Frequently Asked Questions About the DPRM and the Theme
ABOUT DPRM
1. What is the Development Policy Research Month about?
Pursuant to Presidential Proclamation 247 signed in September 2002, the Development Policy Research Month or DPRM is celebrated every September to encourage Filipino leaders and the public at large to appreciate the role and importance of evidence-based research in program planning and policymaking. The DPRM seeks to encourage proper, systematic, and quality policy research in creating social and economic policies.
2. What role does the Philippine Institute for Development Studies (PIDS) play in the celebration of the DPRM?
As the country’s leading state think tank, PIDS organizes various activities to demonstrate the importance of policy research and to engage the public to participate. During the month-long celebration, the PIDS, together with the members of the DPRM steering committee, organizes policy seminars and dialogues, press conferences, and roundtable discussions with institutions, fellow researchers, planning advisers, policymakers, and the media. These events demonstrate an exercise in interagency cooperation to emphasize the importance of evidence-based policymaking.
3 Why is there a need to declare a DPRM?
Policy research is an important requirement for effective planning and policymaking. Policies should be evidence-based and the DPRM highlights this fact. It also aims to make people become more aware of the importance of research evidence in crafting programs and policies and to remind our policymakers that we have policy studies and other similar resources that are within their reach for their decisionmaking processes.
4 What is this year’s DPRM theme?
In line with the impending integration of the countries comprising the Association of Southeast Asian Nations (ASEAN), which reflects the need for increased competitiveness of its member-economies, the 13th DPRM theme highlights a corresponding need to “improve [the] overall business and economic environment” in the country. According to PIDS President Gilbert Llanto in his paper, “Reduce Regulatory Burden, Improve Regulatory Quality”, it is essential to review and reform existing regulations and to establish a coherent and quality regulatory management system. Regulatory reform is an important component of efforts to improve the country’s investment climate and a critical step toward establishing regulatory coherence in the future ASEAN Economic Community.
5. Who are the members of the DPRM steering committee?
Alongside PIDS, the National Economic Development Agency, the Civil Service Commission, the Philippine Information Agency, and the Presidential Management Staff serve as permanent committee members. This year, in light of the DPRM theme, additional members to the committee include the Land Transportation Office, the Local Transportation Franchising and Regulatory Board, and the National Competitiveness Council.
6 What do we mean by regulations?
Regulationsare tools governments use to “influence or direct” changes in the way people make decisions or behave toward the things they consume or the way they do things. They are policies intended to achieve a particular social or economic objective.
7. Who are in-charge of regulations?
Regulations are created by the national and local governments, and regulatory bodies, through the issuance of circulars, memorandum orders, or executive orders. Regulations also cover the laws enacted by the legislature, and rules and administrative tools such as licenses and permits issued by regulatory bodies and local governments.
Regulatory bodies are institutions, like the Bangko Sentral ng Pilipinas (BSP) and the Local Transportation Franchising and Regulatory Board (LTFRB), that are in-charge of managing the rules in their particular sector.
The BSP manages the rules and regulations for all banks operating in the country, while the LTFRB makes sure that transportation vehicles like jeepneys and buses follow and comply with the road rules and safety standards of the country before they are granted licenses to operate.
The Philippines has 60 regulatory bodies that oversee the regulations and rules in various sectors of the country, including energy, trade, health, and education.
8. Do regulations always work?
No, they do not. As reality shows, there is no guarantee that a regulation will always work.
9. In what ways do regulatory failures occur?
Regulatory failures may occur because of over-regulation or under-regulation.
Over-regulationhappens when the laws make it nearly impossible or damagingly difficult for businesses to operate. Under-regulation, meanwhile, occurs when there are no rules or when existing rules are weakly implemented. Regulatory failures can also arise from situations when the regulations are poorly designed or when the regulatory bodies in-charge of implementing them are institutionally weak.
10. What happens when regulations fail?
Regulatory failurecreates an environment that discourages businesses to pursue creativity and innovation, and instead encourages poor service and incompetence that hurt consumers. The good intentions of a regulation can be diminished by poor design or implementation. In situations like these, the cost of a policy objective outweighs the intended results. Worse, the original problem continues to remain unaddressed or is worsened altogether.
The negative impacts on the business environment and on society as a whole caused by regulatory failure are called regulatory burdens. A poor regulatory environment that is full of regulatory burdens can cause a drop of business confidence, build-up of corruption, and loss of public faith in governance.
11. How can we ensure that regulations will not fail?
Regulations can be improved by addressing the most important components in the regulatory process—design and implementation. But regulations are not meant to last forever, nor can they be truly designed to perfection. They are, according to Gilberto Llanto, a work in progress.
Regulations should be subject to systematic and continuous review to evaluate if they continue to be effective. In cases when they are costlier than they are beneficial, regulations must be subject to reform.
The goal ofregulatory reform is to improve the quality of regulation, ensure regulatory coherence, and reduce regulatory burdens. This can be achieved through (1) systematic assessment of the potential impacts of a proposed regulation before it is implemented, (2) effective alignment of different regulations to ensure that they are complementary and do not contradict each other, and (3) the capacity building of regulatory bodies to function in all life phases of a regulation—design, impact assessment, interagency coordination and implementation, evaluation, and further reform.
12. What are instances of regulatory reform in the Philippine history?
Postwar economic policies were characteristically inward. The big reforms to open up the national economy began in the late 1980s under the administration of President Corazon Aquino which dismantled monopolies in the sugar and coconut oil industries and reduced tariffs in the industrial sector.
Throughout the 1990s, there were many policy and regulatory changes to promote trade liberalization, privatization, and deregulation. They include the creation of the BSP to replace the debt-ridden Central Bank of the Philippines, the enactment of the Public Telecommunications Act in response to the demonopolization of the telecoms industry, and the privatization of water distribution in Metro Manila. At the local level, the responsibility of delivering basic public services was devolved to the LGUs with the implementation of 1991 Local Government Code (LGC). The LGC also vested the LGUs expanded taxing and borrowing powers.
In the 2000s, there was the General Banking Law; the Retail Trade Liberalization Act to open limited opportunities for foreign investors in retail trade; the Electric Power Industry Reform Act of 2001 to introduce competition in power generation, distribution, and retail supply; and the Anti-Red Tape Act of 2007 to reduce the processing time for government applications.
The traction of these reforms was slowed significantly by political scandals and accusations of corruption throughout the Estrada and Arroyo administrations.
Nowadays, there’s a comparatively healthier political environment, and the private sector is ready and more willing to participate in reform efforts. An example is the creation in 2006 of the Public-Private Sector Task Force on Philippine Competitiveness, which was renamed by President Benigno Aquino III in 2011 as the National Competitiveness Council (NCC). As a public-private sector collaboration, the NCC’s goal is to improve the country’s competitiveness on 13 areas (agri-trade logistics, anti-corruption, budget transparency, business permits and licensing system, education and human resources development, ICT governance, infrastructure, judicial system, national quality infrastructure, national single windows, performance governance system, power and energy, and services).
Currently, the NCC is involved in the Ease of Doing Business Task Force and in Project Repeal.
a. Ease of Doing Business Task Force is an interagency body designed to initiate, implement, and monitor reforms that are intended to simplify business processes, reduce regulatory burden, nurture a more enabling business environment, and improve the level of competitiveness of the Philippine business sector.
b. Project Repeal is a government project designed to identify laws and regulations that do more harm than good, meaning, they fail to productively achieve their policy objectives or hinder growth and compromise an otherwise healthy business environment. Congress will work with the NCC to legally revoke problematic regulations and to create a formal system in 2016 to oversee the process.
13. What is a Regulatory Management System?
A Regulatory Management System (RMS) is a method to make sound, coherent, and effective regulations. It helps in reducing the burdens of regulations and in improving the quality of the overall regulatory environment. The processes and elements involved in an RMS form a mechanism that aims to, as envisioned by the Organization for Economic Co-operation and Development, address concerns in all life stages of a regulation.
With an RMS in place, regulatory bodies are tasked to evaluate the efficiency of the design and the possible impact of a regulation before it even gets passed. Beyond that, regulatory bodies will continue to oversee the implementation, monitor the impacts and the costs, and conduct any necessary reforms in the future.
There are four components of a functioning RMS. They are regulatory policies, regulatory institutions, regulatory procedures, and regulatory quality tools.
a. Regulatory policiesinclude regulations, rules, laws, administrative and executive orders that shape the social and economic environment. They can be designed to incentivize the private sector to increase participation in the market, or they can be designed to reduce monopolies and create a more open economy. They have objectives that balance social welfare and business productivity.
b. Regulatory institutionsrefer to the regulatory bodies or government departments that discharge regulatory functions. Good governance, well-designed policies, the ability to implement regulations, access to resources, and strong institutional capacity are crucial to becoming an effective regulatory institution.
c. Regulatory procedures include public policy dialogues, notifications, consultations, and workshops that discuss the changes of a proposed reform or introduce the details of a new regulation.
d. Regulatory quality tools are instruments to assess the costs and benefits of regulatory changes. In a formal RMS, an exercise called Regulatory Impact Assessment (RIA) is required. It is a comprehensive tool for measuring the probable impact of a proposed regulation. It also examines the different options for achieving the desired policy objectives. It consists of identifying a problem, setting the objectives, reviewing policy options, and assessing the impact of a future regulation. The results of the RIA are made available to the public before any agreement is made on whether or not the proposed regulation should be passed. Consultations with parties who will be affected by the proposed regulation are also part of the RIA.
As a tool, an RIA ensures that the government approves policies and regulations that are supported by evidence proving that they work, that they will achieve the policy objectives, and that they will do more good than harm to society.
14. Do we have an RMS in the Philippines?
We have one, but it is not a formal RMS nor does it have all the basic elements. It has regulatory policies, regulatory institutions, regulatory processes, and some features of regulatory quality tools. These existing elements are also fragmented and do not represent a well-coordinated system. Regulatory quality tools like RIA are also not regularly undertaken.
15. How does the existing RMS in the country look like?
Some examples of the regulatory policies in the country are the Anti-Money Laundering Act of 2001, which provides banks with rules and guidelines to stop laundering crimes, and the Memorandum Circular 2015-021 imposed by the LTFRB to require public bus services to install GPS. There are also various regulations, rules, and laws that have been passed to address the needs of specific economic and social sectors.
We have different regulatory bodies that cover various sectors—banking, telecommunication, energy, and water, to name a few. For example, aside from the BSP and the LTFRB, we have the Professional Regulation Commission, the Securities and Exchange Commission, the National Telecommunications Commission, Energy Regulatory Commission, and the National Water Resources Board.
Regulatory processes such as policy dialogue and consultation are part of the existing RMS in the country but they are not regularly undertaken. They also take place on a sectoral basis and are not necessarily coordinated across regulators whose stakeholders may be affected by the proposed regulatory change.
In terms of regulatory quality tools, conducting an RIA is not part of the existing RMS. Cost-benefit analyses are presumably undertaken but their results are neither published nor are made available to the public and not even to academics or policy analysts for review. The RIA is not a standard practice in regulation-making in the Philippines unlike in our fellow ASEAN country, Malaysia, which has a well-developed and complete RMS. A critical component of Malaysia’s RMS is the RIA, which is considered a powerful regulatory tool.
16. Under the existing system, are regulations being reviewed and monitored?
Yes, they are undertaken by agencies for specific sectors but there is poor coordination, or none at all, among regulatory bodies. Coordination is an exception, rather than a default arrangement, under the Philippine RMS. There is no central governmental unit or agency similar to the Malaysia Productivity Council that ensures capacity-building of regulators on RIA, reviews existing rules and regulations, and facilitates coordination among regulators. The common approach is to create temporary, ad-hoc task forces when regulatory problems arise.
There are governmental interagency committees (for example, the Infrastructure Committee of the National Economic and Development Authority) that look into regulatory issues whenever they arise. However, they are not focused on regulatory reforms but have a broader mandate of approving and reviewing sectoral plans.
Another example is the Legislative-Executive Development Advisory Council, which provides a venue for the executive and legislative branches to prioritize, discuss, and monitor regulatory reforms.
The problem with these institutions is that they do not have the technical capacity nor the proper staff to undertake a formal RMS. Regulatory review is also not their main focus.
17. What are the limitations of the Philippines’ RMS version?
It is not a required practice within regulatory bodies to conduct an RIA and issue a regulatory impact statement (RIS) prior to passing any regulation. Even when some form of an RIA and an RIS is conducted, public presentation and documentation of the analysis and results rarely happen, neither for the sake of further public review nor for secondary advice.
In other words, what the regulatory bodies and the national and the local governments do in their own houses is neither systematic nor uniform. The same can be said about the methodology used by government regulatory institutions to review proposed regulations and regulatory reforms. The lack of a central oversight body to review regulations for their consistency, coherence, and interagency coordination results in poor quality regulations, weak implementation, and total regulation failure.
18. What is the Philippine government doing to bridge the gap in the system?
The National Economic and Development Authority (NEDA), particularly its Governance Staff, has been tasked to take the lead in promoting the RIA as a standard practice among regulatory bodies. There are three pilot projects that aim to develop the capacity of the NEDA, the Department of Labor and Employment, and the Department of Tourism in conducting RIA.
Once the pilot stage is completed, it will be rolled out across other departments backed by an executive order for full implementation. The NEDA is also overseeing the review of policies and regulations in key economic sectors and coordinating regulatory reform efforts. There is also a plan to establish an office that standardizes RIA in regulatory practices across the bureaucracy.
19. What are the challenges?
Addressing the limitations in the current system may not be enough. As Llanto says, political leadership is a critical component in the process of creating a formal regulatory management system. Commitment to reform and to the creation of an institution that systemizes regulation-making and ensures the quality and coherence of regulations depend on the political will to initiate and undertake the changes.
20. Why is it important for all Filipinos, not just policymakers and researchers, to understand the nature of the country’s regulatory system?
It is every citizen’s civic duty to participate in a democracy. The Philippines espouses values of political freedom and engagement. It is the concern of every citizen to take part in creating an environment where businesses can thrive and people’s welfare are well taken care of, and to ensure that further growth becomes characteristically inclusive.
Governance is, as are regulations, a work in progress. It is important that the country’s policymakers address the gaps in the current regulatory system and aim at establishing a formal RMS. There is also an urgent need to establish a central oversight body that will assess the quality of regulations and duly inform the public through every step of the process: conception, impact assessment, implementation, review, and reform. This information can empower public opinion and enable civil society to engage government agencies and regulatory bodies to sustain and further improve governance.
References
Llanto, G. 2015. Reduce regulatory burden, improve regulatory quality. In Economic Policy Monitor 2014 and Prospects for 2015. Makati City: Philippine Institute for Development Studies. Forthcoming.
National Competitiveness Council (NCC) website. http://www.competitive.org.ph/ [Accessed on August 23, 2015].