The Philippines, democratic according to its Constitution, ideally should have a government that guarantees political and economic freedom to individuals and support to equitable property markets. World Bank surveys show relatively high ratings in democratic representation in terms of freedom of expression, association, and the existence of free media. The country, however, is weak when it comes to transparency and integrity mechanisms aggravated by perceived high levels of corruption. The problem is the persisting gap between laws on the books and their actual implementation.

When it comes to property markets – as in many other areas involving interaction with public officials and agencies – overlapping processes and multiple layers of bureaucracy, weak organizational coordination, and the lack of institutional capacity hinder effectiveness and create opportunities for corruption.

 

Goal – A popularly elected government free of corruption and functioning efficiently and transparently enough to guarantee economic freedom to individuals and support equitable property markets

3.1 Democratic Representation
Core Question: Does the country have free and open elections for the leadership and can citizens engage in free enterprise?

Yes – Weak, while the constitutionally prescribed democratic practices and mechanisms are in place, elections are often marred with corruption and vote-buying. However, there are no legal barriers that keep citizens from engaging in free enterprise.

3.1.1 Voice & Accountability
3.1.1.1 Are citizens able to elect their government and do they enjoy freedom of expression, association and a free media? Yes – Weak – Percentile Rank – 46.9 Trend ↑

Sources:Governance Matters 2010, World Bank, www.govindicators.org

3.1.1.2 Are citizens free to form political and civic organizations free of state interference and surveillance? Yes – Strong – Score 9.12 out of 10Overall Ranking – 74th out of 167

Source:The Economist Intelligence Unit 2010 Democracy Index http://graphics.eiu.com/PDF/Democracy_Index_2010_web.pdf

3.1.2 Public Information
Overall Ranking – Very Weak. The 2010 score 57 out of 100 has decreased significantly compared with 2008 (71) primarily due to the growing gap between the laws on the books and their actual implementation. Trend ↓

3.1.2.1 Are there regulations governing conflicts of interest in the executive and legislative branches of government? Yes – Executive Score 34 out of 100 – Very Weak; Legislative Score 61 out of 100 – Weak

3.1.2.2 Can citizens access legislative processes and documents? No – Score 42 out of 100 – Very Weak

Source:Global Integrity Report 2010  www.globalintegrity.org/report/Philippines/2010/

3.1.3 Market Intervention
Overall Ranking – Weak 109th out of 179 Trend =

3.1.3.1 To what extent does the government intervene in the private sector including state-owned industries? Little intervention in most sectors – Score 91 out of 100 with a higher score indicating less intervention

3.1.3.2 To what extent does the government control prices? Moderate intervention in utilities, telecommunication and transportation, Score 76.3 out of 100 with a higher score indicating less control

Source:Index of Economic Freedom 2011 – Heritage Foundation
www.heritage.org/index/Country/Philippines

3.2 Lack of Corruption
Core Question: Is the public sector transparent and free of corruption? No – Weak, endemic and institutionalized corruption have compromised prevention efforts.

Transparency
3.2.1 What is the perceived level of corruption in the country? Very Weak – Ranking – 134th out of 178; Score 2.4 out of 10 Trend =

Source:Corruption Perception Index 2010, Transparency International www.transparency.org/policy_research/surveys_indices/cpi/2010/results

Integrity Mechanisms
3.2.2 A National Integrity System is a framework where the principle institutions that contribute to integrity, transparency and accountability in a society can address corruption in a systematic way. Does a National Integrity System exist? Yes – Weak, although a system is in place, it has difficulty functioning effectively. However, processes for the government agencies to report to the public regularly on their performance are being put in place.

Source:National Integrity System Assessment, Transparency International

http://archive.transparency.org/policy_research/nis/nis_reports_by_country

Extralegal Payments
3.2.3 How often do companies report that officials and/or companies expect additional payments to “expedite” services or gain business? 18.6% of firms surveyed by the World Bank say they are expected to make unofficial payments – Weak, SMEs believe true incidence of bribery is higher.Source:Enterprise Surveys 2009, World Bank www.enterprisesurveys.org/ExploreEconomies/?economyid=153&year=2009

3.3 Efficient Administration
Core Question: Are quality services and qualified civil servants available to the public through the efficient use of public money free of corruption? Yes – Strong, overall progress has been mixed, but some fiscal reforms have been accomplished.Size of Government

3.3.1 What is the size of government relative to GDP? 17.3% – 25 to 30% considered optimum – Very Strong

Source:2011 Index of Economic Freedom, Heritage Foundation
www.heritage.org/index/Country/Philippines

Civil Service
3.3.2 What is the quality of the civil service? Strong – Score 71 out of 100

Source: Global Integrity Report 2010
www.globalintegrity.org/report/Philippines/2010/

Government Effectiveness
3.3.3 What is the overall effectiveness of the government? Strong – Percentile Ranking – 51.7 Trend ↑

Source:Governance Matters 2010, World Bank, www.govindicators.org

In-Country Assessment Information
FQ22: What is the actual experience of small businesses in dealing with the government, particularly the number and complexity of required procedures and the prevalence of extra payments to facilitate services such as licenses or permits?

Overlapping processes and multiple layers of bureaucracy among national government agencies i.e., BIR, Registry of Deeds, and Land Registration Office are hindrances to having a competitive property rights market. Stakeholders noted that this problem makes the entire bureaucracy susceptible to corruption and political favors.Processes and structures prevailing in various agencies with respect to lost titles and settlement of taxes are burdensome. Stakeholders underscored the need to have consistent, time-bound and accountable channels that would protect the rights of property owners and promote better systems and procedures. Stakeholders also note that the records and information system has to be developed to address the following gaps: (1) safe-keeping of relevant and important records used to determine proper legal ownership of properties; (2) lack of available centralized information that entrepreneurs, creditors and real estate professionals can access in relation to acquiring and selling property; (3) credit providers’ need to have consistent and reliable information to conduct due diligence and proper assessments. Weak organizational coordination among agencies was highlighted as another important issue in property rights administration. Stakeholders discussed the need for coordination between national agencies and local government units on records management and information sharing.Computerization was highlighted as a major milestone in property administration while at the same time it appears to be a failure at the onset of its implementation. Stakeholders argued that the computerization program created more delays rather than addressing the problem of long transaction turnover. Stakeholders believe that while the computerization program in the long term will address corruption, the lack of staff capacity and technology know-how among the agencies implementing undermines its purpose in the short term.Capacity of institutions to address illegal settling as well as implement valuation and land use and expropriation policies was also in question. According to the stakeholders, political considerations tend to prevail over rules, structures, processes and procedures. Institutions and agencies, therefore, are susceptible to political dynamics both at local and national levels. Another gap that needs to be addressed is the conduct of dispute resolution especially in resolving informal settling and rightful ownership issues. Stakeholders underscore the need to equip government agencies with resources, negotiators, and knowledge in tackling disputes.Source: Findings from focus groups and interviews conducted by the Institute for Solidarity in Asia in June and July 2011 in Manila and San Fernando, Pampanga.