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2017 MANILA CONFERENCE PROCEEDINGS Regulation and Governance in the Philippines: Development Policy Challenges for the New Administration

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2017 MANILA CONFERENCE PROCEEDINGS Regulation and Governance in the Philippines: Development Policy Challenges for the New Administration 2017 MANILA CONFERENCE PROCEEDINGS Regulation and Governance in the Philippines: Development Policy Challenges for the New Administration © 2018 The ANU Philippines Project School of Regulation and Global Governance (RegNet) College of Asia and the Pacific Australian National University Canberra ACT 2601 Australia CRICOS Provider #00120C T: +61 2 6125 1501 E: [email protected] W: regnet.anu.edu.au/Philippines-project 2017 MANILA CONFERENCE PROCEEDINGS List OF Acronyms ACCC - Australian Competition and Consumer Commission ADB - Asian Development Bank ADMU - Ateneo de Manila University ANU - Australian National University ANZFTA - ASEAN- Australia-New Zealand Free Trade Agreement APEC - Asia Pacific Economies ASEAN - Association of Southeast Asian Nations BSP - Bangko Sentral ng Pilipinas BPO - Business Process Outsourcing COMELEC - Commission on Elections CPCN - Certificate of Public Convenience and Necessity CSOs - Civil Society Organisations DILG - Department of Interior and Local Government DFAT - Department of Foreign Affairs and Trade DLSU - De La Salle University DOE - Department of Energy DUs - District Utilities EAP - East Asia Pacific EJKs - Extra Judicial Killings EPIRA - Electric Power Industry Reform Act (Republic Act 9136) ERC - Energy Regulatory Commission ESRD - Electoral System Redesign for Development FDIs - Foreign Direct Investments FGDs - Focus Group Discussion FPTP - First Past the Post System GDP - Gross Domestic Product GOCCs - Government Owned and Controlled Corporations (referred here as GCGs) GPS - Global Positioning System ICT - Information Communications Technology LGUs - Local Government Units MNEs - Multinational Enterprises NAPOCOR - National Power Corporation NCP - National Competition Policy NEDA - National Economic Development Authority NGCP - National Grid Corporation of the Philippines OECD - Organisation for Economic Cooperation and Development PCA - Philippine Competition Act (Republic Act 10667) PCC - Philippine Competition Commission PDP - Philippine Development Plan PEMC - Philippine Electricity Market Corporation PIDS - Philippine Institute for Development Studies PMR - Product Market Regulation POEA - Philippine Overseas Employment Agencies RESs - Retail Electricity Suppliers RMS - Regulatory Management Systems ROI - Return of Investments SDGs - Sustainable Development Goals i © THE ANU PHILIPPINES PROJECT 2017 MANILA CONFERENCE PROCEEDINGS SGLG - Seal of Good Local Governance SLC - Substantially Lessen Competition SMEs - Small and Medium Enterprises SOEs - State Owned Enterprises SONA - State of the Nation Address SWM - Solid Waste Management TRAIN - Tax Reform for Acceleration and Inclusion UP - University of the Philippines ii © THE ANU PHILIPPINES PROJECT 2017 MANILA CONFERENCE PROCEEDINGS TABLE OF CONTENTS List of Acronyms…………………………………………………………………………………………….i Executive Summary…………………………………………………………………………………………1 Imelda Deinla Director, The ANU Philippines Project Opening Address……………………………………………………………………………………………4 H.E. Amanda Gorely Ambassador to the Philippines Department of Foreign Affairs and Trade Opening Address……………………………………………………………………………………………6 Gilberto M. Llanto President, Philippine Institute for Development Studies Keynote Address……………………………………………………………………………………………7 Arsenio Balisacan Chairman, Philippine Competition Commission ECONOMIC UPDATE Achieving Sustained and Inclusive Growth: Drivers and Constraints ‘The Philippine Economy: No Longer the East Asian Exception?’………………………………….12 Hal Hill, Emeritus Professor, Australian National University ‘What Does It Take To Eliminate Poverty in 25 Years?’…………………………………………….15 Ramon Clarete, Professor, School of Economics, University of the Philippines POLITICAL UPDATE Political Developments and Issues Affecting Growth Momentum ‘Governance and Institutions in the Philippines: Untying the Gordian Knot and Mapping Possible Paths Forward’…………………………………………………………..17 Ronald Mendoza, Dean of School of Government, Ateneo de Manila University ‘The Philippine Growth Momentum and Contentious Politics’………………………………………19 Antoinette Raquiza, Associate Professor, Asian Centre, University of the Philippines “Formulating Reforms in the Philippine Electoral System: Insights from the ‘Electoral System Redesign for Development’ Project”………………………………………………22 Paul Hutchcroft, Professor, Cora Bell School, Australian National University iii © THE ANU PHILIPPINES PROJECT 2017 MANILA CONFERENCE PROCEEDINGS Regulation and Governance Panel 1 Institutions: Enabling Competition Policy in the Philippines and Insights from Other Jurisdictions ‘Regulating Institutions: Enabling Competition Policy in the Philippines’………………………..25 Stella Quimbo, Commissioner, Philippine Competition Commission ‘Competition Policy and Economic Development in Asia’…………………………………………28 James Roumasset, Professor, University of Hawaii and EPDP (Competition Policy and Economic Development in Asia) ‘Competitive Neutrality in the Philippines’…………………………………………………………..32 Graciela Miralles Murciego, Senior Economist, World Bank Regulation and Governance Panel 2 Regulation in the Philippines, Prospects, Challenges and Comparative Perspectives Gilberto M. Llanto………………………………………………………………………………………..34 President, Philippine Institute for Development Studies ‘Regulation and Oversight in Local Governance Reform’…………………………………………..35 Francisco Magno, Director, Jesse M Robredo Institute of Governance, De La Salle University ‘Changes in the Regulatory Framework in the Banking Sector’……………………………………36 Lyn I. Javier, Managing Director, Financial Supervision Research and Consumer Protection, Central Bank of the Philippines Regulation and Governance Panel 3 Global Standards and Regulation in Key Sectors ‘Health and Food’…………………………………………………………………………………..…38 Sharon Friel, Professor and Director, School of Regulation and Global Governance, Australian National University ‘Energy’………………………………………………………………………………………………...39 Francis Saturnino Juan, CEO of Philippine Electricity Market Corporation ‘Transport, Shared Economy, Data and Technology’…………………………………………….40 Marian Panganiban, Grab Southeast Asia Regulation and Governance Panel 4 Rights-Based Regulation, and the Role of Civil Society, and the Private Sector ‘Rule of Law and Justice’…………………………………………………………………………….42 Veronica Taylor, Professor, School of Regulation and Global Governance, Australian National University “Rights-Based Regulation and the Role of Civil Society: Case Study of Sin Taxation’………………………………………………………………………………..46 Filomeno Sta. Ana III, Executive Director, Action for Economic Reforms ‘Law and Development and Accountability Mechanisms’………………………………………..47 Jose Manuel Diokno, Dean, College of Law, De La Salle University iv © THE ANU PHILIPPINES PROJECT 2017 MANILA CONFERENCE PROCEEDINGS EXECUTIVE SUMMARY The Duterte administration has provided the impetus for rethinking regulation and governance in the Philippines. With law and order as Duterte’s overriding narrative, how will a vision of inclusive growth translate into equitable development and better social outcomes? What role can regulation and governance do to attain these goals? Central to President Rodrigo Duterte’s envisaged platform for change is his 0+10 point socioeconomic agenda that prioritizes trade, customs and tax reforms, education, rural development, health, foreign investment, infrastructure, and public-private partnerships. The economic agenda forms part of the Philippine Development Plan 2017-2022, with its twin goals of reducing poverty to fourteen percent (14%) by 2022 and implementing ‘Ambisyon Natin 2040’ (Our Ambition 2040), the envisaged framework for the Philippines’ long term vision. With the Philippines’ strong economic performance averaging 6.3% in the last five years, the country can reach the upper-middle income grouping in a decade (Clarete, Hill, Esguerra, forthcoming 2018). Good regulation can have positive impact in governance and development outcomes (Laffont 1999; Drahos 2010). Yet regulation may not always deliver anticipated outcomes, nor inevitably lead to good governance. Regulation is likewise dependent on governance to effectively implement policies. Regulation can, like other policies and interventions, have unintended consequences (Majone 1997; World Bank 2017). It may lead to regulatory freeze, inefficiencies, bottlenecks or even abuses and arbitrary policies. Since the advent of regulatory studies, regulation has also come to be understood not merely as a set of coercive subordinate rules enforced by the state on particular activities. Regulation has been understood to cover all forms of activities and behaviour - political, economic, and social- and involves non-state and private actors (Ayres and Braithwaite 1992). Institutions, groups, and even individual behaviour have been found to play important policy roles (Braithwaite 1995). Regulation embodies and underscores, the importance of cross-disciplinary studies in solving complex social and governance issues. In the Philippines, rapid policy change in the regulatory space has occurred since the 1990s. This coincided with the push for privatisation and liberalisation prompting a regulation explosion. Regulatory reforms in the country have produced problems and failures such as regulatory burden in sectors and industries that caused more inefficiency and stunted productivity (PIDS 2015). The phenomenon of regulatory capture and corruption continue to plague government agencies and institutions while predatory and uncompetitive business practices impede further growth and prevent access
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