• Abdicating central government and the devolution of power?

    Mike Wootton

    Mike Wootton

    WELL I must confess to finding it all a bit confusing really. It’s “a bit of a muddle” these days.

    The DAP fiasco! Money being sequestered from approved budgets to do other things—nobody is quite sure what the “other things” were but that may become a bit less opaque if a well-detailed list is made available, and wouldn’t it be great if the list quantified the economic benefit of whatever alternative uses the money was put to; for example how many jobs it created et cetera versus how many jobs would have been created had the money been used as originally intended.

    But the DAP business and its predecessor, the PDAF, are headline-catching issues. There are lots of other rather odd things going on. I have heard from several directions an apparent plan to devolve more of central government oversight and direction to local government units—the LGUs. The off-grid power sector is a case in point—apparently LGUs are now to be responsible for the adequacy of electricity supply to their constituents, working with the local electricity cooperatives. NPC is to be taken out as soon as it can finally be killed off and the cooperatives will take over. LGUs are already busy making plans and as this is the Philippines enjoying totting up how much money they will need to do it all—about P40 billion in the case of the two million agriculture and tourism based population in Palawan alone!
    I’ve done a bit of management consulting in my time, in fact I am a certified management consultant and I know well that high-level management advice is not really something which is seen to have too much value here in the Philippines, so selling management consultancy services would not be a very profitable pursuit.

    When you pause to think about why it wouldn’t be—I mean, there’s a lot of it in places like Singapore and even Hong Kong—the realization dawns that major business here doesn’t really need any advice, and it doesn’t need to do anything to gain competitive advantage because it has made its own monopoly position, anyway. Why bother spending money to improve your service when you can just keep it for yourself and have fun on Saturday nights counting it all [or whatever it is these people do with it]or go out and buy another Maserati on a Saturday afternoon with which to tackle those awful speed control bumps in Forbes Park or Ayala Alabang.

    So this brings me to a sort of thought that those with power [which means money]in the Philippines don’t really see any need for professionalism or strategic thinking because they have made loads of money anyway, have a captive and docile market funded by OFW remittances so they have done well, haven’t they!? By some measures they indeed have, they have managed to “fix the place up” so it works for them.

    Extend this thought trail to government, which after all, is largely made up of the sort of people who have such admiration for money making and a central government apparatus [laws, IRRs, Departmental Orders, and disorganized and poorly paid and motivated, but well qualified people] which is dysfunctional, then you can see why it might seem like a rather clever idea to devolve important functions to powerful provincial units. Add to this an underlying enthusiasm driving the private sector to take over other government controlled business opportunities like education and health, and you end up with a totally marginalized central government.

    Bottom line is that in running a business whether or not the management knows anything about the business that they are running is an irrelevance. What is important is that they make money by whatever means they can and a lot of the means will involve political patronage as power resides there. This theme runs through not only the private sector but central government as well—“let’s just rid ourselves of having to manage stuff, pass it over to the private sector or the LGUs wherever, let’s just abdicate.”

    The Philippines is certainly not a knowledge-based economy. Success is based on craftiness, which produces the maximum return for as little effort as possible. But lest the reader thinks I am “having a go” at the way the Philippines operates, this admiration for making as much as possible in exchange for very little is certainly not confined to the Philippines, it is a global syndrome spawned by the easy money which can be made by intermediaries in trading activities, higher returns can be made on simple trades than in manufacturing.

    Mike can be contacted at mawootton@gmail.com.


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    1 Comment

    1. You mention some cynical reasons to devolve responsibilities to LGUs. Is it too naïve to consider that, in the future, devolution might hold LGUs more accountable to their constituents than the central government would be?

      Historically, government authority has been highly centralized for the simple reason that administrative expertise was very scarce, and, looking further back, that colonial administrations necessarily wanted to keep a tight grip. Central control of education also has had a nationalistic and redistributive basis. (Cebuanos currently are resisting the mandatory inclusion, or incursion, of additional Tagalog subjects into tertiary education.)

      Other countries have had devolution of powers in their history. I think it is partly because, as the general population becomes better-educated, their demand to ‘run their own affairs’ in certain matters becomes more credible.

      (I have no opinion on whether LGUs are ready to manage off-grid power.)

      As for the reason that management consulting in the Philippines lacks traction right now, it is NOT that bosses don’t face problems that they need help (a lot of help) solving. It may be that many local problems are not the type that consultants are experienced in tackling. Culture may also play a role.

      I have to take particular issue with your 2nd-last paragraph. It is very challenging to run a business here, and the challenges are mostly NOT in arranging political cover or obtaining patronage. Much has to do with managing people, dealing credit, balancing risk, and old-fashioned, sharp-elbowed, competition. Oh, and trying to predict the future. The current state of affairs is indeed a muddle, but that’s no reason to take a broadside at Philippine businesspeople.