Press Releases

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State think tank Philippine Institute for Development Studies (PIDS) hosted the assessment and coordination meeting of the Federalism Initiative Project last January 16 at its office in Centris, Quezon City. The meeting was attended by experts in the fields of political science, governance, economics, and finance from government, academe, and international organizations.

PIDS President Gilberto Llanto, in his opening statement, emphasized the importance of carefully studying the proposals to shift from the current government structure to a new one. He noted that the studies and discussions from this group could serve as valuable inputs in the current political discourse on federalism.

Prof. Ed Tayao of the Local Government Development Foundation (LOGODEF) presented the political and governmental framework of the Philippine model of federalism that the study groups of the Federalism Institute are currently working on. He noted that there are still plenty of gaps requiring in-depth study on federalism that need to be addressed.


Dr. Romulo M. Miral, director-general of the Congressional Planning and Budget Research Department of the House of Representatives, also presented his PIDS-commissioned study on federalism. Miral's paper looks at how the government has responded to issues and challenges in the field of governance and how successful these policy responses were, notably in terms of decentralization reforms. It also looks at what federalism has to offer and whether a shift from a unitary to a federal form of government for the Philippines is warranted.

Meanwhile, PIDS Senior Research Fellow Rosario Manasan discussed the considerations in the design of the fiscal features of a federal form of government. She also talked about the distinction between a multi-tiered unitary and a federal form of government, particularly on the sharing of powers among the various branches of government.

Manasan also pointed out that shifting to a federal form of government has potential benefits such as increased efficiency and welfare. According to Manasan, when a geographic area where benefits of public service are confined coincides with jurisdictional boundaries of level of government operating and financing, public service also improves. She further argued that when lower level governments have some degree of revenue autonomy, local accountability is also enhanced.

Other issues on the ongoing draft of the Philippine model of federalism were also discussed during the meeting. These include issues on the dual executive (i.e., the president and the prime minister are both responsible for the executive functions), powers of the Senate and the National Assembly, intergovernmental relations, and national and regional elections.


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To improve the effectiveness and efficiency of the collection and disbursement of the Motor Vehicle Users Charge (MVUC) fund, a study by state think tank Philippine Institute for Development Studies (PIDS) is calling for greater transparency and accountability among government agencies involved in the program.

The call was in response to allegations of misuse and politicized allocation of the MVUC fund. For example, a 2009 World Bank study noted that high share of MVUC funds were used to fund employment-generating roadside maintenance programs such as sweeping, beautification, and planting.

The MVUC, which is imposed through the registration fees of vehicles and penalties for overloading and collected by the Land Transportation Office (LTO), is envisioned as a new source of funding to finance road maintenance and minimize air pollution. MVUC is considered the third biggest source of tax revenue for the government, contributing an additional 40 percent of available funds for maintenance of national roads.

According to Republic Act (RA) 8794, funds collected from the MVUC should be placed in four special accounts in the National Treasury, namely, Special Road Support Fund (80%), Special Local Road Fund (5%), Special Vehicle Pollution Control Fund (7.5%), and Special Road Safety Fund (7.5 %). The tax forms the bulk of the annual motor vehicle registration.

The law also created the Road Board to ensure the prudent and efficient management and utilization of the Motor Vehicle User's Charge fund. It is assisted by the Road Board Secretariat (RBS) that is responsible for the implementation of the Board decisions and the day-to-day operation of the management of the Special Funds.

In a recent forum at the House of Representatives, PIDS Consultant and UP National Center for Transportation Studies Director Ma. Sheilah Napalang noted that recording of MVUC deposits can be made transparent and efficient through automation, regular reconciliation of records of the Land Transportation Office (LTO) and Bureau of Treasury records, and random audits. She added that automating the recording and encoding of collections and deposits will reduce human errors.

Napalang also pointed out the lack of a definitive operating procedure system in identifying and prioritizing projects under the MVUC fund.

"Based on the discussion by the PIDS study team with the different Road Program Offices (RPOs) of the Department of Public Works and Highways (DPWH), it was intimated that projects are proposed by the District Engineer Office (DEO) or the Regional Offices and not generated by DPWH RPO using the Highway Development and Management model-4 (HDM-4) as stipulated in the MVUC Act. This also validates the 2011 finding of the Commission on Audit on the 'lack of effective procedures by the Planning and Evaluation Division (PED) of the RBS in the evaluation of 1,011 projects amounting to PHP 7.99 billion'," Napalang stated.

Thus, the PIDS study recommends that for the special accounts under the DPWH, advance planning, programming, and project proposal development must be done within the DPWH itself. Also, the process should conform to RA 8794, wherein DEOs and RPOs must submit their proposed projects to the DPWH Central Office and that projects are prioritized using HDM-4.

In terms of approval and release, Napalang highlighted the lack of a systematic way for proponents to track their proposals due to considerable time gap between request for the project and the eventual release of the Special Allotment Release Order. She also pointed out the incapacity of the RBS to undertake monitoring and evaluation of MVUC projects given its limited technical personnel.

To solve these issues, the study recommended that information system and communication channels with local government units must be strengthened, particularly regarding conditionalities and eligible work categories. The study also recommended the establishment of a monitoring system to facilitate project implementation, monitor early warning signals on possible implementation problems, and recommend ways to fast-track implementation. The auditing system by the RBS must also be strengthened and a third-party audit setup must be explored, according to the study.

To enhance transparency, the PIDS study suggested that information on projects undertaken for the last five years be published on the Road Board website, along with a clear timeline from submission of project proposal to the Boards approval or disapproval. Another recommendation is to require project proponents to have an appropriate impact evaluation plan, where expected outputs and outcomes are stated.

The study also suggested that instead of abolishing the Road Board, it is more worthwhile to strengthen its oversight capability and transparency through at least three measures: (1) restructure it to include other road users aside from transport and motorist organizations, (2) make the Road Board's reports easily accessible to the public, and (3) re-orient the RBS as a fund manager and not an implementing agency. ###

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Crop insurance can be an effective safety net that can significantly reduce poverty among agricultural households. This is according to a study by state think tank Philippine Institute for Development Studies (PIDS).

In a forum held recently at the House of Representatives in Quezon City, PIDS Senior Research Fellow Celia Reyes noted that around half of the households who are engaged in agriculture can be considered as sometimes poor. According to Reyes, these are farmers who usually become poor when they are unable to recover from losses in their farm production after typhoons, flooding, and other calamities. She noted that providing safety nets such as crop insurance can protect these vulnerable households from sliding into poverty.

Crop insurance helps farmers manage risks by providing them with funds to cover production costs for the next season and finance household expenditures after a shock such as typhoon, flood, and drought, Reyes stated.

Reyes' presentation at the House of Representatives was based on a PIDS study that aims to evaluate the design and implementation of the government's crop insurance program vis-a-vis its objectives as well as its sustainability and impact on farmers. The forum is part of the Legislative Forum Series organized by PIDS and the Congressional Planning and Budget Research Department of the House of Representatives.

The PIDS study, which was conducted in collaboration with major universities around the country, concluded that the Agricultural Insurance Program has a positive impact on farm households' income and welfare. However, it also noted that the program, which is being implemented by the Philippine Crop Insurance Corporation (PCIC), leaves a lot to be desired.

Improvements in the design and implementation of the crop insurance program of the PCIC, particularly with regard to the penetration rate and insurance cover, can further increase its benefits to farmers, Reyes emphasized.

The crop insurance offered by the PCIC is considered as a production cost insurance as it typically insures the cost of production inputs of farmers, with prescribed cover ceilings. One of its programs is the free insurance to farmers and fisherfolk that are listed in the Registry System for Basic Sectors in Agriculture (RSBSA). RSBSA is a database of farmers, farm laborers, and fisherfolk in the 75 poorest provinces in the Philippines which the Philippine Statistics Authority maintains.

For the past three years, PCIC's annual budget has been an average of PHP 1 billion. This amount was increased to P2.5 billion in the proposed 2017 national budget. Under the program, farmers with farm sizes of three hectares and below are the priority beneficiaries. Despite the increase in funding, Reyes noted that the amount is still not enough to cover all eligible beneficiaries under the existing RSBSA program.

In addition, the PIDS study pointed out that the actual insurance cover that PCIC pays is below the average production cost particularly for rice and corn. For example, PCIC's average amount of cover per hectare for rice in 2015 was around PHP 21, 000 under the RSBSA program while average production cost per hectare is around PHP 42,000. According to Reyes, the low insurance cover is a trade-off of targeting more farmer beneficiaries for the free insurance program. Thus, the PIDS study suggested that given the limited funds, the free insurance premium subsidies should be directed to the poorest farmers.

Since PCIC will continue using the RSBSA as a targeting tool for giving free insurance premium, there is a need to validate and reconcile the list of farmers and fisherfolk in the RSBSA with the list of agrarian reform beneficiaries (ARBs), Reyes explained.

Another way for the PCIC to increase coverage rate of insured farmers, particularly for those not listed in the RSBA, is through partnerships with local government units (LGUs) such as in the case of Isabela, Cebu, Negros Oriental, and Davao del Norte. Reyes and her co-authors suggested LGU-PCIC partnerships in the form of full premium subsidy by the LGU or the provision of loans to farmers as the LGUs counterpart in the insurance premium.

Lastly, the PIDS study highlighted the low level of awareness of target beneficiary farmers about the programs of the PCIC.

Some farmer groups and LGUs are not aware of the different types of PCIC programs. There are also farmers who are not aware that they are insured under the RSBSA and that they are the priority beneficiaries of the program, Reyes stated.

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State think tank Philippine Institute for Development Studies (PIDS) has outlined several recommendations to improve the design and implementation of the college scholarship grants for the children of Pantawid Pamilyang Pilipino Program (4Ps) beneficiaries.

In a forum organized by PIDS and the Congressional Planning and Budget Research Department (CPBRD) of the House of Representatives, PIDS Senior Research Fellow Aniceto Orbeta presented the findings of a PIDS study that evaluated the operational issues and impacts of the Students Grants-in-Aid Program for Poverty Alleviation (SGP-PA).

The SGP-PA, which was introduced in 2012, has been expanded in 2014 to become the Expanded SGP-PA or the ESGP-PA. It aims to alleviate poverty by increasing the number of college graduates among poor households and eventually getting them employed in high value-added occupations.

The SGP-PA is intended for identified 4Ps households. It provides a grant that is sufficient to cover the usual education expenses. The grant consists of PHP 10,000 per semester for tuition and other fees, PHP 2,500 per semester for textbooks and other learning materials, and PHP 3,500 per month for 10 school months as stipend. Living allowance is also provided. The total grant amounts to PHP 60,000 per academic year per student.

The ESGP-PA is being implemented by the Commission on Higher Education (CHED), the Department of Social Welfare and Development (DSWD), the Department of Labor and Employment, and selected state universities and colleges (SUCs). Initially, the SGP-PA provided scholarship to 4,041 students from identified and classified poor households. This number increased by 36,412 beneficiaries under the ESGP-PA starting academic year 2014-2015, bringing the total number of beneficiaries to 40,453. The number of implementing SUCs also increased from 35 to 112 across the country.

Given that the success of the program is measured based on the number of grantees that are able to graduate, Orbeta emphasized the importance of choosing grantees who have a relatively high likelihood of completing their degrees.

Enforcing admission exams, according to Orbeta, is one way of achieving this objective. This recommendation was based on the result that shows a strong correlation between entrance exams scores and academic performance in core subjects.

Orbeta also reiterated the importance of full financing for scholarship programs such as the ESGP-PA, which are targeted to poor households.

"There are other school-related expenses that are not covered by the grant but are necessary for the students to complete their degrees. For example, there is no budget allocation for summer courses, on-the-job trainings, national competency exams, field trips, and thesis," Orbeta explained.

The study also pointed out aspects of the program that are not within the academic realm. As most grantees experience cultural change from being relocated to a more urbanized setting, there should be interventions to help them cope with these changes.

"With appropriate interventions, well-selected students with poor socioeconomic background are able to perform as good as their peers. The results show that the effect of their poorer socioeconomic background is reflected only in their poorer grades in the first year. By the second year, they are already performing at par in Math and even better than their peers in Science and English," Orbeta explained.

Lastly, Orbeta calls for the institution of a well-thought-out monitoring system so that critical features of the program can be rigorously assessed.

Orbetas study on the SGP-PA is part of a series of impact evaluation (IE) studies conducted by PIDS to evaluate the effectiveness and impacts of key government programs and projects. IE is a special type of research that allows policymakers and program implementers to ascertain whether a particular program is achieving its objectives and whether the results are attributable to the intervention. ###

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The role of global value chains (GVCs) as channels for the growth of micro, small and medium enterprises (MSMEs) was emphasized at a policy forum hosted recently by the World Bank (WB)-Philippine office and state think tank Philippine Institute for Development Studies (PIDS).

"Three quarters of world trade is in intermediate goods and services," explained WB Senior Economist Olivier Cattaneo. "It's much harder [for MSMEs] to export directly than indirectly."

For the Philippines, GVC participation presents an opportunity for its leaders to improve the quality of jobs in the country and for MSMEs to access international markets.

"It's not only about entering GVCs but also about upgrading once you're in GVCs," said Cattaneo. To explain this point, he enumerated the vertical transfer from lead firms to MSMEs of the following benefits: skills and management capacities, technology upgrades and innovations, access to finance, access to global markets and increased connectivity, and an overall improved business environment.

Compared to its peers in the region, Catteneo concluded that the Philippines "could do better". In the past years, the pattern has seen a decline in Philippine exporters using foreign input, and an increase in Philippine input in other countries' exports. This means the Philippines has become "less integrated in the global value chains", moving further away from the end consumer, and, thus, away from control of the market.

Noticeably, another character of Philippine GVC participation, according to Cattaneo, is "less GVC integration in electronics, but more in services".

This is no coincidence. PIDS Senior Fellow Ramonette Serafica noted that there has been "an increase of services intensification" in various industries across the country, whether they are already service chains or manufacturing chains. Most of the Philippine MSMEs are concentrated in three industries"retail and wholesale, accommodation, and foods services and manufacturing.

"In each of these industries, there are also subvalue chains occurring," Serafica pointed out, "Although not explicitly identified, they also need broadband services, financial services, and other services to implement the various activities along the value chain."

Goods manufacturing involves services like product development, manufacturing, distribution, sales, and after-sale services. The most popular service outsourced and acquired by MSMEs is finance and accounting.

"Services make up [on average] a quarter of the value added in value chains," said Serafica, underlining the role and the integrated value of services sector.

Even the gamut of business upgrading, whether it is in product development or process improvement, requires services such as research and development, marketing, logistics, and internet broadband services, among others.

Increased GVC participation may increase MSMEs' exposure to global economic risks. However, this downside comes hand-in-hand with the promise of increasing MSME capacity to grow, innovate, improve their performance, and access resources that can help develop their resilience to economic and other shocks. ###