[ Vol.Xl No.5 September-October1993 ISSN 0115-9097 I

/Owninga HouseintheMetropolis:'

Lands,Incomes,MobilityandHousing: 6HealthBringsTheCaseof MetroManila* Econom=cGrowth8Talking Issues Out

and Sharing the Bounty

AlistairC.Blunt 9ExportFinance Pavesthe Way to NIChood 2000

ThePresentSituation Furthermore, over 40percent of urban ___¢_;_;_;_;_;_;_households (2.35 million) have iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiE_:_!_i_i_ii_i_:_iiii_iiiiii_

In 1990, 48.6 percent of the inadequate water supplyand a similarpopulation lived in areas classified as number also lack adequate sani tation Having a house thatone cancallhisownurban. In terms of households, the facilities. Discounting those relocated remainstobeelusiveformost Filipinos. Evenfigure was 49.1 percent. In 1998, under RA 7279, this will still leave the lowest-cost,mass-based housing projects

are hard on the pockets. Present salaries areassuming similarhousehold sizesand almost 1.9 million such households, simply not enough to buy ahouse.a steady increase in population at the Alistair C. Blunt, Chief Technical hd-

samerateasinthepreviousdecadein NCR has 636,000 (37.2%) viser for a United Nations Development Pro-gramme (UNDP)projecton housing, presented

eachofthemajorsub-groupings(Box households with 'vulnerable' tenurial during a Pulong Saliksikan the highlights of a1), the proportion of households in arrangements, approximately 171,000 studywhichheco-authoredwithProfessorPaul

these urban areas will make up 50.4 of which will be subject to demolition St,_ssman_ofMichiganStateUniversity. Theirstudy, which isdue to appe_ ina forthcoming

percent of the total. According to the and relocation. Access to water and Urban Studie_journal issue, points to the poorCensus of Population and Housing, sanitation facilitiesismuchbetter. Only land distribution as the main culprit.

approximately 1.8 million urban about 18 percent of the households do Meanwhile, thisyear'stopicforthe WorldDevelopnuentReportis"lnvesting inHeal th." Khis

households have tenurial not have safe water and sanitation was presented during a Seminar-Discussionarrangementsoverthelandonwhich facilities. These figures are,close to the held on August 30 at the Manila Hotel. The

theylive. This might be considered as Philippine Women's University (PWU) main points raised during such discussion, i.e.,the relationship between health, policyand eco-

making the households highly 1991 household survey findings which nomicdevelopmentaswellasthecurrentpoli-vulnerable _toremovalordemolition. found that 32.4 percent of the ties and programs of the Philippine Depart-

TheHousingand Urban Development households can be considered to have ment of Health are hereby discussed.Still on development, one way to attain.

Coordinating Council (HUDCC) vulnerable tenurial arrangements. NIChoodbytheyear2000istoaddresstheissueestimates those without legal tenure Fourteen percent of the households do ofmakingcreditfacilitiesandguaranteeinstitu-whoare notpresentlyprotected under not have access to clean water while 23 tions available to the marginalized exporters.

A recent Pulong-Saliksikantackledthethe UrbanDevelopment and Housing percent donothaveadequate sanitation, secrets of success of the so-called high

Act (RA 7279) at 0.42 million. _Topage2 performing Asian economies (HPAEs).These, and more, when you read on.

IIIIIIIIIml Ill III I I II I II III I III II •

DRNSeptember-Oct0ber1993Box1

Estimates of Housing Need from May 1993-May 1998

Total MajorUrbanSub-Groupings RuralLands,Incomes... NCF/ LargeCiffes Ofhe¢Urban(From page 1) .a.raas

1990Population 60,559 7,906 4,043 17,491 31,119Individual access is even lower, with GrowthRate_ 2.33% 2.92% 3.12% 2.44% 2.01%approximately 33 percent of the

households without internal piped 1993 64,891 8,619 4,433 18,803 33,036water supply and water sealed toilet. 1998 72,811 9,953 5,169 21,212 36,477

Based on the Census figures, AverageHouseholdthe average annual need for new houses Size2(Actual) 5.31 5.04 5.29 5.35 5.36to accommodate the growth of urban 1990Households 11,407 1,570 764 3,269 5,804households will be 171,000 new units.

Failure to provide for this need will 1993 12,224 1,710 838 3,515 6,163lead to more households entering the 1998 13,722 1,975 977 3,965 6,805'vulnerable' category described. It canbe said that the performance during the Distributionlast year of the Aquino administration of Households

is in line with this need on the 1993 13.8% 6.7% 28.7% 50.9%assumption that its efforts are focused Distributionon the lowest 50 percent of the of Householdshouseholds. However, the 1998 14.4% 7.1% 28.9% 49.6%government's efforts are not solely

concerned with the demand for new HouseholdGrowth 1,498 265 139 450 642housing units to meet urban growth. It 1993-98is also concerned with relocating those

identified under RA 7279 as well as Homeles_ 7 2 1 3 1assisting the residents with "vulnerable' Relocation

tenurial arrangements to legalize their (RA 7279)' 422 171 75 176tenure through the CMP. This concern D0ubled-upalso ignores any effort to decongest Households_ 444 161 32 134 117housing units which contain more than Upgradingone household. (On-site)' 1,355 291 178 886 (2,763)

Running After Time

Bearing all these needs in mind, i. Population growth rites are based on the Census of Population and Housing for 1980 to 1990 for the nation,

the past efforts are clearly inadequate. NCR, Isrgecitics(withpopulationsofmorethan200,000)andthegmwth ratvofothercha_eredcities(forflu;otheruCoanareas). The growth for the rural areas is based on the balance of the national growth l¢_,sthe three urben cet_gofies, TheBased on the national urban projections assumethst growth rates will remain steady from 1990.

requirements for 'upgrading '2 and 2. Thehouseh_ldsizeisbased_the_99_Cens_sf_r_l_ti_andH_using.Theh_useh_ldsize_fa_the_urban areas is 5.34. However, as evidence suggests that the household size of the larger cities is smaller than the smaller

relocation, and on the present _en areas, the average household size of the other areas was incrcasaed to 5.35 which brought down the average

programmed 40,000 household householdsizeoflargeciticstoS.29, Itisessumcdthstthesizesofthehouseholdsforeachoftheca_tcgork_donotchengefrom 1990 to 1998,

beneficiaries annually, the programs 3. H_mel_s_gure_refe_toth_se_iterallyh_meless_suchasth_seslec_ing_nsidewa_ks_rin_a_ks_r_ushcarta

will need to run for more than 40 years _d have no other home, [Census figures collected by the Department of Social Welfare and Development 0DSWD),1990].

to accommodate all those presently 4. R©_cetiunn_`_arebas_d_th_crit_ria_rovidnd_ytheUr_anD_vel_mentendH_usin_A_rUDHA

needing relocation or improved tenure! (RA 7279) based un estimstes. The p'mpoaion used here is the same as the une used in the same Draft National ShelterRepoa. More detailed figures should be svsilable once the cities and urban municipalities have carded o ,,t the inventory

of those households living in hazardous or other areas required for government pmje_;.All these assume that 5. Thod_ubl__uph_useh__d_gureispmvidedbytheCPH_99__Thenumberofh_useh_ldssha_ngwith_th_r

government's efforts are not aimed at houschelds are" Nationsl Cspital Region (NCR), 9.4%; large cities and other urban areas, 3,8%; and mml awa_, 1.9%.6. Based on those households who live on land over which they or the house owner has no sag:tzretenure. For

those with incomes above the 50th thiscal_ul_tiun_variabl_stendafdis_pplied_F_rth_NCR_the_vu_nembl_h_usch_dsinclud_th_sewhoan_livin_un

percentile because they can be rentedland_landwhi_hiI_c_cupiednmt_frecwith_utthecousent_fthe_wnef_Fo_tba_aqIe¢itiesand_theruzben

completely satisfied by the formal ,r_, the same groups sre included with half of the households living on land t_at*fme with the comumt of the owner.For the mrei annts, the figure includes all those who live on land rent free even with the _t of the owner. The

private sector. However, evidence from underlying tenure statm_of those who rent their hous_ are at,started to be the seme se umtme matus of thrt© who own theirdwelling. The households zabject to relocation have been deducted from the total to avoid double counting. The figure

the survey carried outby PWU suggests forthemrelareahasnosimilardeductionastbaUDHAdoesnotp¢l_aintomrelaWlS.that for the National Capital Region

DEVELOPMENTRESEARCHNEWS 3 September-October 1993

Table 1Income of Occupants and Prices of Housing

by the Type of Tenure in Metropolitan Manila, 1991

Monthly income ($) Price of House and Lot ($)

Number Mean Std. Error Median Mean Std.Error Median

(Std.deviation) (Std.deviation)

1. Clearownersofhouseandlot 971 407.3 12.3 296.3 20,882.7 1,196.8 12,963(384.3) (37,126.6)

2. Rentersol housingunitandlot 1,186 287.6 5.9 248.1 10,351.9 383.3 6296.3-(2O2.8) (13,168.7)

3.Rent-lreeoccupants 299 224.6 166.7 9,926.7 676.5 5,925.9(11,593.7)

4.Irregularowners 547 225.3 7.4 181.5 8,0062 565 5,000(172.1) (13,034.8)

a. Rentlandonly 130 236.8 15.1 185.2 10,873.2 1,898.8 6,481.5(1712) (21,593.8)

b.Rent-lreeland 174 241.1 13.6 1852 9,804.9 7902 7,407.4(180.2) (10,403.4)

c.Regularized 84 255.7 20.1 206.5 6,223.4 742.7 4,814.8(1842) (6,330.6)

d.Squatting 139 174.5 122 111.1 3,593.9 390.5 2,333.3(143.4) (4,565.4)

e.Others 20 238.8 40.3 190.4 10,464.5 1,917.4 5,555.6(181.9) (8,646.3)

5.Totalsampb 3,003 309 52 237 13,313.6 451.5 7,407.4(280) (23,954)

Note: Pesoswe_ convertedtoUS dollarswith the exchangerate of I>27,,,$I.Source: Surveyof 3,003householdsof MetropolitanMan/l=,carried out by a team frclmthe PhilippineWomen',=Un/veraity (PWU), May 14 - July7,1991.

(NCR), at least, this may not be the 16.4percentfor50citiesincludedinthe reached P15,000 per square meter (Tablecase. World Bank/United Nations Centre for 2).

Human Settlements (UNCHS or

Comparing the price of Habitat) Housing Indicators Program. However, thereisevidencethatdwellings with income, Table I shows a high premium is paid for landthat the market value of housing Our Monoy'sWodh developed for housing. Raw

occupied by clear ownersis not unusual, agricultural land in the outskirts of theCiearownershavedweUingsaveraging Thehouseownerpaysnotonly NCR is approximately P60 per square$20,900 (median $13,000) which for the structure but for the land as meter, lf zoned for urban use, thepriceamounts to 4.3 (median 3.6) times their well A common international norm rises to 2.5-3 times. The developed land

annual incomes ($4,888 or $407.3 suggested by Orville Grimes in the price is found to be 5.3-6.7 times asmonthly). This compares with 4.1 for 1970s was that 100 square meters of expensive as the zoned land. This landan international sample of 15 large or land will cost asmuch as the GNP per developmentmultipliercompareswith

primate cities in the same number of capita _. In 1990, the price of a new site the findings of the Housing Indicatorsdifferent countries. This international in the outskirts of Manila (at Pl000/_er Program suwey in 45 countries which

comparison also holds up when the square meter) wasS.2 the national GNP "_ suggested a horm of 4.4'.percentage of income spent by those per capita or 3.65 the Metro Manilawho rent is analyzed. The mean grosscityproductperperson.Thisland _"Topa_4

percentage of income spent on renting price compares with prices in the morewas 15.5 percent for Metro Manila and exclusiveareasofPasigorMakati which

DEVELOPMENTRE_EARCH NEWS 4 Sc )tember-October 1993

compared with an average of about six The premium on skilled constructionlands, Incomes... percent for Metro Manila s. This means workers is only higher by 40 to 60(From page 3) that during an average life span of 70 percent on the unskilled worker.

years, a person is likely to move about Housing cost of $100 to $200 per squarefour times. Lower mobility rates were meter (low to mid cost housing) is built

Over-Priced l_ond only found in countries where faster in Manila than in six other Eastinterference by the State in housing Asian capitalsT which suggests that the

Regular housing produced by distribution, such as in the Eastern construction industryisnotinefficient.the formal private sector is not easily European countries surveyed before The cost of some building materialsaffordable to those below the median theendofcommunism, hasbeengreat _. have recently risen sharply due to theincome.WithamedianincomeofP6,700 Interestingly, the PWU survey reveals prospect of a total commercial loggingand the lowest cost mass-produced that the most frequent reason for ban. However, the survey was carried

housing unit available in themarketof movingwasnot'toownahouse'but'to out well before that period.P250,000, the cost is 3.1 times annual pay less' (55.3 .percent of allincome. This is just about affordable respondents). Only 15.3 percent gave The main problem is the priceusing finance packages presently the opportunity for house ownership of land. The PWU survey resultsavailable which work on a 30 to 40

as the primary reason. This suggests a suggest that land costs make up on thetimes monthly income multiplier. In low level of expectation that house average 50 percent of the total cost of

Bangkok, this ratio is 1.7 times the ownership can be afforded, thehouse.InsomeareassuchasMakati,annual income. Commercially it reaches as high as 62.5 percent. Inconstructed houses are affordable to Escalating Land Prices nine other middle income countries,households in the 30th percentile the ratioisonethirdthetotalcostS.The

income group. The relatively high price of the reason for this could be the problem oflowest costmassproduced commercial supply, specifically, the real physical

Mobility is much lower than dwelling unit can be attributed to a shortage of suitable land. However,might be expected. While mobility is numberoffactorssuchasmaterialcost, unpublished figures from a 1986culturally biased, data from six other labor cost and the inefficiency of the mappingexerciseidentified49.5squareSoutheast Asian countries included in construction industry, among others, kilometersofopenlandand54.tsquarethe Housing Indicators Program However, the evidence suggests that kilometers of land still in agriculturalshowed a mobility of 13.3 percent these do not apply in the Philippines. use 9. In addition, there are large areas

Table 2Ratios of Housing Prices to Incomes of Occupants

by Type of Tenure in Metropolitan Manila, 1991

1. Clearownersof houseand lot 32.33 4.27 3.65 5.13 0.21 3.37(6:4O)

2. Rentersof housingunit and lot 39.49 3. 2.11 3.54 0.13 2.22(4.56)

3. Rent-treeoccupants 9.96 3.68 2.96 4.61 0.33 3.03(5.67)

4. Irregularowners 18.22 2.96 2.3 3.52 0.2 2.22(4.S0)

a. Rent landonly 4.33 3.83 2.92 4.27 0.50 2.98(5.14)

b.Rent-freeland 5.79 3.39 3.33 4.20 0.39 2.56(3.30)

c. Regularized 2.80 2.03 ! .94 2.65 0.39 1.75(3.30)

d.Squatting 4.63 1.72 1.75 2.22 0.22 1.34(2g)

e. Others 0.67 3.65 2.43 4.68 0.93 2.64

(4.21) ,5. Totalsample 100 3.59 2.60

Source:Storeyof3,000householdsatMetroooitanManilacardedoutbya teamfromtheRlll_plneWomen'sUnlvmky,May14-July7, 1991.wl i .. ,, i. ,=,11i i

DEVEL()PMENTRESEARCHNEWS SeHember- October 1993

of partially developed subdivisionproperties still available. The same Box 2unpublished source suggests that 65 Permit Delay, Land Conversion Multiplierand LandDevelopmentMultiplierpercent of all land use in the NCR isresidential. However, if the average lot A comparisonismade of therelationshipbetween the"permitdelay" def'medas thesize identified in the PWU survey is median length in months to get approvals, permits and titles for a new medium-sizedcompared and if circulation and open residentialsubdivision in anareawhereresidentialdevelopment is permitted, and the "landconversionmultiplier"(the ratioof theprice per squaremeter of agriculturalzoned landtospace is allowed, the total area residentia_z__ed_and_ntheurbanfringe)andthe___anddeve__pmentmu_tip_ier"(incr_asedeveloped for housing should be in priceof undeveloped residential land todeveloped land) and the composite of these tw0.approximately half the area classifiedfor residential purposes in the same ¢/_ P_fmitOatay LandOmvorsion LandOevolopm_t Compositeunpublished survey. This suggests that Multiplier - Idultiplier Idultipliera very large proportion of this arearemains vacant, being used either as an Manila 36 2.2 6.7 14.74investment or inheritance for future Bangkok 11 1.8 2.6 4.68

off-spring. Therefore, the supply crisis Kuala Lumput 18 5.5 4.3 23.65Singapore 2 6.0 1.3 7.80is not one of physical shortage but the Jakarta 28 2.2

failure of the delivery system to Tokyo 8 10.4 2.0 20.80properly distribute land. 1°

Source: Housing Indicators Program, 1993.A Good Investment Potential

Note: There is a correlation between the "permit delay" and the "land developmentAnumberofreasonshavebeen multiplier," but not the "land conversion multiplier" which is a better indicator of real

given tO explain the supply shortage: supply shortage.from the cumbersome bureaucracy(Box 2) to the cultural link between started this process. According to U.P. A comparison of the effectivepeople and the land. However, while School of Economics' Dr. Edita Tan, real property tax rate in countries with

these may be contributory, it is also thereisnostandardsystemforassessing similarGNPpercapitalikeWashington,clear from the analysis that land is the market value. Instead, "the most Paris and Tokyo, shows that the pricewidely used asa safe investment. The important obstacle to effective of l00 square meters ofland in Tokyo isinvestment potential for land as a implementation of the RPT is the case- in a ratio of 12.5 the GNP per capita,speculative commodity has greatly to-case method of valuation, which whileinParisitis0.6andinWashington,contributed toland price inflation. Land makes it physically impossible for local DC, a little over 0.3. The effective

will continue to play this role while the governments to achieve a fair and propertytaxrateis0.4percentinTokyocost of holding land including actual accuratevaluation.Themethodisprone and4.0percentinParisandl.3percentcosts and loss of potential income can to corruption..(and) the problem, in Washington?3These figures indicatemore than be made up by the capital combined with power politics at the the relationship between effectivegains achieved when it is ultimately local level, works against the property tax and land prices.soldorismortgaged.Itisbelievedthat implementation of the RPT. ''2land price inflation can best be brought Consequenfly, because of the system On Equal Footingdown by an efficiently administered used and the time delay in the

land tax." applicationof the assessment, assessed Metro Manila households paymarket pricescanlagbehind real market a shareof theirincometowardshousing

Efforts to impose suitable and prices by 200 to 600 percent or more. that is not noticeably different fromefficient land tax met with little success Hence the actual cost of holding land that found in other countries with

in the Philippines. The idle land tax, which is assessed at 20 percent its real similar levels of development andnow five percent, hasbeenrarelyifever market price is approximately 0.08 economic growth. But, it is clear that

imposed.RealPropertyTax(RPT) rates percentthevalueoftheland.Even with the people tend to enjoy less adequateare lowest for residential land, being the five percent idle land tax, thecostis housingthanmightbeexpected.Thisisbased on 20 percent of assessed market still only 0.28 percent of the market largely due to the price of land whichvalues which should all have been re- value. With land prices rising at 20 to resultsinanatypicalshareofthecostofassessed within two years of the 100 percent per year, it is hardly housing goinginto that element.Thls,effectivity of the Local Government surprising that the tax offers little in turn, has hindered the movementof

Code (RA 7160). However, very few disincentive. However, weretheactual people at different periods of their

local government units (LGC) have market valuesapplicable, the tax would _To page 10.completed , and many have not yet increase to l.4 percent the market value., nl ,. .

:: : cussion featured the highlightS: ofthe:::developing countries like the Philippines,: World: Bank-published Report,

...... : World Bank Senior Economist : : ......: ........ : ii

: I:and:WDR:1993 Team Member Robert will enable households to improve their : protection againstabuseshould always iHecht:presented the three-pronged:il own health. Second, redirect govern' be upheld.

ii approach to government policies for:: ment spending to more cost-effectivei improving health. On the Philippine programs. Thlrd, promote greater di- There have _n strong argu-

:: : side;: Health Undersecretary and Chief versity and competition in the financ- mentsto increase total health spendingof Staff jaime Galvez-Tan talked about: ing and delivery of health services, as a percentage of GNP. In the Philip-

: i the issues and current policies of the . pines, however, the question is more ofhealth programin the country. Invited:ill: .......: allocation. How much is allocated to

to comment on theReport were formeriiiiii: Thei:goVernmentlcan help promotive, preventive and curativeHealth: Undersecretary: and Chief by: pursuing economic care?staffMari0Taguiwalowhoiscurrently: i growth policies that will benefit the i ::

i i Project Director of the Health Policy: ii poor. Investing in basic education, es- _revei._iiv_ Vi_:..G_:_<:_iv_iDevelopment Program, and Dr. Orville pecially for girls, has a very substantial ..... ......... ........

: :i i i Solon, Associate Professor at the Uni, i impact on health, Likewise, the rights: : i : Spending for preventive care.....versity: of: the Philippines, School of and status of wOmen through political does not always mean cost-effective-

ness. For instance, environmental con-

: : RepresentativeOheneO.Nyaninintro-:duCed theguest speaker for the WDR1993i::Dr; Ponciano S. Intal, Jr:, PIDS

President,: welcomed: the participants l: and introduced the guest speaker for

the Philippine Health Pr0gram while....... DriMarioK Lamber re; PIDS Vice,Presi -I

dent_ served as themod erat orandg avengthe closi statement. ......

: i nomic development. In essence, :the ::

: :Report: claims tha t although there have :...... i beengreat::.advances in healthworld_ :

......... wide;: the fact remains that developing:i:

i i:: countries_especially thepoor,-continue i:i

: to::suffer::a heavy:burden 0f disease,.... much of which:can be inexpensively iI

:i: ipreVented:or:cured;: Hence:, the:.Report :: :: .....::i i advocatesa three-pronged approach: to :: WDR'93 Team Member Robert Hecht (third from left) clarifies the issues on health

i movernment ooliCies in developinl_ as World Bank Deputy Resident Representative Obene O- Nyanin; DOH Undersecretary: :: : countries for i'm,_rovin_- health I:irst. Jaime Galvez,Tan; PIDS President Ponciano S. Intal, Jr.; UPSE's Dr. Orville Solon; and......... 1" b " _ .... .....: .........

. _ .... ............. Health Pohcv Develovment Prozram (HPDP) Prolect Director Mano Tagulwalo, hsten.roster an economic envlronmem wrucn ...... ................ . .....: o

i:

DEVELOPMENTRESEARCHNEWS Se3tember- October 1993

trol of dengue is preventive but it is notcost-effective. On the other hand, drug BOX 1

therapy for tuberculosis is curativebut BenefitsandCostsofHealthInterventionsit is cost-effective (Box 1). Cost-effec-

tiveness depends on the interplay of Ir,c_e.s_inDALYsflogscale)

many factors 100 _ "_" _ Chemotherapyfortuberculosis

Hecht identified the cost-effec- _ x,,,#,,_ _ _, .....five essential services as immunization 10 _ " _ _ _ VitaminA "

with vitamin supplement; health pro- i_ _ . _ _. supple_nen!ation

.r=,,,o.pre. .oo,e.ss., a.yon, ".':'.1%.. ,,....marion and education programs on

_ \ ._ x._ x_ ".b "_ _l/_Ynutrition, health and family planning; 0_

controlofalcoholandtobaccoconsump- ____ele_mi_ _ _,_ ° _e___$111iiii _

tion; and vigorous AIDS prevention 0.0_program. On the other hand, the clini- - 4, G_=t_,cal package includes drug therapy for

tuberculosis; management of child'sill- 0.001 rnesses including malaria and

schistosomiasis;pre-natal and delivery 0+0not YIcare; reproductive health needs of _0,0o0 1,000 w0 10 1 010women; planning services and infer- co_t per intervention or per intervention-year (dollars, log scale)

ma tion; and iTeatment of sexually-trans-

mired diseases (STDs). Note: DALY (disability-adjusted life year). Interventions are specific activities intendedto reduce disease risks, treat illness, or pallia te the consequences of disease and disability;

Diversify and Compete anintervention-yearisanintervenfionrepeated throughout theyearrather than providedonly once.

The government can promotediversity and competition in the provi- Source: World Development Report 1993, Figure 3,2, page 62.sion of health services by adopting poli-cies that encourage social or private

insurance for clinical services. Both with their foreign counterparts. Infer- ing equityin health. In partnership withpublic and private suppliers should be mation on provider performance, es- the people, the DOH will aim to guar-

encouraged to deliver clinical services, sential equipment and drugs, effective- antee quality of, equityin, an d access toDomestic suppliers should compete ness of intervention and on accredita- basic health services.

lion status of institutions

and providers should al- The 10 policy statements of theways be made available to DOH, according to Galvez-Tan, reflect

Box 2: The 10 Ps the consumers, the equity thrust of the DOH (Box 2).

(The10 PolicyStatementsoftheDepartmentofHealth) Overall, Hecht The DOH's focus on equity in

stressed the need to formu- health has resulted in an increasinglate well conceived strate- share of government expenditures forgies that will serve as the preventive and promotive health, in

1. Primary health care backbone of the policy re- 1992, P600,000 had been allocated to

2. Preventiveandpromotivehealthcare form efforts of the govern- the anti-smoking drive, in 1993, the3. Peopleempowermentand participation ment. amount rose to P11 million. In 1992,

4. Populationmanagement P600,O00 went to preventive ,cardiol-5. Peripheralbias Equity in Heollh ogy. The following year, the amount6. Philippinemedicine _, was increasedto P76 million. In 1992,7. PartnershipwithNGOs,POs,LGUs,privatesector On the Philippine P34 million w,_sspent on the immuni-8. Pesos for health government side, Galvez- zation program. In 1993, this amount9. Peace-building Tan underscored the im- rose to P272 million. In 1992, P16410. Positioningfor performance portancenotonlyofinvest-

inginhealthbutinpromot- _" To page 12

DEVELOPMENTRESEARCHNEWS September-October 1993

HighPerformingAsianEconomies:

TalkingIssuesOutandSharingtheBounty

O n 13 August 1993, Dr. Jose Growth should be accompanied by improved in-Edgardo Campos, an econo-mistatthePolicyResearchDepartment come distribution, goes one of the economic credosoftheWorldBankandformervisitingthat many have exhorted time and again.research fellow of the PIDS, reiterated

the advice during the Pulong-Saliksikansa PIDS as he took a look at the growthmiracles attained by High PerformingAsian Economies (HPAEs) in recent Convincing the Elites andNon-Elites tiently make sacrifices during the ini-decades, tial stages of growth before benefits

Though policies to promote will finally trickle down to them.Shared growth of these I-IPAEs, growth are generally well known, they

according to Campos, derived part of tend to be difficult to initiate or sustain The HPAEs' Lessonsits strength from the coordinated work over time. Growth creates uncertain-of each nation's key players. He cited ties on two fronts: among the elites, TheHPAEshadlonginstitutedtwo mechanisms that will coordinate over the future of their wealth; among certain mechanisms to coordinate thethework toward growth and equal the non-elites, over the recovery from actions and expectations of both theincome distribution. These are: (1) cam- their plight as low wage earners, elite and the non-elite. Communica-

munication channels called delibera- tion, thus, is their key factor.

tion councils and (2) wealth-sharing •••••••••••••••••••••schemes. • • Campos cited the role of delib-

• _ eration councils--- consultative com-• What has not beenTheAsionMirocle ==fully appreciated about -= mitteeswithrepresentativesfromgov-ernment, labor, private sector, academe

A cursory look at the record of 1m these countries' perform- -" andthepress--inthegrowthofHPAEs.

the East Asian economies-- the first • ante is that their growth ••

tier NICs such as japan, Taiwan, South • has been accompanied by • To be effective as a coordina-

Korea, HongkongandSingaporeaswell : significant, evendramati¢, • tionmechanism, a council must ideallyas the second tier NICs such as Thai- • embody four important features: (1) Itland, Malaysia and Indonesia---shows : improvements in poverty : must include as member all the impor-that starting 1965, the NICs already _mreduction and income •• tantplayersinanindustryorsector;(2)achieved rosy growth. " distribution. • Decisionsmadewithinthecoundlmust

• • be based on some rule of consensus; (3)

By the 1980s, the HPAEs, in- • [] Government representatives must becluding Thailand, Malaysia and Indo- • • w • • • • • • • • • • • • • • • • • • competent and relatively incorruptiblenesia, fared better than other countries and possess both the authority and thein terms of average GDP growth rates instruments with Which to bargain;and average gini coefficient (a measure Toward these ends, govern- and (4) The policies recommended byof income distribution), ment has to grapple over the problem the council must be adopted by the

of how to solicit the cooperation of the government with no major amend-What has not been fully appre- elites and the non-elites. That is, (1) ments.

dated about these countries" perform- how private sector is to be induced toance is that their growth has been ac- generate growth-promoting activities; This council differs from the

companied by significant, even dra- and (2) how the benefits generated are typical consultative coundls in othermatic, improvements in poverty reduc- tobe shared widely and not limited to countries because the former's repre-tion and income distribution. Their sto- monopolistic structures only. These sentatives have to be individuals inries suggest that growth may not be requireconvincingtheelitetoinveston authority who actually possess the in-(politically) sustainableunlessdistribu- a long-term basis, and the non-elite, to struments to deliver what they say.tive issues are addressed, understand that they will have to pa- _" To page 11

i in i l

abound. Butaretheyavailabletothose: : :: :: :: : .: : : : .....inneed? Only the large exporters who : :: : : : : _: i I_,t i :

i : can provide:physical collateral have::: : _: _ ! : : : :

access to financing. A good credit track :: ...... .... :: : ....

recordls also essential in being able to: :: In line with: government efforts toward attain,:: securecredit_: Ironically, a firm cannot: :_ :--_:: :-- _ ......

have:that :track record if it were.or :::lng NIChood bythe year 2000, policymakers have: : given:accesst°f°rmalcredit* ..... : targetted an ambitious annual export growth of 15

: :percent:,: Without::adequate access to financing, this

:::::::::::::_sisa fact thata largenumber : : target willbe quite hard if not impossible to achieve.: :of:small and::medium-sized exporters, : ::: :: : :

exporters, have : : : : ::_! .... .....: : ::to deal:with:_ :: : ..... : ...... : : :

:: :: ::implemented to:put the:marginalized tion thr0u consenSUs-building and:::: : ::AS:a:result, small and medium : exporters:at par with their counter-advocacy. .

:i::exporters depend on self-financing and::i : parts: in terms of credit at in terna tion' : ....

.... informal sector loans which limit the : ally-c0mpetitive rates: : ........iiAstudyteamwassetupjointlycapacity to grow. :They tend:to accept i by Andersen Consulting, thePolicyandlimited export Orders that willlead to :i i::: ::iCommiSsionedbytheConfed _ Development FoundatiOn, Inc.(PDFI),

slow export: growth :While our :eration of:::Philippine: Exporters, Inc: andFirstWashingtonAssociates(FWA)i neighborshaVe sustained their:export (PHILEXPORT) through the policy re- to assist PHILEXPORT/PITO-P in thisi groWthiourexporterscontinuetostrug-search and advocacy component of the area. Members of the study team were

i gle in the world markets. : Private Investments and Trade Oppor- Dr. Gilberto Llan'to, Team Leader andiii ...... tunities - Philippines (PITO-P), the PIDS Research Fellow; Dr. Mario

pr0jecton:"ImprovingAccess of Phil, Lamberte, Economic Specialist andPIDS Vice=President;Mr. Derek Hill, ....

Technical Specialist (foreign); and Mr.

: gent:action.: :Policy measures andsup: i the export finance Systemof the Philip- Daniel Samson Flores, Technical Spe-portProgra_ to ensure an immediate :pines. It looks into:the: current export cialist (local).

ii: andundisrupted flow of: funds to the: finance situation, determines strengths : :export sector have to be identified and :: and weaknesses, proposes corrective ....... AresourcepanelwOrkshopwas

............. measures, and:initiates implementa-i held on 12 August 1993 at the Westin...... Philippine Plaza to gather the

..... views and comments from the

export sector, the banking com-munity, and government agen=

.... cies onthe results of the study. :i

i credit:has been found to be an

important issue where expor tershave to be provided credit at

internafionally-competi tive rates. IOtherwise, exporters find them,

........ ....... selve_ losing to foreign competi-..... .......... ..... ........ tors..

: : CMA SDr.CayetanoW.Paderanga, Jr. stressesapointas(l-r):PIDS Dr:Ponciano S.intal, : i ........:i : First washington Associates Derek Hill; PHILEX_PORT:President Sergio Ortiz-Luis, Jr.;: : ........ i _.:_,.:iTo page 15 1

i PIDS' Dr. Gilberto Mi Llanto; and PiDS':Dr. Mario B:Lamt_rte, listen : Not in picture" Study .... : :--_: Team mem_r Daniel Samson A; HOres and Project DireCtor Catalino Y, Buktaw ...... ..... .........

DEVELOPMENTRESEARCHNEWS Se)tember-October 1993

Lands,Incomes... investment available locally for goes beyond housing and is important(From page 5) industrial development, to the future economic development of

the country as well as the potentialIt is possible to go on success of the aims of the Local

speculating as measures are taken to Government Code (LGC).family life cycle, thereby resulting in an encourage foreign investment includingunder-utilizationoftheexistinghousing the rights of foreign companies to take The recommended action,stock. This is reflected in the low level long leases on land. However, it is therefore, is to increase the rate of taxof mobility, already sufficiently clear that the on the speculative investment in real

present land market situation is a real property and to improve the collectionFurthermore, the escalating threat to many of the objectives of the rates. However, urbanlandreformgoes

costoflandhasjustifieddemandsfrom present Administration. beyond simply increasing collectiondevelopers that the present ceilings on rates. It also involves improved landsubsidized loan packages be regularly • • • • • • • • • • • • • • • • • • • • • use planning and a review of the tax

raised. Likewise, packages designed to • • rates used for various actual types ofassist the urban poor regularize their • • land use. Furthermore, any programtenurial arrangements have become • The need for a rea] • launched needs to be carefullyineffective because the poor either • commitment to urban • monitored to ensure sensitiverequires more than the maximum •provided to purchase theland or that • land reform is more Jllrl- •• adjustments to avoid further• • undesirable distortions.theland, evenwiththegenerousinterest • portant than simply en- •subsidies, exceeds the poet's capacity _ sur[ng that the urban • Note that increased tax rates

to pay. An analysis of the distribution • poor have access to bet- • are usually more acceptable and,

of the Unified Home Lending Program • ter housing conditions. • therefore, have a better chance of(UHLP) loans shows that a very small • • workingifthepeoplewhomustpayseeproportion of the loans are being • • thebenefitofdoingso.Astheimrnediatereceived by the lowest 30 percent • • • • • • • • • • • • • • • • • • • • • impact of increased land taxes will notincome groups.14This suggests that the only be felt by the land speculator andeffective interest subsidy is being traditional land holder, but also byenjoyed more by the middle income Land Taxes: The Answer? many middle class citizens who feel

than by the poorest groups. In effect, they are often made to pay while seeingthe subsidies provided are subsidizing This study argues that the little benefit to themselves, it isthe market distortion, main cause of the present distortion is necessary that they themselves feel

the negligible property tax. The effects the benefits. For the traditional land

One consequence of this will of the low level of real property tax and owning and new investing classes, thebe the growing demand for land thepoorcollectionperformancearenot advantage is seen in terms of aaccessed informally. This, in its turn, only felt in the direct impact it has on diminishing number of extra-legalhasfosteredthegrowthofinformalreal the price of land and the other developments. For the middleincomeestate agents and the squatter consequences already identified, but groups, it should be seen in improvedsyndicates.Thegrowingpowerofthese also on the availability of financial levelofbasicservices, parlicularlyroadgroups attests to the depth of demand resources available to local access, drainage and ultimately, lower

there is for their services, govemments16.ThepotentiMadditional cost of land and the opportunity forrevenue could be used to extend their children to majoy improved

Moreover, the present essential infrastructure, in particular housing.Forthesquatterandtheurban

distortion in the land market has an local roads which, in their turn would poor, it is the increased opportunity toimpactonthewholedomesticeconomy, helpfacilitatetheincreaseinthesupply have a lot of their own and for theFirst, efforts to use the housing sector of land going onto the market, government to concentrate the limitedas a means of stimulating the local resources it has for subsidies on those

economy are likely to be less effective Policy Implicolions who are in greatest need.than they can be because a smaller

proportionoftheinvestrnentinhousing The implications for policyare Finally, the relationshipsis spent on the actual constructionY clear. The need for a real commitment between supply, demand and other,

Likewise, the preference for investment tourbanlandreformismoreimportant externalities are not simple. The mostin land has possibly been one cause for than simply ensuring that the urban productiveanalysisis tolookatabasket

the low domestic savings rate hence poor have access to better housing offactors, specifically those thatdistortdiminishing the potential domestic conditions. Resolving this problem theprice.(Eonsidernotonlytheeffective

III III I I III III II I I III llll III II I ii i iii ii

DEVELOPMENT RE_;EARCH NEWS Se 3tember - October 1993

property tax rate, but also the Makati:PhilippineinstituteforDevelopmentimprovement of the legal processing Studies (PIDS), 1993. Talking Issues Out...

12. Ibid., page 169. (From page 8)time, review of local land use plans to 13. "£he Housing Indicators Program:ensure they reflect present and future Volume 1" The Report of the Executivedemand for land and the need to look Director, United Nations Centre for Human Soliciting Cooperation

more closely at the alternative Settlements(UNCHSorHabitat).WorldBank,

investment opportunities and how 1993. There are still other schemes

these can be made more productive for 14. An analysis of the distribution of that draw in the elite's participation

the mass of potential middle class theUnifiedHomeLendingProgram(UHLP) in actual investment activities.loans as of 1991 suggests that while aboutinvestors. By monitoring all the factors 24.5 percent were for P80,000 or less, the total Among the different economic eli tes,againstlandprice, moreeffectiveaction value of these loans made up less than nine Campos suggested that certain per-canbe taken. Otherwise, thedetrimental percentofthe total loaned. (Analysis ofExhibit formance criteria, such as in the use

effects of the present situation will 5 of Public Lecture given by Housing and of directed credit, should be drawn

continue not only to threaten efforts at Urban Development Coordinating Council up. Korea and Japan, for example,(HUDCC) Chairman Teodoro K. Katigha k to already have effective directed credit

resolving the housing crisis but also the theUniversity of thePhilippines on theRecordwhole economic development of the and Legacy of the Aquino Administration, programs given on the basis of per-country as well. o:. February 1992. formance.

15. A comparison between the ratio of

Notes investment in housing and the gross city On the otherhand, the coop-product suggests that the level of investment era tion of the non-eli te can be solic-

is more than twice as high in Bangkok than it ited by first creating credible wealth"Talk presented during a Pulong- is in Manila. (Housing Indicators Program,

SaliksikansaPIDSonJtme21,1993. Thetalkis Volume ll: Indicator Tables. World Bank/ shaxing mechanisms. The HPAEshasedonanearlierstudyjointlywrittenbyMr. UNCHS, 1993). Furthermore, Strassmann fiavea variety of such mechanisms.Alistair Blunt and Professor Paul Strassmann, claims that in Metro Manila, had the land Taiwan, Japan and Korea initiatedwith the assistance of Raul Thomas. price been nearer a third of the total house/ extensive land reform programs by

1. This is assumed to vary from area to lot price, an additional P190 billion could redistributing land from traditionalarea but includes all those living on land who theoretically have gone into the constructionrent the land or live on land rent free without sector. ("Factors Affecting the Supply and landlords to peasants. In exchangethe consent of the owner. Demand for Housing in the Philippines." for the land, landlords were given

2. Upgrading refers to assisting those National Workshop on Shelter Indicators. shares in state enterprises. The re-with 'vulnerable' tenurial arrangements Unpublished paper, Manila, May 18, 1993). form was also backed by necessarypurchase the title to the land on which they live 16. Professor Tan cla ires that the real support institutions.with the assistance of the CMP. property tax (RPT) contribution to local

3. Grimes, Orville F., Housing for Low government revenue fell from 27 percent inIncome Families. Baltimore: John Hopkins the period 1978-1983 to 15 percent in 1990 Singapore and Indonesia,University, 1976. (Tan 1993). too, encouraged the creation of, and

4. World Bank. Housing Indicators provided seed money to workers'

Program: Extensive Survey- Preliminary Results. cooperatives as a means to alleviate

Washington, DC, June 1992. urban poverty. An example of suc-5. Ibid. Announcementcessful cooperatives is Singapore's

6.Strassmann,W. Paul. "Housing Market I

Interventions and Mobility: An International The Journal of Philippine Devel- i NTUCCOMFORTTaxiCooperative,Comparison," UrbanStudiesVol.28,No.5(1991), which was created to give memberspp. 759-771. opment (JPD) issues for 1994 will come opportunities to purchase and own

7. World Bank, June 1992. Outin one volume in honor of Dr. Celia taxis.8. World Bank, June 1992. T. Castillo,aninternationally-respected

9. Metro Manila Authority Land Use social scientist and a former member of Finally, although there areSurvey carried out with assistancefrom Japan theBoardofTrusteesof thePhilippineInternational Cooperation Agency (JICA). InstituteforDevelopmentStudies(PIDS). no clear-cut strategies for resolving10.Blunt, Alistair C. "The Informal Land the coordination problem, the fact

Market." Monograph presented at National Amongthe papercontributorswillbe: remains thataddressing the problem

LandAccessWorksbop, ManilaMidtownHotel, is critical, especially in the Philip-

28-29 May 1993. Dr. Arsenio Balisacan pines. After all, reasonable growthll."Ofallforrnsoftaxation, itisgenerally Dr. Cynthia Bautista rates cannot be sustained under

known thata tax on land has the most desirable Dr.RomeoBautista conditions of conflict and uncer-effect on equity and efficiency....The tax lowers Dr.LedivinaCarifi0the capitalized value Of land and therefore - tainty. (SADT)discourageswealth holding in this idle form/' Dr.MercedesConcepcionFrom Tan, F__itaA., "Real Property Taxation Dr.CristinaDavidand Its Potential as a Major Source of Local Dr.EditsTanRevenue" from Emmanuel S. de Digs and

Associates, Poverty, Growth and the Fiscal Crisis.

DEVEU)PMENTREIEARCHNEW_ 12 Se)tember-October 1993

HealthBrings... awidespreadenjoymentofbetterhealth fosterresharingandpersonalresponsi-andnutrition. This canbe done through bilityforhealthcara, Second, empow-

(.Frompage7) increased household incomes, better erment, by improving access to basiceducation, peaceandorder, peopleem- preventive, protective and promotivepowermentofthepoorandthewomen, health care especially those that deal

million went to drugs for tuberculosis, and protected environment, with information, education and cam-The followingyear, theallocation went munication for health. Resourcesup to P209 million. For 1994, the DOH Government spending on should be mobilized to implement ba-projected an increase to P300 million, healthtoadequatelyaddresstheagenda sic health -- immunization, tuberculo-The government did not allocate any- of the unfinished and emerging health sis control, safe water, safe mother-thing from its own coffers to the pre- interventionneedsshouldbeimproved, hood and nutrition. Third, environ-vention of diarrhea. All the funds for This can be done by increasing public mental concerns, by improving the liv-the prevention of this disease came spending as well as improving the ingand working conditions to containfrom foreign sources, in 1993, how- managementofpublicexpenditureand diarrhea and other infections.ever, the government allocated P48 investments. Galvez-Tan added thatmillion for the prevention of diarrhea the adoption of the Ten-year Public From the NGOs(Box 3). Investment Plan for the •health sector

which the DOH hopes to unravel in the For his part, Taguiwalo notedRationale for Government Action next few months will be a very viable thatthe WDRunderemphasizestherole

instrument in this task. of intersectoral reallocation of publicThe access to basic health care expenditures towards health which is

is regarded as a human right. And Atechnological, regulatoryand moreimportantthanalltheintrasectoralsince privately-operated services are public finance framework should be allocation that is made. In a healthinaccessible to the poor, government established to achieve coherent inte- sector that utilizes two percent of GNI"normally provides for their heal th serv- gration of public health and clinical and a DOH that utilizes six percent ofices. Forinstance, of the people belong- intervention. Cost-sharing between the total government expenditure, theing to the bottom 30 percent of the the government and the households is opportunities for 98 percent of GNPincome bracket, 77 percent visited a encouraged as well as the promotion of and the opportunities for 94 percent ofpublic facility, 70 percent consulted a efficiency in public and private health the general appropriation is simply toogovernment health worker, 81 percent care services, delivery and production, large to ignore as against focusing onof the women got pre-natal care from The scope and coverage of private vol- the meager portions that are allocatedgovernment health centers and 81 per- untary and charitable workin the field to health.cent of the children were immunized in of health can ease the widespread de-government facilities, velopment and adoption of appropri- Alternative sources of funds

ate instruments in achieving the fol- for health, he said, may come from theProblernsrelatedtouncertainty lowing: potential peace dividends which will

of the health insurance market calls for result in the postponement of the mod-governmentaction. Large variationsin a) adoption of the national health ernization of the Armed Forces of the

• health risks and probability of illnes insurance scheme; Philippines (AFP) and lesser allocationgive rise to these uncertainties. Like- b) implementationofanessential for Civilian Armed Forces Geographicwise, problems related to adverse st- national health research program; Units (CAFGUs).lection in the health insurance market c) reform and rationalization ofcall for government action. Thosewho professionalandfacilityregulation;and On Public health, Taguiwalotend to be more sick are shut-off from d) continued implementation of pointed out that family planning andinsurance.Governmentinterventionin the national drug policy program, nutrition programs have been takenregulations, mandated socialinsurance over by the DOH. Unfortunately, theor other public finance mechanism can A Three-Fold Strategy resources for these programs have notensure wide coverage, contain cost and followed accordingly. To augment thisachieve equitable yet efficient health The three major intervention in theimmediateterm, thereisaneedtofinancing, points in the Philippine health strategy redefine the im,estment and public ex-

are also three-fold. First, economic in- penditure cer'lings of the DOH toThe Government's Role tervention by improving access to eco- accomodate spending for family plan-

nomic activities and development as ning and nutrition.The government should create well as addressing the social issues that

the general macroeconomic and cause inequity. A national health in- _" Topage14intersectoralenvironmentconduciv.eto surance should also be develo .pe.dto ii i !

DEVELOPMENTRESEARCHNEWS 13 Se)tember- October1993

Cure for Diarrhea(In Million Pesos)

/

_]" . Box3Increasing GovernmentExpenditures

- forPreventiveandPromotiveHealth20-

10-

11_82 1993

Immunization Drugs for Tuberculosis(In MillionPesos) (In MillionPesos)

/ /300 260,

160

I(XI'

........ -il ........

od o,_1992 1903 1992 1903

Anti-Smoking Drive Preventive Cardiology(In MillionPesos) " (InMillionPesos)

"- ' ........................... 2'7(I ........ :10,

e, _''

40 ,

4,

2, O,e

Z7 0' /-O, O: •1992 lg_GI 1(i(12 |9e3

DEVEb)PMENTRESEARCHNEWS 14 Se_tember- October 1993

tries usually receive lesser amounts or cost-effectiveness in public sectorHealthBrings... than what was originally disbursed by encourage or diminish private sector(Frompage12) donor countries. Second, prudentdebt participation? Will DALYs help car-

management is worth examining espe- rect imperfections in the private healthdally its implications on reallocating care markets? These are importantthe debt payments to health services, considerationsin designingpolicies for

The WDR has emphasized the health, Solon added.organizational, managementandstruc- From Ihe Academeture of public finance to support the Political Willhealth sector. However, the Report has For his part, Solon focused onnotdweltmuch ondevolution, anissue the usefulness of cost-effectiveness ra- Among the issues raised in thein which the Philippines has an edge tie as an allocation criteria. For cost- open forum were the brain drain ofover many other countries, effectiveness to be useful, according to health wol_kers, equityin health ration-

Solon, the disability-adjusted life years ing specifically the sociopolitical fac-On clinical services, he noted (DALYs) will have to be computed for tars that go with it, medicare reforms

the many complex reforms needed everydollarthatisspentondebtreduc- and healthmaintenanceorganizationsbecause of varied interests among the tion, national police, electrical projects (HMOs) regulation, improvement inprofessionals and government ageno and reforestation, among others. In theeconomicconditionofpublichealthdes as well as the lack of consensus other words, the DALY has to become workers, the need for reliable statisticsamong key stakeholders in the alloca- the numeraire for calculating the and other data relevant to devolution,tion of resources. In addition, a forum intersectoral resource allocation. Ob- reallocation of debt-service paymentsformakingdedsionsinallocatinghealth viously, this is going to be very diffi- as well as a portion of taxes that will goinputs should be set up. cult. to health care.

For Taguiwalo, there are two In developing countries, pub- Finally, former Health Secre-important items in the agenda for ac- lic and private providers coexist. In tary Alfredo R.A. Bengzon encouragedt'ion. First, correction should be made caseswherethereareservicesnotbeing the participants to look at policy at ain themisconception thatallintermedi- offered by private agencies, resource bigger picture. He noted that much ofate costs that occur between the dis- allocation through DALYs may not be what is being suggested in the discus-bursements made by donor countries, thatdifficult. Butwhen thetwoprovid- sions boil down to one agenda - chal-on the one hand, and the exact amount ers overlap, the overall impact of these lenging the establishment- which, un-received by developing counbries, on two needs to be carefully examined, fortunately, has not been addressed bytheother, arenothing.Developingcoun- WillresourceallocationthroughDALY the Report. (ADL)

DEVELOPMENTRESEARCHNEWS 15 September-October1993

An information system on ex- Inthe meantime, PhilguaranteeExportFinance.. porters especially indirect ones and on does not yet have the institutional net-(Frompage9) foreign markets within PHILEXPORT work, manpower sufficiency and ex-

should be institutionalized to provide pertise to become a major guaranteehanks and other lending institutions institution forall exporters. Hence, it iswith critical information, suggested that Philguarantee limit its

Guaranteeschemesdonothelp scope to exporters of industrialthe export sector and are ineffective Finally, a training and techni- goods, the typical export that guaranoand inadequate. Financinginstruments cal assistance facility for the export tee corporations in the US, from whichare traditional. More sophisticated fi- sector in PHILEXPORT with funding Philguarantee was patterned, assist.nancing ones such as factoring and from the private sector, government Interestingly, the Guarantee for Smallforfaiting are hard to come by because and donor agencies should be created, and Medium Enterprises (GFSME)of lack of credible information system welcomes the proposal to be anon exporters and on the export mar- A Pockog® of Reforms alternative credit organization for ex-ket. porters.

Once again, the need for infor-Though automatically-admin- mation on exporters and their opera- On the alternative sources of

istered and can provide exporters tions cropped up during the open fo- financing, the banking sector has re-access to funds at lower than domes- rum. Banks should handle credit infor- sponded by setting up the BAP Credittic commercial rates, the marion while exporters should be re- Guarantee Corporation. Other sourcesrediscounting facility of the Central sponsible for market researchinforma- which can be tapped to provide fund-Bank cannot assume exports of inter- Lion, pricing of goods in the market, ing are home mortgage loan develop-nationally-competitive rates on export distribution system and competitive ment institutions similar to the US, co-loans, approaches, conutlevy or the Oil Stabilization Fund.

Both exporters and importers, indirectThe Team also noted that mon- Both hanks and guarantee in- beneficiaries of a guarantee agency,

etary and credit policies should be re- stitutions are suggested to agree on a should also be financially involved inlaxed to ease the pressure on interest beneficial evaluation criteria so that someway. Inaddition, the experiencesrates, banks will save time in reevaluating of other countries in financing _hould

accounts submitted for guarantee. For alsobeexamined. Ultimately, theques-1he Challenge theirpart, guaranteeinstitutionsshould tion of funding boils down to three

be less stringent in their evaluation, factors: source, accessand pricing.WhatThe Study Team recommends is important is to make sure that the

that monetary policy be relaxed by ac- Meanwhile, the recommenda- alternative sources for financing do notcelerating the reduction of the reserve tion to transfer the rediscounting facil- hurt other programs.requirementtoalevelcomparablewith ity to the Development Bank of thethoseofotherASEANcountries(3-7%) Philippines (DBP) drew strong reac- In his closing remarks, Dr.within the next two years. Lions from the participants. Accord- Cayetano Paderanga of the Central

ingly, such move will result in higher Monetary Authority (CMA) said thatA rediscounting facility for interestrates. To a certain degree, DBP thefocusoftheworkshopjibeswiththe

exportsattheDevelopmentBankofthe is-still beholden to other banks which long-term plan of thegovernment. ThePhilippines(DBP) shouldbecreatedby helped it develop its facilities. In con- importance of enhandng global com-securing external funding at trast, the Central Bank exercises a cer- petitiveness and of increasing exportsconcessional rates so that it can offer tain degree of moral hold over com- for the country's economic develop-rediscounting at internationally-com- mercial banks. Moreover, the Central ment has always been the goal. Whilepetitive rates. Likewise, a strong and Bank, which is currently handling disagreements and adjustment prob-credibleexportcreditguaranteeagency rediscounting, hasthemoralobligation lems are inevitable, the governmentwhich will provide a risk-reducing tobring down rediscounting rate. The will always be committed to the long-mechanism for exports should be cre- DBP should instead concentrate on run sustainable development of theated. Specifically, the Philippine Ex- developmentbankingwhereithasdone country. This commibment will helpport and Foreign Loan Guarantee Cor- very well especially in financing major pave the way to NIChood by the yearporation (Philguarantee) should be agribusiness diversification, research 2000. (ADL)prioritized in terms.of rehabilitation and development ventures and highlyand strengthening, industrial manufacturing.

DEVELOPMENT RE: EARCH NEWS 16 September- October 1993

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