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
1
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
2
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
3
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
4
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
5
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
6
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
7
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
8
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?
9
Table 1. Financial Highlights of GFIs, 2012-2014
Source: Government Commission for GOCCs, 2014
10
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
11
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;
12
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
Mandate
To provide banking services principally to cater to the
medium and long-term needs
of agricultural and
industrial enterprises with
To provide banking service with a social mission of
spurring countryside
development by granting
loans to agricultural,
13
emphasis on small and
medium-scale industries to
develop the countryside.
industrial, home-building or
home-financing projects and
other productive enterprises,
farmers, cooperatives/
associations to facilitate
production, marketing of
crops and acquisition of
essential commodities, and to
cross-subsidize agrarian land
transfers
Sectors
Served
1. Infrastructure and
Logistics
2. Social Services
3. Environment
4. Micro, Small and Medium
Enterprises (MSMEs)
Small farmers & fisherfolk
Agri and aqua-business
(public and private sector)
MSMEs
Communications
Transportation
Housing
Education
Health care Tourism
Environment-related
projects
Utility-related projects
Services/P
roducts
1. Deposit Products and
Cash Services
2. Trade Products and
Services
3. Center for Global
Filipinos
1. Remittance Products and
Services
2. Reintegration Program
for OFWs / MSME Loans
1. Trust Services
2. Electronic Banking
1. Deposit Products
2. e-Banking Products
3. OFW Remittance Product
4. Fund Transfer
(Remittance) System 5. Loans for Cooperatives
6. Countryside Loan Fund
7. Treasury Products
8. Trust Products & Services
9. Assistance Programs for
Landowners
10. Programs for Countryside
Financial Institutions (CFIs)
11. Technical Assistance &
other Programs for
Cooperatives
Source: GCG Briefing Paper on the Merger of DBP and LBP, 2016
14
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
include the production of a stronger government bank, creating the 2nd
largest universal bank in the country in terms of total assets at P 1.6
trillion. The surviving bank will also be 2nd
in terms of deposits at P 1.2
trillion. In terms of loans and capitalization, it will be 4th 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
15
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
P Billion DBP Landbank Without Capital
Infusion
With P30 B
Infusion
Deposits 303 901 1,204 1,204
Capital 45 88 133 163
SBL 9 18 27 38
Source: DBP and Landbank
16
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-
Merger DBP Landbank
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
17
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).
18
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 4
th 1,527.6 3rd
Loans 143.1 9th 405.3 4
th 548.4 4
th
Deposits 293.8 9th 914.2 4
th 1,208.0 2
nd
Capital 36.2 10th 75.2 5
th 111.4 4
th
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
19
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
Source: DBP and LBP
Table 10. Number of Cardholders
Pre-Merger Post-
Merger
DBP LBP
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
Card - 4,967 4,967
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
20
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
Million) 321 681 906
Source: GCG estimates based on data from DBP and LBP
21
Table 12. Merger Incentive Rates for Affected Employees
Years of Service Rate
First 20 years of
service
1.00 x Basic Monthly Pay
(BMP) x No. of years
Next 10 years of
service
1.25 x BMP x No. of years
Remaining years of
service
1.50 x BMP x No. of years
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.
22
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).
23
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
24
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
25
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
26
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
27
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
28
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
29
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.
30
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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
33
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).
34
35
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
36
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,
37
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
38
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
39
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
40
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
41
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
42
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 million23
. 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
43
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
44
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
45
discussions about a potential union. These cases demonstrate that,
contrary to some notion, mergers between viable or sound banks can
happen.
46
47
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.
48
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
49
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
50
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.
51
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
52
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.
53
(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
54
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
Budgeting at the local level
CODE-NGO
ULAP
INCITE-GOV
Participatory Audit
BUB Monitoring and Evaluation
Check-my-school
CCAGG
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
55
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
56
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
57
concerns in government. Its network has grown to around 100 CSOs
and individuals5. 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.
58
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
59
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.”
60
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
61
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
62
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
Local Sources: Tax revenue and
non-tax revenue
External Sources: Internal
Revenue Allotment, Shares from
national tax collections, inter-
local transfers,
grants/donations/aids
Total Current Operating Expenditures
Education, culture, sports &
manpower development
Health, nutrition, population
control
Labor and employment
Housing and community
development
Social services and social
welfare
Economic services
Debt service
Non-income Receipts
Capital investment receipts
Receipts from loans and
borrowings
Report on the utilization of
the 20% component of the
Internal Revenue Allotment
(Development Fund)
Abstract of bids as calculated
Annual budget report
Annual Gender and
Development
Accomplishment Report
Annual Procurement Plan or
procurement List
Bid Results on Civil Works,
Goods and Services and
Consulting Services
Items to Bid
Local Disaster Risk Reduction
and Management Fund
Utilization
Manpower complement
Quarterly statement of cash
flow
Report of Special Education
Fund Utilization
Statement of Debt Service
Statement of Receipts and
63
Non-operating Expenditures
Grant/loan to other entities
Debt service
Other non-operating
expenditures
Expenditures
Supplemental procurement
plan
Trust fund utilization
Unliquidated cash advances
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
and Awards Committee Abstract of bids as calculated
Annual Procurement Plan or
procurement List
Bid Results on Civil Works,
64
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
65
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)
66
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
67
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
68
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
69
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
70
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
71
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
72
Figure 6: CCAG Citizen’s Participatory Audit of Road works
73
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/
74
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.
75
(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.
76
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
ents
(DILG
MC
2010-
83)
Dat
e
(DIL
G M
C
20
11
-13
4)
ILO
ILO
CIT
Y
ILO
ILO
PR
OV
INC
E
NA
GA
QU
EZ
ON
CIT
Y
BO
HO
L
PR
OV
INC
E
SO
UT
H
CO
TA
BA
TO
CA
M.
SU
R
(Nag
a)
AB
RA
(CC
AG
G)
An
nu
al B
udg
et
Rep
ort
Curre
nt
Year
20
15
XL
S
2016
XLS
Link
ed to
FDP
P
201
6
PD
F
2016-
2016
XLS
2014
2013
PDF None
An
nu
al P
rocu
rem
ent
Pla
n o
r P
rocu
rem
ent
Curre
nt
Year
20
15
XL
S,
2016
XLS
Link
ed to
FDP
P
201
6
XL
S
IN
FD
PP
2014
None
as of
06151
6
2016
XLS
2013
PDF None None
Sp
ecia
l E
du
cati
on
Fu
nd
In
com
e &
Ex
pen
dit
ure
Est
imat
es
Curre
nt
Year
20
15
XL
S,
2016
XLS
Link
ed to
FDP
P
201
6
Q1
PD
F
2015
None
As of
06151
6
2015
Q3
XLS
2013
2013
PDF None
77
FDP
Docum
ents
(DILG
MC
2010-
83)
Dat
e
(DIL
G M
C
20
11
-13
4)
ILO
ILO
CIT
Y
ILO
ILO
PR
OV
INC
E
NA
GA
QU
EZ
ON
CIT
Y
BO
HO
L
PR
OV
INC
E
SO
UT
H
CO
TA
BA
TO
CA
M.
SU
R
(Nag
a)
AB
RA
(CC
AG
G)
Sta
tem
ent
of
Deb
t S
erv
ice
Curre
nt
Year
20
14
XL
S
2014
201
6
Q1
PD
F
Certif
icate
of No
Debt
Servi
ce
2016
XLS
2014
2013
PDF, None
An
nu
al G
end
er &
Dev
t A
cco
mp
Rep
ort
Curre
nt
Year
20
15
XL
S,
2015
XLS
,
Link
ed to
FDP
P
Not
fou
nd
as
of
061
516
2013 2016
XLS
2014
2013
PDF None
Sta
tem
ent
of
Rec
eip
ts &
Ex
pen
dit
ure
s
Curre
nt
Year
20
15
XL
S
2015
XLS
Link
ed to
FDP
P
201
6
Q1
PD
F
None 2016
XLS
2014
2013
PDF None
Sta
tem
ent
of
Cas
hfl
ow
1st
Qtr
Curre
nt
Year
20
16
Q1
XL
S
2015
XLS
,
Link
ed to
FDP
P
201
6
Q1
PD
F
Feb
Jun
Sept
Dec
2015
2015
Q1-
Q4
XLS,
2013
2013
PDF, None
78
FDP
Docum
ents
(DILG
MC
2010-
83)
Dat
e
(DIL
G M
C
20
11
-13
4)
ILO
ILO
CIT
Y
ILO
ILO
PR
OV
INC
E
NA
GA
QU
EZ
ON
CIT
Y
BO
HO
L
PR
OV
INC
E
SO
UT
H
CO
TA
BA
TO
CA
M.
SU
R
(Nag
a)
AB
RA
(CC
AG
G)
Rep
ort
of
SE
F
Uti
liza
tio
n 1
st
Qtr
Curre
nt
Year
20
16
Q1
XL
S,
2015
XLS
Link
ed to
FDP
P
201
6
Q1
PD
F
2015
Q3
XLS,
2015
Q4
XLS
2013
2013
PDF None
Tru
st F
un
d (
PD
AF
)
Uti
liza
tio
n 1
st
Qtr
Curre
nt
Year
20
16
Q1
XL
S
2015
XLS
,
Link
ed to
FDP
P
Not
fou
nd
as
of
061
516
2014
2015
Q3
XLS
2013
2013
PDF None
Bid
Res
ult
s on
Civ
il
Wo
rks
and
Go
ods
and
Ser
vic
es 1
st
Qtr
Curre
nt
Year
20
16
Q1
XL
S
2015
XLS
Link
ed to
FDP
P
201
5
2016
Q1
2013
2013
2013
PDF None
Ab
stra
ct o
f
Bid
s as
Cal
cula
ted
1st
Qtr
Curre
nt
Year
20
14 2012
Non
e None
NON
E
FOU
ND
2015
PDF,
2013
PDF None
79
FDP
Docum
ents
(DILG
MC
2010-
83)
Dat
e
(DIL
G M
C
20
11
-13
4)
ILO
ILO
CIT
Y
ILO
ILO
PR
OV
INC
E
NA
GA
QU
EZ
ON
CIT
Y
BO
HO
L
PR
OV
INC
E
SO
UT
H
CO
TA
BA
TO
CA
M.
SU
R
(Nag
a)
AB
RA
(CC
AG
G)
20
% C
om
po
nen
t o
f
the
Inte
rnal
Rev
enu
e
All
otm
ent
Uti
liza
tio
n
1st
Qtr
Curre
nt
Year
20
16
Q1
XL
S
2015
XLS
Link
ed to
FDP
P
Non
e None
2015
Q4
XLS,
None 2013
PDF None
Su
pp
lem
enta
l
Pro
cure
men
t P
lan
, if
an
y
Curre
nt
Year
20
16
Q1
XL
S
2015
XLS
,
Link
ed to
FDP
P
Non
e None
2015
Q4
XLS,
None None None
LD
RR
M*
20
16
Q1
XL
S
LI
N
K
TO
FD
PP
2015
Q4
201
6
Q1
PD
F
2013
2015
Q4
XLS
2014
2013
PDF None
*LDRRM was not part of the FDP
80
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
81
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.
82
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 detailed27
. 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
Case/Doc Completeness Timely Machine
Processed
National
National
Budget/NEP
Yes
Downloadable
But no meta
data on the data
Size of file may
make it difficult
to download
Linked to DBM
Yes
But only for this
year; not
comparable
from year to
year
Yes
Available in
pdf (but not
searchable
electronically)
,.xls, and .csv
BLGF’s
eSRE
No
No meta-data
on the file
No, Late
(2014 latest)
Annually
Yes
in .xls, .xlsx
manuals and
27 The 2016 GAA is also thicker and has more volumes.
83
Not
disaggregated
Reported by
treasurers
reported
Not quartely
procedures
are available
in pdf
FDPP No
Quality is
suspect
But more
detailed than
BLGF, no
aggregation
No (not on
time),
Not quartely
Only as far as
2012
Varies
Some files are
jpg, most are
BUB Portal Incomplete
Not useful for
LGUs
More internal
tracking
Quarterly
reports from
2014- end of
Partial/Limited
difficult to
compare from
year to year
Yes
In .csv
and .xls
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.
84
Table 6: Open Data at the Local Level
Case/Doc Completeness Timely Machine
Processable
LGU Data (based on Table 4 and feedback from CODE-NGO
conference)
FDP in
LGUs
Varies
Submission in
FDPP only for
compliance
incomplete
access
information
quality varies
Internet
access varies
Varies/Inconsist
ent
Varies
mostly pdf
if open
access, is
proprietary
(.xls)
some are
hardcopies
presentation
varies; not
standard
LDRRM Low number of
posting
Varies/ Most
Not timely
- mostly pdf
National Agency Data in Local or Regional offices
Per Agency:
BUB Menu
of
Projects/req
uirements
Requires
intermediation (see
openbub.gov.ph)
-call center
operations are
requested
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)
No,
incomplete;
requires queries
to agencies; no
FAQs
generated
No
DILG: compliance
with SGLG
No -requires
intermediation
No No
85
Agencies:
DPWH
(Kalsada)
No
Hardcopy from
regional offices or
national office
No No
Hardcopy only
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
86
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.
87
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.
88
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
89
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.
90
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92
93
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
94
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
95
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.
96
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
97
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
98
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
99
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.
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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
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Mathiason, J. (2013). “Information and Communication Technologies and e-
Participation for the Empowerment of People and e-Governance.” In
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McNutt, K. (2007). “Will e-Governance and e-Democracy Lead to e-
Empowerment?” in library.queensu.ca/ojs/index.php/fedgov/article/down
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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
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Act, The Civil Service Law, and Anti-Graft Laws). Manila: Rex Bookstore,
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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)
100
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)
101
102
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
103
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
104
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
105
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
106
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
107
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.
108
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
109
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
110
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.
111
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.
112
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)
113
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
114
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
115
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
116
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 century
38. 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.
117
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.
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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
119
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.
120
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
121
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
122
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.
123
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
124
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
125
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.
126
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.
127
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.
128
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.
129
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.
130
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.
131
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.
132
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.
133
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.
134
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.
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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
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137
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.
138
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.
139
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
140
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.
141
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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143
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:
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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:
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:
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:
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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
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]
ISSN 2546-0234 (Online)
ISSN 2546-0226 (Print)