlap with one another; 2) The merger of LBP and DBP will further enhance the financing of priority projects and sectors such as infrastructure, public services, agrarian reform/agriculture and SMEs; 3) It will provide better access and provide quality financial products and services to more unbanked and underserved areas;

１１ and 4) It will build a stronger and more competitive universal development bank able to fulfill its mandate of providing banking services to propel countryside development and to contribute to sustainable and inclusive growth. (Office of the President of the Philippines, 2016)

The GCG justified the merger based mainly on the overlaps or duplication in both banks in terms of their mandate, clientele and services. Among these are: (1) both provide banking services to agricultural sectors and other agriculture-related projects, and to promote rural development; (2) both provide for the needs of small farmers, fisherfolk, small and medium enterprises; and (3) both provide deposit products and cash services, trade products and services, trust services, electronic banking and services for Overseas Filipino Workers (InterAksyon.com, 2016). Please see Table 3. Further, the GCG explained, “the merger will consolidate development banking in the country to more effectively contribute to sustainable and inclusive growth. It will build a stronger universalii development bank with a solid resource base, unmatched geographical reach, inclusive customer base, a loan portfolio catering to priority sectors, and institutional knowledge and experience in developmental finance. It will benefit the economy in important ways: (i) by enhancing the financing of priority projects and sectors, (ii) by widening access to financial services, and (iii) by building a stronger development bank thus contributing to the stability of the financial system.” (GCG 2016) Thus, operationally, the merger would theoretically create the Philippines’ second largest bank in terms of total assets (Magtulis & Porcalla, 2016)(Also please See Table 1). The consolidated entity, while second only to the Banco De Oro (BDO) Unibank, overtakes Metropolitan Bank and Trust Company (MetroBank) and Bank of the Philippine Islands (Magtulis & Porcalla, 2016).

Table 3. Overlaps in DBP and LBP DBP LBP To provide banking services To provide banking service principally to cater to the with a social mission of Mandate medium and long-term needs spurring countryside of agricultural and development by granting industrial enterprises with loans to agricultural,

１２ emphasis on small and industrial, home-building or medium-scale industries to home-financing projects and develop the countryside. other productive enterprises, farmers, cooperatives/ associations to facilitate production, marketing of crops and acquisition of essential commodities, and to cross-subsidize agrarian land transfers Small farmers & fisherfolk Agri and aqua-business (public and private sector) 1. Infrastructure and MSMEs Logistics Communications 2. Social Services Transportation Sectors 3. Environment Housing Served 4. Micro, Small and Medium Education Enterprises (MSMEs) Health care Tourism Environment-related projects Utility-related projects 1. Deposit Products 2. e-Banking Products 1. Deposit Products and 3. OFW Remittance Product Cash Services 4. Fund Transfer 2. Trade Products and (Remittance) System Services 5. Loans for Cooperatives 3. Center for Global 6. Countryside Loan Fund Services/P Filipinos 7. Treasury Products roducts 1. Remittance Products and 8. Trust Products & Services Services 9. Assistance Programs for 2. Reintegration Program Landowners for OFWs / MSME Loans 10. Programs for Countryside 1. Trust Services Financial Institutions (CFIs) 2. Electronic Banking 11. Technical Assistance & other Programs for Cooperatives Source: GCG Briefing Paper on the Merger of DBP and LBP, 2016

１３ Pres. Aquino added that the merger is necessary “to rationalize the operations of the LBP and the DBP, strengthen their financial capabilities, improve the delivery of services, achieve economic efficiency and support the development thrusts of the government” (Leyco, 2016). Similarly, Finance Secretary Cesar Purisima observes that the merger “bodes well for the stability of our banking system” ("Govt says DBP- LBP", 2016). According to the 2016 briefing paper provided by the GCG, the resulting body from the merger will be “more effective, efficient and sustainable in carrying out the mandates of both banks, particularly in anticipation of the wave of foreign banks that may enter the Philippine market upon the occurrence of ASEAN integration of 2015” (InterAksyon.com, 2016). It is also foreseen to have better retail and wholesale banking operations compared to that of the LBP and DBP as separate entities ("Govt says DBP-LBP", 2016).

Assumed Benefits The benefits of the merger, according to the GCG analysis in 2016 shall nd include the production of a stronger government bank, creating the 2 largest universal bank in the country in terms of total assets at P 1.6 nd trillion. The surviving bank will also be 2 in terms of deposits at P 1.2 th trillion. In terms of loans and capitalization, it will be 4 at P 582 billion and P 114 billion, respectively. Further, it shall enhance financing of priority projects and sectors with a more diversified portfolio that shall support both growth in agriculture, SMEs, and other priority sectors, as well as investments in infrastructure and public utilities. It shall also provide a bigger fund base with its combined capital base and total deposit base thus allowing greater lending capacity.

1) Enhanced Financing. Among others, the merger hopes to redound to a more diversified portfolio, greater lending capacity and access to long term funding (GCG 2016). a. Diversified Portfolio. DBP and LBP allocate the bulk of their portfolios to mandated sectors and National Government priorities. DBP’s lending program is geared to supporting investments in infrastructure and logistics, social services, environment, and SMEs. LBP's mandate has focused on supporting growth in agriculture – providing financing to

１４ individual producers, agri-business, rural banks, and cooperatives – as well as financing priority projects of the government. Both banks provide financial services to public sector agencies. The GCG believes that the merger will result in a stronger bank with significant exposures in agriculture and industry, small producers and SMEs and other priority sectors, as well as priority investments in infrastructure and public utilities (GCG 2016). b. Greater Lending Capacity. The combined capital base of P133 Billion and total deposit base of P1.2 Trillion of DBP and LBP will support higher loan growth by providing a bigger fund base and by raising single borrower’s limit (SBL). DBP’s current SBL stands at P9 Billion while that of LBP is at P18 Billion. The merger will result in a combined SBL of P27 Billion. The infusion of P30 Billion in equity as proposed in EO 198iii will boost the LBP’s SBL significantly and enable it to fund big- ticket infrastructure projects, which private banks had difficulty serving due to SBL and other regulatory constraints (GCG 2016). See Table 3. c. Access to Long-term Funding. – Providing long-term financing is a key mandate of most development banks. DBP and LBP have built strong relationships with sources of long-term finance like the WB, ADB, JICA, KfW, JBIC, IFID. Combined total approved loans reached $3.6 Billion in 2014, of which $1.3 Billion is available for relending in critical areas like infrastructure, environment, SMEs and social services. On top of ODA funds, there is a need to develop competitively priced long-term financing to support infrastructure and other investment priority projects (GCG 2016; see Table 5).

Table 4. Pre-merger, Post-merger Data according to Deposits, Capital and Single Borrower’s Limit (SBL) Pre-Merger Post-Merger Without Capital With P30 B P Billion DBP Landbank Infusion Infusion Deposits 303 901 1,204 1,204 Capital 45 88 133 163 SBL 9 18 27 38 Source: DBP and Landbank

１５ Table 5. Official Development Assistance (ODA) and Bilateral Credit Pre-Merger Post-Merger USD Million DBP Landbank Approved 2,240 1,300 3,540 Drawn 1,840 370 2,210 Available 840 936 1,776 Source: DBP and Landbank

2) Wider Access to Financial Services. The merger is expected to pool resources that would provide wider access to the different clients of LBP. This is mainly because there will be: a. More Branches in Unbanked Areas. The merger presents an opportunity to rationalize existing branch networks of DBP and LBP in order to reach more unbanked and underserved areas. At least 34 branches of DBP and LBP can be relocated in the short- term. Along with the planned branch openings in 2015, the relocation of branches will expand the reach of the surviving bank to 298 cities and municipalities (GCG 2016; see Table 6).

Table 6. Branch Network and Physical Presence in Cities and Municipalities Pre-Merger Post- DBP Landbank Merger Branches and EOs Existing (Dec 2014) 96 369 465 New (2015) 28 21 49 Total 124 390 514 Cities and Municipalities

Existing (Dec 2014) 90 234 234 New (2015) 12 19 31 Relocation 20 13 33 Total 102 266 298 Source: DBP and LBP

１６ Upon consolidation, several branches from both institutions may be closed should they be deemed redundant, which the GCG (2016) argues will result in an increase in savings that can be used to spur improvement among the existing branches or open new ones in areas of “inclusive growth” so that more clients may find it accessible ("Govt says DBP- LBP", 2016). 103 branches will remain in NCR, 207 in Luzon, 74 in Visayas, 94 branches in the Mindanao region (GCG 2016).

b. Investing in IT to Reach the Underserved. – Technology offers a means to reach more municipalities that are either unbanked or underserved by financial institutions, but requires minimum volumes to be cost effective. By increasing volumes and reducing overhead cost, the merger allows cost-effective use of technology to reach out municipalities that have been previously marginalized (GCG 2016).

c. Financial Products and Services Catering to Priority Sectors. – The merger will enhance the delivery of products and services catering to the agriculture-agrarian reform sector, SMEs and Overseas Filipino Workers (OFWs). The surviving bank can leverage its presence in cities and municipalities to offer more financial services to OFWs and their beneficiaries who are the natural customers of its branch network. Beneficiaries of the government’s 4Ps program will gain access to a wider network of strategically located branches and ATMs as DBP and LBP integrate networks (GCG 2016).

3) Stronger Government Bank. Thus in general, the merger hopes to build a stronger government bank that may take on other tasks it could not do before, e.g., serving infrastructure needs of the country. In addition, the GCG assumes that the following will happen:

a. More Solid Financial Base. – The DBP-LBP merger will create the 3rd largest universal bank in the country in terms of total assets, 2nd in terms of deposits, and 4th in terms of loans and capitalization. The consolidated financial resources of the surviving bank provide a more stable and stronger base for developmental financing (GCG 2016; see Table 7).

１７ Table 7. Level and Industry Rank in terms of Assets, Loans, Deposits and Capital, 2014 Pre-Merger Post-Merger DBP Landbank

P Billion Rank P Billion Rank P Billion Rank Assets 476.3 6th 1,051.3 4th 1,527.6 3rd Loans 143.1 9th 405.3 4th 548.4 4th Deposits 293.8 9th 914.2 4th 1,208.0 2nd Capital 36.2 10th 75.2 5th 111.4 4th Source: DBP and LBP

b. Wider Customer Base, Wider Product Range. – Some 5 million customers of DBP and LBP will gain from a wider array of products and services as the merged banks integrate their product offerings. The surviving bank will realize synergies from an expanded customer base, wider range of products, and more product delivery channels. Larger transaction volumes of both traditional and non-traditional products will raise operational and cost efficiencies. Non-traditional financial services like technical advisory for privatization and variants of public-private partnerships, investment banking, and trust services will be strengthened by the merger. DBP and LBP currently provide these services at different scales, sophistication, market focus, and investment risk profiles. Consolidation of operations will enhance capacity to provide these services (GCG 2016; see Table 8).

Table 8. Number of Accounts and Average Daily Balance (ADB) of Traditional Bank Products Pre-Merger Post-Merger DBP LBP No. of Accounts Current Account 779,488 779,488 Savings Account 605,533 3,627,255 4,232,788 Time Deposit 12,402 13,094 25,496 Total 617,935 4,419,837 5,037,772

１８ Average Daily Balance (P Billion) Current Account 65.6 354.0 420 Savings Account 16.9 379.2 396 Time Deposit 174.5 36.1 211 Total 257 769 1,026 Source: DBP and LBP

c. Enhanced IT Platform and Operations. – DBP and LBP have been investing to upgrade their respective IT systems to widen access to banking services and improve bank operations. The merger will add 340 ATMs to LBP's network of 1,330 ATMs, double the number of Point of Sale (POS) Terminals, and expand by over half-a-million cardholders LBP's customer base (GCG 2016; see Tables 9 and 10)

Table 9. Number of Electronic Machines Pre-Merger Post-Merger DBP LBP ATMs 340 1,330 1,670 Cash Deposit Machines - 12 12 Bills Payment Machines - 14 14 Mobile ATMs - 8 8 Point of Sale Terminals 153 156 309 Source: DBP and LBP

Table 10. Number of Cardholders Pre-Merger Post- DBP LBP Merger Credit Card - 53,557 53,557 Regular ATM 104,875 3,424,808 3,529,683 International Visa Card 473,471 394,013 867,484 E-card 1,227 123,117 124,344 Radio Frequency ID - 4,967 4,967 Card

１９ Unified Membership ID Card (GSIS) - 415,630 415,630 Prepaid Cash Card 9,764 4,457,971 4,467,735 All Card Products 589,337 8,874,063 9,463,400 Source: DBP and LBP

d. Optimized Business Policies. – The merger creates an opportunity to further align business policies and processes to the mission and business strategy of the surviving bank. Initial review of these policies revealed areas of similarities where integration should pose no difficulties, but also opportunities to optimize policies by choosing the best of both banks (GCG 2016).

The merger will entail the reorganization of LBP and the separation or retirement of some personnel of both banks. Some 5% of the total workforce of 10,704 will be affected (Table 11). Thus, EO 198 provided for a reorganization plan and a compensation package that will ensure that those who will be retained will “not suffer any break in service or tenure, or any diminution of salaries and lawful benefits” (Kabiling, 2016). In addition, those who will be forced to retire or resign will be given Merger Incentive Pay (MIP) under the following rates (EO 198 s. 2016; see Table 12):

Table 11. Affected Employees Number of Affected Employees, MIP Cost and Annual PS Cost Savings DBP Landbank TOTAL Total Employees 2,264 8,440 10,704 Affected Employees 120 417 537 Percent Affected Employees 5.3% 4.9% 5.0% Total MIP Cost (P Million) 232 1,035 1,267 Annual PS Cost Savings (P 321 681 906 Million) Source: GCG estimates based on data from DBP and LBP

２０ Table 12. Merger Incentive Rates for Affected Employees Years of Service Rate

First 20 years of 1.00 x Basic Monthly Pay service (BMP) x No. of years Next 10 years of 1.25 x BMP x No. of years service Remaining years of 1.50 x BMP x No. of years service Source: EO 198 s. 2016; GCG 2016

IMPLICATIONS AND COMPLICATIONS OF THE MERGER

Despite President Aquino’s approval of the proposed merger through EO 198, issues are still raised why the merger was decided in the first place. As earlier explained, both banks have been financially performing well. In addition, both banks have passed the measure of financial strength. LBP’s and DBP’s capital adequacy ratios were far beyond the mandated 10% of the BSP (Magtulis & Porcalla, 2016). Also, both have recorded three years of positive net income or total comprehensive income. Both were not losing, nor suffering from bad loans portfolio, nor being perceived as inefficient. But why merge? Local and international regulators also expressed their concern with the possibility of the government cornering higher banking assets (Magtulis & Porcalla, 2016). Bankers Association of the Philippines President Lorenzo Tan however suggested that this event might be viewed from two different sides of a coin. He stated that there is benefit in having economies of scale, wider reach, and higher Single Borrowers Limit which can spur nationwide development; but if the merger were not properly managed, it can be a “too big to fail” situation (Magtulis & Porcalla, 2016). Former Anakpawis party-list Representative (now Secretary) Rafael Mariano and former Agriculture Secretary William Dar have both expressed opinions regarding the unconstitutionality of the merger. Mariano in particular explains that “Merging LBP and DBP is an encroachment of legislative functions by the Executive Department, since both banks have their own charter created by Congress” (Reyes, 2016). This means that only the Congress can amend or repeal the laws, which created the LBP and the DBP.

２１ Also, speculations regarding cover-ups have arisen with regard to several issues involving some DBP and GOCC officials in alleged anomalies and reported illegal banking practices. Last year, the Commission on Audit has issued Notice of Charge against DBP treasury officials for alleged losses arising from the sale of millions-worth of government securities (Factao, 2015).

A. 2011 Behest Loans During the year 2011, loans granted by the DBP to Delta Ventures Resources Inc. (DVRI), led by former Trade Minister Roberto Ongpin, reached legislative investigation (Cruz, 2011). It was reported that loans amounting to P510-million and P150-million were granted with “undue haste”, and reflected several violations to the regulation policies of the Bangko Sentral ng Pilipinas (BSP) (The Philippine Daily Inquirer, 2013). The case was filed by DBP itself, questioning the grant of large amount of money to what they considered a “puny company”. DBP stated that “since it was approved by the RMC credit committee, the executive credit committee and the board of directors of DBP all in one day makes the loan transaction doubly suspicious” (The Philippine Daily Inquirer, 2013). Another incident involved charges against 25 DBP officials and 3 private individuals. During the Arroyo administration, criminal complaints of graft and violation of banking laws were filed against Businessmen Roberto Ongpin, former DBP president Reynaldo David, former DBP chief operating officer Edgardo Garcia, and former DBP directors Patricia Sto. Tomas, Ramon Durano IV, Alexander Magno, Floro Oliveros, Joseph Pangilinan, Miguel Romero, Franklin Velarde and Renato Velasco (The Philippine Daily Inquirer, 2013). Behest loans granted by DBP were also reported to have amounted to P1.6 billion, such was given to several institutions owned by the Lopez group namely: Maynilad Water (P710.86M), Bayantel (P591.81M), Central CATV Inc. (P207.10M), and Benpres Holdings (P157.95M) (Cruz, 2011). In 2012, Ombudsman Conchita Carpio Morales ordered the filing of criminal charges against the concerned DBP officials, which then ultimately resulted in the dismissal from service of 13 personalities (The Philippine Daily Inquirer, 2013). It was stated that they “were administratively liable for grave misconduct and conduct prejudicial to the best interest of the service punishable by removal from the service” (The Philippine Daily Inquirer, 2013).

２２ B. 2015 Trade Anomalies Last year, the Commission on Audit’s supervising auditor reported a series of illegal transaction activities conducted by DBP, which resulted in millions worth of losses from the government. The state-owned institution was discovered to have participated in a trade-bonding known as “wash sales” in the period between January 29 and March 3, which totaled to P717 million (Lucas, DBP hit with P717M loss in ‘wash sales’: COA scores bank’s ‘unsound trading practices’, 2015). 28 transactions involving government-issued 20- and 25- year fixed rated treasury notes (FXTNs) were reported to have been sold by DBP to a single counterparty, the First Metro Investment Corp. (Lucas, DBP hit with P717M loss in ‘wash sales’: COA scores bank’s ‘unsound trading practices’, 2015). These wash sales were characterized by securities being bought back by DBP on the very same day they were sold, under a pre-agreed price (Lucas, DBP hit with P717M loss in ‘wash sales’: COA scores bank’s ‘unsound trading practices’, 2015). COA stated that, “The same government securities series were purchased on the same day at the same price under [DBP’s] hold-to- maturity account when these were sold at a loss, which may give us an impression of unsound trading practices leading to market manipulation” (Lucas, DBP hit with P717M loss in ‘wash sales’: COA scores bank’s ‘unsound trading practices’, 2015). News reports explain such practice involving the fixed-income securities of banks: either banks book them through a “hold-to-maturity” account (“to be held until they mature and not subjected to periodic re- pricing to recognize paper gains or losses”); or through an “available-for- sale” account (to be used for short-term trading activities and are required to be revalued regularly to reflect paper gains or losses”) (Lucas, DBP hit with P717M loss in ‘wash sales’: COA scores bank’s ‘unsound trading practices’, 2015). This activity is, of course, subject to the rules and regulations by the BSP and the Securities and Exchange Commission (SEC), which seem to be helpless against this widespread practice. “Wash sales” or the unimpeded shifting of securities holdings from one book to another, are done in order to manipulate good finances through impressions of bigger gains or minimal losses (Lucas, DBP hit with P717M loss in ‘wash sales’: COA scores bank’s ‘unsound trading practices’, 2015). These tend to mislead auditors because they appear to be new purchases. This practice is considered illegal in the financial sector because of the many damages and complications that it provides. Wash sales

２３ misrepresent open market dynamics through an artificial increase of trading volume, even when there is no actual change in ownership (Lucas, DBP hit with P717M loss in ‘wash sales’: COA scores bank’s ‘unsound trading practices’, 2015). They also victimize third-party institutions into thinking that the large interest rates produced by large transactions are market-accepted and acknowledged, even when they are actually manipulated by certain bodies (Lucas, DBP hit with P717M loss in ‘wash sales’: COA scores bank’s ‘unsound trading practices’, 2015). DBP was quick to defend the scandalous transactions, to which it argued that they were “done in good faith” and that such actions were gravely necessary as they are part of a strategy to avoid even bigger losses. DBP supported this statement by providing materials which proved that these were approved by none other than their risk oversight committee, headed by bank director Alberto Lim along with other top officials (Lucas, 'Wash sales' had DBP brass' blessing, 2015). A meeting in 2014 highlighted “Resolution No. 0001”, proposed by DBP senior vice president Mariquita Agena, suggested that the bank should “gradually sell our holdings of long-dated ‘available-for-sale’ peso government securities worth P20 billion and buy for the ‘hold-to- maturity’ portfolio to avoid increasing the mark-to-market losses and preserve the accrual income” (Lucas, 'Wash sales' had DBP brass' blessing, 2015). Such a strategy legitimizes the implementation of wash sales, which, as DBP officials have deemed, is the ultimate solution to avoid staggering losses. DBP further argued that had they not taken action, a bigger loss amounting to P940 million would have been the consequence. According to DBP, they just used a strategy to “preserve capital and strengthen the bank’s long-term viability” (Dumlao-Abadilla, 2015). They further explained that, “In order not to breach regulatory capital adequacy ratios, the bank had to cut losses and sold illiquid and out-of- the-money government securities and booked trading losses on said securities” (Dumlao-Abadilla, 2015). The bank suggested that such a case should not be taken in isolation because as counterbalance, it engages in trading activities, which offsets the losses, as they have been doing so in similar incidences (Dumlao- Abadilla, 2015). However, COA stated that the very concept of selling assets is unnecessary for DBP, given that they are in a very “liquid cash position” (Lucas, 'Wash sales' had DBP brass' blessing, 2015). Because DBP negated the purpose of the need to sell assets, the bank is then held to be

２４ practicing flawed banking practices. Prompted by the COA, the SEC further engaged in the investigation primarily because it implemented the Philippine Securities Regulation Code. Under the Code, banking institutions are prohibited in “engaging in transactions in which there is no change in actual ownership of a security, taking into consideration internal control systems adopted by the firm to prevent manipulative practices” (Dumlao-Abadilla, 2015).

C. 2015 Excessive Bonuses Not long after the issue with wash sales, DBP was then subjected to another incident, which involved its top-ranking officials with allegedly excessive bonuses. DBP Vice President Mario Pagaragan and Atty. Francis Romulo, both DBP employees, filed a plunder complaint before the Office of the Ombudsman with regard to officials receiving excessive performance-based bonuses: Chairman of the DBP Board of Directors, Jose Nunez Jr., DBP President and CEO Gil Buenaventura, Director Reynaldo Geronimo, Director Daniel Y. Laogan, Director Lydia Echauz, Director Alberto A. Lim, Director Raul O. Serrano, Director Vaugn F. Montes, and Director Cecilio B. Lorenzo (Cayabyab, 2015). What made the incident graver was that not only did it involve personalities from DBP but also several officials from the GCG itself: Cesar L. Villanueva, Ma. Angela E. Ignacio, Ranier B. Butalid and Paolo E. Salvosa (Cayabyab, 2015). It was reported that the questioned bonuses were made possible in connivance with the governing body of GOCCs. Included in the report is the total amount of bonuses reaching P312.077M, which were in excess of the amount allowed by the law (Cayabyab, 2015). Under the GCG Memorandum circular only 2.5 times the basic salary is the maximum allowed bonus that should be received by an employee. However, the complainants stated that the officials mentioned received far greater—12 times their basic salaries (Cayabyab, 2015). This action is a violation of Section 10 of Republic Act 10149, which mandates the GCG to recommend whatever incentive in consideration of good performance to the President (Cayabyab, 2015). In response to this, DBP describes the complainants as “disgruntled” employees because their performance report denied them the eligibility to receive fat bonuses (Cayabyab, 2015). Former and now Budget Secretary Benjamin Diokno stated that, “Is the outgoing administration trying to sweep under the rug some questionable deals made by DBP officials? Who benefited from these

２５ deals? What will happen to the questions raised by the Commission on Audit on DBP’s losses and disallowances involving billions of pesos?” (Lozada, 2016). With the consolidation of assets and liabilities of the two banks, this could give a bad impression with regards to faulty procedures and bad loans under the Aquino administration. Mariano added that, “anomalies and irregularities…could be concealed or folded in once the merger gets under way” (Reyes, 2016). In contrast to this, Dr. Santiago R. Obien, senior technical adviser to Agriculture Secretary Proceso Alcala, said there is no illegality in the merger. However, he suggested that the goals of the two banks as separate entities, once consolidated, may weaken under the merger. Obien stated that, “LBP was created as a dedicated bank for agriculture, fisheries and forestry…but if they merge, that objective may not be achieved anymore. “The problema [sic] is what they are supposed to do. It might be that the bank becomes only useful to industries and business people, and the support to farmers may become more and more negligible” (Reyes, 2016). Also, with the state of the proposed merger already a pending bill before the Congress, “why did the President have to beat the lawmakers to it?,” Mariano asked. (Reyes, 2016). Another party lukewarm to the merger is the then incoming and now Finance Secretary Carlos G. Dominguez. He stated that with only a presidential approval and lack of legislative action, the merger may not survive in the incoming Duterte administration (de Vera B. O., 2016). He further explained that, “the GCG’s bids and awards committee for the procurement of advisor was well aware the next administration may have different priorities, but tried nevertheless to complete the bidding for advisors right before the elections” (de Vera B. O., 2016).

The Challenges Ahead As an official who is in-charge of state-owned companies, Finance Assistant Secretary Maria Teresa S. Habitan stated that the Aquino administration wants “substantial progress” before the president steps down. However, Finance Secretary Cesar Purisima said that the remaining time is already inadequate, given that the merger was proposed to be implemented within only a one-year timeline (de Vera B. O., 2016). With Aquino stepping down as President, the next administration is given the power to scrap the Executive Order signed by Aquino (Leyco, 2016). Even before Davao City Mayor Rodrigo Duterte assumes

２６ presidency, he has already expressed his disdain with the merger. Along with his running mate Sen. Alan Peter Cayetano, they warned that such act may hinder the LBP and DBP from providing services to the poor, and instead make farmers and small business baits and victims of lenders and loan sharks (Frialde, 2016). Duterte averred that, “Kapag tinuloy ito, papahirapan na naman ng gobyerno ang mga tao. Diyan ako galit. Ang gobyerno dapat ay para sa tao. Hindi para lang sa mga mayayaman at may impluwensiya” (Frialde, 2016). The two also highlighted the distinct function of LBP and DBP, stating that the former gives credit to the agriculture sector and the latter helps small and medium businesses. Cayetano argued that, “These banks are not meant to compete with private banks. They are meant to grant financial assistance to ordinary Filipinos, especially farmers and micro, small and medium enterprises” (Frialde, 2016). With this in mind, Habitan also called into attention the possibility of opposing parties to seek the ruling of the Supreme Court. This is because without Congress approval, the authorization given to the GCG to merge two state-owned entities may be put into question (Leyco, 2016). Almost 100 days after the formal inauguration of President Duterte, the new administration put a stop to the merger. As of the en banc resolution of the new GCG, it “resolved to cancel the implementation of EO 198 of the Aquino administration.” (De Vera, 2016). It assessed that “the merger would not serve the public interest, given their different functions. LBP serves the agriculture sector while DBP serves the industry. Both were created for different purposes” (De Vera, 2016). In addition, the new GCG believes that Congress created the two GFIs and only Congress could legalize their merger (De Vera, 2016).

LESSONS LEARNED FROM THE RATIONALIZATION PROCESS

The reform measure highlighted in the case of the failed LBP-DBP merger speaks of good intentions that were not good enough. It was good of the Governance Commission for GOCCs to do passionately and efficiently its function of rationalizing GOCCs. It can legally base its recommendations on the principle that the “corporate form of organization through which government carries out activities is utilized judiciously” (Sec. 2 of RA 10149). However, it seems to have naively

２７ underestimated the politics and dynamics involved in public sector reform.

Political Dynamics. GOCC reform requires the convergence of law, rigorous evaluation, change management and the interaction of at least the Legislature, the Executive, the Regulator (GCG) and the GOCCs (LBP and DBP) concerned. It is not just a matter of routine. It does not mean that just because overlaps and duplications are bases for mergers, a recommendation for merger holds water. A lot of calibration, consultation, and revisit to the very bases for creating GOCCs have to be done at least. In addition, even if the GCG is legally the central advisory, monitoring, and oversight body for GOCCs, it does not mean, that as a super body, it can do what it deems legally perfect, without consulting with Congress and the GOCCs themselves. Though the GCG under the Aquino administration belongs to the great minds of public servants and are legal luminaries in their own right, it does not mean that their actions will not be subject to second opinions, more so legal opinions. As in the alternative perspective during the Aquino administration and now the mainstream voice of the Duterte administration, the major legal infirmity it seems, is GCG’s encroachment on the power of Congress to legislate the reform measure. As the new GCG believes in its latest en banc resolution, “Congress created the two GFIs and only Congress could legalize their merger” (De Vera 2016). In the case of LBP and DBP, it was established that both banks were not losing. In fact, they have been performing financially well. Though there may be allegations of corruption, abuses, bad financing practices (for DBP), these did not matter in the overall equation since in most mergers, stronger institutions subsume weaker institutions in order that the resulting entity is far better than any of them separately. The latter was not the case in the proposed merger initiative, as both are supposed to be strong. Merging two strong institutions will give the economies of scale and may pose undue advantage over the competition. The government as owner of these GFIs should refrain from unfairly competing in order to earn, at the expense of the other banks.

Revisit the Core Rationale of GOCCs. Merger requires going back to the basic principles of creating GOCCs. So what if two GFIs have seeming overlaps in clientele, services or development functions and are in a privately dominated banking sector? In the country, these overlaps or redundancy are more needed in order to spur development, serve the

２８ underserved and contribute in the attainment of national development goals. Thus, they are the necessary ‘redundants’ in more than 640 banks in the country (BSP 2015). In addition, if we merge DBP and LBP, there will be one important GFI less in the banking market that could expand financial services to the ‘poor’ clients (farmers, fisher folks, SMEs). Most universal and commercial private banks cater to those who are relatively richer and with collateral to pawn. DBP and LBP are supposed to serve these clients as well, but more so, the poorer segments of the populace who need funding assistance more. Cost-benefit analyses should give primacy to the development objectives of GOCCs.

Areas for Future Research. This case is only a snapshot of public enterprise reform in the country. A more comprehensive study of reform initiatives may be needed in order to better understand the pains and gains so far instituted in the country with regard to GOCCs. A more comparative assessment over the quality of GOCCs may also be needed to ascertain which groups are better serving their avowed functions and advocacies, and which GOCCs are failing. A country-to-country comparison may also be done to enrich the discourse on public sector reform. Though Korea may not have GFIs, reforms in government- influenced banks may give a semblance of the lessons and moving forward recommendations to improve the quality of public service delivery by governments through the corporate form. GOCCs or SOEs are still needed to propel growth and promote trust in government through the corporate form. They are still needed to impress on the nation that they are performing effectively, responsibly and efficiently, and actually doing service which is value for money for the taxes paid by citizens. They should be exemplars of good governance, and of the judicious use of the corporate form. GOCCs should be reformed for public good and not just because it is legal to do so. Rationale for reform should be convincingly satisfactory in order to gain the trust and confidence of the public.

ACKNOWLEDGEMENT The author acknowledges the very able assistance given her by Vianchi Arevalo, student intern, 3rd year AB Political Science from the University of Santo Tomas.

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Administrative Order 59, 1988 Rationalizing the government corporate sector. Alvendia, A.M. (1991). The role of government corporations in national development: Extent and boundaries of strategic industries. Government Corporate Sector Rationalization Program policy studies1989-1990 (pp. 387-415). Manila: Department of Budget and Management. Sponsored by the United Nations Development Programme. Bati, A.(2005). Limitations on effective corporate governance in state-owned enterprises and how to deal with them. Salans. Briones, L.M. (1985). The role of government-owned or controlled corporations in development. Philippine Journal of Public Administration, 29(4), 365- 391. Cayabyab, M. (2015, May 25). House passes DBP, LBL merger bill. Retrieved June 29, 2016, fromThe Philippine Daily Inquirer: http://business.inquirer.net/192501/house-passes-dbp lbp-merger-bill De Vera, B. O. (2016, May 23). New administration to decide on DBP- Landbank planned merger. Retrieved June 28, 2016, from Philippine Daily Inquirer: http://business.inquirer.net/210486/new-administration-to- decide-on-dbp-landbank-planned-merger De Vera, B. O. (2016, February 13). Gov’t wants LBP-DBP merger finalized by June.Retrieved June 29, 2016, from The Philippine Daily Inquirer: http://business.inquirer.net/207022/govt-wants-lbp-dbp-merger-finalized- by-june De Vera, B. O. (2016, June 7). Dominguez bucks DBP-LBP merger. Retrieved June 30, 2016, from The Philippine Daily Inquirer: http://business.inquirer.net/210865/dominguez-bucks-dbp-lbp-merger Delavin, I. C. (2015, August 25). Landbank-DBP merger may fall through. Retrieved from BusinessWorld Online: http://www.bworldonline.com/content.php?section=Finance&title=landba nk-dbpmerger-may-fall-through&id=114106 Development Bank of the Philippines. (2010). History. Retrieved from Development Bank of the Philippines :https://www.devbnkphl.com/about.php?cat=9&e7dd75a5860 84ea7be23318056a06380 Development Bank of the Philippines. (2015). DBP Profile 2015. Retrieved from Development Bank of the Philippines:https://www.devbnkphl.com/about.php?cat=9&e7dd75a58608 4ea7be23318056a06380 Drilon, Franklin M. “Recent Endeavours of the Philippines on Drafting a New SOE Act.” A presentation for the 6th Meeting of the Asia Network on Corporate Governance of State-Owned Enterprises, Seoul, Korea, 17 May 2011 Dumlao-Abadilla, D. (2015, June 3). SEC looking into DBP trade anomalies.

３０ Retrieved from The Philippine Daily Inquirer:http://business.inquirer.net/192965/sec-looking-into-dbp-trade- anomalies Dytianquin, N.G. (1985, December). The economics of privatization. Central Bank Review. EO 24. Prescribing Rules to Govern the Compensation of the Board of Directors/Trustees of GOCCs s. 2011 Factao, G. (2015, August 24). COA issues notice of charge againts DBP treasury officials. Retrieved from BusinessMirror: http://www.businessmirror.com.ph/coa-issues-notice of-charge-against- dbp-treasury-officials/ Fernandez, P., and Sicherl, P. (1981). The identity and character of public enterprises: A building blocks approach in seeking the personality of public enterprises. International Center for Public Enterprises, Ljubljana, Yugoslavia. Frialde, M. (2016, February 10). Duterte-Cayetano slams gov’t for plan to merge DBP and LBP. Retrieved June 30, 2016, from The Philippine Star: http://www.philstar.com/headlines/2016/02/10/1551673/duterte-cayetano- slams-govt-plan-merge-dbp-and-lbp Governance Commission for GOCCs 2012 “Philippines’ New Paradigm in Public Corporate Governance” Governance Commission for GOCCs 2016 “Proposed Land Bank of the Philippines-Development Bank of the Philippines Merger, A Briefer InterAksyon.com. (2016, February 9). Govt says DBP-LBP merger to result in more competitive, more service-oriented bank. Retrieved from InterAksyon: http://interaksyon.com/article/123864/govt-says-dbp-lbp- merger-to-result-in-more competitive-more-service-oriented-bank Kabiling, G. (2016, February 9). Palace assures compensation package for employees affected by LBP-DBP merger. Retrieved from Manila Bulletin: http://www.mb.com.ph/palace assures-compensation-package-for- employees-affected-by-lbp-dbp-merger/ Land Bank of the Philippines. (2014). History. Retrieved from Landbank of the Philippines: https://www.landbank.com/history Land Bank of the Philippines. (2014). About Us. Retrieved from Land Bank of the Philippines: https://www.landbank.com/about Leyco, C. (2016, February 12). DOF wants LBP-DBP merger implemented ASAP. Retrieved From Manila Bulletin: http://www.mb.com.ph/dof- wants-lbp-dbp-merger-implemented- Lozada, R. (2016, February 28). Cover-up Seen in Rush to Merge DBP, LBP. Retrieved from The Market Monitor: http://marketmonitor.com.ph/cover- up-seen-in-rush-to-merge-dbp lbp/ Magtulis, P., & Porcalla, D. (2016, February 10). P-Noy OKs Landbank, DBP merger. Retrieved June 28, 2016, from The Philippine Star: http://www.philstar.com/business/2016/02/10/1551379/p-noy-oks- landbank-dbp-merger

３１ (Villamejor-)Mendoza , M. F. (1992). Towards deepening public enterprise reforms. Paper presented at the Fourth National Conference on Public Administration, Quezon City. (Villamejor-)Mendoza, M. F. (1995). Towards deepening public enterprise reforms: Alternatives beyond privatization. In P.D. Tapales &N.N. Pilar (Eds.), Public administration by the year 2000: Looking back into the future (pp. 347-392). Quezon City: College of Public Administration, University of the Philippines. (Villamejor-)Mendoza, M. F. (2007). “Corporate Governance and Reforms in the Public Sector” Philippine Journal of Public Administration, January- October Volume LI Nos. 1-4 Office of the President of the Philippines. (2016, February 4). Executive Order No. 198, s. 2016. Philippine Government 2010, R.A. 10149 An Act to Promote the Financial Viability and Fiscal Discipline in GOCCs and to Strengthen the Role of the State in its Governance and Management to Make them more responsive to the Needs of Public Interest and For Other Purposes or the GOCC Governance Act of 2011Retrieved from Official Gazette: http://www.gov.ph/2016/02/04/executive-order-no-198s-2016/ Reyes, E. (2016, March 8). LBP-DBP merger illegal, unconstitutional - agri experts. Retrieved June 30, 2016, from Interaksyon: http://interaksyon.com/business/124951/lbp-dbpmerger-illegal- unconstitutional---agri-experts Tabbada, J.P. (1989). Explorations on the history of state intervention in the Philippine economy: The role of public enterprises. In G.U. Iglesias, J.P. Tabbada, & M.F.V. Mendoza, Review of public sector management improvement and technical cooperation in the Philippines. A report for the United Nations Development Programme Management Development Programme. Tabbada, J.P., and Baylon, M.S. (1991). Organizational arrangements for monitoring, coordinating and supervising GOCCs. Government Corporate Sector Rationalization Program policy studies 1989-1990(pp. 1-35). Manila: Department of Budget and Management. Sponsored by the United Nations Development Programme. The Philippine Daily Inquirer. (2013, August 2). WHAT WENT BEFORE: DBP’s P660M grant in alleged behest loans. Retrieved from The Philippine Daily Inquirer: http://newsinfo.inquirer.net/457119/what-went-before- dbps-p660m-grant-in-alleged-behest-loans

Endnote i Disposition as a reform measure is now anchored on the GCG’s evaluation criteria as contained in RA 10149 (Section 5). These include among others, a) possible abolition, or b) privatization, if the functions or purpose for which the GOCC was created are no longer relevant or no longer consistent with the

３２ national development plan of the State; or if the GOCC is not producing the desired outcomes, or no longer achieving the objectives and purposes for which it was originally designed and implemented, and/or not cost-efficient and does not generate the level of social, physical and economic returns vis-à-vis the resource inputs; or when the GOCCs are already dormant or non-operational, and have outlived their purpose; or c) consolidation or merger , if the GOCC’s functions or purpose duplicate or unnecessarily overlap with functions, programs, activities or projects already provided by a Government Agency, and could be subsumed under or undertaken by such agency; or if the functions or purpose or nature of operations of any group of GOCCs require consolidation under a holding company. ii A unibank is a universal bank, which participates in many kinds of banking activities and is both a commercial bank and an investment bank. These are also called full-service financial firms, although there can also be full-service investment banks which provide asset management, trading, and underwriting (www.philippinesplus.org.com) iii Included in EO 198 is the increase in the authorized capital stock of LBP from 25 billion pesos to 200 billion pesos, which according to Pres. Aquino is “necessary for the surviving entity to absorb the latter” (Magtulis & Porcalla, 2016). It also directed the Departments of Finance (DOF) and of Budget and Management (DBM) to provide capital infusion to LBP of at least thirty billion pesos in order to allow LBP to continue supporting the government’s sustainable and inclusive growth agenda (EO 198 Approving the Merger of the Development Bank of the Philippines and the Land Bank of the Philippines, 4 February 2016).

３３

３４

Reactor’s Note

Locating the LBP-DBP Merger in the Context of Regional Financial Integration

Lucio Blanco Pitlo III, Chinese Studies Program Ateneo de Manila University

The research is a significant contribution in advancing existing literature on public enterprise reform and consolidation in the financial sector in the Philippines. Unlike other fast developing East Asian states, the Philippines has a smaller share of state enterprise sector, which is further shrinking because of continuous reform and disposition, although elsewhere in the region, the trend towards consolidation, as well as gradual privatization, of state-owned assets is accelerating. Attention to the country’s financial sector is expected to grow as the country is poised to usher in a “Golden Age of Infrastructure”, which would put greater demand for financing and capacity to manage incoming capital flows. This is especially so in the aftermath of the successful state visits of President Duterte to China and Japan and the Philippines' ratification of the Asian Infrastructure Investment Bank—a new multilateral development bank that could provide a new funding channel for the country’s burgeoning infrastructure needs. The anticipated boom in infrastructure, trade and investment—given the economic pragmatism of the new Philippine leadership— will also attract other sources of long- term finance like foreign commercial and policy banks, donors and official development assistance partners like Korea, highlighting the important intermediary role that the financial sector will play in this regard. Taking the LBP-DBP merger as case in point, Dr. Mendoza inquired into the rationale, implications, challenges and lessons of this state enterprise reform initiative. The choice of this transaction was very timely and relevant considering that the same was not the usual mode of disposing state assets and because of the controversy surrounding the

３５ deal. At this point, it might have helped if the author had cited some conventional examples of state asset disposal to demonstrate how this transaction can be considered as an outlier or a norm. Another factor that added salience to the merger was the variance with which the previous and present administrations appreciated— the former Aquino government pushed for it, while the Duterte government opposed it. Even during the campaign, the Duterte-Cayetano tandem (running as President and Vice President respectively) challenged the wisdom behind the transaction. Hence, its fate was sealed with Duterte’s electoral victory. It remains to be seen whether this position will change or if the proposed merger would be reconfigured or revived in another form perhaps for the consideration of the next administration. Both state-owned banks involved in the deal were created by their respective charter laws so the failure to involve Congress in the matter was also thrown into light. It would have helped, in this regard, if the author had been able to cite previous mergers or acquisitions (M&As) involving state assets particularly those created by law where legislature intervened or where their participation was sought by the executive. Also, it may be apt to inquire into the extent that the management of both state banks or GCG have consulted or conferred with Congress or relevant Congressional committees about the proposed merger deal. The possibility of covering up irregularities in both banks with the consummation of the merger also added controversy to the transaction. Various reasons were put forth to account for M&As in the public enterprise sector. Dr. Mendoza outlined these as they play out in the merger at hand, while at the same time, offering a critique of each narrative. Performance deficit was one of the most cited rationale for consolidation, but the utility of this explanation for the LBP-DBP merger was put in the spotlight since both banks were doing well pre-proposed merger. While the author was able to cite the financial health of both banks and how they measure up with competition, it was not established whether GCG maintains its own metrics for assessing the performance of GOCCs and if there are any special set of metrics for state-owned financial institutions. Are state-owned banks measured against their private sector peers given their different nature, with the latter having a public interest (on top of a proprietary) mandate? Overlapping mandates and the desire to create efficiency and economies of scale was also cited as another reason behind the deal. Some studies came out refuting the claim of efficiency post consolidation. In fact, in a study of the Korean banking consolidation,

３６ Park (2011) 1 noted that it even produced the reverse—increased inefficiency, thus challenging conventional assumptions about the benefits of mergers in the finance sector. However, Sufian et al (2008)2 noted that bank mergers could result to higher efficiency (especially in the event of a merger with a more efficient bank), though not necessarily to higher profitability due to higher costs incurred. Analyzing the Korean commercial banking market from 1992-2004, Park (2009) 3 also described it as under monopolistic competition before and after the crisis and that the restructuring and consolidation that took place in the aftermath of the crisis did not reduced such forces of competition. Hence, some prevailing assumption that M&As may give rise to entities with potential monopoly power that can stifle competition may not necessarily hold. Among the challenges and obstacles to consolidation include geography which can put strains on the technology infrastructure, weak regulatory and supervisory capacity, valuation differences, non-public ownership structures (e.g. private family), concerns about job losses, working relations with foreign supervisory bodies (e.g. differences in the legal treatment of certain information), and high acquisition costs. A second look at these potential impediments and an evaluation of how they may impact on the LBP-DBP case may be sensible.

Regional trends towards financial consolidation The financial industry witnessed tremendous changes in the 1990s. Deregulation, globalization, increasing use of technology and intensifying competition encouraged domestic, as well as cross-border consolidation to benefit from spreading risk and economies of scale4. The Asian financial crisis accelerated such trend. In Southeast Asia, attempts to consolidate the state-owned banking sector surfaced. Hence, it would be good to also set a brief regional context behind consolidation of the state-owned banking sector, the rationales used by the country’s

1 Park, Kang H. (2011) “What Happened to Efficiency and Competition after Bank Mergers and Consolidation in Korea?”, KDI Journal of Economic Policy 2011, 33 (3) 35- 55. 2 Sufian, Fadzlan, Muhamed Zulkhibri Abdul Majid and Razali Haron (2007) “Efficiency and Bank Merger in Singapore: A Joint Estimation of Non-Parametric, Parametric and Financial Ratios Analysis,” MPRA Paper No. 12129 posted December 12, 2008. Retrieved December 18, 2016 from https://mpra.ub.uni-muenchen.de/12129/1/MP RA_paper_12129.pdf 3 Park, K. (2009) “Has Bank Consolidation in Korea Lessened Competition?” Quarterly Review of Economics and Finance, 49, pp.651~667. 4 ibid

３７ neighbors in such a move, the catalysts and impediments encountered in doing so and their progress. As such, one would realize that the LBP- DBP merger does not stand in isolation. With the coming of the ASEAN Economic Community (AEC), for instance, the banking sector of individual Southeast Asian states are expected to consolidate and strengthen in anticipation of greater competition given the planned regional financial integration by 2020. As such, plans and actions to consolidate state-owned banks in Indonesia and Malaysia, for instance, were rolled out. The Indonesian Financial Services Authority (OJK) plans to merge four state-owned banks— Bank Mandiri, Bank Rakyat Indonesia, Bank Negara Indonesia and Bank Tabungan Negara by the end of 20185. Consolidation may help the post- merger entity be eligible for the Qualified ASEAN Bank status which allows for business expansion into other ASEAN member states without requiring a special permission6. As Southeast Asia’s largest economy and most populous state, Indonesia has a huge room for improvement in its financial sector— bank penetration still stands at 30% of GDP and lending is growing at 20%, turning it to one of the world’s most profitable lending markets7. Efficiency, better capitalization, and the need to make the Indonesian banking industry more attractive to investors are cited as among the rationales behind OJK’s plans to consolidate the country’s 120 or so banks to about 608. In Malaysia, early this year, the proposed merger of three banks— CIMB Group Holdings Bhd, RHB Capital Bhd and Malaysian Building Society Bhd—eventually fizzled over failure to arrive at a mutually agreed value added for the three parties and their stakeholders9. Another reason stated was that the deal could have cost the loss of 8,000 jobs as a consequence of the rationalization10. Had the deal pushed through, it could have created Malaysia’s biggest bank with close to USD200 billion

5 Global Business Guide Indonesia. (2016) “Consolidation of State-Owned Banks in Indonesia: A Recipe for AEC Success?,” GBG Indonesia, April 29, 2016. Retrieved December 15, 2016 from http://www.gbgindonesia.com/en/main/business_updates/2016/ consolidation_of_state_owned_banks_in_indonesia_a_recipe_for_aec_success_11536.ph p 6 ibid 7 ibid 8 ibid 9 The Star Online. (2016) “CIMB-RHB Cap-MBSB merger would have cost 8,000 jobs,” March 28, 2016. Retrieved December 11, 2016 from http://www.thestar.com.my/business /business-news/2016/03/28/cimbrhb-capmbsb-merger-would-have-cost-8000-jobs/ 10 ibid

３８ in assets or about 60% of the country’s GDP, making it a domestic systemically important bank (D-SIFI), a major player in the region and a potentially big player in the global Islamic banking industry11. According to 2012 Basel Committee on Banking Supervision (BCBS) document titled “A Framework for Dealing with Domestic Systemically Important Banks”, such entity that could be created out of industry consolidation should be strictly supervised and should have higher loss absorption requirement12. BCBS defers to national regulatory authorities in terms of deciding the threshold that determines whether a proposed post-merger entity would constitute a D-SIFI, although some fundamental criteria are laid out, notably interconnectedness, substitutability/financial infrastructure and complexity. The “too big to fail” argument was also cited in relation to the transaction. Accelerating expansion of financial services in emerging markets is welcome but there are significant challenges and risks attached to the same that should also be considered, requiring robust risk management, supervision, cooperation across jurisdictions (especially for cross-border M&As) and crisis prevention, the failure of which could result to grave financial and economic consequences. In Singapore, Overseas Union Bank (OUB) was acquired by United Overseas Bank (UOB) for USD10 billion after almost a year of intense rivalry with another bidder, Development Bank of Singapore (DBS)13. In the same year, OCBC acquired Keppel Tat Lee for USD5.21billion, the latter being a similar product of a merger between Keppel Bank and Tat Lee Bank14. In Thailand, Krung Thai Bank, the country’s second largest lender by assets and whose major shareholder is the state, is also preparing for acquisitions to join the ranks of the region’s biggest banks15. The State Bank of Vietnam also encouraged consolidation with 2015 announcements of upcoming transactions e.g. Phuong Nam Bank-

11 Poenisch, Herbert. (2016) “Malaysian bank giants merging?” Penang Monthly, January, 2016. Retrieved December 11, 2016 from http://penangmonthly.com/malaysian- bank-giants-merging/ 12 ibid 13 “Singapore’s largest bank M&A deals through the years”, Straits Times Business, April 7, 2014. Retrieved December 18, 2016 from http://www.straitstimes.com/business/ companies-markets/singapores-largest-bank-ma-deals-through-the-years 14 ibid 15 Chanjaroen, Chanyaporn & Anuchit Nguyen (2016) “Krung Thai Bank Aims to Join Regional Banking Powers,” Bloomberg, January 29, 2016. Retrieved December 15, 2016 from https://www.bloomberg.com/news/articles/2016-01-28/krung-thai-bank-sets-sights- on-joining-regional-banking-powers

３９ Sacombank union, merger between Ocean Bank and an undisclosed big bank and merger of some small banks with Vietcombank and BIDV16. Evolving trends towards regional financial integration, particularly with the formation of AEC, figured well as a rationale behind consolidation. While the same was mentioned in Dr. Mendoza’s paper, it may be helpful, for purposes of providing a better regional picture, that this matter be given more treatment. Across the region, governments seem involved in encouraging consolidation and from this perspective the LBP-DBP merger can be set in context. However, it remains to be established whether the goal for the same was to create a national champion that can compete with fast-consolidating regional rivals or just to promote efficiency or economies of scale for domestic operations. Was readiness to compete in the regional level used by LBP, DBP, GCG or the government in endorsing the merger? Interestingly, while state- encouraged consolidation is taking place between already big banks, consolidation in the largely fragmented Philippine banking industry still occurs among smaller provincial banks under the Consolidation Program for Rural Banks, an initiative by the Bangko Sentral ng Pilipinas in cooperation with the Philippine Deposit Insurance Corporation and LBP17. Other reasons cited for consolidation include overbanking or too much fragmentation (Vietnam), crisis recovery (Indonesia), response to increasingly sophisticated customer demands and technological advances (Malaysia), and the need to acquire additional capital and world-class management and operational expertise, mostly through foreign investments (Singapore).

Financial industry consolidation in Korea: contrasts and possible lessons The Korean banking sector also experienced consolidation especially in the aftermath of the Asian financial crisis in the late 1990s. Korea Exchange Bank (KEB) merged with its subsidiary Korea International Merchants Bank in 1999 increasing KEB’s paid in capital to USD1,280 million. Hana Financial Group acquired Chungchong in 1999, which previously merged with Seoul Bank in 1992, to become the country’s

16 Techcom Bank. “A snapshot about bank mergers and acquisitions in Vietnam.” Retrieved December 19, 2016 from https://www.techcombank.com.vn/priority-banking/n ews/market-news/a-snapshot-about-bank-mergers-and-acquisitions-in-vietnam 17 Torres, Ted (2016) “Consolidation of banking system to persist this year,” Philippine Star, February 9, 2016. Retrieved December 18, 2016 from http://www.philstar.com/bank ing/2016/02/09/1551068/consolidation-banking-system-persist-year

４０ third largest bank. In 1999 alone, a flurry of merger deals took place - Kookmin Bank merged with Korea Long-Term Credit Bank; Commercial Bank of Korea with Hanil Bank creating Hanvit Bank; Hana Bank with Boram Bank; Kangwon Bank with Hyundai Merchant Bank; and Chohung Bank with Kangwon Bank. Consolidation carried on post crisis. In 2006, Shinhan Financial Group acquired Chohung Bank for USD 2.8 billion propelling it to become the country’s second largest bank with combined assets of USD168 billion. In 2012, Hana also announced acquisition of KEB making it the largest Korean commercial bank18. Foreign banks and private equity (PE) firms have also been involved in the consolidation of the Korean financial sector post crisis. PE firm Lone Star acquired KEB in 2003 with the aim of turning it around, increasing organizational efficiency and contributing to its recovery before determining the best available investment exit option19. In 2002, US investment bank Lehman Brothers Holdings Inc. signed a deal with state-owned Woori Finance Holding Co. to help the latter shed its nonperforming loans, the principal loan balance of which stands at USD8.4 billion20. The two sides set up a special purpose vehicle, 70% owned by Lehman and 30% by Woori, to buy Woori’s bad debt in batches. Lehman also bought a 49% stake in the newly established Woori Asset Management Co. Ltd. to manage such non-performing loans. Woori’s substandard (non-performing) loans declined and standard loans improve as a result of the transaction. German Commerzbank increased its share in KEB to 32.55% in 200021. Also in 2000, Goldman Sachs & Co. bought a 16.8% stake in Kookmin Bank for USD500 million in stock and USD200 million in convertible bonds22. In 1999, US investment firm

18 The merger was consummated in September 2015 with the post-merger entity, KEB Hana Bank, becoming Korea’s biggest bank with a balance sheet of USD254 billion. KEB Hana Bank “Merger of Hana and KEB Completed” Retrieved December 17, 2016 from https://www.kebhana.de/en/about-us/ir/news/115-01092015.html 19 Menle, Matthias & Dirk Schiereck (2007) “Private Equity Investments in the Banking Industry – The Case of Lone Star and Korea Exchange Bank”, Bank and Bank Systems, Vol. 2, Issue 2, pp. 22-34 20 Choi, Hae Won (2002) “Woori Sets Deal with Lehman to Shed Nonperforming Loans,” The Wall Street Journal, September 6, 2002. Retrieved December 16, 2016 from http://w ww.wsj.com/articles/SB1031213599848775875 21 Menle & Schiereck (2007) 22 Schuman, Michael (1999) “Goldman Investment to Bolster South Korean Banking Industry,” The Wall Street Journal, April 12, 1999. Retrieved December 16, 2016 from htt p://www.wsj.com/articles/SB92385615247975353

４１ Newbridge Capital Ltd acquired a 51% share of Korea First Bank for USD417 million and in 2000, HSBC Holdings acquired 70% of Seoul Bank for USD700 million 23 . Foreign investments in the country’s banking sector had been taken as positive signs of the effectiveness of the reforms undertaken in response to the regional financial contagion. With such foreign investment flows, the Korean government no longer has the sole burden of recapitalizing the country’s beleaguered financial sector. State-owned Korea Asset Management Corporation was put up to sell the country’s distressed assets, but Korean commercial banks also set up their own bad loan centers, enabling foreign investors to directly deal with them24. Similar developments also took place in the related insurance sector, with private funds and foreign investors also actively expanding their portfolio in Korea. Last year, Chinese insurance conglomerate Anbang Insurance acquired 63% of Tong Yang Life Insurance’s outstanding stock for USD 1 billion25. The year after, Anbang further expanded its reach in the Korean insurance market by acquiring Allianz Life Insurance Korea and Allianz Global Investors Korea from its German parent company Allianz SE for US3 million, making Anbang the second largest insurer in Korea26. Consolidation is also taking place in the country’s securities industry with the country’s Financial Services Commission encouraging the creation of a national champion that can be globally competitive like New York’s Goldman Sachs27. There were significant contrasts between Philippine and Korean experiences in banking consolidation where some valuable lessons can possibly be drawn from. Before the crisis, there were numerous banks operating in Korea, but after the regional crisis, market concentration increased and the restructuring that followed paved the way for the

23 ibid 24 Choi (2002) 25 Boey, Darren & Shinhye Kang (2015) “Anbang to Buy Stake in Tongyang Life for $1 Billion,” Bloomberg, February 17, 2015. Retrieved December 15, 2016 from https://www. bloomberg.com/news/articles/2015-02-17/anbang-insurance-to-buy-stake-in-tongyang-lif e-for-1-billion 26 Bloomberg News. “Anbang Agrees to Buy Allianz's Operations in South Korea,” Bloomberg, April 6, 2016. Retrieved December 17, 2016 from https://www.bloomberg.co m/news/articles/2016-04-06/anbang-agrees-to-buy-allianz-s-operations-in-south-korea 27 Cha, Seonjin (2013) “Woori Sale to Spur Mergers as Korea Builds Own Goldman Sachs,” Bloomberg, December 16, 2013. Retrieved December 14, 2016 from https://www.bloom berg.com/news/articles/2013-12-15/woori-sale-may-spur-takeovers-as-korea-builds-own- goldman-sachs

４２ emergence of financial holding companies and merger between big banks28. Like Korea before the 1990s financial crisis, the Philippines has a fragmented banking system with numerous private commercial banks, rural banks, cooperative banks and thrift banks. Consolidation began in the 1990s but proceeded in a slower pace and lesser scale, although there were major transactions in later years (e.g. 2006 Banco de Oro-Equitable PCI Bank merger, 2012 Allied Bank-PNB merger). Unlike in Korea, foreign investors and private funds played a lesser role in Philippine financial industry M&As. Unlike other countries in the region where the state is still heavily invested in the finance sector even post Asian financial crisis, Philippine government started divesting from the industry early on with the privatization of the once de facto Central Bank, Philippine National Bank29, commencing as early as 1989 following the wave of privatization of state assets under the Cory Aquino Administration. Whether lesser state involvement meant lesser state role in consolidation remains to be established, more so whether more robust state role contributes to faster consolidation or not, although other countries wherein the state is a major player in the finance industry experienced faster consolidation. This plays into the question of whether the consolidation is driven more by market forces or by state dictum. But at least as far as Korea is concerned, the role of the state is very much apparent. This could be an interesting angle that the paper can consider exploring. Aside from creating asset management companies, what other strategies and policy tools can the Philippines exercise to promote consolidation and rationalization in the public sector? What factors impede these goals and what measures can be done to address them? It may be relevant to revisit the laws governing M&As in the finance industry or in the public sector to see whether they are being observed in the LBP-DBP case and if there are provisions which may require amendments to suit the changing times. The accumulation of bad debt and several corporate insolvencies helped trigger reforms in the Korean financial sector. Reflecting on Dr. Mendoza’s paper, the loans of DBP and LBP were outlined but there was no mention as to what proportion of these loans are considered as good or bad (nonperforming). As part of the International Monetary Fund (IMF) standby credit program it availed to bail itself out of the Asian financial quagmire, Korea has to restructure its financial industry, clear

28 Park (2011) 29 Privatization was completed in 2005

４３ its bad debts, tighten on prudential regulations, heighten transparency and disclosure requirements, and reorganize corporate governance of financial entities30. As such, consolidation was considered an essential element in helping the country get past and recover from the crisis. In the case of the Philippines, crisis recovery did not figure prominently in the rationale behind M&As in the finance sector. Was the fact that the Philippines was less affected by the crisis (although economic growth almost came to a complete halt) compared to say Thailand, Indonesia and Korea resulted to playing down the crisis as a basis for consolidation can be debated. Swift and decisive government response demonstrates how Korea was one of the countries hardest hit by the crisis. Financial institutions that can no longer be rescued because of too much exposure to nonperforming loans were closed, while those that remain viable were bailed out but has to undergo strict measures—five undercapitalized banks were forced to exit the market by 1998; nine banks merged to create four surviving banks in 1999; and two banks were merged in 2000 with the end result of reducing the total number of Korean banks from 33 to 22 by end of 200031. Furthermore, in non-bank financial institutions, twenty-one merchant banks, six securities firms, eight securities investment trust companies, and twelve insurance companies had been shut down by way of exits or mergers by end of August 200032. Interestingly, part of the second stage of the Korean financial restructuring involves merging of healthy banks, which reflects the DBP- LBP merger case, along with other measures as setting up a financial holding company (e.g. state-run Woori Financial Holding to manage 4 nationalized banks and their nine subsidiaries and an investment bank deemed as not self-sustainable) and merging unhealthy provincial banks with healthy ones33. Strict turf boundaries in financial business services was also eased allowing for business diversification, encouraging commercial banks to set up subsidiaries or cooperative alliances to go around industry demarcation lines. In 2001, two of the country’s healthiest banks, Housing & Commercial Bank and Kookmin Bank merged. Two other healthy banks, Shinhan and Cheju also began

30 Ro, Hyung-Gon. (2001) “Banking industry consolidation in Korea,” The banking industry in the emerging market economies: competition, consolidation and systemic stability, vol. 04, pp 93-101. Bank for International Settlements. Retrieved December 18, 2016 from http://www.bis.org/publ/bppdf/bispap04i.pdf 31 ibid 32 ibid 33 ibid

４４ discussions about a potential union. These cases demonstrate that, contrary to some notion, mergers between viable or sound banks can happen.

４５

４６ Assessing fiscal data openness in local governments in the Philippines*

Erwin A. Alampay, Pauline Bautista, and Raphael Montes Center for Local and Regional Governance National College of Public Administration and Governance University of the Philippines

Abstract

This research attempted to transition traditional ways by which CSOs interrogate, audit and participate in local governance by modelling the information gathering systems they undertake in ‘following the money’ and actively getting involved in planning and budgeting, into an open data fiscal transparency model at the local level. This research was done by documenting four cases of CSOs that audit or participate actively in budgeting and auditing processes at the local level. From these cases an open-data ecosystem for local fiscal transparency was diagrammed. The model was validated against websites of eight local government units (LGUs)to determine existing information gaps in ”open-ness” in LGUs that need to be addressed. Open data refers to the existence of fiscal data that are completeness, provided on time and is machine processable. For the local fiscal open-data ecosystem to transition from the traditional ways of CSO engagement, will require: (1) sustained national government support to implement responsive open data policies that will continue to incentivize LGUs to acquire complete, timely and machine- processable fiscal open data; (2) national laws that will sustain the open data initiatives of the previous administration; (3) a government-wide open data capacity-building through the newly established Department of Information and Communication Technology (DICT) that will systematize open data requirements across all levels of government while also providing the needed infrastructure to make it work, and finally (4) building understanding at the grassroots, starting with the K-12 curricula, of how the local government works, especially the local budget process, so that fiscal data that are eventually made open can be found, understood and used by every citizen of the country for whatever purpose they require.

４７ List of Acronyms Featured in the Research Report

ANSA-EAP- Affiliated Network for Social Accountability in East Asia and the Pacific BLGF- Bureau of Local Government Finance BLGS- Bureau of Local Government Supervision BUB- Bottom Up Budgeting CCAGG- Concerned Citizens of Abra for Good Government CLRG- Center for Local and Regional Governance CODE-NGO- Caucus of Development NGO Networks CPA- Citizens Participatory Audit CSO- Civil Society Organization DBM- Department of Budget and Management DILG- Department of Interior and Local Government DOF- Department of Finance DOH- Department of Health DPWH- Department of Public Works and Highways DSWD- Department of Social Welfare and Development FDP- Full Disclosure Policy FDPP- Full Disclosure Policy Portal GAA- General Appropriations Act GAD- Gender and Development IRA- Internal Revenue Allotments INCITE- Gov-International Center for Innovation, Transformation and Excellence in Governance KALSADA- Konkreto at Ayos na Lansangan at Daan Tungo sa Pangkalahatang Kaunlaran LCE- Local Chief Executive LGU- Local Government Unit LGC – Local Government Code LDRRMF- Local Disaster Risk Reduction and Management Fund MC- Memorandum Circular M&E- Monitoring and Evaluation NCPAG- National College of Public Administration NEP- National Expenditure Program NGO- Non-Government Organization NGA- National Government Agency PhilGEPS- Philippine Government Electronic Procurement System SGLG- Seal of Good Local Governance SEF- Special Education Fund SRE- Statement of Receipts and Expenditures ULAP- Union of Local Authorities of the Philippines

48 Introduction

E-Government, Open Government and Open Data

In the quest for better government services and higher accountability of government, many are turning towards the use of information and communication technology (ICTs) to improve governance. Some refer to this as e-government. This concept has also evolved from the exploitation of ICTs as a means of enhancing government operations and services towards the expansion of the democratic space through transparency, accountability and citizen participation (Velkovic, et.al., 2014). Through the ever growing use of Internet technologies, e- government has now given rise to open government where government agencies open new channels of communication and information exchange with citizens (Martin & Bonina, 2013; Parycek and Sachs, 2010). This is seen as potentially providing new spaces for openness, transparency, participation, service provision and accountability (Parycek and Sachs, 2010; Martin & Bonina, 2013) and is focused on building trust between the government and the governed and making governance more responsive (Velkovic, et al., 2014). Open government is based on the principle that citizens have the right to access documents, proceedings, information, etc. of the government in order to allow for effective public oversight. It has five components: (1) government transparency (clearness in procedures, tasks, operations, and regulations); (2) data transparency (authenticity, understandability and reusability), (3) participation through open dialogue; (4) collaboration (government to government, government to citizens, and government to business); and (5) open data (Velkovic, et al., 2014). Open data are those that are ‘freely and easily accessible, machine readable, and explicitly unrestricted in use” (World Bank, 2016:270). Government is an important source of open data on population, public budgets, infrastructure and other services (Velokovic et.al. 2014). The subject of open government data would be the disclosure of datasets that are valuable for re-use and civic engagement (World Bank, 2016). Open data demand that complete, primary and timely government data be made accessible, processable and sharable, free from licenses and should be non-discriminatory (Velkovic, et. al., 2014). Hence, open data are complementary to the values of transparency and participation that define good governance, and integral to e-government and open government. At

49 present there is growing exploration on how the publication and use of open and linked data can impact governance, economic growth and the delivery of services (Davies & Edwards, 2012)

Open data at the national and local levels

The origins of the open data movement can be traced to the Freedom of Information (FOI) Act in the United States in 1966. This came about through the growth of an increasingly non-transparent post-World War II federal bureaucracy and the idealistic motivations for an informed citizenry (Tauberer, 2014). The FOI Act set the standards for the opening of government documents to the public. Today, many countries are committing to proactively disclosing information, though the discussions and commitments have largely been at the national level (Canares and Shekhar, 2015). In the case of the Philippines, it was one of the eight founding states of the Open Government Partnership1 (OGP) in 2011. Its official open government data program is managed by a task force composed of the Department of Budget and Management (DBM), the Office of the Presidential Spokesperson, and the Presidential Communications Development and Strategic Planning Office. There are also national programs in the Philippines that further encourage greater transparency, such as the Department of Interior and Local Government’s (DILG) “Seal of Good Housekeeping” program (Ona, et.al. 2014). In 2014, the Philippines’ open data portal (data.gov.ph) was officially launched. It is managed by the government’s Open Data Task Force and is anchored on access to public sector information, data-driven governance, public engagement and practical innovation (DBM 2015). The portal hosts datasets2 from different national government agencies which are accessible, and sharable. In this respect, a catalogue of available open government data is already available from a number of departments and agencies (see http://data.gov.ph/catalogue/dataset/agenc y-data-inventory). However, while the open government task force is continuing to collect and access data from national government agencies,

1 Open Government Partnership is a multilteral initiative that aims to secure concrete commitments from governments to promote transparency, empower citizens, fight corruption and harness new technologies to strengthen governance 2 Data formats are in CSV, TXT and XLS formats. 50 its hard work has not yet cascaded to local government units (LGUs). Capacity building is being done on both the demand (users of data such as CSOs) and the supply side (source of government data such as national agencies), but most capacity-building efforts are Manila-centric and interrogate national data (Canares et.al. 2015). As such, attaining the expected benefits of open data-enabled e-governance may require new forms of "technological intermediaries” that will bridge the information gap between the government and its citizens (Alampay, 2002).

Transparency, participation and open data at the local level

The passage of the Local Government Code (LGC) in 1991 was intended to strengthen LGUs and promote social development through the decentralization of power. It devolved basic services to each LGU and empowered it to increase local financing to make it more self-reliant (Alampay, 2006). This was similar to reforms in other countries that focused on improving governance by bringing government closer to the people and making them active participants in development (Brillantes, 2003). It is worth noting that the passage of the LGC came at a time when the ICT revolution was beginning. Hence, complementary to its call for reform and better governance was the emergence of electronic government (Alampay, 2006). This provides the connection between e- government and people’s participation and its continued evolution in the local level. There is great demand for local government data in the Philippines from various stakeholders. The national government, for instance, requires regular reporting by LGUs as part of its monitoring of local governments. Academic researchers and civil society watchdog organizations also need data for research and independent third-party assessments. Moreover, the Philippines’ LGC has enshrined the participation of citizens and civil society through local special bodies (e.g. local school boards, local poverty reduction teams) which plan each LGU’s development programs. In such cases, active participation requires proper access to local data, especially financial data, so that policies and programs are founded on good evidence. In relation to open data, the Full Disclosure Policy (FDP) is a national government initiative by the Department of Interior and Local Government that provides incentives for the public disclosure of some LGU financial data (e.g. budget, procurement plans, Special Education

51 Fund, etc.), and is a logical starting point when discussing the state of openness in local governmental data (Canares, 2014c).

Research Questions

Given the above background, this study investigated the following:

1. What are the needs of CSOs for financial data with respect to their work in dealing with government? 2. What is the state of "openness” of LGU-related financial data in government at the national and local levels? 3. How can government financial data at the local level be made more open, useful and accessible to stakeholders?

In so doing, the research should help in strengthening government transparency and accountability through the development of open financial data standards for local governments in the Philippines. The research investigated financial sector-focused CSOs that require LGU financial data for their work. The assumption is that workable models for strengthening government transparency and accountability through open financial data in the realms of Bottom-Up-Budgeting (BUB), Participatory Budgeting3 and Citizen Participatory Audit (CPA)4 can be a springboard for collaborative and complimentary initiatives in the design of open data initiatives at the local level. This is premised on the idea that the design of how data are disclosed can limit citizen participation and use (Canares & Shekhar, 2015). The methodology is elaborated in the next section.

Methodology

Matching existing data to possible uses or existing users can help in the data structure design (See Figure 1). It must consider the perspective of current and potential users of the data to make the data valuable

3 Bottom-up-Budgeting is actually a form of participatory budgeting that was operationalized as a program during the Aquino Administration, whereby citizens, through CSO representatives participated in the identification of projects that can be enrolled for additional funding from national agencies. 4 In CPA, citizens independently monitor the implementation of government projects (e.g. roadworks, school buildings, book procurement) but can also work with official government oversight organizations such as the Commission of Audit. 52 (Zuiderwijk, 2014). For example, open data on funding or disbursements for development projects have limited use if these could not be analyzed due to undisclosed local census data. It would be difficult to compute per capita allocation or proportional allocation corresponding to the size of particular sectors. Also important is raising awareness of CSOs that such initiatives exist (Canares, 2014a), whether this be at the national or local level. As such, in order to come up with an open data model at the local level for finance-related use, two phases of research were done: first was collecting and modeling the data CSOs use; and second was testing the model in some LGUs vis-à-vis how open these financial data were at the local level.

Figure 1: Mapping Information Needs, Requirements and Availability

In the first phase, three main sources were documented, compared and analyzed. First, was the financial information that the national government agencies have of LGUs; second was the information that civil society organization (CSOs) need to get from LGUs with respect to their finances; and last was the information that LGUs already have, make available and provide in various forms (whether in open format or not) to the public (see Figure 1). Organizing these data then involved (1) mapping the requirements

53 for documents to be posted, imposed by national agencies/programs (e.g. by the Department of Interior and Local Government (DILG); by the Department of Finance) for local government units to post in connection with fiscal transparency and reporting. The study put particular focus on DILG’s FDP requirements, given the FDP’s critical value for bringing the open data discourse at the local level (Canares, 2014c). Canares and Shekar (2015:20) argued that if data serve socio- political or economic ends, it will always be sought by those who need them regardless of whether they are open or not. As such, the next step required (2) identification and documentation of CSO ”follow-the-money” projects and mapping information requirements related to it. Among these are projects like bottom-up-budgeting (BUB) and citizen’s participatory audits. The case studies of existing initiatives of follow-the- money projects that the study covered were the following (see Table 1):

Table 1: List of Follow-the-Money Cases Follow the Money Project CSO involved Alternative Budget Preparation Social Watch

Bottom-up Budgeting/Participatory CODE-NGO Budgeting at the local level ULAP INCITE-GOV

Participatory Audit BUB Monitoring and Evaluation CCAGG Check-my-school ANSA-EAP

As such, the case analyses were intended towards developing an integrative model of the data and information needs of the various CSO initiatives. This is because most CSO initiatives are often stand-alone and not connected, and reflects the different roles and contexts intermediaries play with respect to open data (Canares and Shekhar, 2015) and participation in governance in general. The CSOs, in these cases, are data intermediaries that can potentially hasten open data use at the local level. Social Watch is a network of around 100 civil society organizations and individuals, advocating citizens’ participation in public finance; CODE-NGO, the Caucus of Development NGO Networks, is the country’s biggest network of non-government organizations; ULAP, or the Union of Local

54 Authorities of the Philippines, is the umbrella organization of all the leagues of local government units and leagues and federations of local elective and appointive officials; CCAGG, or Concerned Citizens of Abra for Good Government is the Philippine pioneer in social audits; ANSA-EAP, short for Affiliated Network for Social Accountability in East Asia and the Pacific, is linked to the website of the Commission on Audit for “i-kuwenta”, COA’s Citizen’s Participatory Audit; INCITE- GOV, or the International Center for Innovation, Transformation and Excellence in Governance, convenes uniquely positioned reform advocates for discourse and capacity building in public fiscal management. Their work is consistent with the rationale for engaging citizens in accountability and budgeting (Boncodin, 2007). Lastly, (3) there are local government data that are available which are not required by DILG under the FDP, but needed by CSOs for their work, whether in open-format, or not. As noted by Canares et al. (2015:11), among the challenges for accessing local government information in the Philippines include approval protocols, duration for request to be addressed, outdated data, and personnel for retrieving information among others. Hence, to map these, LGU websites were studied as a separate phase of the research. This was done to identify where there is a large overlap in the intersection of the three sources that would represent the level of fiscal data openness in that LGU. In this report, eight LGU websites (3 cities and 5 provinces) were documented. The eight are: Iloilo City, Naga City, Quezon City, Iloilo Province, Bohol Province, South Cotabato Province, Camarines Sur Province, and Abra Province. However, these were not purely selected in random. Quezon City was selected because it was where CLRG- NCPAG operated; whereas Abra province was chosen because it was the home base of CCAGG). Bohol and Naga, on the other hand, were LGUs known for their e-government initiatives.

Operationalization of data openness

Fiscal data openness is not just about granting access to basic data sets. It can also be viewed in terms of the level of “openness” that the datasets possess. According to Velokovic et al. (2014), openness pertains to the quality of the data and the infrastructure on which the data is hosted or disseminated. The three most sensitive open data principles are “completeness”, “timeliness” and “machine processability.” Open data

55 are most complete as they progress from availability of description to being downloadable, to being machine readable, and having linked data. Timeliness factors in the length of time period covered in the data, the frequency the dataset is updated and the last time it was updated; while the degree of being machine processable relies on the format- whether it is static (PDF, JPG, non-editable), processable proprietary (XLS) or open source/non-proprietary (CSV), and machine readable and interoperable (RDF, XML) (Velkovic, et al., 2014). This simply means that the less encumbrances in the processing of data, the more open it is. Recommendations for improving the opennesss of fiscal data in LGUs were then based on this process of looking at the availability of information in the websites of these LGUs.

FINDINGS

Civil society organizations (CSOs) engage government with respect to financial matters in various ways. This section discusses findings based on selected “Follow-the Money” cases involving CSO participation. The cases present the types of data/information they require from government in performing their function and how “open” these are. The discussion of the findings for this paper is structured in three parts. First is a discussion of open data at the national level. A case of a CSO interrogating this data is provided through the example of Social Watch. Second is a discussion of the need for local government financial data based on cases of local CSOs engaging with government at the local level. This is illustrated through the case of CSOs participating in bottom-up-budgeting (BUB).Third, is a discussion of cases that interrogate both national and local data, thereby illustrating how information at the two levels interrelate, both in terms of information, and also in terms of fiscal transfers to the LGU.

Open Data at the National Level and CSO Interactions with open data

Case 1: Social Watch and the Alternative Budget Initiative Social Watch Philippines (Social Watch) is a network of NGOs with a reputation as a budget watchdog. Set-up in 1997, its objective is to increase the public’s awareness and promote social development

56 concerns in government. Its network has grown to around 100 CSOs and individuals 5 . At the national level, it interrogates the national government with respect to the national budget. It reviews the national expenditure program (NEP) and the GAA, and even proposes an ‘alternative budget’ that it aggregates through their own consultation with other CSO members in their network. National budgets and appropriations are also of interest to other organizations within government. Departments, agencies, and other units of government, for instance, need to know the funds appropriated in the budget. Furthermore, the interface of national and local in terms of financial information generally revolves around fiscal transfers involving the internal revenue allotment (IRA), and departmental budgets that get downloaded to the LGUs such as menu of projects6 allowed in bottom- up-budgeting (BUB).

5 see http://socialwatchphilippines.weebly.com/about-us.html 6 Each agency offers a prescribed set of programs and projects. In turn, if these align with development priorities identified by LGUs in consultation with CSOs and identified in their local plans, they can apply for access to these projects for their communities. 57 Figure 2: Social Watch Alternative Budget Preparation

Its Alternative Budget Initiative (ABI) program uses data from the national budget to critically engage the national government vis-à-vis an alternative budget it crafts on behalf of its network of NGOs. Social 58 Watch’s network of other non-governmental organizations work on different areas or clusters of government. These affiliated NGOs, in turn, deal with national departments/agencies in the preparation of their budgets (Figure 3). Mr. Alce Quitalig of Social Watch says that their “natural ally is the opposition.” This suggests a natural tension between the administration that provides data, and Social Watch which "fiscalizes" the administration. As such it is ironic that they saw their relationship with the Aquino administration, which espoused "open government", as somewhat in a lesser quality because “this year (was) the first year that we could not present out alternative budget with the committee on appropriations” which they had done previously from 2007 to 2014. Nonetheless, they engage with whoever wants to engage with them, and they are “willing to give data.” In fact, according to Mr. Quitalig, some lawmakers (e.g. Senators) request for briefings from Social Watch.

“Alternative Budget Initiative (ABI) is our engagement and our method of engagement is partnering with CSOs and also with government in terms of the budget preparation. We partner with program officers. But, our engagement in budget preparation is uneven for different clusters” according to Mr. Quitalig.

He says that their engagement might be affected by the type of relationship of their network NGOs, with the various agencies of government, and the agencies’ openness to share data and allow participation. For instance, they find it easier to get data from the Department of Health (DOH), whereas, with the DSWD and DepEd, participation requires a more formal process. DOH, he says, provides hard copies and on occasion emails some documents. Clusters, then, base their budget proposals from the proposed agency budgets. This provides a baseline. The collaboration can then be seen as a partnership (among CSOs). “Clusters would meet within (sic) themselves and they look at their own budget proposals. If a budget item is unfunded, they look at the costing and link it with an existing budget item” added Mr. Quitalig. In some cases, CSOs may also be knowledgeable of the country’s United Nations (UN) commitments (e.g. health, climate). They can interrogate the plans based on these commitments. “We also propose the financing sources, we know the budget ceilings, those sources of financing comes from the contestable budget items, like lump sums, that we see should be re-aligned or re-allocated, reducing the lump sums.”

59 However, proposed items that CSOs successfully include in an agency budget may still end up being cut in the technical budget hearing, Mr. Quitalig shared. As such, CSOs complain if these get removed in the budget. A problem he gave was the issue of how the ‘language’ or terminologies could change from one stage to another. This makes tracking budget proposals difficult.

Use of open data At the national level, there are already some documents that can be accessed. The GAA/NEP can be downloaded in .pdf, .xls, and .csv form from the Department of Budget and Management (DBM) website. The DBM also has data on the Bottom-up Budgeting (BUB)7. There’s also the FDP portal lodged with the DILG, and the BUB Portal, and the PhilGeps portal. Some of the organizations whose cases are discussed in this paper are also cognizant of the open data initiatives by the government. Social Watch, for instance, has also been trained by DBM on the use of open data, according to Mr. Quitalig. However, he said, downloading these files could be problematic. Some files, even just 2-3 pages long, could take so long to download because of how ‘large’ they are. This was echoed by Ms. Czarina Guce of ULAP, who also added how more difficult it is to download in the provinces where Internet services are slower. Hence, Mr. Quitalig still prefers to use ‘print outs’ and hardcopies which he says are ‘easier to understand.’ He still copies data into Excel, before transferring charts to PowerPoint. He finds .csv not ‘user- friendly.’ To check for accuracy of the items he re-encodes, he compares the computed totals, and if it is incorrect, he manually traces back where the error occurs. In 2015, Social Watch was unable to get a hardcopy. However, they were already able to get it from the website. We noted, however, that the NEP in pdf could not be searched electronically, and hence one has to get through the document ‘manually’ to search for items. Social Watch also uses data on budget expenditures and sources of financing. Since he has been doing this annually for a number of years, Mr. Quitalig has been able to develop his own system for visually presenting any changes or

7 For 2016 BUB see: http://www.dbm.gov.ph/wp-content/uploads/Our%20Budget/2016/ BUB/FY2016%20BUB%20Detailed%20Project%20List%20-%20Version%201%20As %20of%20July%2028%202015.pdf 60 trends from year to year.

Other open data at the national level

Currently available open LGU-related financial data available in national websites include data from the Department of Finance’s (DOF) Bureau of Local Government Finance (BLGF), and the Department of Interior and Local Government’s (DILG) Full Disclosure Policy Portal (FDPP). In some instances, as a result of the FDP, the provision of local financial transaction related information in some provincial government websites has resulted out of it (Canares, 2014b).

DOF-BLGF’s Statement of Receipts and Expenditures and the DILG’s Full Disclosure Policy Portal

The DOF-BLGF’s data on the State of Receipts and Expenditures (SRE)—formerly Statement of Income and Expenditures (SIE, 2001 to 2008)—are datasets that contain fiscal data from local governments as submitted through the BLGF’s eSRE system. The eSRE uses software where local government treasurers are able to input the amounts directly into the system. The SRE is done by Provincial/City/Municipal treasurers and follows the guidelines for financial information needed for economic forecasts and evaluation of the LGU’s financial performance. In cases where an LGU’s treasurer does not have online access, they submit a printed copy of their financial reports to the DOF-BLGF regional office, who then encodes this into the system. The SRE is also partially compliant to the International Financial Reporting Standards which are generally accepted by international financial institutions. The SRE contains data that can measure the LGU’s cash position and a snapshot of its annual spending. There is also a portion of the eSRE which is accomplished by the Assessors—the Quarterly Report on Real Property Assessments. On the other hand, the DILG’s Full Disclosure Policy Portal (FDPP) contains local government documents or reports that include details on procurement, and fiscal related data. The FDP policy essentially requires the LGUs to disclose data that they already prepare regularly, whether in spreadsheet files, budgets, procurement plans or utilization reports (Canares and Shekhar, 2015:17-18). Most of its financial data are on a

61 micro-level compared to the aggregated data in the SRE (see Table 2). The FDPP was set-up by the DILG’s Bureau of Local Government Supervision (BLGS) to facilitate the mandatory posting of local government financial data as required by law and DILG directives. There are now sixteen (16) reports that all LGUs are required to post in the portal (see Table 3). Unlike the SRE—which is done by the local treasurers, these 16 documents are sourced from a number of local government offices, particularly those of the accountant, budget officer, general services officer/bids and awards committee, human resources officer and treasurer. While the portal provides for templates, reports posted vary in terms of format (using LGU letterheads or adapted formats) while some post in different file formats (PDF, word or JPG).

Table 2: Comparison of SRE and FDPP data SRE Items FDPP reports Current Operating Income  Report on the utilization of  Local Sources: Tax revenue and the 20% component of the non-tax revenue Internal Revenue Allotment  External Sources: Internal (Development Fund) Revenue Allotment, Shares from  Abstract of bids as calculated national tax collections, inter-  Annual budget report local transfers,  Annual Gender and grants/donations/aids Development Accomplishment Report Total Current Operating Expenditures  Annual Procurement Plan or  Education, culture, sports & procurement List manpower development  Bid Results on Civil Works,  Health, nutrition, population Goods and Services and control Consulting Services  Labor and employment  Items to Bid  Housing and community  Local Disaster Risk Reduction development and Management Fund  Social services and social Utilization welfare  Manpower complement  Economic services  Quarterly statement of cash  Debt service flow  Report of Special Education Non-income Receipts Fund Utilization  Capital investment receipts  Statement of Debt Service  Receipts from loans and  Statement of Receipts and borrowings 62 Expenditures Non-operating Expenditures  Supplemental procurement  Grant/loan to other entities plan  Debt service  Trust fund utilization  Other non-operating  Unliquidated cash advances expenditures

It can be observed that the details on expenditures in the eSRE do not correspond to individual departments or offices. Services are clustered into what are considered “planning clusters” and therefore overly aggregated. Hence, the eSRE does not reflect the expenditures of each local government department. The expenditures of the individual departments are clustered under seven expenditure categories. An example is where the expenditures for the Office of the Municipal Agriculturist are placed. It is not clear whether it is included in the category of Economic Services or in the General Public Services. This makes it difficult to analyze LGU spending patterns (i.e. agriculture), and hence, the eSRE is not sufficient as an open data set. This is consistent with other studies which say that full analysis cannot be done when budget data is described in a generic way or presented in an aggregate manner (see Canares and Shekar, 2015:21). On the other hand, the financial reports under the FDPP are focused on the utilization of specific funds or trust funds. While there is a Statement of Receipts and Expenditures report, this is a summary of the more detailed SRE in the possession of the treasurers and the BLGF. Table 3 shows the sources of the reports under the FDPP.

Table 3: Source for FDPP reports Sources of Reports FDPP reports Accountant  Local Disaster Risk Reduction and Management Fund Utilization  Report of Special Education Fund Utilization  Trust fund utilization  Unliquidated cash advances General Services Officer / Bids  Abstract of bids as calculated and Awards Committee  Annual Procurement Plan or procurement List  Bid Results on Civil Works,

63 Goods and Services and Consulting Services  Items to Bid  Supplemental procurement plan Budget Officer  Annual budget report  Report on the utilization of the 20% component of the Internal Revenue Allotment (Development Fund)

Even as there are already LGU financial data open at the national- level, additional policy may have to be developed if there are other local government data that stakeholders require and that need to be more open. As such, local governments will also have to adopt local policies, if in case they would like to host open data in their own websites, separate from already available open data at the national level which local community stakeholders may find difficult to access, and assist in facilitating better participation and transparency. In addition, capacity building is an issue for any new functional assignment passed on to local governments. As a matter of policy, priority for opening data has to be established. However, data professionals do not immediately gravitate towards working for local governments, especially in financially-limited local governments (i.e. third to sixth class municipalities). Provision of open data also has to compete with service delivery functions that are supported by finite resources. Slow data release is not necessarily a consequence of unwillingness, but simply because data release is not part of the regular work of data professionals (Conradie & Choenni, 2014)—more so local government personnel who are not data professionals. As such, mapping existing datasets in local governments may help in defining and standardizing data that can be opened in LGUs beyond documents required to be posted presently under the Full Disclosure Policy (FDP).

Use of FDP documents at the local level: DATAGov and BUB

Some of the Full Disclosure Policy (FDP) documents are particularly useful for local CSOs engaging the LGUs in various capacities, including for CSOs’ participation in Bottom-up Budeting (BUB). One example is

64 the Data Access Towards Accountable Governance (DATAGov) Project that the CODE-NGO was implementing at the time of the study. The DATAGov project aimed to enrich citizen participation in local governance by assisting civil society organizations (CSOs) to more effectively use government data towards evidence-based agenda building, advocacy and planning, including CSO-participation in BUB. To do this CODE-NGO built capacity in partner CSOs to analyze six (6) budget documents (wherever available from the FDP Portal or from the LGUs themselves). They developed guidelines8 or toolkits for local CSOs engaged in the Grassroots Participatory Budgeting Process, Budget Advocacy and Monitoring, and participatory governance in general. Their goals in doing this were to:

1. facilitate familiarity with local government budgets and spending priorities by their respective local government units; and 2. standardize basic, easy-to-follow guide in understanding and analyzing LGU budget documents, primarily the Annual Budget, Statement of Revenues and Expenditures, Utilization reports on the LDF, GAD Fund, SEF and the LDRRM Fund.

Note that four of the six documents are part of the FDP, with the LDF and LDRRM Fund not among those mentioned in the FDP. There is also specific information that needs to be extracted from the documents, from which CSOs are expected to base their analysis. Among the analysis that can be done in interrogating the LGU’s annual budget include reviewing mandated allocations; reviewing maximum allowable allocations; analyzing revenues generated; and breaking down indicative budget priorities (See Figure 8). The gender and development (GAD) fund, for instance, can be further analyzed to check compliance to lawfully mandated allocation for gender and development. In the case of BUB, there are various points in which CSO engage. This could be from identification of projects, to monitoring its implementation.

8 From CODE-NGOm CGuidelines in and Standardised Approach to Understanding and Analysing Local Government Budgetst BWorking Draft as of October 2015) 65 Figure 3: Analyzing the Annual Budget and Statement of Revenues and Expenditures

Diagram based on CODE-NGO (2015) Guidelines

Case 2: Bottom-up Budgeting – Participation among CSOs (CODE- NGO) CODE-NGO’s national conference helped highlight issues with respect to accessing data from the LGUs based on the field experiences of their partners who were participating in bottom-up budgeting. For instance, in Dipolog, one of their CSO partners mentioned the inconsistencies between LGU data that was posted online and the ones that came in hard copies. They reported that what they see in the FDP portal is not the same as the hardcopies they were given. One feedback from CSOs in CODE-NGO’s national conference meeting mentioned

66 that sometimes submitting on the portal ends up as ‘for compliance only,’ and hence the quality of the information is sometimes compromised. This was also something we validated from our observations when we looked through the data available in Quezon City. Conference participants also mentioned difficulty understanding the terminologies used in the official documents. Furthermore, with respect to the physical posting of some of the documents, CSO representatives in the conference also mentioned that there were barriers such as the space being not hygienic (e.g. near a slaughter/meat space), and presence of other physical barriers (e.g. glass casing such that only the first page can be seen). As for online posting, the limitations of Internet access were also apparent in a number of cases we documented from key informant interviews. This was validated based on the experiences of people from various CSO representatives9 we interviewed for this research.

Case 3: Bottom-up Budgeting – Intermediation by CSOs (ULAP) Compliance with the FDP is important for LGUs since this is one of the requirements for the ‘Good Financial Housekeeping’ core component of the DILG’s Seal of Good Local Governance (SGLG). Getting this seal allows LGUs to access or download additional funds from the national government. Examples of these, according to Ms. Czarina Guce are: the bottom-up budgeting (BUB) programs that are LGU-implemented, the KALSADA10 program, and technical assistance with respect to disaster risk mitigation.

9 In particular from CCAGG, CODE-NGO, ULAP and INCITEGOV. 10 Subsidy to provincial roads management and implementation 67 Figure 4: ULAP’s intermediation between NGAs and LGUs on financial matters

It is in this area where the Union of Local Authorities of the Philippines (ULAP) helps mediate between the DILG and LGUs. ULAP assists DILG inform ULAP members about SGLG components their respective LGUs are still non-compliant with. ULAP also assists LGUs

68 understand how to access additional funding from the national government, such as the BUB program. With respect to the FDP, they also provide guidelines to build capacities of LGUs with respect to their internal Public Fiscal Management systems. These systems generally involve the local Treasurer’s Office, Budget Office, Planning and Development Office, Engineering office, BACs, and the office of the Local Chief Executive (LCE). In terms of specific data ULAP uses with respect to Bottom-up budgeting (BUB), many of these come from national agencies, which they then inform or feedback to the leagues and LGUs. Specific data on the BUB is also available in the BUB Portal11. The data there however, has limited usefulness for ULAP. Executive Director Czarina Guce of ULAP says that it (BUB Portal), the portal was designed with a national government perspective. “Initially the purpose of the Open BUB portal is for the NGA to track the LGUs gastos (expenses) of the na-download na pera (downloaded funds).” As such, she says what you find there is not so useful (for LGUs and communities). “The BUB portal only had budget allocations versus release; it doesn’t actually show you actual expenditure.” She adds that “the magnitude and scale of the data there is not CSO- nor municipal officer- friendly.” Among others, they’ve found that accessing it requires good Internet speed. Second, the amount of data is really meant for the national implementer. She further adds that “they (the Portal administrators) try to have a feedback and response protocol but only national can give feedback.” Hence, ULAP wishes that the BUB portal becomes friendlier to the users in the communities. As of March 15, 2016 there was already a number of downloadable data in the portal. These include downloadable quarterly BUB reports from 4th quarter of 2014 to end of 2015. The joint memorandum circulars (JMC 1 to JMC 7) provided the annual guidelines for BUB implementation (including menu of projects) and specific BUB Project lists in the GAA from 2013 to 2016. Both the BUB reports and the BUB GAA project lists are already in open format (csv or xls) and searchable. The BUB project list has the region, province, city/municipality, program name, project name, targets, agency and amount. The BUB reports are actually more comprehensive, including project quarterly status (e.g. complete, dropped), project reference for the report, if it is a replacement project, a merged project, quarterly disbursements, status of reports of quarterly accomplishments, and whether reports have been published,

11 See http://openbub.gov.ph/data 69 among others. The BUB projects are also searchable in the portal itself by agency, location, year, status, budget type and budget.

Other Cases: using both national and local data In other cases, CSOs require looking through data from national agencies and from local government. Some of these pertain to the monitoring and audit work of CSOs with respect to how projects are implemented at the local level (see Cases 4 and 5).

Case 4: Social Audit- ANSA-EAP’s Check my School Project Some organizations, such as Affiliated Network for Social Accountability in East Asia and the Pacific (ANSA–EAP) and the Concerned Citizens of Abra for Good Government (CCAGG) do nationwide auditing and use various sources of data at the national and local level. This is in line with the process of ‘social accountability’ which Ms. Selosa of ANSA-EAP defined as the “constructive engagement between citizens and government in monitoring government’s use of public funds to improve service delivery, protect rights and improve citizen welfare.”

Figure 5: ANSA-EAP Check my School Program

In their Check my school program, for instance, they monitor over 44,000 schools (see Figure 4). This requires cross validating information from different sources, some of which are already available online, with

70 some in open data format.

Case 5: Citizen’s Participatory Audit - CCAGG The Concerned Citizens of Abra for Good Government (CCAGG) engages in community organizing, participatory monitoring & auditing, social audit, concerns for the indigenous cultural communities, development programs, conservation and protection of biodiversity, and peace building.12 Among its current ongoing and completed projects in Following the Money are: the pilot Citizens Participatory Audit (CPA) of road works; monitoring of planning and implementation of Bottom Up Budgeting (BUB) of water systems in Abra; and the Monitoring and Evaluation (M&E) of Conditional Cash Transfers of Project i-Pantawid.13

12 from Key Informant Interview with Pura Sumangil, December 9, 2015 13 See http://www.ccagg.org 71 Figure 6: CCAG Citizen’s Participatory Audit of Road works

72 CCAGG pioneered the citizen’s participatory audit (CPA), particularly on road projects (see Figure 5). In their case much of the information they collect and cross-validate are from national agencies such as the Department of Budget and Management (DBM), and agencies that have roadwork in their budget. Examples of these are farm- to-market roads implemented by the Department of Agriculture and school buildings, national roads, and bridges constructed by the Department of Public Works and Highways (DPWH). It is also possible that there are some budgeted infrastructure projects by the LGU. It is their strong presence on the ground that allows them to systematically monitor implementation of these public works and their validation feeds into the audit report that they submit to the Commission on Audit. CCAGG gets documents and information from various agencies and levels of government (e.g. DBM, DA, DPWH). They also get information from the local governments with respect to data about projects that are in their budget. However, CCAGG’s approach is largely done ‘offline’ requiring hardcopy printouts of documents. This is partly because the digital data infrastructure in Abra is problematic in terms of access and quality of local content available. For instance, the website of the Provincial Government of Abra’s status is “suspended.”14 Based on the DILG Regional website for the Cordillera Autonomous Region15, of the 27 municipalities in Abra, only two have websites: Dolores16 and Malibcong17. However, documents entitled Program of Works could not be found on either website. The data that CCAGG needs from National Government Agencies is relatively more accessible in comparison. First, the website of the Department of Public Works and Highways (DPWH)18 has an icon on Program of Works which leads to a search engine19. Scanned Program of Work documents are downloadable in PDF format. It provides filters for Calendar Year (from 2012-2015), Region, Project Name and Cost. However, there is no Program of Work under Abra listed. Second, the website of the Department of Budget and Management20 has an icon “DBM Publications” which leads to a page that presents a listing of

14 http://abra.gov.ph/cgi-sys/suspendedpage.cgi 15 http://www.dilgcar.com/index.php/2015-07-10-04-38-51/province-of-abra 16 http://doloresonline.gov.ph 17 http://www.malibcong.gov.ph 18 http://www.dpwh.gov.ph/infrastructure/index.htm 19 http://www.dpwh.gov.ph/infrastructure/program_of_work/index.asp 20 http://www.dbm.gov.ph/ 73 Content Pages. Clicking on “General Appropriations Act of 2015 with UACS” leads to a listing of National Government Agencies21. Clicking on Department of Public words and Highways leads to a 918-page pdf file listing of the allocated amounts for operating costs of DPWH and for DPWH programs and projects classified by region (see Figure 5). CCAGG then cross-validates the data they collect in order to come up with an Audit Memo (see Figure 5). The audit memo is then inputted into their social validation process. In the social validation process, they interview government officials and beneficiaries to determine the true status of implementation. As Pura Sumangil explained, “CPA is more technical and (sic) Social Audit engages the community. As such, CPA requires an engagement with the Open Data Ecosystem while social or participatory audit requires an engagement with the physical and social processes of auditing.”22 In other words, there are some things in their work that cannot be captured by open data. CCAGG Chair Pura Sumangil also stressed the importance of “proper data curation” in the innovation towards government’s transparency and delivery of public information. She emphasized the need for simplification of terminologies and basic illustrations. She observed that some of the language being used is “hardly understood by laymen”23. She said that CCAGG intends to learn and be familiarized with the Unified Accounting Code System (UACS) of the government to heighten understanding on government transactions (e.g. funds, disbursements, receipts, financial reporting)24. She emphasizes that the “government should strictly mandate the disclosure of public documents up to the offices on the ground,” for the reason that “computer and Internet is not accessible to all Filipinos”25.

State of Openness of FDP in LGUs: A Walk-Through of Some LGU Websites

The requirements for documents that are to be disclosed by LGUs under the Full Disclosure Policy is listed in DILG MC Memorandum Circular

21 http://www.dbm.gov.ph/?page_id=11744 22 from Roundtable Discussion of the CPA Capacity Building Workshop held on November 29, 2015. 23 Key Informant Interview with Pura Sumangil, December 9, 2015. 24 SuriDiwa, 9 December 2015 25 Key Informant Interview, 9 December 2015. 74 (MC) 2010-83 and the quarter of posting is specified in DILG MC 2011- 134, an amendment DILG MC 2010-83. The policy, at present, does not require this to be posted in the LGU website. But, in assessing the state of open data at the local level, the availability of these was done for a few websites. A scan of local government websites revealed various states and styles of compliance with DILG’s Full Disclosure Policy (see Table 4). Table 4 presents the compliance status of eight focal LGUs vis-à-vis the amended FDP. The eight are: Iloilo City, Iloilo Province, Naga City, Quezon City, Bohol Province, South Cotabato Province, Camarines Sur Province, and Abra Province. The first column lists the FDP Documents required. The second column specifies the requirement as of the 4th quarter of the current year. LGU website walk-through findings are indicated by green (when required data is available) or red (when required data is not available). When current data is not available, the date of the most recent data is available is indicated in red. It was noted that the timeliness of the FDP Documents in LGU websites were sometimes one to two years behind. Further to the compliance to the amended FDP, it was observed that the LGUs had varying ways for presenting the FDP Documents. The variations could be in locating them in the websites, in how the files are labeled or named, and in how the formats for the reports/documents are presented. It was observed that the non-standard ways by which LGUs website were designed made it difficult to easily locate FDP Documents. For example, the FDP Documents were put under different headings, and were not always consistent with the FDP Document Name. In some cases, some downloadable PDF files were not decipherable due to the size of the font or the quality of the scanning. Often cited as a model of e-governance has been Naga City and it does provide a large amount of information that is current and is downloadable. However, many of these are only in pdf form, and therefore are non-machine readable. In this regard, Bohol Province, provides a better benchmark of openness, since they already provide data in excel format, albeit this is a proprietary format. In majority of the LGU websites, the data is not available, or not current, and if made available are in pdf.

75 Table 4: Open Data status of FDP documents in 7 LGUs (as of 15 June 2016)

Legend: Green : Required Data is Available Red : Current Data is unavailable. Date of most recent data is identified.

FDP

Docum

4)

ents CITY

13

INCE

(DILG -

Date

ABRA ABRA

(Naga)

NAGA

ILOILO SOUTH

MC BOHOL

2011

(CCAGG)

(DILG (DILG MC

CAM. SUR

PROV PROVINCE

2010- COTABATO ILOILO 83) CITY QUEZON 2016 201 XLS

20 Curre 6 2016- 2016 2014 2013 15 None nt Link XL PD PDF XLS PDF PDF Report Year ed to S F FDP Annual Budget P

201 2016 6 2014 XLS 20 XL Curre None 2016 2013 15 Link S None None nt as of

Procurement XL ed to XLS PDF Year 06151 S, FDP IN 6

P FD Plan or AnnualProcurement PP

2016 2015 201 XLS 6 2015 20 None 2013 2013 Curre Q1 Q3 15 Link None nt XL ed to As of PDF PDF Year PD XLS Estimates S, FDP 06151 Expenditure F

Fund Income & Fund& Income P 6 SpecialEducation

76

FDP

Docum

4)

ents CITY

13

INCE

(DILG -

Date

ABRA ABRA

(Naga)

NAGA

ILOILO SOUTH

MC BOHOL

2011

(CCAGG)

(DILG (DILG MC

CAM. SUR

PROV PROVINCE

2010- COTABATO ILOILO 83) CITY QUEZON 201 Certif 6 icate 20 2016 2014 2013 Curre Q1 of No 14 None nt 2014 Debt XL XLS PDF PDF, Year PD Servi

S Statement Statement of Debt Service F ce

2015 Not XLS fou 20 , nd Curre 2016 2014 2013 15 2013 None nt Link as XL XLS PDF PDF Year ed to of S, FDP 061

Annual & Gender P 516 Devt Accomp Report Devt

2015 201 XLS 6 20 2016 2014 2013 Curre Q1 15 Link None None nt XL ed to XLS PDF PDF Year PD

Receipts & S FDP Statement Statement of Expenditures F P

2015 Feb

201 st XLS Jun 2015

1 20 6 , Sept Q1- 2013 2013 Qtr 16 Q1 None Curre Q1 Dec Q4 Link PDF PDF, nt XL PD 2015 Cashflow ed to XLS, Statement Statement of Year S F FDP PDF P

77

FDP

Docum

4)

ents CITY

13

INCE

(DILG -

Date

ABRA ABRA

(Naga)

NAGA

ILOILO SOUTH

MC BOHOL

2011

(CCAGG)

(DILG (DILG MC

CAM. SUR

PROV PROVINCE

2010- COTABATO ILOILO 83) CITY QUEZON 2015 201 st 1 20 XLS 6 2015 2015 2013 2013 Qtr 16 Q1 Q3 Q4 None Curre Q1 Link PDF PDF nt XL ed to PD XLS, XLS

Utilization Year S, FDP F Report of SEF P

2015 Not fou st XLS 1 20 nd 2015 , 2013 2013 PDAF) PDAF) Qtr 16 Q3 2014 None Curre Q1 as Link PDF PDF nt XL of XLS

Utilization ed to Year S 061 FDP

Trust Fund ( Trust 516 P

2015

1st 20 XLS 2016 2013 2013 2013 Qtr 16 201 Q1 None Curre Q1 Link 5 PDF PDF PDF ed to

Services nt XL PDF Year S FDP

P

Bid Results on Civil Works and Goods and and Goods and Works

st 1 NON 2015 2013 Qtr Non E 20 None None Curre 2012 e FOU 14 PDF, PDF

Bids as nt ND Calculated Abstractof Year

78

FDP

Docum

4)

ents CITY

13

INCE

(DILG -

Date

ABRA ABRA

(Naga)

NAGA

ILOILO SOUTH

MC BOHOL

2011

(CCAGG)

(DILG (DILG MC

CAM. SUR

PROV PROVINCE

2010- COTABATO ILOILO

83) CITY QUEZON

2015 XLS 1st 20 2015 2013 Qtr 16 Non Q4 Link None None None Curre Q1 e mponent mponent of ed to PDF nt XL XLS, FDP Year S

P

20% Co

theInternal Revenue Allotment Utilization

2015 20 XLS 16 2015 , Curre Q1 Non Q4 None None None None nt Link e Year XL XLS, ed to

Supplemental S FDP

P Procurement Procurement Plan, anyif 20 16 Q1 201 XL 6 S 2015 Q1 2013 2015 LI 2014 2013 Q4 Q4 None N PDF PDF PD PDF XLS

LDRRM* K F TO FD PP

*LDRRM was not part of the FDP

79 DISCUSSION

Needs and Nature of CSO engagement

CSOs from the private and public spheres are agents that act in the political-economic sphere in pursuit of their conception of the public good (Holmes, 2012: 143-144). The public goods that they are expected to push for include, among others: accountability of public officials; inclusive representation; equitable development; and, its own autonomy. Towards these ends, they engage the state to secure democratic and redistributive reform. More specific to the budgeting and public accountability process, Boncodin argues that the rationale for engaging with citizens (and CSOs) is to (1) demystify the budget process; (2) respond to basic needs; (3) improve budget allocation and facilitate fund distribution procedures; and (4) prevent financial corruption and enhance accountability (Boncodin, 2007). It is in line with this, that the cases discussed in this study engaged government in fiscal transparency for different reasons; be it for advocating budgetary reforms; participating in planning; act as service providers; or for social audit. As such, if CSOs’ goals vary, so does the data they require of government. It is also for this reason that there has long been a demand for freedom of information (FOI), in order to facilitate the varied objectives of CSOs. In turn, how government views CSOs (as a partner, as a critique, etc.) can then lead to varied relationships and levels of trust with government, which can also be a factor with respect to accessing data, especially if the data is not open, and there is no compelling FOI law. Advocating for budgetary reforms, or allocations for specific advocacies, for instance, requires access to the national budget. Participation in the budgetary process requires participation in agency level deliberations and sector specific information. At the local level, this also requires specific information and evidence needed in the crafting of local poverty reduction plans. For those with a monitoring and audit role, data from the national, especially from agencies, and agency implementation at the local level is needed to be cross-validated with funds at the local level. Hence, data is not limited to data required of LGUs from the FDP. On the other hand, those who are directly involved in service delivery, often require information on how to participate, access, and track funds. This might also require CSO intermediation, especially when

80 the information and data is difficult to navigate, especially for new programs that the government is initiating (e.g. BUB).

Open Financial Data at the local government level

This investigation has seen more data and information about local government finance being opened in the Philippines, especially at the national level (see Table 5). For instance, The DOF has aggregated financial data provided by LGU treasurers on LGU statements of receipts and expenditures (eSRE). While the data is machine-processable in excel format, the data is not complete. The e-SRE does not provide access to bulk raw data because the method of input to the system follows the prescribed templates of the BLGF-DOF. Data has already been aggregated particularly for sectoral expenditure items (i.e. general public services, economic services etc.) These sectoral expenditure items have primary sources that reflect the expenditures of individual local government departments (i.e. office of the municipal agriculturist, local economic enterprises office etc.). These primary sources are not available at the eSRE system and are generally not open at the LGU level as well. Data in the eSRE is also not timely since the eSRE system only provides access to aggregated data for each year, the latest being 2014 eSRE. The DILG has a full disclosure policy (FDP) portal where LGUs can post the financial documents it requires of LGUs under the FDP. However, data in the portal is also incomplete. There is no access to the “entire data set.” The data is not primary and have been aggregated or modified. In some cases, the reports posted do not follow the same format, which would also complicate aggregation in the future26. Other postings on the various LGU trust funds are very simple but still have varied formats in presenting the data. Others reflect just the amounts released while others include other details such as % of completion of project and the amount released so far. In terms of timeliness, many LGUs do not post on time. It should be recalled that there are documents in the FDP Portal that are required to be submitted quarterly, not only to the portal but also to the Sanggunian or local council for accountability purposes. Assuming regularity in LGU operations, each LGU must already have such documents ready for posting every quarter, which may

26 For example the 2014 SRE of Batangas City follows the prescribed format of the BLGF-DOF, while Quezon City’s SRE posting follows the PS-MOOE-Capital Outlay format with trial balance. 81 be difficult for some LGUs to do. Furthermore, most of the documents in the FDP Portal are in pdf format. There are documents that were converted through “Print to pdf” function while others are photos or scanned documents converted to pdf. The previous being considered “searchable” while the latter is not “searchable.” But, both are not machine processable. In other cases, documents are in JPG format— these being photographs of the documents. One reason for this is that many LGUs want to present a fully authenticated document that shows the signature of the reporting officer (i.e. treasurer, accountant etc.). This happens in spite of the fact that DILG has provided templates for each document subjected for required posting. In addition, the 2016 General Appropriations Act (GAA) is open, accessible, and more detailed 27 . The level of detail even includes information on some allotments that go down to LGU levels, and some even down to the barangay-level for some infrastructure projects (like in evacuation centers). The Bottom-up-Budgeting (BUB) portal also now provide more detailed quarterly reports of BUB project, distilled from the GAA, and does go down to the municipality/city level on a per project basis. As the detail go down to the LGU-level, this provides opportunities for stakeholders (e.g. CSOs, citizens) to interact with their LGUs in various stages, whether it be in project planning, implementation or monitoring.

Table 5: Open Government Financial Data at the National Level Machine Case/Doc Completeness Timely Processed National National Yes Yes Yes Budget/NEP  Downloadable But only for this Available in  But no meta year; not pdf (but not data on the data comparable searchable  Size of file may from year to electronically) make it difficult year ,.xls, and .csv to download  Linked to DBM BLGF’s No No, Late Yes eSRE  No meta-data (2014 latest) in .xls, .xlsx on the file Annually manuals and

27 The 2016 GAA is also thicker and has more volumes. 82  Not reported procedures disaggregated Not quartely are available  Reported by in pdf treasurers FDPP No No (not on Varies  Quality is time), Some files are suspect Not quartely jpg, most are  But more Only as far as pdf detailed than 2012 BLGF, no aggregation BUB Portal Incomplete Partial/Limited Yes  Not useful for difficult to In .csv LGUs compare from and .xls  More internal year to year tracking  Quarterly reports from 2014- end of

At the local level, the state of open data remains spotty at best. The posting of FDP documents on websites are not yet the norm, and if they are posted, they are not complete, current or on-time with documents mostly non-machine processable, or use proprietary format.

83 Table 6: Open Data at the Local Level Machine Case/Doc Completeness Timely Processable LGU Data (based on Table 4 and feedback from CODE-NGO conference) FDP in Varies Varies/Inconsist Varies LGUs  Submission in ent  mostly pdf FDPP only for  if open compliance access, is  incomplete proprietary access (.xls)  information  some are quality varies hardcopies  Internet  presentation access varies varies; not standard LDRRM Low number of Varies/ Most - mostly pdf posting Not timely

National Agency Data in Local or Regional offices Per Agency: Requires No, No BUB Menu intermediation (see incomplete; of openbub.gov.ph) requires queries Projects/req -call center to agencies; no uirements operations are FAQs requested generated templates per agency is needed on process; partly because of the newness of program -key implementors not linked (DBM, DILG, NAPC) (policy coordinating and monitoring) DILG: No No No compliance -requires with SGLG intermediation

84 Agencies: No No No DPWH Hardcopy from Hardcopy only (Kalsada) regional offices or national office

It should also be noted that Internet access would be necessary for posting and accessing financial data that is available online, whether this is by national agencies or by LGUs. Unfortunately, the quality of Internet access varies, especially as one goes farther from socio-political and socio-economic centers in the country. Hence, some CSOs are still heavily reliant on getting information the traditional way. In other words, getting hard copies of the needed data from LGU offices or local and regional offices of national agencies that implement projects in their communities is still quite common. Furthermore, citizens’ and in some cases the LGU’s access to information requires more than having an Internet access. There are a number of pre-conditions and contexts necessary to make this happen. Work is still needed on the “analog complements” which includes developing workers’ skills to the demands of the new economy, and by ensuring that institutions are accountable (WDR 2016). To some extent this study has shown some of the analog complements that need to be worked on, such as: policies on freedom of information and human resource capacity. According to Canares & Shekhar, context extends beyond the description of national situation or local idiosyncrasies and becomes a description of relations between different actors across various level of state governance (2015:28). This was supported in some of the cases, as it was shown that ‘relationships’ can be both an enabler and a barrier to accessing information. INCITE- Gov for instance gave the example of establishing good relationships with LGUs as this helps them gain access to data. CODE-NGO said they sit down with LGUs, to have a better understanding of the financial data they provide. Our own experience also required interacting with an LGU’s webmaster, to help navigate websites and locate needed information. But even gaining access to that information required assistance from other people to better understand the content. On the other hand, Social Watch, found their ‘relationship’ with government as a hindrance since they were not allowed to present their Alternative Budget Initiative, to the current Congress. The absence of these (policies and capacity), in turn, also create spaces that CSOs fill-in, whereby they end up as ‘intermediaries’ in understanding the budget process, in processing

85 available information, and in facilitating compliance of LGUs with national government agencies.

CONCLUSIONS

One of the digital dividends brought about by the Internet is the ease of access to information given how it helps overcome information barriers (WDR, 2016) . In connection to this, the objective of this research was to encourage more fiscal transparency at the local level by making LGU financial data openly accessible to citizens. Openness in government is a culture and philosophy that still needs to be developed and nurtured. By culture we refer to mindsets, values and behaviours that will support and enhance the supply, demand and use of open data beyond policies and legislation. Notwithstanding the fact that it requires laws to make compliance mandatory. By philosophy we refer to the essential understanding and practical consciousness of deliberately embracing, and engaging with, open data regardless. It requires laws to make compliance mandatory. However, a freedom of information bill has yet to be passed in Congress. Despite this, the Aquino administration has had made inroads in making more data available through open government and open data initiatives, and incentives through the full-disclosure policy (FDP). The FDP at present, however, does not require web-posting nor providing documents in an open data form. Requiring LGUs to post these online and in an open data format can enhance its accessibility and usefulness for CSOs. In fact, there was a pending bill in the last Congress that proposed amendments to Sec 352 of the local government code28. The main points of the proposal require OTHER INFORMATION, and making this an accountability of LCEs (Governors, Mayors and Vice-Mayors) and posting these in websites. The same basic documents in the FDP are mentioned but no longer limited to a calendar year, the spirit of which assumes that previous years are also provided as a basis for comparison and trending, and in more detail (not just summaries). Better information, would then lead to better decisions. This, though has not been passed, but should be re-considered in the next Congress to make open data a sustained institutional policy in future administrations. There is also room to expand the idea of openness not only to

28 HB 19 and HB 186 by Rep Leni Robredo and Rep Winnie Castelo. 86 government, but also other non-government actors, consistent with how society ascribes to a concept of governance that is more inclusive. In relation to this, some non-governmental actors openly said that they can share data (e.g. Social Watch; CODE NGO). Some stakeholders however were cautious because the data might have been given in confidence or with restrictions (e.g. ULAP), while others also had to consider legal protocols (e.g. audit finding, non-disclosure agreements). From this research, there were three perspectives highlighted in how data is reported: (1) National Government templates; (2) Local Government operations; (3) CSO interests29. It echoes the multiple ways in which data and information is appreciated. As Brown and Duguid (2000: 18) says: “it is people, in their communities, organizations and institutions, who ultimately decide what it all means and why it matters.” However, if data is reported in different ways, this then becomes as barrier for people’s capacity to understand them. This means that what is found online should be the same as the official document. How these are reported, named, or referred to should be consistent all throughout (and in all levels of government). As such, to build capacity to understand financial data at the national and local level, data quality must be prescribed. In the Philippines, compliance by local government units with the FDP was high at more than 80% when it was first implemented – made possible by the fact that data required to be disclosed under the policy come from financial systems with clear data collection, aggregation, and reporting procedures (Canares & Shekhar, 2015: 17). However, upon examination in this study, format and quality of compliance varied. Hence, compliance to the FDP must be refined to make sure the data that is opened and posted is useful. Current initiatives can be improved by putting in place more specific regulations and rules that help standardize how data is reported (data architecture), how files are named, and where in LGU websites they can be found (even standardizing the look of LGU websites). This would make it easier for stakeholders to find needed data, develop applications for processing data into more understandable figures, and allow aggregation of data in higher levels of government, perhaps even without human intermediation. Hopefully, this is something that would be addressed by the recently created Department of Information and Communication Technology (DICT), as part of their mandate is developing a coherent e-government framework

29 Example of which is the CODE-NGO guideline. 87 for all levels of government to follow. In making refinements in these fiscal reports, it is essential not only to have LGU representatives, but also CSO representatives to align expectations, planning, aspirations of the community, and how LGU performance will be assessed. This means agreeing on a common metric for performance evaluation, putting common fields in the financial templates and agreeing on where these are found in all LGU and related national agency websites. These will help in developing numeracy capacity among stakeholders to understand data. It can also assist in easily developing applications for processing data in LGUs and aggregating them in provincial, regional and national reports. Also, for non-governmental stakeholders, the challenges also requires better understanding of the processes involved, whether this be in budgeting in general, or bottom-up budgeting processes in particular. It also requires understanding some of the terminologies used in government budgeting and finance (e.g. UACs), which is also made more complicated by the fact that LGUs are not consistent in using the same templates and terms. This process of understanding how local government work should ideally be known to all citizens could be incorporated in current initiatives to revise basic education through the K-12 curriculum. In summary, there is still much to do in the Philippines to have documents become more open, and accessible. At present, there is limited local fiscal documents that are accessible, timely, and in open- access form. This is why the proposed revisions to the FDP that provides open data should be supported. This can be done by making it standard, and having a template that can then be easily taught. Capacity building can be done by larger CSO networks, as exemplified by the work done by CODE-NGO and to a certain extent by ULAP. CSOs become intermediaries in this undertaking. However, this should also be cognizant of the reality that certain CSO roles are by design supposed to be independent of government. This means that if they are service providers, they are necessarily separate from the ones that monitor/evaluate, even as there might be overlaps in the information they require (e.g. budgets). As such, the irony is that even as ‘Follow-the money’ CSOs may share a common interest in the budget and planning process, their objectives require some independence from each other. What remains critical is that data, to which keeping everyone linked, regardless of affiliation, relations, etc. be made open. As such, for the local fiscal open-data ecosystem to transition from

88 the traditional ways of CSO engagement requires: (1) continued national government support to implement responsive open data policies that will continue to incentivize complete, timely and machine-processable fiscal open data in LGUs; (2) congressional laws that will sustain the Open Data initiatives of the Aquino administration; (3) a government-wide open data capacity-building through the Department of Information and Communication Technology (DICT) that will systematize open data requirements across all levels of government while also providing the needed infrastructure to make it work. This though, should also be complemented by (4) building understanding at the grassroots, starting with the K-12 curricula, of how the local government works, especially the local budget process, so that fiscal data that is eventually made open can be found, understood and used by every citizen of the country for whatever purpose they require.

* This project was made possible through funding support from the World Wide Web Foundation.

89 References

Alampay, E. (2006). ‘Incorporating Participation in the Philippines’ e-LGU project,’ Regional Development Dialogue, Vol. 27, No. 2, Autumn 2006, United Nations Centre for Regional Development, Nagoya, Japan, 189- 199. Alampay, E. (2002). ‘People’s participation, consensus building and transparency through ICTs: issues and challenges for governance in the Philippines’ KASARINLAN Vol. 17 No. 2: 273-292. Boncodin, E. (2007). ‘Citizen Engagement in Budgeting and Public Accountability’ (slides) presented at the 6th Session, Committee of Experts in Public Administration, April 10-17, 2007. United Nations. New York. Brillantes, A. B. Jr. (2003). Innovations and Excellence. Understanding Local Governments in the Philippines. Center for Local and Regional Governance. National College of Public Administration and Governance. University of the Philippines. Canares, M. and Shekhar, S. (2015). “Open Data and Sub-national Governments: Lessons from Developing Countries”. Step Up Consulting: Tagbilaran City Canares, M., Marcia, D. and Narca, M. (2015). “Enhancing Citizen Engagement with Open Government Data” Step Up Consulting: Tagbilaran City. Canares, M. (2014a). ‘Assessing Open Governance Data in Bohol,’ in Insights into Open Local Governance, February 2014 , Vol. 1, Issue 1. A Product of the Open LGU Research Project. Canares, M. (2014b) ‘Why Local Governments are Apprehensive to “Open Data” in Insights into Open Local Governance, February 2014 , Vol. 1, Issue 3. A Product of the Open LGU Research Project. Canares, M. (2014c) ‘Opening the Gates: Will Open Data Initiatives Make Local Governments more Transparent?’ This case study research was done under the Exploring the Emerging Impacts of Open Data in Developing Countries (ODDC) research project, funded by the World Wide Web Foundation supported by grant 107075 from Canada’s International Development Research Centre, 2014. Davies, T. and Edwards, D. (2012) 'Emerging Implications of Open and Linked Data for Knowledge Sharing in Development', IDS Bulletin 43 (5) 117- 127 Department of Budget and Management (DBM) (2015) Reference for Open Data and Fiscal Transparency Practices in the Asia-Pacific. APEC Fiscal Openness Working Group. Holmes, R. D. (2012) ‘The Curious Cases of Philippine Society and Decentralizaton’ in Miranda, et. al (Eds.) Chasing the Wind: Assessing Philippine Democracy. Commission on Human Rights. Quezon City, pp. 139-181. Martin, A.K and Bonina, C.M. (2013) Open Government and Citizen Identities:

90 Promise, Peril and Policy. Open Development. Smith, M.L. and Reilly, K.M. (Ed.) Networked Innovations in International Development. MIT Press and IDRC. Ona, S., Hecita, I., Ulit, E. (2014). Exploring the Role and Opportunities for Open Government Data and New Technologies in MHCC and MSME: The Case of the Philippines. De la Salle University. Parycek, P. and Sachs (2010). Open government-information flow in Web 2.0. European Journal of ePractice, 9(1), 1-70. Veljkovic, N, Sanja, B.-D. and Leonid, S. (2014). “Benchmarking open government: An open data perspective.” Government Information Quarterly 31, 278-290. World Bank (2016) World Development Report 2016: Digital Dividends: 2016 International Bank for Reconstruction and Development. The World Bank. Zuiderwijk, A. (2014). “Open data policies, their implementation and impact: A framework for comparison.” Government Information Quarterly 31, 278- 290.

91

92 Reactor’s Note

LEARNING FROM THE KOREAN NARRATIVE IN OPEN GOVERNANCE: A Reaction to “Assessing fiscal data openness in local governments in the Philippines”

Jinky Joy dela Cruz Oversight Officer Professional Regulation Commission

A renowned scientist and award-winning author, Mr. David Brin, once remarked that liberty flourishes not when the government is weak but when government is accountable. Indeed, history teaches us that the narrative of true democracy and development of nation-states reaches climax as governments disrobe themselves of the secrecy cloak. And what could be the best way to do so but by initiating an open data program that would make as much government documents as publicly available as possible. The Philippines, being one of those countries whose liberty and democracy were in peril, threatened, and put into test throughout its written history, has warranted its independence and sovereignty by providing for a right to information provision in its Highest Law of the Land—the 1987 Constitution. This right is particularly important to matters of public concern. Therefore, this paper by Dr. Erwin Alampay et al. is yet another important piece of literature in the review of transparency and accountability in Philippine governance. It most especially presents not only the full disclosure policy but also the importance of standardizing the formats of full disclosure for all LGUs. Furthermore, through this study, we realize not the lack thereof but rather the need to push more and exert extra effort so that what the past administration has initiated in terms of the openness and accessibility to data may develop, considering that the Philippines is one of the first few to be part of the OGP. With this, yours truly thank the organizers and the authors of this paper for giving yours truly this rare opportunity to read, learn, and take part in this noble project. I have truly acquired an in-depth knowledge on

93 subjects that have always been my areas of interest—local governance, public consultation, and e-participation—since I have personally experienced this difficulty in data accessibility. Moreover, this open data, as part of the pro-active disclosure policy, is somehow personal to yours truly as this, with the Freedom of Information (FOI) program, is one of the major projects by the Policy and Legislative Unit of the Presidential Communications Operations Office (PCOO), where yours truly is currently affiliated with. At this point, however, I shall veer away from the traditional commentary format as this would be more of sharing than actually critiquing. At least, this glimpse of how they do the open data program in Korea would become a matter of cross socio-cultural exchange; part of this is also to observe Korea’s best practices on its engagement and commitment in the open government partnership. The lessons drawn from the Korean experience which may be applicable to the Philippines could be utilized to enhance open governance in our country, as also asserted by the paper. Despite the wars that made Korea hit rock bottom, in less than five (5) decades, Korea is now one of the leading developed countries in Asia, particularly in East Asia. In fact, it has one of the world’s best information and communications technology (ICT), particularly the broadband internet. Furthermore, ICT became a tool in Korea to actively pursue e-Government to make its country more competitive (National Information Agency [NIA] 2015, p.5). It was solely a concept at first, which was formulated and developed into a plan; this plan pay heed of Korea’s “빨리 빨리” (hurry hurry) culture in its contents. After the groundwork for e-Government, laws were enacted and institutions were established. These activities influenced the laying of the National Basic Information System (NBIS) computer networks in the 1980s; streamlining all applicable laws and institutions in the 1990s, including but not limited to Administrative Appeals and the Civil Petition Treatment Act; and most importantly, making e-Government the major national agenda for the 2000s that included 11 major tasks in 2001~2002 and 31 major tasks for a roadmap in 2003 to 2007, which resulted to having e-Government as becoming firmly established in all areas of the Korean government (NIA 2015). Consequently, of course, the Korean bureaucracy has become efficient and effective in upholding the pillars of good governance. Its being transparent, accountable, strictly following the rule of law, and engaging

94 citizens in decision-making made Korea ranked first in Online Service Index and e-Participation Index, among all UN-member countries. Now, Korea focuses on seamless digital cooperation system to enhance connectivity of all departments and bureaus with and amongst each other to improve convenience for the citizenry. The Ministry of Public Administration and Security and National Information Society Agency listed Korea’s best e-Government Practices, to wit:

1. Electronic Procurement Service 2. Electronic Customs Clearance Service 3. Comprehensive Tax Services 4. Internet Civil Services 5. Patent Service 6. e-People : Online Petition & Discussion Portal 7. Single Window for Business Support Services 8. On-nara Business Process System (BPS) 9. Shared Use of Administrative Information 10. National Computing & Information Agency (NCIA)

These portals facilitate people’s participation in policy-making by processing people’s complaints and suggestions via a single window. Now, people can voice out opinions on almost all matters of the national and local significance. They can complain about unfair administrative handling, infringements of their rights and interests, improvement of institutions, and various policies. In addition, at the same time people can check the results of what they ordered or transacted online. These facilities also “manage all information systems of the government by integrating them into two data centers and provide non- interruptible administrative services by the best information technology and expertise.” (NIA 2015: 8). The contents of services are as follows:

1. Back-up systems of the major infrastructure, state-of-the-art security facilities, and top-notch human resources ensure uninterrupted availability of e-Government services 24/7; and 2. Advanced information security and reliability are ensured by real-time monitoring of system errors and security, disaster recovery system, and real-time back-up system.

95 This system of open government has also been implemented in local governments of Korea. In particular, Seoul Metropolitan Government (SMG) implements various policies and initiatives to communicate with its people. SMG has realized that open government is a significant instrument to communicate with people. As one of the most prominent cities in the world, it is particularly important to mention the efforts that SMG has been doing regarding open data government. It was July of 2015 that, in order to help citizens understand the status of fiscal payment of the city and to improve transparency of budget, the city started a service changing data on daily public expenditure into image formats or infographics and provided them to the citizens. This made Seoul as the first local government to disclose all non-confidential data on administration. What lessons can be drawn on the discussion of Korean Open Governance System then? There are actually three important lessons herein:

1. Strengthening the Institutional Framework The Korean government strengthened its institutional framework in order that all de facto undertakings in relation to open governance are de jure. In lieu of this, even local governments, particularly SMG, were able to apply the principles and system of open governance especially in local fiscal area.

2. Standardization of Processes and Forms The system of standardization means that what is found online should be consistent with the actual and/or official document. Korea’s system of standardization could actually be a paradigm for governments in their infant-stage disclosure policies implementation. The citizens may apply online but having been secured that applying the document online would be the same with that of the actual would not only be a relief to the people but would have the government gain the trust and confidence of its stakeholders.

3. Establishing a Unified Framework Both are important for data to be more accessible so that we would be able to better evaluate projects and programs and to

96 uphold the pillars of good governance (transparency, accountability, rule of law, and participation).

Korea (Seoul in particular) makes good plans, come up with better decisions, and undertakes best implementation strategy due to the accessibility of the stakeholders to data thru their Government 3.0 or ubiquitous (smart) city concept. Their approach may not be perfect (as they are almost extremely top-down) but the lessons we may observe from their approach may be explored in order to address the issues on open data governance, as presented on the paper discussed a while back. In the case of the Philippines, both in the national and local levels, open data governance meant the use of Information and Communications Technology (ICT) to make data and information available to the public. In fact, even before the Philippines’ membership to the Open Government Partnership in 2011, itsconstitution and all ICT-related laws provides for two (2) major recognitions, namely: (a) that the State acknowledges the necessity for it to be cognizant of the need for a decent information and communication technology to improve the procedures and transactions, and; (b) that the State adapts its policies with the fast paced technological advancements, yet, remains to be aware of the need to regulate the actions of the ICT provider and the ICT consumer. Even for Local Government Units (LGU), for instance, the Local Government Code of 1991 had been explicit in its mandate for LGUs to be equipped with the proper research and information-based management system of every province, municipalities, cities and barangays. Thus, ICT has always been recognized to play a pertinent role so that the citizenry and different organized groups would become aware of the updates about government actions and may actively participate in policy- making process. Non-governmental Organizations (NGOs) and People’s Organizations (POs) even used the Internet to campaign the anti-pork barrel call and summon more citizens to join the mobilization for the scrapping of PDAF before. ICT has become a tool and catalyst of change according to its functionality and to the silhouette of its various forms. It is a key tool in redefining boundaries and delimitations amongst nation-states and within National and Local Government. Accordingly, ICT is used as an empowering instrument for the public – that includes the civil societies and the businesses - to participate and interact with their government, as well as, be well informed on how their government undertakes bureaucratic and administrative responsibilities. It (ICT) is said to aid

97 LGUs in their Knowledge Management schemes so that learning concepts would be easier; easier learning means fast acquisition of the wisdom; fast acquisition of wisdom ensues good management of the knowledge acquired that would result to sound decision making for economic advantage.1

The Use of ICT in Freedom of Information The signing of EO No. 2 on 23 July 2016 that sought to operationalize the People’s Constitutional Right to Information and to ensure the State Policy to full public disclosure and transparency in the public service is considered a milestone in Open Data Partnership. This is a historic event indeed as this affirms the government’s thrust for transparency, openness, and fairness as the centerpiece of its platform of good governance. Learning from Korea and other countries such as the UK, Australia, US, India and New Zealand taught the Philippines to embrace pro-active disclosure to complement Freedom of Information (FOI). In pro-active disclosure, government makes as much of its documents available to the public. This has been seen to reduce the burden on public administration of having to process standard paper requests. Open Data reduced FOI requests by 31% for the period covering 2014-2015 in Australia, for one.

The Philippines and Korea in Open Data Program This paper of Dr. Alampay et al. gives both a macro and micro perspective on how the Philippines implements its obligation in Open Government Partnership. It shows how the previous administration might have failed to enact a Freedom of Information law but initiated openness in government via the full disclosure policy that includes open data initiatives. However, since posting on websites of all information and data are not required under this program, there has been less accessibility and participation by the citizens and organized groups with the LGUs. Thus, the conclusion is that the Philippines still has a long way to go in terms of full disclosure policy. This is where the Korean experience comes in. With its adept knowledge and use of ICT to implement its open government initiative both in the national and the local, efficiency and transparency in public administration would improve; administrative services in the bureaucracy would now be people-centered and CSO-focused; communications with the people by the government about its policies would be strengthened;

1 Romero et.al. (eds), 2006, p. ix 98 and, an increased efficiency in information resource management would ensue. As Korea ranked first in the 2010 UN Global E-Government Survey and evaluated to be one of the world’s best by the international community, perhaps the Philippines may be able to receive awards and citations for its best practices in e-government from international organizations as well, soon.

REFERENCES

Fenton, H. N. and Anderson, B. D. (2013). “Internet Enhancement of the Role of Civil Society in Promoting the Rule of Law in Transitional Studies.” In ojs.law.cornell.edu index.php joal article download 21 20 Mathiason, J. (2013). “Information and Communication Technologies and e- Participation for the Empowerment of People and e-Governance.” In www.un.org/esa/socdev/egms/docs/2013/ict/BackgroundPaper.pdf McNutt, K. (2007). “Will e-Governance and e-Democracy Lead to e- Empowerment?” in library.queensu.ca/ojs/index.php/fedgov/article/down load/4408/4421 NIA and Ministry of Public Administration and Information (2013). “E- Government of Korea (Best Practices) Pollit, C. (1993). Managerialsism and the Public Services. Oxford, UK: Blackwell Romero, S. et. al (eds). (2006). Forging Local e-Government Ventures: Exemplars, Lessons and Opportunities. Manila: Development Academy of the Philippines Salao, E. C. (ed). (2005). The 1987 Constitution of the Republic of the Philippines (including, The Local Government code, The Omnibus Election code, The Initiative and Referendum Act, The Partylist System Act, The Civil Service Law, and Anti-Graft Laws). Manila: Rex Bookstore, Inc. United Nations Development Programme. (2007). Democratization and Civil Society Empowerment Programme. in www.undp.org.af/publications/.../dc se/DCSE_Fact_Sheet_July08.pd

Internet Sources Comprehensive Tax Services (www.hometax.go.kr) Electronic Procurement Service (www.g2b.go.kr) Electronic Customs Clearance Service (portal.customs.go.kr) e-People : Online Petition & Discussion Portal (www.epeople.go.kr)

99 Internet Civil Services (www.egov.go.kr) Patent Service (www.kiporo.go.kr) Shared Use of Administrative Information (www.share.go.kr) Single Window for Business Support Services (www.g4b.go.kr)

100

101 Synergies: Production, Marketing, and Promotion of Philippine and Korean Television Series

Josefina M. C. Santos Assistant Professor Broadcast Communication Department College of Mass Communication University of the Philippines-Diliman

ABSTRACT Synergies are found both within and outside of the production processes, marketing, and promotion of television series both in Korea and the Philippines. Synergy is first found in the conceptualization of stories to produce. Choices are made based on many elements that once put together can increase the chances of the program to be a primetime hit. Scripting is dependent on many factors affecting the process while the production itself has the star as primary consideration. Marketing and promotions follow similar patterns and avenues among networks except for ABS-CBN’s marketing strategy of further synergizing the marketing of television products with other products and services. What is missing in the production processes, marketing and promotion in the Philippines is the government support and funding that pushed the Korean cultural industry to better position itself in the international market. What is needed is a will on the part of the Philippine government and the Filipino people to use the culture industry to promote nationalism and introduce the Filipino culture to the world.

Keywords: synergies, television drama, drama series, drama production, marketing

102 The last decade before the end of the twentieth century saw great changes in the television landscape in Korea and in the Philippines. Korea, in its bid to overturn the onslaught of American films in the Korean market, set up a culture industry bureau that sought to develop the entertainment industry and provide incentives to investors in film and television1. The Philippines opened its doors to other foreign drama series for television. Drama became primetime television fare2. By 2003, Hallyu3 has become a global phenomenon and Philippine television networks started buying Korean television series for local airing. This paper seeks to trace some parallelisms and differences in the production processes, marketing, and promotion of Philippine and Korean television series beginning 20034. It aims to 1) identify what elements serve as prime determinants in the success or failure of television drama productions; 2) pinpoint how maximization of profit affect the decision making processes of producers and promoters of Korean and Philippine television series; and 3) determine how political economic processes in the production, marketing and promotion of cultural products affect the culture and social life in the two countries. To answer the above stated objectives, this researcher mainly used interviews and observations in the production and consumption of television series in the Philippines. Articles from the Internet, books, and unpublished theses were also consulted.

History of Philippine and Korean Television

Television in Korea and the Philippines were born in the same decade. The Philippines was the first to have a television station in Southeast Asia and one of the first to put up one in Asia. While a temporary permit

1 https://en.wikipedia.org/wiki/Korean_Wave 2 The Mexican television drama series became a big hit in the Philippines in 1997. This started a series of importation of television drama series from Central and South America. Source: https://en.wikipedia.org/wiki/Philippine_television_drama 3 Hallyu is a combination of two Korean words “Han” and “Ryu” which literally translates to “Korean wave or flow”. The word applies to Korean drama or Kpop music that has gained popularity in the global market. https://en.wikipedia.org/wiki/Korean_Wa ve 4 2003 was the year the first Korean drama series was aired on Philippine television. https://en.wikipedia.org/wiki/Korean_television_dramas_in_the_Philippines 103 was obtained by American James Lindenberg in 1950, it was in 1953 that the first telecast was aired with the launching of DZAQ-TV.5 In 1958, the Lopez family bought DZAQ-TV from Judge Antonio Quirino and renamed it Bolinao Electronic Corporation (BEC) and later again to Alto Broadcasting System or ABS6. In that same year, television operations were entered into by the Chronicle Broadcasting Network (CBN), put up initially by the Lopez family as an FM radio station in 1956. This makes CBN the second television network while the third station, GMA, was established in 1961 when ABS was already starting to put up provincial television stations. This has rendered ABS-CBN a bigger network in a two-tiered monopoly in Philippine Broadcasting. ABS and CBN merged in 1969 to become ABS-CBN Broadcasting Corporation that Filipinos know today. By that time, the corporation was already broadcasting in full color. The company, however, was to cease operations from 1972 to 1986 when broadcasting companies were closed because Martial Law was declared in the Philippines. The government sequestered the company properties when it started to operate its state-run television network NTV4 (later to become PTV-4). Martial Law also inspired some Filipinos to start operating a cable station in the Philippines to counter the state controlled media. The beginnings of cable operations started in Baguio City (near the northern tip of the Philippines) in 1969. In the late 1970s, the government’s Ministry of Public Information launched the country’s major cable company called Sining Makulay (Colorful Art) that operated in several parts of Metro Manila. Its operations later expanded to cover other major cities in the country7. In 1986, immediately after the EDSA revolution in the Philippines, the Lopez family regained their ownership of ABS-CBN as a merged station and bounced back to topnotch position as a major media monopoly in the Philippines8.

5 James Lindenberg first got athe permit to operate but financial difficulties delayed the operations of a televison station. Judge Antonio Quirino, brother of then Philippine President Elpidio Quirino bought majority shares of stocks from Lindenberg and named it Alto Broadcasting System (ABS) or DZAQ-TV. Source: Pinoy Television: The Story of ABS-CBN. (1999) Quezon City: ABS-CBN Broadcasting Corporation. 6 Pinoy Television 7 https://en.wikipedia.org/wiki/television_in_the_Philippines#cite_note-pinoytv-3 8 Santos, Josefina C. (2000) Ang Pampulitikang Ekonomiya ng ABS-CBN at Ang Globalisasyon [The Political Economy of ABS-CBN and Globalization]. An unpubliched master’s thesis. University of the Philippines 104 While there are seven major networks in the Philippines today – ABS-CBN, GMA, ABC5, RPN, IBC, and PTV49, this paper will mainly focus on the 3 major companies since in her unpublished master’s thesis, this author presented that there were only 2 networks dominating Philippine television – ABS-CBN and GMA. While television in the Philippines is dominated by commercial networks, Korea’s television is largely influenced by government. Korea’s first television program was aired in 1956 but the experimental station HLKZ-TV ceased operations after a few years because of fire. It was only in 1961 that a national television station, the Korean Broadcasting Corporation (KBC), under the Ministry of Culture and Public Information, started to broadcast programs. By its second year of operations, KBC aired its first television drama series10. KBC was to become Korean Broadcasting System (KBS 1TV) in 1973 with its transformation into a public broadcasting corporation11. The second major television station, Tongyang Broadcasting Corporation (TBC-TV), owned by the Samsung Group, was launched in 1964 as part of the private sector’s response to the government’s campaign to encourage local capitalists to be competitive in the international market12. It was the first commercially operated television network in South Korea13. TBC merged with KBS and became KBS 2TV in 1980 as a result of the passage of the Basic Press Law in 1973 that placed all broadcasting companies under the umbrella of public broadcasting. The third television company to operate in South Korea was the Munwha Broadcasting Company (MBC). It was put up by a daily newspaper in 1969. While MBC has become a public broadcast station in 1973, it was able to maintain advertising as its primary source of revenue14. Today there are four major television stations operating nationwide in South Korea – EBS (an educational public broadcasting network), KBS (another public television corporation), MBC (commercial network

9 PTV4 is the only network operated by the government of the Philippines 10 https://en.wikipedia.org/wiki/Korean_drama 11 Kwak, Ki-Sung. (2003) Civil Society as the Fifth Estate: Civil Society, media reform, and democracy in Korea. In Kitley, Philip. (editor) Television, Regulation, and Civil Society in Asia. London: Routledge-Curson. P. 233 12 Kwak, Ki-Sung. P. 233 13 https://en.wikipedia.org/wiki/Television_in_South_Korea 14 Kwak, Ki-Sung. P. 233 105 owned by a foundation) and SBS (a commercially operated network owned by a private corporation). Cable television and local commercial television were launched in 199515.

Television Drama in the Philippines

Today, almost every household in the Philippines owns a television set. In 2014, 92% of Filipino households in the urban area and 70% of rural households have at least one television set in their homes16. They tune in to television everyday making television the number one source of information and entertainment in the Philippines. Of the many genres/program formats aired in Philippine television, drama and soap operas stand out as favorites. Proof of this is the number of drama programs occupying the daytime and primetime slots in television programming. The two biggest networks in the Philippines – ABS-CBN and GMA - devote the whole three hours of primetime programming to television serials that are aired daily from Mondays to Fridays. Three more hours are devoted to afternoon drama series and usually one drama program precedes the noontime variety show17. A television series is a drama made for television that is narrated part by part through the production of episodes aired from twice a week to daily programming18. The audience of an effective entertainment drama is stimulated by its emotional impact and identifies with its characters and their social relationships. Viewers are inclined to make changes in their own beliefs, values, and behavior from exposure to an effective drama. This is one reason why producing a drama program for television in the Philippines is a major undertaking for broadcasting networks.

15 Kwak, Ki-Sung. P. 234 16 http://www.manilatimes.net/tv-ownership-on-the-rise-while-filipinos-still-read- newspapers/77179/ 17 These are separate from drama anthologies and weekly series aired in the two networks. Observations from the listing of programs enumberated in https://en.wikipedia.org/wiki/List_of_programs_broadcast_by_GMA_Network and https://en.wikipedia.org/wiki/List_of_programs_broadcast_by_ABS-CBN 18 https://en.wikipedia.org/wiki/List_of_serial_drama_television_series 106 Television Drama in Korea Broadcasters in Korea started to air television drama series in the 1960s19. It was, however in the 1990s that Korean soap opera gained world attention with the Internet as its main conduit for the popularization of its drama series. Scholar Seongbin Hwang (Professor, College of Sociology, Rikkyo University) in his Internet article titled “The Current State of Korean TV Drama,” traced the growth of exports of broadcast products from Korea from 199520 as listed in the table21 below:

Table 1. Changes in Exports and Imports of Broadcast Programs in the Republic of Korea

19 https://research.omicsgroup.org/insex.php/Koreandrama 20 http://www.jamco.or.jp/en/symposium/19/5/. Retrieved on November 28, 2016. 21 Changes in Exports and Imports of Broadcast Programs in the Republic of Korea (in thousand USD as sourced from “Broadcast Program Export Import Statistics,” Ministry of Culture, Sports and Tourism, Republic of Korea by Professor Seongbin Hwang in his article” “The Current State of Korean TV Drama” for the 19th JAMCO Online International Symposium on February 1-28, 2010. http://www.jamco.or.jp/en/symposium/19/5/ Retrieved on November 28, 2016. 107 According to Professor Hwang, majority of these exports are drama production. Although there were slowdowns in the growth rate, Professor Hwang traced these to increases in the price of products and the growing popularity of Taiwanese dramas. Sales recovered as soon as the selling price of Korean drama was slashed down to half its price in 2008. This was coupled by the introduction of the so-called “fusion historical dramas” or historical accounts infused with modern interpretations and plot narratives. Television dramas produced in Korea are divided in 2 ways: those produced for the foreign market or as part of the Korean Wave (Hallyu) and those produced for local consumption. Another way for classifying them, especially the Hallyu, is contemporary and historical22. With the popularity of Hallyu and mainly because a drama series have to be out in the market at the soonest possible time, A Korean drama meant for foreign audience is produced within a short span of time and is released to the foreign market immediately after or even simultaneously during its run in Korea. Hence the series is meant to follow a planned script that run from 12 to 24 episodes. One way to increase consumption of Korean television drama series is its openness to audience feedback in the local market. Hence scripts originally written for 12 -16 episodes can run for half a year or more. Scripts, length and complexity of production are adjusted based on many factors including audience feedback, ratings and sponsorships.

Synergy In The Production Of Korean And Philippine Television Series

One word that can be used to describe each stage in the production, marketing, and promotion of Korean and Philippine television series is synergy. Synergy as defined by the Cambridge Dictionary is “the combined power of a group of things when they are working together that is greater than the total power achieved by each working separately.” 23. Elements and forces in the production, distribution, and consumption of television series actively interact with one another to fit together or

22 https://research.omicsgroup.org/insex.php/Koreandrama. Retrieved on November 20, 2016. 23 http://dictionary.cambridge.org/us/dictionary/english/synergy 108 complement each other such that the end result greatly affect the business, politics and culture both within and outside the medium (television)24. This paper studies the different elements and forces in the processes involved in production, marketing, and promotion of television series made in Korea and the Philippines by their corresponding broadcast networks. These elements include ratings, regulations, technology, financing, advertising, and star system. Television is a capital-intensive industry. High investments are needed in order to buy equipment, put up facilities and hire human resources to run a station. Permits have to be secured at every stage in the development of the enterprise and programs have to be produced for twelve to sixteen hours of programming in order to reach maximum efficiency. This is one reason why big companies or institutions are the ones who mainly invest in broadcasting. Private investors in Korean and Philippine broadcasting were big companies who already have businesses in communication and are including television as part of their vertical integration – Samsung (appliance and telecommunications company) in Korea and Chronicle (newspaper and radio company) in the Philippines. The case of Korea is different from the Philippines since political exigencies resulted in the high intervention of the state in the media such that its first television station was put up by the government. Ownership of television stations in Korea and the Philippines are limited to citizens of their respective country. Except for the Martial Law years, the freedom to operate a station was never curtailed in the Philippines. Business investors saw broadcasting (starting with radio) as a lucrative business and a source of influence. This is one reason why despite the introduction of a government run public affairs television in the 1970s, commercial stations are the ones dominating the industry. In Korea, the freedom to operate television stations, until the liberalization of government policies in the 1990s, was highly regulated. In the 1970s, all television stations were public affairs television. In the 1990s, however, with a change in government policies, introduction of new technologies (color and cable television), and globalization, the Korean government liberalized the ownership of stations and provided incentives to boost the industry. Milim Kim, in her 2011 study cited the following reforms in Korean regulatory policies for broadcasting: 1) ownership was opened to commercial broadcasters; 2) outsourcing of

24 Television is defined here to include terrestrial and cable television as well as the internet as platforms for television drama program 109 production of programs became obligatory; 3) a system of training for broadcasting professionals was institutionalized and 4) a policy supporting participation in trade fairs was enacted.25 This researcher will now discuss the different synergies that take place in television dramas based on the aforementioned regulatory set ups.

Commercial Broadcasting

With the relaxation on TV ownership, SBS, a commercial station, became a primary player in the Korean television industry. Cable companies also became part of the broadcast landscape. At the same time, the 1980s gave rise to a fully globalized media market. New technologies allowed for global consumption of media products. Television drama series became a primary product in the international market. Soap opera, a genre that first came out in England and the United States, was developed and exported by nations like the Latin American countries using their language, local artists and setting, Joseph Straubhaar said:

Latin American radio and television producers adapted the genre to their cultures and needs, moving it into prime time, aiming it at both men and women, changing the form of storytelling, and using local motifs, characters, humour, etc…. In a sense, then, a global form is being localized, both for purposes of global capitalist development and for expression of local identity. The soap opera genre is still used to sell and, even more basically, to show people an ethic or goal of consumption… While cultural forms, particularly those related to consumption, within capitalist societies, diffuse, globally, they tend to be adopted locally.26

25 http://www.mediacom.keio.ac.jp/publication/pdf2011/10KIM.pdf 26 Joseph D. Straubhaar. “Distinguishing the global, regional , ans national levels of world television”, in Annabelle Sreberny-Mohammad, et.al. (1997) Media in Global Context. London: Arnold p. 288 as cited in Santos, Josefina. Ang Pampulitikang Ekonomiya ng ABS-CBN at ang Globalisasyon [The Political Economy of ABS-CBN and Globalization,” unpublished graduate thesis in M.A. Communication, University of the Philippines Diliman. 110 During this period, since Philippine television had been commercial in nature from the outset, the introduction of soaps in primetime programming inspired networks to not just import Latin American telenovelas but also produce local television series as primetime television fare. By the beginning of 2000, because of its tendency to score high in the ratings charts27, all television networks in the Philippines produce or import drama programs with the top two networks airing an average of seven drama programs per day during weekdays. Almost all drama produced for television have the local audiences first and foremost in the producers’ and network managers’ minds. The length, complexity, stars and other elements are determined primarily by its potential to get higher ratings and sponsorship. Like Korean drama, there are two types of Philippine television drama based on how they are sourced – the adaptation and the originally written scripts for television. Production goes through similar stages – conceptualization, pre-production, production and post-production. The differences lie in the sub-stages and the processes involved in each sub-stage. Adaptation in Philippine television can take two forms – adaptation from a foreign television series and adaptation from another medium. Adaptations from foreign television series are further subdivided into Tagalog dubbed adaptations, remakes and adaptations written to respond to several cultural, social and economic factors. One example of an adaptation from a foreign television series is King of Baking or King of Baking Kim Tak Gu, also known internationally as Bread, Love, and Dreams. It is a Korean Television series about a boy who actually is the heir to a business tycoon who owns a bread factory. Kim Tak Gu grew up poor, alone and uncultured because he lost his mother (the tycoon’s mistress who constantly was fleeing from the hired killers of the tycoon’s wife) at a young age. Fate led him to regain his dignified self through the help of a master baker/ teacher who taught him how to bake. In the end, the boy not only regained his position as heir but found and felt the love of his parents, and found a loving wife.

27 Based on the author’s observations. On the November 24, 2016 report of Kantar media (an organization measuring television popularity ratings), 8 out of the 15 top rating programs in Philippine television are drama series with “Ang Probinsyano” consistently occupying the first slot. 111 Kim Tak Gu became a popular television series in Korea in 2010. The AGB Nielsen Media Research data ranks it as the 25th highest rating Korean drama of all times.28 The series also received citations including an award from state-run Korean Creative Content Agency for its contribution to the overseas popularization of Korean pop culture.29 In September 2010, immediately after its run in Korea, the series was aired worldwide with English subtitles through KBS World. Rights to air the series were sold to many countries including Japan, Vietnam, Cambodia, Hong Kong, Taiwan and the Philippines. The series first aired in January 2011 in GMA Channel 7 as a Tagalog dubbed adaptation under the title “The Baker King”30. Most of the time, the show enjoyed the highest rating and considered one of the most watched programs in the first quarter of 201131. The success of the series in the Philippines and its continuing success in other countries as Kim Tak Gu continued to be re-aired in several networks in Asia including the Philippines in 2011 and 2012 may have inspired the management of another Philippine television network ABC TV 5 to acquire the rights to remake The Baker King.32 The remake’s rating was relatively high --higher than most programs aired in that channel. However, it ranked third in the number of audiences watching at that particular timeslot during the whole run of the series. Several factors may have contributed to the weak ratings performance of the remake. First, it was not as widely promoted compared to programs aired by networks with bigger reach. Second, the remake was produced by a network that ranks third in an industry ruled by a two-tiered monopoly. Third, it has a relatively unknown actor for its lead performer and the actor looked completely different from the original Kim Tak Gu and therefore did not inspire a following from Kim Tak Gu fans. Fourth, it did not give much attention to promotion and marketing. Lastly, critics say that The Baker King remake was too close to the original with no new flavors put in such that the Baker King fans

28 https://en.wikipedia.org/wiki/Korean_drama retrieved on November 20, 2016 29 https://en.wikipedia.org/wiki/King_of_Baking,_Kim_Takgu 30 http://www.gmanetwork.com/news/story/219093/showbiz/top-rating-koreanovela-the- baker-king-bids-goodbye 31 PEP Magazine (January 2011). GMA7’s The Baker King earns high ratings during its pilot week. Philippine Entertainment Portal, Inc., www.pep.ph. Published with an excerpt from a GMA Network press release. Retrieved from http:// www.pep.ph/guide/tv/7651/gma-739s-the-baker-king-warns-high-ratings-during-its-pilot- week. 32 https://en.wikipedia.org/wiki/Baker_King_(Philippine_TV_series) 112 will prefer to follow the original adaptation dubbed in Tagalog. Even when the producers introduced changes to the storyline in the later stages of the remake, it has already lost a sizable number of audiences who lost interest when they saw that the remake was too much of a retelling of the same story. Other networks have done remakes of Korean Television series before but some changes were made to suit the taste of Filipino audiences. An example of this was My Girl. My Girl is the story of a young fruit vendor in Korea who was commissioned by a wealthy business leader to pretend as his long lost cousin in order to make his grandfather happy. The two, however, fell in love and complications followed. In the end the lovers got accepted by the man’s family and they ended up happily married. A remake was made by ABS-CBN starring popular Philippine actress Kim Chiu and her equally popular love team partner Gerald Anderson.33 While the main story remains the same, several changes were made. The original character in the story was a fruit vendor. Kim Chiu in the remake was a tourist guide who spoke Chinese and Cebuano maximizing Kim Chiu’s Chinese background and her being a native of Cebu, an island in Southern Philippines. This endeared her more to her fanatic following so that much of the promotion for the remake was already done. The remake increased the number of episodes and therefore more characters were introduced and subplots were added to the story. Some complications in the plot were also incorporated. Comedic dialogues were inserted. While the original was also meant to be funny, the comedic dialogue in the adaptation was more suited to the Filipino culture and more scenes were made to tickle the imagination of fans.

Synergy in the Production of Korean Drama Series Kim Tak Gu and My Girl were handled by two big Korean broadcast companies – KBS and SBS respectively. Since by regulation Korean broadcast stations have to outsource program productions, a great majority of Korean drama are produced by independent producers34. These entrepreneurs would choose carefully the material that they are to invest on. While it has a democratizing effect in the sense that broadcast networks do not have the monopoly in the production of dramas and it

33 http://en.wikipilipinas.org/index.php/My_Girl_(Philippine_TV_series) 34 https://en.wikipedia.org/wiki/Korean.drama retrieved on November 1, 2016 113 sets higher standards since competition among producers is high, the practice of subcontracting independent producers for drama series is precarious. Producers have to secure broadcast time slots first before investors, sponsors, and actors engage in the project. Securing an airtime and possible pilot airing date, however, brings pressure to the producer to shoot the drama at the soonest and shortest possible time35. This practice often results in overworked actors, creative and production teams. The system works in the following manner: independent producers present their project proposal to the big broadcast company. Sometimes, a producer already has one to several episodes of a series canned before the producer shows the proposal to the television company. This may happen when a producer is able to get the attention of investors or acquired a loan for the project. The participation of bankable or known actors in the project most of the time allows for more attractive investment packages on the part of the producer. Once the producer’s proposal gets approved by the broadcasting company and airing is scheduled, the broadcasting company shoulders half of the production cost. The share of the broadcasting station is increased if the independent producer is able to contract the services of a bankable actor or an actor who has starred in a recent blockbuster series. The independent producer may apply for a loan from the Korea Creative Content Agency (KOCCA), a government agency affiliated with the Ministry of Culture, Sports and Tourism. The agency has partnered with the Export-Import Bank of Korea to provide loans to small companies producing cultural products like television shows36. The creation of culture industry departments in schools in Korea in the 1990s helped tremendously in the sourcing of directors, writers, actors and other production team members. These contributed greatly to the creation of the Korean Wave and its popular reception in many parts of the world. The set up of broadcasters subcontracting small independent producers of drama series, however, has its weaknesses. Aside from the already mentioned high pressure on both the producer and the production team, including the actors, to produce their episodes through live shoots that barely make it to the deadlines, small producers shoulder the greater risks in the production of Korean television drama series. Broadcast

35 https://koreancultureblog.com/2016/10/03/k-drama-series-live-shoot-system/ 36 https://en.wikipedia.org/wiki/Korea_Creative_Content_Agency retrieved on November 21, 2016 114 stations share half of the revenues from the productions while they enjoy one hundred percent of the income from the sale of airtime to commercial advertisers. Meanwhile, the small independent producers get sponsors and advertisers who get their products displayed through product placement within the television series. The practice can get the independent producer to darker alternatives should the production fail to deliver in the market. The third biggest network in the Philippines, ABC TV5, one of two bigger networks that loan out airtime to independent drama producers has a similar production set up for independent producers in Korea. In this set up, the independent producer, Viva Entertainment has complete control over the production processes involved in the making of a television series37. Marketing and promotions are shared by the network and the independent producer.

Adaptations

The first stage by which a produced material is sold is in the local market. The Philippine and Korean production companies produce their materials for the local market and are sensitive to the market trends that shooting of episodes is done on short periods of time during the week to make it to the airtime schedule during the same week. Audience feedback and situations prevailing in the country affect the developments of plots in contemporary narratives. The second level to generate income is the international market. Small teasers are sent to potential buyers or are promoted through many means. Broadcasters from buyer countries get to know the existing production and they either broadcast the material whose copyright they bought immediately after it was shown in the source country or they are aired simultaneously as they are being aired in the source country. This was the case of Korean television drama series Descendants of the Sun which was shown simultaneously in China while it was being shown in Korea. To adapt to the local market, the distributors of the series (VIKI, Dramafever) provide subtitles to the series. Since VIKI and Dramafever have Internet sites for international subscriptions, they show the subtitled

37 Interview with Amor Olaguer, Creative Director, Head writer for Ang Panday, April 10, 2016 115 drama series without advertisements to paying subscribers. There are also free sites for these series which allow fans to enjoy the series but with advertisements popping in at certain points in the series. When a broadcaster in another country (Philippines for example) choose to broadcast a Korean television series for airing in terrestrial television in that country, copyright is bought and adjustments are made to suit the cultural requirements of the host country. In the two cases of adaptations of Korean television series Kim Tak Gu and My Girl, the simpler process, dubbing of Korean soap opera, was first adopted by Philippine broadcast networks. Dubbing originated from the rise of movies with dialogue in the early 20th century38. With the understanding of the fact that not all people speak English, dubbing was adopted as a way to increase the audiences of materials first produced in another language. Rights to air the television series were first secured. The material with two separate audio tracks comes with a full script which is initially translated faithfully. Then the series is run to adjust the translations to the opening of the mouths of characters. Recording follows. The moment a material is given to a translator, the translator first looks at the storyline. The characters are studied and the nuances of their language taken into consideration. Then the translator works on a per episode basis. The translator looks at the general overarching plotline of the episode being translated. Visuals are also taken into consideration. Because of differences between the Korean language (source language) and the Filipino language (target language) some changes have to be done during the translation. What is most important is that the translation of the episode is faithful to the story and the story flows smoothly from one plot point to another39. Voice casting is done after an initial decision by the director on what kinds of voices suit the characters in the series. The music and sound effects are usually retained from the original but sometimes the

38 Tveit, J.E. (2009) Dubbing versus Subtitling: Old Battleground Revisited. In J.D. Cintas and G. Anderman (Eds.). Audiovisual Translations (pp.65-96). Great Britain: Palgrave Macmillan 39 Manalili, P. (2004)Pagsasalin at Komunikasyon: Pagsasa-Filipino ng mga Banyagang Programa sa Telebisyon sa Kaso ng Telenovelang “Ctistina” [Translation and Communication: How Foreign Programs are Translated to Filipino in the Case of the Television Series”Cristina”]University Library University Archives, University of the Philippines Diliman. 116 adaptation will also feature certain songs to promote recorded original Pilipino music (OPM). The receiving country of translated/dubbed productions maximizes income through the re-airing of the dubbed material in other timeslots and in other stations (cable, provincial station, internet, and mobile phones). If the source material, despite the several rebroadcasts still remain a favorite among viewers in the receiving country, copyright are again negotiated --this time for remakes. The remake becomes the third level by which an original production is able to deliver returns to the producer and the broadcaster of a television series. The remake has more processes to follow for the producer or the buyer of copyright or the target country. The production processes that it follows are similar to production of original stories. A talent (usually someone who provides creative work to a network but who is paid based on output) pitches or suggests to the heads of unit that a material is good for an adaptation/remake. If the suggestion is accepted, a team headed by a director is formed and brainstorming on the plot and subplots are done. Either a head writer is assigned to hire a pool of writers, or only one or two writers are tasked to write for the whole series. This part is dependent on network policies. The decision on who to cast in the series is dependent on many factors. Is the material a vehicle to keep up the energy and enthusiasm of fans of a star or a couple of stars? Is the material part of a strategy to outpace competition? Or are there politics involved in the decision? After stars are cast, locations are identified based on a specific budget allocation. In ABS-CBN, decision-making on these aspects will require the presence of the head of the audience research department. Ratings, Internet statistics, audience reactions were carefully studied before decisions are made. Scripts were then adjusted to suit the additional requirements set by stars and locations. The same processes apply to the other two bigger television networks in the Philippines. In the case of GMA network, the casting of singer Regine Velasquez in the lead role of the remake of Kim Sam Soon has made it even more cost effective for the network since the actress was also hired to sing the program’s theme song.

117 Synergy in Pre-production of Adaptations

Synergy works in the different stages of pre-production. Several elements are considered before an original material (movie, book, comic- magazine, or television series) is accepted for adaptation. The first element is the popularity of the original material. The several adaptations of the comic magazine narrative of the local hero “Darna” by GMA network is based on the knowledge that Darna is a character that almost every Filipino has knowledge of. Even its fan following has gone to the extent of critically examining if the network sticks to the characteristics associated with the character Darna40. The second element is the narrative. Is the story something most people can identify with? Most roles essayed by stars are composite characters so that a majority of the audience can identify with the character. In the conceptualization phase, some of the head writers employed by the network sit through the pitching process and bank on their knowledge of what the audience tastes are. A freelance writer or director with a record of writing for or directing a drama series that has/had high rating will most likely get his/her story accepted compared to a neophyte with no work previously done. This leads to a common practice among networks to hire writers who migrate from one medium to another (from film to television or from writing romance novels or books in the Internet to television). It has also become a common practice to adapt a material that has gained popularity in another medium to television. Casting is already decided on even before an idea is presented to higher management.41 There are however cases when stars are primary considerations in the pitching of stories or materials for adaptation. Star writers from other media can be one primary consideration. Examples of these are television adaptations from movie series or movies with sequels that gained fanatic following. More often than not, adaptations from another medium are adaptations from popular movies although Philippine drama can also be adaptations from books, comic magazines, or stories from the Internet.

40 Interview with Professor Amor Olaguer, instructor at the University of the Philippines College of Mass Communication Broadcast Communication Department and Creative Director/Producer for Viva Entertainment (an independent film and television drama production studio, April 10, 2016. 41 Interview with Amor Olaguer, creative director and head writer for Viva Entertainment, Inc,, Apri; 10, 2016 118 While in adaptations of foreign drama series makers are generally given freedom to make adjustments in the narrative, many adaptations from movies are strictly monitored by their authors. Many requirements were set in order to maintain the integrity of their characters and narratives. This is the case of Ang Panday, a teleserye adopted by Viva Entertainment for ABC TV5 from the movie series of the same title written and directed by Carlo J, Caparas. Mr. Caparas strictly monitors the scripting and production of the television series aired in ABC TV5. 42 The above is not the case in Ang Probinsyano, a teleserye of the same title as the blockbuster hit of a late action star hero in Philippine movies Fernando Poe Jr. in the 1990s. The original movie is part of the FPJ collection that ABS-CBN bought from FPJ productions, now headed by Fernando Poe Jr’s widow, Susan Roces. Since copyright was ceded to ABS-CBN, the network enjoys the liberty of making changes without having to ask permission from anyone.43 Ang Probinsyano, the television series stars Philippine popular actor Coco Martin and was made as a comeback vehicle for the actor after the success of an earlier produced television drama series by ABS- CBN Juan De la Cruz. It airs on the ABS-CBN primetime slot from Mondays to Fridays and tells the story of twin brothers Ador and Cardo who got separated from each other while they were still young. Fate however led them both to become law enforcers—one in the city and the other in the province. Ador, however dies early due to the tyranny of his colleagues. When their grandfather (who happens to be the head of CIDG) found Cardo he orchestrated an investigation on the death of Ador by making Cardo take the identity of Ador. The story would have ended with the killers being found and justice was done. But the continued support of loyal followers prompted ABS- CBN to decide not to end the series after one season and instead created several mini-series within the series44. The series has moved forward to include subplots that resemble current events in Philippine politics almost at the same time that the events are being reported on Philippine television and in the Internet.

42 Interview with Amor Olaguer, April 19, 2016. 43 Interview with Toto Natividad, one of the director of ABS-CBN’s “Ang Probinsyano”, April 16, 2016. 44 Based in the author’s observations on the series and comparing the material with the original movie that was shown in the networks sister cable company, Cinema 1. 119 Synergy in this adaptation worked effectively as several elements were taken into consideration one by one. The original movie Ang Probinsyano was a blockbuster hit in the 1990s. It was not too old such that there were segments of the audience who can still recall their experience of lining up at the theater just to see the movie. To increase the number of audiences recalling the movie, Ang Probinsyano was shown on Cable television through ABS-CBN’s sister channel, Cinema One. The vehicle was a good one for actor Coco Martin since he has been resting after a long running primetime topnotcher Juan dela Cruz. Juan dela Cruz was an action television series. To add to audience recall, some of Coco Martin’s old photos wearing police uniform were featured in magazines and in the Internet. His hairstyle for a while was made to resemble that of the former action star, Fernando Poe, Jr. An old song “Kung Wala Ka Nang Maintindihan” was revived and played over the radio and performed in television variety programs several months before the showing of “Ang Probinsyano”. The song was to become the theme for the whole series. Copyright was secured by another unit to make sure that the songs used in the drama series will not have problems in ownership. The songs are bundled together and sold in the market as another product and they become handy in events organized to further promote the drama series. The same synergistic elements are also present in Korean drama. What is different is the way narratives are created or adopted. A good number of Korean dramas that enjoyed global following are also adaptations from other media. Boys Over Flowers is an adaptation from the manga Hana Yori Dango45. To the Beautiful You is an adaptation from the Japanese shojo manga series Hanazakari No Kimitachi e written by Hisaya Nakajo46. The manga and anime followers among the young population became interested not just in reliving their enjoyment in the stories again but also in identifying the many differences in the ways the stories are told in each remake. These practices, based on the author’s observation are now hardly done by Korean producers.

45 Based on the writer’s own observations since she followed the manga series, the anime, and the 4 television series, Meteor Garden 1 and 2, Boys Over Flowers, and Hana Yori Dango. 46 https://en.wikipedia.org/wiki/To_the_Beautiful_You retrieved on November 13, 2016 120 What is unique is that the news and current affairs department of GMA News Network (a sister company of GMA channel 7) has twice conceptualized, pitched and produced two historical drama series, Katipunan based on the declaration of war for independence against Spain by a revolutionary organization of Filipinos known as Katipunan, and Ang Ilustrado, based on the life of Philippine National Hero Jose Rizal. Concepts can also come from stars that regularly come out in productions of the same network. This was the case of the popular primetime television series in the Philippines, Ang Probinsyano. Dreamscape Entertainment Television, one of ABS-CBN’s creative arms, picked up Philippine star Coco Martin’s suggestion to do a remake of Ang Probinsyano and immediately started to hold brainstorming sessions with the pool of writers to develop the story. Dreamscape Entertainment Television consists of creative writers headed by Roldeo Endrinal. Dreamscape Entertainment Television changed the plot of the original story in order to prevent the predictability of the story and to adjust it to current happenings in the Philippines. These are factors that affect the audience share of the program. Heeding the decision of top-level management headed by Mr. Eugenio Lopez III, Filipino values were injected in the story to inspire Filipino children to be upright and dignified. The character of Susan Roces as Ador and Cardo’s grandmother was added in the television series to honor her late husband, Fernando Poe, Jr. and to attract the loyalty of older viewers who may be Susan Roces’s fans since the lady was a superstar in her younger days. Also, Cardo’s role in the television series is as a SAF trooper since the program is marketed as one made to honor the fallen SAF troopers in Mamasapano (a town in the Southern part of the Philippines). Cardo in the original story is a police chief in an unknown town of San Marcela.

The Scripting Process

Korean television series have one writer and one director all throughout the series. Although the script may change during production in response to audience feedback and other factors, authorship of the drama series is clear. In the Philippines, even if there are drama series with only one or two writers writing the scripts of the program, their script goes through

121 brainstorming sessions where a pool of brainstormers would comment on the script and the scriptwriter rewrites the script based on the changes agreed upon by the writer, director and brainstormers. In the case of the Philippines’ biggest network, ABS-CBN, positions for creative consultants were given to star writers or well- known writers of drama in different media and platforms. They oversee and comment on the work of the scriptwriting team. The scriptwriting team is composed of head writers and writers. Since, unlike Korean drama series that airs only twice weekly, Philippine teleseryes air daily from Mondays to Fridays, several writers have to work on several plots and subplots in the story. The head writers agree on the plot and pivotal points of the story where they identify main slants. They then coordinate with their own set of writers who are assigned which part of the material they will work on. Individual writers submit their work to their head writers who work together in improving the plot, usually on the weekend before the first shooting day of the next week, add more excitement (action or romance), and insert hypertexts with trending topics. The writers made the pace of the story faster in order to make the story more interesting.

Production and Post-Production Processes

It is usual for Philippine teleseryes to have two or three directors, each working on their field of expertise. One director may be good at action scenes. Another director is good at romance while another is on family drama. Templates are not uncommon such that members of the production team are already given instructions on how a particular scene will be shot even as the writers are still writing the script. This is called "hand-to-mouth shooting" in the Philippines while Koreans call the practice “live shooting”. In each case, shooting is done within a hectic schedule such that there were cases when shooting was still happening while parts of the television series are being edited for airing that night. There are two ways by which scenes are shot. One is three (3) separate cameras recording a scene separately and the editor choosing which ones to use in the finished product. The other is taping as live or editing and recording are done using three cameras to shoot a scene. Actors, especially the bigger ones are allowed to give comments or suggestion on the scripting or execution of scenes. Adjustments are also made when actors find the lines or scenes difficult to execute.

122 Mr. Toto Natividad, one of the directors of Ang Probinsyano, revealed,

“Most of the time, we shoot parts of an episode on the day that you will watch that episode later that night. That is very crucial because we have to follow the 5 o’clock pm deadline. Editing follows after the shoot.”47

This revelation partly explains why additional special effects are not done despite ABS-CBN’s technical capacity to make such effects. Celebrities from other programs are also invited to essay some character roles in teleserye to boost the popularity of the program. This is called stunting technique. At the same time, the star acting out a role is tested for possible casting in subsequent teleseryes. The celebrity also gets to promote projects in the series through hypertexts. The effectiveness of the technique was proven by an earlier drama shown in ABS-CBN such that FPJ’s Ang Probinsyano is currently maximizing the benefits of the stunting technique and continues to soar high not only in television ratings, but also in attracting a greater number of advertisers investing in the show. While Ang Probinsyano enjoys a large following both within the Philippines and abroad the impressiveness of its production techniques and effects cannot match the greatness of production values infused to a Korean action drama that has finished airing in a competing network in the Philippines, GMA. The Tagalog-dubbed Korean telenovela Descendants of the Sun used sets, camera works and effects that Philippines Ang Probinsyano can only match with occasional explosions and cars flying from buildings. Korean productions have the capacity to construct sets, create costumes and hire more supporting characters compared to its Philippine counterpart. While Descendants of the Sun spent approximately six hundred sixty eight thousand US dollars in producing an episode, the Philippines’ GMA fantasy series Encantadia spends around twenty thousand US dollars per episode. This is already considered high by Philippine standards. GMA’s historical series Ang Ilustrado had a budget of four thousand US dollars per episode. What is even more impressive is how Korean networks are able to capitalize on building impressive sets by not dismantling these sets and making these sites for tours for Koreanovela fanatics. The MBC Dramia

47 Interview with Mr, Toto Natividad, ABS-CBN drama director, April 16, 2016 123 for instance is not only a set maximized in the making of many Korean historical drama productions. It is now a famous tourist destination for Korean drama fans and a location for Hallyu performances of K-pop bands.

Integration and promotional materials

The greater part of the success of Hallyu (Korean Wave) is the infusion of government support to its culture industry. Reacting to South Korean movies’ losing out to Hollywood films entering the country, the Ministry of Culture created its cultural industry bureau designed to boost the media industry. Investors were encouraged to put in capital into the culture industry, purchase new and high-end equipment and set up facilities for cultural presentations. At the same time, cultural industry departments were set up in schools nationwide. The use of new and emerging media was encouraged and Korean media products flowed freely through the net. Even meetings by K-pop artists with their fans were funded by cultural offices in countries outside Korea. These K-pop singers were casted in Korean drama series that almost spelled success in the ratings chart for Korean drama series. Korean actors are also made to sing songs featured in drama series such that these became major segments of promotional events for their drama. Actor Lee Min Ho sang a song in Boys Over Flowers while Jang Keun Suk sang songs in You’re Beautiful. Similar promotional events are mounted by networks in the Philippines but while Korean Hallyu targeted the foreign audiences, Filipino producers targeted mainly Filipino audiences living abroad. Philippine broadcasters did export materials mainly for consumption of audiences from other nationalities – as was the case of Mula Sa Puso. GMA also produced materials that were eventually sold abroad. This was the case of Boys Next Door which was exported to countries in Asia including South Korea.48 The sustenance of such initiative may have not have been discussed freely as a synergistic endeavor not because the networks did not earn from the initiatives but more because the returns may not be as immediate as when they target mainly their Filipino market abroad.

48 https://en.wikipedia.org/wiki/Boys_Nxt_Door 124 ABS-CBN, GMA and ABC TV5 are media conglomerates in the Philippines. The three networks control the creation and production of television dramas, as well as other programs they air, their promotional materials, publicity, and distribution. The advantage of being a vertically-integrated broadcast company is that it saves the money or capital it would allocate if a project is outsourced. Thus, it equates to more profit for the company. The broadcast network does not need to worry about its market access for the promotion of its products because it has a lot of channels that can showcase all produced materials. While its Korean counterpart networks would cooperate with independent producers in the creation of television series, ABS-CBN has two independent creative arms: Dreamscape Entertainment Television and Star Creatives49. These two creative units independently choose projects that they pitch to the network’s management. They also vie for placements within the network’s programming. While they work independently in the conceptualization and even to some extent production process, management always can decide on matters like content, choice of stars, locations, etc. depending on many factors like rating, feedback from fans, sponsorships, advertising and upcoming shows. There are also two stables of stars and while contracting stars from other networks or media is not discouraged, getting from the pool is highly recommended. Most of the members of one unit are winners of reality TV programs while the other unit has sons and daughters of top celebrities as their mainstays. Usually one or two major stars are hired in a television series and they are supported by a combination of new stars testing the waters and reliable veterans in the field. Stars in the Philippines, like their Korean counterpart in Hallyu, get a big slice of the production budget. The inclusion of theme music as major part of the production boosts not only the creation of a big fanatic following but also creates good bankable segments for the promotion of the drama series in the provinces as well as in major cities abroad. Months before a drama series is launched, a professional singer will sing the song on radio, in television and in promotional events. The song is also promoted and sold as ringtones for mobile phones for audience recall. If the actor of the upcoming teleserye happens to have the

49 All other broadcast stations in the Philippines do not have these structures. 125 capacity to sing a tune, he/she will either record a version of the song or launch a single that will be sung during the airing of the drama series. This was the case of Enrique Gil in Dolce Amore and Daniel Padilla in Pangako sa Iyo. Aside from being vertically-integrated, the three big networks in the Philippines are also horizontally-integrated. They own different types of media products. They use diverse holdings to promote products. A television drama promotion can be done for multiple media and platforms to further expose the television drama to audiences. For example, a promotional material shoot of the main stars of the television drama is executed to fulfill different needs. This promotional material shoot will be used to supply video materials for television spots, news and entertainment features, press releases, social media, print advertisements, radio programs, brochures, posters, and other print requirements.

Promotions on Television

Some of the synergistic endeavors of Philippine and Korean television networks to promote their drama series are the following: teaser, the full plug, the character spots, spots with time and date, the rider, brand bugs, behind-the-scenes, music videos, television appearances as guests, and news features. The teaser is also called a “soon plug” because it gives the audience a hint that a new show is soon to air. Usually a 15-minute teaser is aired during the commercial break of a soon-to-end drama series. The audience is enticed to look forward to a new show that is about to start in a few weeks. Teaser trailers were also used to inform and create a buzz for the upcoming airing of the program, complete with a few scenes of what to expect and the characters from the television series. The teaser may be followed by a 30-45-seconder advertisement that gives the audience an idea on what the story is all about. Interspersed with these spots are those advertisements that give the audience information on the date and time of airing or premiere showing of the program. The date and time of airing is usually announced so as to preempt possible switching of channels because the series before it has ended. The plug announcing the date and time of the program is followed by a rider that reminds viewers of when the premiere will be.

126 Sometimes, actors and actresses of the primetime drama that is about to end are the ones that remind viewers of the day and time of the new series. Brand bugs are the logos of programs that are about to begin that are displayed on the screen while another program is airing or about to end. Behind the scenes are video materials that show how certain scenes are done or how certain chemistry is seen or how relationships are developed between actors so that excitement is stirred among fans. Exciting scenes are also shown in music videos especially in teleseryes that feature star couples created for fanatics’ consumption. Filipino stars, like their Korean counterpart, tour the different television programs while promoting their drama series. They become contestants of live game shows and guest artists in variety programs. They also talk about their new show in talk programs and are featured in the news as well. Sometimes these news features are about the content or what happens next in the story of the character in the teleserye. Aside from television promotions, there are also ways on how to use synergy as strategy for radio promotions.

A. Announcement-on-Board (AOB) AOB are done by disc jockeys. They announce informally, make mention of or straightforwardly read promotional materials about the launching of the new television drama. B. Airplay The disc jockey promotes the television drama by playing its theme song. C. Stars visit radio personalities as they guest in radio programs The actors of the television drama are given a feature segment on a radio show. D. Radio Spots The audio of the video plug for television is played on the radio program.

Print promotion is one of the most effective ways to promote the television program.

A. Posters These are produced to be displayed inside shopping malls and other establishments, which the stars of the television drama visit for promotional activities.

127 B. Print Advertisements These are released a day before the airing of the new program through broadsheets or tabloids. C. Press Kits It is composed of brochure and functional promotional material items distributed to the members of the press during the press conference of the television drama. D. Billboards These are tarpaulins printed in huge sizes and are displayed along public places. E. Banners These are displayed along the ABS-CBN building and nearby establishments.

The next type of promotion in this synergy is public relations.

A. Press Conferences This is attended by the members of the press, the stars, and members of the production of the new television drama. B. Write-ups These are feature articles about the show, the highlights, prepared by the public relations writer.

Public relations promotion is followed by this type of promotion which involves going to different places to promote the program, the Non-Traditional way.

A. Mall Shows These are held for the launching of new television drama with the cast. The younger members of the cast also show their talents by performing for the audience. A new trend now is the holding of mall tours in provinces as conceptualized and executed by provincial and regional stations. B. Tours in marketplaces It has the same purpose as mall shows. The only difference is that it promotes the show in the marketplace or similar places to appeal to members of the C-D-E bracket of audience. C. Electronic Billboard These are big screens with played videos mounted on strategic locations, where there are a lot of people.

128

The social media is now being used as one of the platforms to promote the television shows.

A. Social Networking Sites Social media accounts owned by the network are created to promote the new television drama to netizens. ABS-CBN, GMA and TV5 are present in Facebook, Twitter and Instagram, popular social network sites in the Philippines. Korean networks, producers, actors and actresses also use the social media networking sites to promote new drama series, new projects and events and themselves. B. Interactive Chat Stars of the upcoming show are instructed to participate in an online chat with their fans to promote the show. In Korea, even chats between actors in a soap opera are made public to increase the interests of fans on actors in the telenovela. C. Websites The upcoming television drama is promoted to different websites of ABS-CBN, GMA and TV5.

In events organized for the provinces, region, and countries abroad, merchandize bearing the television series logo or the images of lead actors and actresses or even copies of past episodes in DVD format were sold by another independent unit, the ABS-CBN Studios. These synergistic tactics not only ensure additional income to the network, it seals fan loyalty and feed into the constant need of fanatics for memorabilia from the events.

Uploading of Episodes in the Internet

The uploading of episodes in the internet, especially in outube has greatly helped the Korean Hallyu to penetrate the international market. Episodes are uploaded and re-uploaded by fans that eventually a niche market for Korean drama is created especially among young audiences of the series. Many women, especially Asians fancied Korean actors or the characters they play since most of these characters are loyal and completely dedicated to the subject of their love.

129 Popular Korean drama series, however, cannot be seen in the Internet in the Philippines once the show is bought by a local network from the market. Unlike its competitor networks that use the internet to upload recent episodes of the Korean drama dubbed in Tagalog, ABS- CBN (the only network in the Philippines with these observed characteristics) with its robust website, iwantv.com.ph, controls the exposure of episodes in the Internet by allowing regular subscribers to watch only up to three (3) most recent episodes of the series or any other ABS-CBN program. When regular subscribers buy the TV Plus, a black box that allows analogue reception of digitally transmitted programs, they receive a bonus of being able to watch episodes of a favorite drama series from the beginning to the end. Even old Korean drama series aired from as early as 2003 can be accessed with the use of the black box or through the use of the ABS-CBN mobile SIM. The ABS-CBN mobile is operated by an ABS-CBN subsidiary, the ABS-CBN Convergence, Inc. ItsSIM card can be bought for 50 pesos ($1.07) and it makes available for viewing several megabytes of drama and programs made or distributed by ABS-CBN. A viewer can enjoy these services for 24 hours and will again enjoy the services through a reload of ten pesos for another 24 hours of downloaded or streamed entertainment. If a fan has a black box or an ABS-CBN mobile SIM or both, one also gets to view behind-the-scenes videos of one's favorite teleserye. The subscriber also gets to view full drama series and mini-series made for the Internet consumption. These drama and mini-series, while giving privileged status to fans and loyal followers, provide alternative platform for materials no longer accommodated in the regular programming grid of ABS-CBN terrestrial broadcasts and become hooks for advertisements in the platform. The Korean drama series Faith starring Lee Min Ho was placed in the ABS-CBN mobile platform. Unfortunately, the platform is not yet well-subscribed and the Lee Min Ho starrer did not fly. How successful this ABS-CBN strategy compared to the Korean Hallyu makers’ policy of continuously feeding the world market of Korean made products can be seen and assessed after a few years of implementation. Meanwhile, the world has witnessed the growth in popularity of Korean products through the use of the Internet and by riding on the popularity of Korean made media products from the late 1990s to the present. These products include food, cosmetics, clothing and fashion styles, accessories, electronic products and many more.

130 Included in the list of the more popular tourist sites in Korea are the sets constructed by broadcasting studios for the production of Korean historical drama series called sageuk. Two of the more popular sites are the MBC Dramia where Koreanovela fans can recall scenes from well- received dramas by Filipinos fans like Jumong, Queen Seong-dok, and Empress Ki are shot, and a reconstructed traditional Korean village. These sites together with areas that fanatics recall as locations for the unforgettable scenes in contemporary Korean television series like the Nami Island for Winter Sonata and the Myeongdong shopping area and cathedral for You’re Beautiful makes Korea among the top choices for tourist destinations in recent years.

Television Drama Series Content

Aside from the aesthetically beautiful sceneries, camera shots and color of Koreanovelas exported to the global market, the popularity of Korean drama series also rests in the stories they tell. Most of the time, the narratives center around the stories of love and sacrifice and these are told in idealistic manner – a man coming from well-off family falls in love with a woman from a poor background but who possesses a golden heart and who is willing to undergo sacrifices for the sake of her family. They encounter many hardships, trials and difficulty but in the end fate will bring them together and they will start a happy union. Many television series from the two countries are made with a conscious effort from their makers to infuse universal values into their stories. In most Korean television series, highlighted are Confucian values of loyalty, filial piety, integrity and a sense of shame. Many Korean dramas would have scenes where the protagonist is hurt – emotionally or physically –by the parent but the protagonist will endure the pain and not hurt back. A man will stay loyal to the object of his love. Go Jun Pyo of the famous Boys Over Flowers loved Geum Jan Di until the very end and that endeared him to his fans who watch the series in the Internet and on terrestrial television in the Philippines several times over. The older generation enjoys the Koreanovelas for the reason that it features the right way to treat and take care of parents. While some Philippine teleserye center on revenge and retribution, many Koreanovelas end with forgiveness and acceptance.

131 Young women fantasize about finding their ideal man who acts and decides similarly as the character in their favorite drama program. Adding to the magic is the fact that the male protagonist is not only wealthy, kind and sweet but is also a one-woman man. Despite trials and temptations, he will remain loyal and loving to the woman he loves. This kind of magic is also found in Filipino teleserye like On the Wings of Love. While the series tackles the plight of Overseas Filipino Workers in the United States dispelling the myth of America as a land of promise, a greater part of the program’s popularity is attributable to the loyal and caring attitude displayed by the character played by mestizo actor James Reid. The lost boy who has a not-so-happy home environment finds happiness in the arms of a lotus woman in a cramped tenement area. Most of the stories in the television series of both countries center on this kind of love even in harsh environments. It does not matter whether the material is a historical piece or a contemporary one. An attempt by some news and current affairs personnel in one network in the Philippines to produce drama series that center on nationalism through period pieces was thwarted by instructions from the management to highlight love and romance in the script and avoid expensive scenes. While stories mainly are variations of the same theme, the many backdrops of the narratives created boosts to other industries. Like its Korean counterpart that encouraged tourists to visit sites like Jeju island and Yongi mentioned in Koreanovelas, television series in the Philippines sometimes also showcase tourist areas like Boracay, Davao, Palawan and Bohol. What remains to be seen is whether such feature will increase the number of tourists visiting these sites the way visitors go to Busan, Gyeonggi and Nami Island or even the relatively unknown non- Korean site New Caledonia before Boys Over Flowers featured it in one or two episodes. Aspects of Korean culture are also featured in Korean television series—Kimchi, fish sticks, the rainbow fountain bridge and others in Boys Over Flowers; seaweed soup, pog and Korean cars in You’re Beautiful, Korean bread in Kim Tak Gu, Korean costumes, dances and music in the sageuk. All these created a wide market for Korean products and an increase in the growth of Korean establishments in many areas in the Philippines.

132 Conclusion

Synergies are found both within and outside of the production processes, marketing and promotion of television series both in Korea and the Philippines. Synergy is first found in the conceptualization of stories to produce – whether they are adaptations or original stories penned by writers for television. A story never goes into the scriptwriting and production phases unless several factors are considered – timing, thematic significance, ratings potential, celebrities and stars, locations and budget. Additional considerations are the country and business financial stability, current events and political climate; and social activities of the community and the country. Scripting may be done individually or collectively depending on how big the production is as defined by its capacity to bring in sales and sponsorships. Production can be made with a full-blown script while others depend on how the shooting environment changes. In both countries, however, shooting schedules, budgets and other decisions are done with the stars as primary consideration. A script may be changed anytime and new materials are essayed on the set. The addition of music and special effects also suffers since a greater time is spent on shooting such that there are instances when the editing is still being done while the program has already started airing. Marketing and promotions follow similar patterns and avenues among networks except for ABS-CBN’s marketing strategy of further synergizing the television products with other products and services like The Filipino Channel, TV Plus, satellite broadcasting in the rural Philippines and the use of mobile phone for marketing and promotions. What is missing in the production processes, marketing and promotion in the Philippines is the government support and funding that pushed the Korean cultural industry to an aggressive position in the international market. What is needed is a will on the part of the Philippine government and the Filipino people to use the culture industry to promote nationalism and promote the Filipino culture and social life to the world.

133 REFERENCES

Interviews Amor Olaguer, Creative Consultant and Head Writer of Ang Panday, Viva Entertainment, March 31, April 10, and April 17, 2016, UP College of Mass Communication, Broadcast Communication Department Office. Herbert Samonte, Creative consultant of ABS-CBN Global. May 15, 2016. ABS-CBN Compound Nowell Cuanang, Production Manager of Ang Ilustrado, GMA News Network. April 11, 2016, UP College of Mass Communication Faculty Lounge Susan Doctolero, Head writer of Encantadia, GMA Channel 7, May 15, 2016, GMA compound Toto Natividad, Director of Ang Probinsyano, ABS-CBN Corporation. April 16, 2016. ABS-CBN Compound.

Books Herman, Edward S. and Robert W. McChesney (1997). The Global Media: The New Missionaries of Global Capitalism. London, England: Cassel Wellington House Kwak, K-S. (2003) Civil Society as the Fifth Estate: Civil Society, media reform, and democracy in Korea. In Kitley, Philip. (ed.) Television, Regulation, and Civil Society in Asia. London: Routledge-Curson Mosco, Vincent (2009) the Political Economy of Communication. London, England: Sage Publications, Ltd. Pinoy Television: The Story of ABS-CBN. (1999) Quezon City: ABS-CBN Broadcasting Corporation. Santos, J. C. (2003) Out of Reach: Television Regulation, Public Sphere and Civil Society in the Philippines. In Kitley, Philip. (ed.) Television, Regulation, and Civil Society in Asia. London: Routledge-Curson Tveit, J.E. (2009) Dubbing versus Subtitling: Old Battleground Revisited. In J.D. Cintas and G. Anderman (Eds.). Audiovisual Translations. Great Britain: Palgrave Macmillan

Theses and Dissertation Lacap, L. I. (April, 2014) More Than A Background: The Political Economy of Music in Selected Kapamilya Drama Programs from 2011 to 2013. Undergraduate Thesis. University of the Philippines College of Mass Communication. Manalili, P. (2004) Pagsasalin at Komunikasyon: Pagsasa-Filipino ng mga Banyagang Programa sa Telebisyon sa Kaso ng Telenovelang “Ctistina” [Translation and Communication: How Foreign Programs are Translated to Filipino in the Case of the Television Series”Cristina”] University Library University Archives, University of the Philippines Diliman.

134 Santos, J. C. (2000) Ang Pampulitikang Ekonomiya ng ABS-CBN at Ang Globalisasyon [The Political Economy of ABS-CBN and Globalization]. An unpubliched master’s thesis. University of the Philippines

Internet Sources Kim. M.L. (2011) The Role of the Government in the Cultural Industry: Some Observations from Korea’s Experoience. Kaio Communication Review Number 33, 171-180 retrieved from http://www.mediacom.keio.ac.jp/publication/pdf2011/10KIM.pdf Hwang, S. B. (2010, February 1-28) The Current State of Korean TV Drama; 19th JAMCO International Symposium retrieved from http://www.jamco.or.jp/en/symposium/19/5/ Korean Drama. Open Access Journal by Omics International retrieved from https://research.omicsgroup.org/insex.php/Koreandrama PEP Magazine (January 2011). GMA7’s The Baker King earns high ratings during its pilot week. Philippine Entertainment Portal, Inc., www.pep.ph. Published with an excerpt from a GMA Network press release. Retrieved from http://www.pep.ph/guide/tv/7651/gma-739s- the-baker-king-warns-high-ratings-during-its-pilot-week TV Ownership on the Rise While Filipinos Still Read Newspapers (2014, February 20) The Manila Times Online retrieved from http: // www.manilatimes.net.

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136 Reactors’ Note

Contemporary Production Processes: Restructuring our Understanding of Philippine Teleseryes vis-à-vis Koreanovelas

Jose Wendell P. Capili, PhD College of Arts and Letters University of the Philippines

“Synergies: Production, Marketing, and Promotion of Philippine and Korean Television Series” by Josefina C. Santos attempts to articulate similarities and differences between the popular Korean television drama The Baker King, Kim Takgu (제빵왕 김탁구) vis-à-vis three successful primetime Philippine television dramas, GMA 7’s Ilustrado and My Husband’s Lover, and ABS-CBN’s Ang Probinsiyano. Santos’s attempts are commendable, largely because her work hinges on the tremendous popularity of Hallyu (Korean Wave) in the Philippines. Her study also echoes the need for more studies that will zero in on Philippine television dramas, a tradition that dates back to the late 1950s, long before many Asian countries embraced and mastered the medium. However, the paper needs to focus on certain vital points to flesh out the author’s problematique and heighten the gaps that needed some filling in. Firstly, the author needs to contextualize her choices—Out of many successful television dramas in Korea, why The Baker King? Furthermore, from the Philippine side, why Ilustrado, My Husband’s Lover, and Ang Probinsiyano? In the process of presenting her findings, the author may have to discuss the process by which she has narrowed down her choices. There has to be an articulation of Hallyu and how it emerged to connote “The Korean Cultural Wave”, a term coined by Mainland Chinese journalists who observed the rising popularity of Korean pop culture outside Korea during the late 1990s. According to the Korea Creative Contents Agency, the export of Korean dramas is on a rising curve from USD 105 million in 2008 to USD 133 million in 2010.

137 Korean television dramas have become increasingly popular all over Asia and the popularity is fast encroaching many other parts of the world. In many ways, the author may also discuss how Korean television dramas drew inspiration initially from the popularity of J-drama (Japanese trendy dramas) and how Korean television dramas creatively imitated, appropriated and transformed J-dramas. Eventually, Korean television dramas took off after the Asian financial crunch of 1997 with the support of Korean’s entertainment industry and eventually, by Korean government agencies. A historical context (The Philippines vis-à-vis Korea) may be in order to trace the origins of the television drama in both countries. South Korea started to broadcast television series in the 1960s. Today's mini drama format of 12–24 episodes started in the 1990s, inspired partly by the format adopted by many J-dramas. It may also be interesting to note that that Philippines started developing radio dramas even earlier, during the 1950s and the 1960s. Many of these radio dramas became hugely successful, after which, adaptations were developed for television audiences. These dramas include Sta. Zita and Mary Rose, Ilaw ng Tahanan and Gulong ng Palad. The development of Ilustrado, on the other hand, may be inspired by Korean historical dramas, transforming the traditional historical series to this format and creating the notion of "fusion sageuks" on Philippine television. Korean dramas are usually shot within a very tight schedule, often a few hours before actual broadcast. Screenplays are flexible and may change anytime during production, depending on viewers' feedback, putting actors in a difficult position. Production companies often face financial issues. And dramas had to work within these limitations while tension builds up towards the development of a much-anticipated finale. Philippine dramas face many of these obstacles, but the local variety tends to stretch the plot too much, much to the chagrin of discerning viewers who prefer compression over quantity. Without question, Korean dramas are popular worldwide, partially due to the spread of the Korean Wave, with streaming services that offer multiple language subtitles. Some of the most famous dramas have been broadcast via traditional television channels. For example, Dae Jang Geum (2003) was sold to 91 countries. Philippine dramas are catching up. ABS-CBN’s Pangako Sa'Yo, for instance, was sold to a number of Asian and African countries.

138 The author may have to strongly justify her objects of inquiry, since Ilustrado, My Husband’s Lover and Ang Probinsiyano, as locally successful productions, have yet to approximate The Baker King’s international success. Personally I would have preferred the selection of Filipino dramas that had been popular overseas, as in the case of Pangako Sa'Yo. The author should also take note of vast differences between structures of Filipino vis-à-vis Korean television drama productions. Korean dramas are usually helmed by one director and written by one screenwriter. In contrast, many Philippine television dramas have 2nd, 3rd and 4th unit directors, with various individual styles and syndromes to further complicate renditions of scripts on the small screen. At this point, I wish to reiterate that Korean television series are likely to have only one season, with 12–24 episodes. Historical series (sageuk) may be longer, with 50 to 200 episodes, but they also run for only one season. These are vital points that Philippine networks may need to adopt to further the cause of locally-produced television dramas. Another vital point: Philippine television dramas are usually aired daily during weekdays, morning, noon and nighttime. The broadcast time for flagship Korean television dramas is 10:00-11:00 p.m. , with episodes on two consecutive nights: Mondays and Tuesdays, Wednesdays and Thursdays, and weekends. Music also plays a rather crucial role in Korean dramas. Original soundtracks (OST) are explicitly made for each series, and in contrast to their Philippine counterparts, fans feel more urgency to purchase the soundtrack album of Korean television dramas. This trend started in the 1990s, when producers swapped purely instrumental soundtracks for songs performed by popular K-pop singers. These circumstances are not necessarily imperative to many Philippine television dramas. The emergence of international Filipino cable channels such as TFC and GMA Pinoy TV is a recent phenomenon. The author may attribute the rising popularity of Philippine television dramas to these two channels. But the author may have to discuss whether these channels are being patronized not only by Filipino communities overseas. The author may have to discuss the contexts and nature of non-Filipino consumers of these channels. The global community of non-Korean-speaking fans, on the other hand, is more involved in the consumption aspects: Fans share their opinions through tweets and comments on newsgroups (for example, the

139 Soompi discussion forum) as well as reviews and recaps on websites and blogs. Other than being top rated, and as I had mentioned earlier, the author may feel the need to justify even further the selection of GMA 7’s Ilustrado and My Husband’s Lover, and ABS-CBN’s Ang Probinsiyano vis-à-vis The Baker King. These choices are so disparate in terms of plot, target audience, local and global success and so on. But then, there may be similarities between these differences. The challenge is for the author to identify these similarities to contextualize her choices a bit further. Otherwise, the study may have to be restructured to articulate television dramas from similar genres and shown within the same period. In terms of proportion, the author may have to justify why there was so much discussion on Ang Probinsiyano vis-à-vis Ilustrado and My Husband’s Lover. In addition, could there be more appropriate choices from the Korean side, other than The Baker King? It may be more ideal for the author to beef up her study by way of extensive archival and field research. It may be ideal to interview key figures (both performers and creative people behind the production) to make her study more substantial and to highlight the unique features of each creative production process. Subsequently, the author may also wish to cite groundbreaking studies on the subject of Korean and Philippine television dramas to illustrate her unique insight and contribution to studies being done in the field of television dramas, broadcasting, and pop culture. Finally, the author may choose to even out her study by focusing not just on the Philippine aspects of the research project but also the Korean potentials in it, in order to make the project hugely Philippine-Korean and less of Philippine Studies.

140 References

Beng Huat Chua and Koichi Iwabuchi. East Asian Pop Culture: Analysing the Korean Wave. Hong Kong: Hong Kong University Press, 2008. Fuhr, Michael. Globalization and Popular Music in South Korea: Sounding Out K-Pop. London: Routledge, 2016. Kim, Jeongmee. Reading Asian Television Drama: Crossing Borders and Breaking Boundaries. London and New York: I.B. Tauris & Co. Ltd.. 2014 Kim, Youna. The Korean Wave: Korean Media Go Global. New York: Routledge, 2013. Len-Rios, Maria E. and Earnest L. Perry. Cross-Cultural Journalism: Communicating Strategically About Diversity. London: Routledge, 2015. Marinescu, Valentina. The Global Impact of South Korean Popular Culture: Hallyu Unbound. London: Lexington Books, 2014. McPhail, Thomas L. Global Communication: Theories, Stakeholders, and Trends. Hoboken, NJ: Wiley-Blackwell, 2014. Roll, M. Asian Brand Strategy: How Asia Builds Strong Brands. New York: Palgrave Macmillan 2005

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142 NOTES ABOUT CONTRIBUTORS

Maria Fe Villamejor-Mendoza, PhD is Professor of Public Administration and Public Policy and the current Dean of NCPAG, University of the Philippines Diliman. She teaches courses both at the undergraduate and graduate programs (e.g., Bachelor, Master and Doctor of Public Administration), in the fields of public policy, public enterprise management, development models, administrative theories and governance. Her areas of expertise include regulatory governance, public enterprise reform and privatization, anti-corruption, accountability, good governance and development. Email: [email protected]

Erwin Alampay, PhD is Associate Professor and former Director of the Center for Leadership, Citizenship and Democracy (CLCD) at the National College of Public Administration & Governance (NCPAG). He teaches courses in research methods, organizational studies and management, administration of social development, and citizenship and governance. He does extensive research on information and communication technologies for development, telecommunication policy and e-governance. In line with this, he has worked with various ICTD networks such as LirneAsia, Technology and Social Change (TASCHA)-University of Washington, Strengthening Information Society Research Capacity Alliance (SIRCA), OpenNet Initiative, etc. Recent articles he has published include: Harmonizing e- Government initiatives in the Philippines: a collaborative institutional framework and Social Media and Citizen-engagement: Two Cases from the Philippines. He is currently a Research Fellow with the Institute for Money, Technology and Financial Inclusion (IMTFI), University of California- Irvine doing research on the use of mobile money for conditional cash transfers to the poor. Email: [email protected]

Josefina Santos is Assistant Professor, Broadcast Communication Department, College of Mass Communication, University of the Philippines- Diliman. She holds BA Broadcast Communication (1996) and MA Communication in Broadcast Communication (2000) at the same college. She handles undergraduate and graduate courses including Political Economy and Broadcasting; Media and Communication Theory; Broadcast Audience Studies; Television Production and Procedures; Broadcast Criticism; Educational Broadcasting; Broadcast Writing and Production, Media Theory, Media Research; Media Ethics and many others. She has presented papers in various international and national conferences. She has been serving as a College Coordinator since 2007. Email: [email protected]

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Lucio Blanco Pitlo III (Master of Laws, Peking University) is an Assistant Professorial Lecturer for International Studies at De La Salle University and Lecturer for Chinese Studies at Ateneo de Manila University. He is also a Contributing Editor (Reviews) for Asian Politics & Policy and a Project Consultant for Asia-Pacific Pathways for Progress Foundation Inc. Email: [email protected]

Jose Wendell Capili, PhD is Professor of English, Creative Writing and Comparative Literature at the College of Arts and Letters, UP Diliman, and the Assistant Vice President for Public Affairs and Director, Office of Alumni Relations (OAR), UP System. He was previously educated at the University of Santo Tomas (BA), University of the Philippines (MA), University of Tokyo (Diploma), the University of Cambridge (MPhil), and Australian National University (PhD). He has published 7 books and over 300 articles. Aside from creative writing and comparative migration studies, Capili also discusses aspects of popular culture in the Philippines. Email: [email protected]

Ms. Jinky Joy L. dela Cruz obtained her Master’s Degree in Urban Administration and Planning at the University of Seoul in Seoul, South Korea with the highest honours. Her thesis entitled “IDENTIFYING THE CRITICAL SUCCESS FACTORS (CSFs) OF PUBLIC-PRIVATE PARTNERSHIPS (PPPs): Case of Public Market Redevelopment Projects in the Philippines” obtained the ‘Most Distinguised Thesis’ Award. She used to work at the local government units of Imus and Kawit and thereafter, at the Public-Private Partnership Center - an attached agency of the National Economic and Development Authority. Her strong background in policy and development planning as well as, substantive work experiences in local and regional governance are what she employs to deliver her duties and responsibilities as an oversight officer at the Officer at the Office of the Chairman of the Professional Regulation Commission presently. Email: [email protected]

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On April 27th 2016, the University of the Philippines has launched the Korea Research Center, with the support of the Academy of Korean Studies (AKS) Korean Studies Promotion Service, aiming to provide Filipino scholars and researchers with opportunities to widen their interest in Korean studies. The Center hopes to be a venue for students and professionals to produce meaningful comparative researches and also to promote collaborative partnerships among Korean and Philippine institutions. The Center will serve as a university-wide hub that will help promote and develop Korean Studies in the University and the country. It will sponsor interdisciplinary and inter-college research and education activities on Korean studies, as well as facilitate the training of the next generation of Koreanists in the country.

The activities of UP KRC are supported by the Academy of Korean Studies – Korean Studies Promotion Service (KSPS) Grant funded by the Korean Government (AKS-2015-INC-2230012).

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UP Korea Research Center UPAddress: Korea 3F Research South Wing Center Quezon Hall, University Avenue, University of the Philippines, Diliman, Quezon City, Philippines Tel : +63 2 981 8500 loc 2543 Email : [email protected]

ISSN 2546-0234 (Online) ISSN 2546-0226 (Print)

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