Overseas Fieldwork Report 1995 :An Integrated Development Analysis
on the Province of Laguna in the Philippines

A Case Study

March 1996
Graduate School of International Development
Nagoya University, Nagoya, Japan

Contents

page

Introduction

Working Group 1

Economic Development in Laguna

7

Working Group 2

Human Development: Education & Health33

Working Group 3

Environment and Infrastructure

53

Working Group 4

Institutional Development

73

Integration and Policy Direction: Synthesis

93

Integration of Group Reports
OFW 95-PHl:Part 2

103Introduction

Introduction

This is our fourth report on the result of the Overseas Fieldwork which was
conducted in Laguna Province in the Philippines (see Map 1) from September
20-0ctober 19, 1995 (hereafter "OFW '95-PHI"). OFW '95-PHI was conductedunder the academic exchange program between the Graduate School ofInternational Development (GSID) of Nagoya University and the University of
the Philippines at Los Banos (UPLB) following OFW '94-PHI which took placein Cavite Province.
This time, 25 graduate students (14 female and 11 male) participated in
OFW '95-PHI which was designed as an integral part of our formal curricular
activities (participants' names and itinerary are listed on page 3-4). The
students were divided into the following four working groups (WG) based on
their initial interests of field research:
WG-1: Economic development (agriculture and non-agriculture)
WG-2: Human resource development (education and health)WG-3: Physical development (infrastructure and environmental protection)
WG-4: Institutional development (public administration and NGOs, POs).
In conducting actual fieldwork, the above four groups were subdivided into
eight groups as indicated in parentheses.
After a one day orientation session on the study framework of the OFW andguidelines for conducting the Modified Rapid Rural Appraisal (MARA) within
given time constraints, three-day MRRAs were conducted in various
barangays (villages). The MARA reports, which were presented by fourintersectoral working groups at a formal discussion session, are not includedin this report.

1Introduction

The report contains four WG reports and my integration and overall
assessments of OFW '95-PHI. Despite theoretical as well as practicaldifficulties in conducting the interdisciplinary analysis based on fieldwork
under the limited time and unfamiliar environments, the WG reports are
well-organized and presented. As I have mentioned in my overall
assessments of OFW '95-PHI, however, the report contains some unrealistic
proposals based on inadequate information and analysis on which we need to
improve, incorporating your frank comments and suggestions.
Since Professor Haruo Nagamine, who initiated and directed the OFW
project until his retirement last year, made detailed acknowledgement of those
who were directly and indirectly involved in the project (please see the OFW
Report 1994), I will not repeat here the lengthy acknowledgements. On behalfof the GSID, however, I would like to express my deepest appreciation forvaluable inputs and guidance provided by our counterpart advisors at UPLB;
Professors Constancia Z. Rosacia (Co-director of the Project), Nelson B.
Querijero, Alvaro L. Soria, Romeo B. Obedoza, Jr . and Wilfredo B. Carada,
Professor Obedoza, together with Professor Regelio V. Cuyno of UPLB, andYutaka Ohama of Nihon-Fukushi University, also conducted the 10-day
Intensive Lecture Course (ILC) ·at GSID prior to OFW '95-PHI. The painstaking
efforts and kind assistance of UPLB graduate students are also cordiallyacknowledged.
I would also like to express my profound thanks to the number ofcollaborators and organizations, particularly the residents of various
barangays, cooperatives, NGOs, various national, provincial and municipal
government offices, Asian Development Bank, JICA and OECF Manila offices
for their assistance and briefings which contributed to the successful
completion of OFW '95-PHI.
In editing this report, I would like to acknowledge the enduring assistanceof Dr. Mitsuhiro Tanimura.
Hiroshi Kakazu, Editor
Professor and Project Director
OFW'95-PHI

2

List of OFW 195-PHI Participants
GSID, Nagoya University, Nagoya

Table 1 GSID Faculty Members Participating OFW '95-PHI
Professor
Hiroshi Kakazu *Adviser to
WG1
Professor
Hirotsune Kimura
Adviser to
WG4
Associate Professor Yasushi Hirosato
Adviser to
WG2
Research Associate Mitsuhiro Tanimura
Adviser to
WG3

ISWG-B
ISWG-CISWG-D
ISWG-A*Project Director, OFW'95-PHI

Table 2 GSID Students Participating OFW '95-PHI
Student#
Name
FIM
Nationality
195110
Ken Takaya
M
Japan
2
95201
Takahiro Aoki
M
Japan
95214
Keiji Hirano
M
3
Japan
4
95104
Hiroko Kato
F
Japan
95111
Yurie Tanimichi
F
5
Japan
Lu
Yu
F
95123
China
6
7
955113
Masakazu Someya
M
Japan
95101
Katsuaki Asakai
M
Japan
8
95112
Supiga Chutivongse
F
Thailand9
Yumiko Tsukakoshi
10
95114
F
Japan
11
95117
Toshiki Nakai
M
Japan
12
95210
Sachiko Takahara
F
Japan
95314
Makiko Tadokoro
F
Japan
13
14
95105
Sachiko Kamo
F
Japan
Yoshiyuki Yamada
15
95120
M
Japan
16
95115
Kaori Toyoshima
F
Japan
17
95211
Takahiro Tsuchiya
M
Japan
18
95217
Suppakarn Pongyelar
F
Thailand19
95102
Andin HadiyantoM
Indonesia
20
95121
Yang Hui Tzu
F
Taiwan21
95205
Amy Capman
F
U.S.A.
22
95215
Tomoki Hirose
M
Japan
23
95106
Etsuko Kawasaki
F
Japan
24
95317
Yuko Hamada
F
Japan
Hideaki Baba
25
1
M
Japan
Working Groups

WG
1a
1a
1a
1b
1b
1b
1b
2a
2a
2a
2a
2b
2b
3a
3a
3b
3b
3b
4a
4a
4a
4a
4b
4b
4b

ISWG
A
B
C

Inter-sectoral Working Groups
A: Macabling
B: San Benito
C: Salangbato
D: Coralan

1a: Agriculture 1b: Non-Agriculture
2a: Education 2b: Health
3a: Environment 3b: Infrastructure
4a: Development Administration 4b: NGOs
3

D
A
B
C
A
B
C

D
D
A
A
B
C

D
B
A
B
C

D
C

D
B

Program of All Working Groups (OFW 95-PHI)
1

A.M.
September

October

~

21
22
23
24
25
26
27
-28
-29
30
1
2
3
-4
-5
-6
-7
-8
-9
10
11
12
-13
14
15
16
17
18
19

Thu.
Fri.
Sat.
Sun.
Mon.
Tue.
Wed.
Thu.
Fri.
Sat.
Sun.
Mon.
Tue.
Wed.
Thu.
Fri.
Sat.
Sun.
Mon.
Tue.
Wed.
Thu.
Fri.
Sat.
Sun.
Mon.
Tue.
Wed.
Thu.

P.M.

NagoyaOrientation: OFW & Rapid Rural Appraisal (ARA)
ARA: Interviews
ARA: Interviews
ARA: Data Analysis
National Government Office: DTI Region IV

Manila (to Laguna)
ARA: Evaluation of Collected Data
RRA: Interviews
RRA: Data Analysis
RRA: Presentation
JICA/OECF
Party (OECF)

Party (UPLB)

See Programs of Respective WGs
See Programs of Respective WGs
See Programs of Respective WGs
See Programs of Respective WGs

Day Off
Provi11cial Government Office: Sectoral Briefings
See Programs of ResQective WGs
See Programs of Respective WGs
See Programs of Respective WGs
See Programs of Respective WGs
See Programs of Respective WGs

Day Off
See Programs of Respective wgs
See Programs of Respective WGs

Report Writing I Collection of Supplement Information
Report Writing I Collection of Supplement Information
Report Writing I Collection of Supplement Information
Report Writing I Collection of Supplement Information
Report Writing I Collection of Supplement Information
Report Writing I Collection of Supplement Information
Brainstorming for Integration (Rehearsal)
Preparation for Integration (Project Director & Advisors); Day Off for UPLB staff
Presentation
Presentation/Farewell Party.. ~~c1ving for Manila (Sightseeing)
Manila (Day Off)
Manila (Day Off)
ManilaNagQY_a

MAP 1. Laguna ProvinceN®

Manila Bay

Lamon
Bay

¢:;'
CaviteQuezonBatangas

(km)
10

•

20

40

City and Municipalities in Laguna Province
No. of Barangays and Population: 1980/19.90

Municipality

Brgys

1980

1990

Municipality

Brgys

1980

1990

District IV

District I
1.San Pedro

20

74552

156537

14.Santa Maria

25

15716

20514

2.Bifian

24

83428

13460715.Mabitac

15

8543

11481

3.Santa Rosa

18

64284

95156

16.Famy

20

5238

7903

17.Siniloan

20

11458

15250

District 11
4.Cabuyao

18

46273

5.Calamba

54

6.Los Banos

14

49322

7.Bay

15

22964

18.Pangil

8

6060

8799

67189

19.Pakil

13

9041

13512

173426

20.Paete

9

16381

20563

66285

21.Kalayaan

3

10245

13114

32707

22.Lumban

16

17348

20040

23.Pagsanjan

16

19485

25187

District 111

24.Santa Cruz

26

60494

76685

8.Alaminos

15

20613

27434

25.Pila

17

20946

27608

9.San Pablo City80

151571

186584

26.Cavinti

19

13075

15025

10.Victoria

9

16518

21984

27.Luisiana

23

12194

14333

11.Calauan

17

25248

32956

28.Magdalena

24

10449

13507

12. Nagcarlan

52

30630

37705

29.Majayjay

40

13696

15895

13.Rizal

11

14735

18679

30.Liliw

33

17434

21885

Source: Laguna Provincial Government5

WG-1 Economic Development in Laguna

Working Group 1

Economic Development in Laguna
Our impulse is not the philosopher's impulse, knowledge for the sake ofknowledge, but rather the physiologist's, knowledge for the healing thatknowledge may help to bring. Wonder, Carlyle declared, is the beginning ofphilosophy. It is not wonder, but rather social enthusiasm which revolts fromthe sordidness of mean streets and the joylessness of withered lives, that isthe beginning of economic science.
The Economics of Welfare by A.C. Pigue

Members

2
3
4
5
6

7

Students#

Name

National it~

WG

95104
95201
95214
95110
95111
95123
955113

Kato, Hiroko
Aoki, Takahiro
Hirano, Keiji
Takaya, Ken
Tanimichi, Yurie
Lu, YuSomeya, Masakazu

JaQan
JaQan
JaQan
JaQan
JaQan
China
Japan

1a
1a
1a
1b
1b
1b
1b

7

WG-1 Economic Development in Laguna

Working Group 1

Economic Development in Laguna1>

1. Introduction
Purpose and Objective
The Philippines is being awakened from long term stagnation. With highexport growth, $13,433 (1994) up 19.2%from $11,265 (1993), GDP growthmarked 4.3% up from -0.6%(1991 ). Furthermore, the fiscal balance achieved
1.1 % surplus for the first time in nineteen years owing to the autonomous
revenue growth.
Laguna and the CALBARZON area, which form the industrial hinterland of
Metro-Manila, are leading the nation's booming economy in many ways. For
instance, the CALABARZON region accounted for 33.9% out of 145,513,000
jobs generated in the Philippines in 1994. Within the CALABARZON area,
Laguna accounted for 12.5%. Although the economy is presently boomingwith the tail wind of the recovering international economy, there still remainsuch structural problems as heavy dependency of capital goods on imports or
institutional weakness, which are holding back the Philippine economy.
Therefore, the objective of this report is to identify structural problems facing
the Philippine and Laguna economy by conducting fieldwork for each topic.

1>

Our special thanks go to Prof. Hiroshi Kakazu for guiding us under academically adverse conditions.

We are also deeply indebted to Prof. Tsunehiro Kimura for his insightful advice. Our debt also extends tomany other professors in GSID, from whose comments we have benefited. We are very appreciative of
the help given us throughout the research period by Dr. Romeo Obedoza, Prof. Nelson 8. Querijero, Mr.
Arch imedes Ancheta, Ms. Edna 0 . Juta and many other staff of UPLB, without whom our research would
have been impossible. Needless to say, none of the individuals named above is responsible for any
shortcomings in this report. Our final thanks are extended to many Filipinos and Filipinas we met in thePhilippines since it is their kindness that encouraged us towards the study. Moreover it is their own lives
that really told us something and gave us the real picture of the Philippines.

8

WG-1 Economic Development in Laguna

Methodology
The research is divided into three main parts -industry, agriculture andsociety. Regarding the industrial section, the macro-:picture and past industrial
policies are reviewed in section 2.1.

Section 2.2 discusses foreign direct

investment (hereafter FDI), which seems to be functioning as an engine forindustrial development of the Philippines. Subsequently,

research ontechnology transfer (TT), which upgrades the industrial structure and improves
the international competitiveness of the country, is presented in section 2.3.
Economic development cannot be achieved by the urban sector alone
independently of the rural sector. The rural sector has a substantial role for therural poor, the majority of the population. Therefore, section 2.4, the final
section on industry, reports on rural industries, particularly the handicraft
industry in Paete.
The agricultural part comprises two sections. Section 3.1 discusses
marketing and management issues which concern Laguna farmers. Agrarian
issues are discussed in section 3.2. Issues regarding rice production,
including the impact of HYV, are discussed in Section 3.3. Subsequently,social issues are discussed in .section 4. Finally, integration of the research ismade in the concluding section.

2. Non-agricultural Sector
2.1 Overview of the Philippine Economy
The Philippines was the earliest ASEAN country to begin industrialisation.
The process was begun as soon as she attained independence, and thecountry enjoyed high GDP growth -- 7.2% on average in the 50s, 4.9% in the
60s, and 6.1 % in the 70s.

In fact, her GDP per capita was $253 in 1960,

which was still lower than $345 of Taiwan and $374 of Malaysia, but far higher
than $71 of Indonesia and $176 of Thailand, and, surprisingly, slightly higher
than $234 of South Korea. However, budgetary and current account balance
deteriorated under the Marcos presidency in the early 80s (Boxes 11 & 13)
due to misused rather than over-active fiscal expenditure based upon foreignloans, and to inappropriate industrial policies. These policies favoured
non-tradable goods, that is, capital intensive industries in the urban-modern

9WG-1 Economic Development in Lagunasector against tradable goods, that is, labour intensive products andagricultural products in the rural-traditional sector (Box 1).
Furthermore, the assassination of Senator Aquino plunged the whole
nation into political turmoil. This not only discouraged foreign capital in-flows(Box. 15) but also encouraged capital flight away from the Philippines.
Reflecting this chaotic political and business environment, foreign commercial
banks became skeptical towards extending additional loans to the Philippines.
This eventually triggered international financial unrest and plummeted thecountry into the so-called "debt crisis" in the early 1980s (Box 13).
However, under the IMF's initiative, a series of policies and an adjustment
program to control aggregate demand, including appreciation of the peso,
fiscal restraints and tax revenue increases, were launched as early as 1983.
Owing to this comprehensive policy package, the Philippine economy
underwent economic turbulence with two consecutive years of negative
growth, -7.3 % and -7.3% and hyperinflation, 50.4% and 23.1% in 1984 and1985 respectively.
The situation started to change when President Aquino was inaugurated in1986 and initiated an economic reform program with trade liberalisation andprivatisation of state enterprises, aiming at the reconstruction of the economy.
With a tail wind of the recovery of the international economy, the Philippine
economy, too, was gradually directed to its own recovery, facilitated byvigorous consumption demand and private investment.
The economic recovery did not continue long, for two reasons. Firstly, oilprice appreciated as a result of the Gulf Crisis, and food prices appreciated asa result of natural disaster. Secondly, the B&P account deteriorated (Box 11)
because of the import surge of capital and intermediate products (Box 10)
coming from the powerful private domestic investment increase. The
Philippine economy underwent recession again in 1991 with negative GDP
growth of -0.6%. The stagnant situation of the Philippines in the 1980s can be
attributed to several factors. Firstly, due to protective policies such as
over-evaluation of the peso and tariff wall undertaken in the Marcospresidency, capital intensive industry was protected from the international
competition at the expense of tradable (that is, labour intensive and10

WG-1 Economic Development in Laguna

agricultural) products in which the country has a comparative advantage. (Box2). The second reason lies in the institutional weakness of the country in termsof collecting taxes and utilising them effectively. In fact, it is said that one of thereasons for the Debt Crisis was the government's limited capacity to efficiently
use foreign loans.
Macroeconomic indicators and the business climate began to show
progressively better performance in 1992 soon after the political situation wasstabilised under the Ramos presidency. Economic growth marked 4.3% in
1994, up from -0.6% in 1991. Inflation fell from 18.7% (1991) to 9.0% (1994).
The budgetary position achieved surplus, 1.1 % to GDP for the first time innineteen years. Amongst those indicators showing good performance, FOi
in-flows into the Philippines have shown remarkable growth, from $285.4
million in 1992, up to $569.3 million in 1993 (approximately 100% increase)and up to $2,455.9 million in 1994 (331.3% increase).
It seems that because of enormous FOi in-flows, exports soared, resulting
in high GDP growth, which moreover contributed to tax revenue increase andameliorated the budgetary position. It has still been a short time since FOi
in-flows started booming. Therefore, it is still very problematic to say that FOi is
contributing to industrial up-grading. However, it is clear that the Philippines isbeing directed towards economic expansion.

2.2 Foreign Direct Investment (FDI)
Policy and Trends
Many new policies have been adopted to attract foreign investment to thePhilippines. More areas have been opened to 100 percent foreign ownership.
2

Last year, investment soared to 392 percent of that of 1993 ) • From January
to August this year, P226 billion worth of investments have already poured into
the country, exceeding 13% of investment during the same period last year
(Board of Investment: 801).

Electronics receive the highest priority ininvestment targets. Facilities including Export Processing Zones or Industrial
Estates, and Special Economic Free Zones enable enterprises to start
operations.

2lFrom P92.5 bin in 1993 to P454.8 bin in 1994.

11

WG-1 Economic Development in Laguna

To activate competition amongst provinces in attracting foreign investors
and thus promote local development, it is anticipated that the pace ofdecentralization will be accelerated.
FD/ in Laguna

Laguna is the nation's centre for economic activity. Because of the low
wage rates, abundant English speaking workforce, and business incentives on
a provincial level, P8,902 million worth of investments poured into Laguna in
1994, creating 18, 162 jobs, or 12.48 % of the whole nation's employment. 3l
Currently, five private industrial estates are operating. They are developed
and managed by a joint venture of local and foreign partners. Four of theseindustrial estates have Special Export Processing Zones. Among theinvestments registered for the first nine months this year, the largest
investment, amounting to P4.93 billion, went to the Camelray Industrial Park in
Laguna.
Despite incentive policies such as tax holidays, foreign investors appear to
be more concerned about problems relating to infrastructure, traffic and highcost of electricity (Box 14). Because of both poor tax collection and the highdebt service ratio (Boxes 11 & 13), a sufficient portion of the budget cannot beallocated for investment on infrastructure. Although P15.6 billion worth ofbuild-operate-transfer (BOT) investments has been poured into theinfrastructure, the government should continue to encourage more BOT
projects, especially BOT with foreign investment. The high energy cost is also
another major component that the government needs to address, since it is
becoming a crucial competitive issue for the nation in the eyes of foreign
investors. The government needs to solve these problems to gain sustainablegrowth and to capture investors' interest.
Another problem is the underdevelopment of local supporting industries(Box 9). Caused by slow commercialization and diffusion of technology andlow domestic investment in local industry, this underdevelopment means thatindustrial estates are enclaves. For example, a Japanese factory which is
producing wire harness in Laguna Industrial Park, imports all parts fromJapan, which requires high costs and at least one month's shipping. Endowed3lLaguna's population ratio: 2%.

12

WG-1 Economic Development in Laguna

with abundant copper resources, the Philippines should set up local industry
to meet mutual interests. Appropriate policies are needed to support more
research and development (R&D) and encourage small and medium
enterprises (SMEs).

2.3 Technology Transfer to SM Es
Local Technology
For SMEs in Laguna, the Department of Science and Technology (DOST)
regional office (San Pablo City, Laguna) plays a significant role as the main
mediator for technology transfer (TT). It is responsible for the diffusion oftechnology from DOST R&D institutes like ITDI (Industrial Technology
Development Institute) and MIRDC (Metals Industry Research andDevelopment Center) as well as to provide consultancy for mainly domestic
but to some extent foreign technologies from the private sector. Since in thePhilippines the government sector accounts for 80% of expenditure for R&D,
compared to developed countries where the private sector accounts for 70% of
expenditure for R&D 4l , the technology from DOST R&D institutes constitutes amajor portion of local technologies (Box 19).
Some recent accomplishments of the DOST regional office are thediffusion of technologies such as low cost laundry soap, instant cassava
grates, ceramics production, and semiprecious gem processing. The
procedure of technology diffusion is explained below using the semiprecious
gem processing as an example. First, a new gem processing machine wasdeveloped by MIRDC, a DOST metal R&D institute. Brochures introducing thisnew machine were prepared and distributed by the DOST regional office.
Collaborating with Bureau of Mines of DENA (Department of Environment andNatural Resources), they scanned the region for possible recipients of this newtechnology. After finding a candidate in Mabitac, DENA Bureau of Mines
conducted a feasibility study. As it was proven economically and technicallyfeasible, free blueprints of the machine were handed out accompanied by thenecessary training.
The diffused technology mentioned above employs unsophisticated and4l

UNESCO Statistical Yearbook, as cited in Villaverde, A.S. Management of Research-Technology

Transfer Linkage: The Case of the DOST Technology Business Incubator (1995)

13

WG-1 Economic Development in Laguna

low level technology. However, these basic technologies are used on local
materials as in the case of the low cost laundry soap where copra is used.
This approach of utilizing local materials heightens the accessibility andfeasibility of new technologies to local SMEs and thus should be further
pursued.
For SMEs with little capital and few human resources, it is difficult toacquire technology on a purely commercial basis from private sectors. So
currently TT to SMEs is greatly dependent on DOST institutes. There is aneed for an increase in agents in R&D, commercialization, and diffusion(box.19). For maximum effects, the private sector and higher education
institutes should play a more active role in TT to lessen the concentration of TT
activities in government agencies.

For example, organizations such as

business associations should take more initiative as they are expected to havea better business sense than government agencies. This is especially crucial
for SMEs as they generally do not possess their own sufficient channels to
new technologies. SMEs should consider organizing business associations
among themselves to act as an entry point for new technologies.
Foreign Technology
Although Laguna is becoming a major recipient of foreign investment, thelocal content rate in FDI is low due to underdeveloped supporting industries(Box 9). Therefore TT from FDI to local industry is still minimal at this stage(Box 16).
On the other hand, most local industries especially SMEs lack thenecessary resources to acquire Technology Transfer Arrangements (TTAs),such as licensing and marketing/distributorship agreements. It has beenfound that a great portion of the 101 TTAs concluded in 1993 between
domestic and foreign companies was actually between the parent company
and its subsidiaries, such as in the case of TTAs between Honda Motor Co.
Ltd. and Honda Phils. Inc. or between General Electric Co. and General
Electric Phils. lnc5l .
So the utilization of foreign technology can be widely seen in FDls and5>Technology Transfer Registry of the Bureau of Patents, Trademarks & Technology Transfer of DTI

14

WG-1 Economic Development in Laguna

local subsidiaries, but at this stage foreign technology is not a major
contributor to local industries as a generator for productivity improvement (Box18).
Although the public sector plays an active role in transferring local
technologies, it performs poorly with foreign technologies. It has retained its
position as a mere consultant to those private firms acquiring foreigntechnologies by their own initiatives. Transfer of foreign technology should begiven a higher priority over development of local technology when it is more
economical and technically appropriate. Foreign TT requires only minimal
domestic R&D expenditures compared to developing new technologies locallyand also, there is already a large pool of technology which can be tapped forthe development of local industries. The main consideration should be on
establishing sufficient channels, which is currently lacking, to be able to secure
the appropriate technology to match the needs of local industries.

2.4 Handicraft Industry
On the whole, the traditional handicraft industry is labor intensive, which
can contribute to local employment generation. And even if the economy
becomes fully developed, the industry can survive and even flourish, as has
been demonstrated in already developed countries. The municipality of Paete
depends largely upon its handicrafts, particularly woodcarving, but it has thepotential to develop much more, if the problems facing the local industry aresolved.
Paete is an agricultural area located on the east coast of Laguna de Bay.
Developing Paete would stem the flow of laborers moving to the industrializing
west side. If the income in the handicraft businesses increases, it willcontribute to raising the income of the local agricultural sector through demand
for agricultural products. Further, the handicraft business contributes to Paete's
high employment rate because it is dominated by labor-intensive cottage scale
factories 6l .

5>According to the municipal office, half of the employment on Paete is created by the handicraft

industries.

15

WG-1 Economic Development in Laguna

Securing Raw Materials
The most serious problem confronting Paete's wood carvers is the scarcity ofwood (Box 24). The total logging ban imposed by the central government due
to severe deforestation has reduced the supply of wood, doubling or even
tripling the price of wood 7l (Box 23). Because forest denudation in Laguna isserious, the wood is brought from nearby provinces, mainly Quezon. In
addition to deforestation, the merchandising and transportation system also
raises wood prices (Box 22).
Wood carvers have been advised to convert from wood products into
taka 8l products by the provincial government due to the short supply of wood.
As a result, oversupply of taka has occurred. Consequently, re-conversion oftaka to wood carving is now happening. The municipal office has set up
several plans for the securing of wood instead of supporting the conversion.
These plans include a communal forest program 9l , a request for the exemption
from the total logging ban, and so on.
Production and Design
Wood carvers can be classified into two types. One is an artisan who
makes relatively simple wood carvings or who works for a big factory which
adopts a division of labor. The other is an artist who makes elaborate articles.
Generally the artisan produces only a limited number of products, such asanimals and necessities, but the artist makes quite a few, sometimes by order,or from their imagination, often with reference to the Bible, Philippine legends
or natural scenery.
Since there is no formal training available, people learn how to carve fromexperience.
MarketingApproximately 20% of total output is sold locally, mainly to tourists in

7)

100%-200% increase in past 5 years from 1990.

8)

Paper mache--First step in making taka is carving a wooden mold in a desired shape. The wet (withflour water) scrap of paper, several layers, are pasted on the mold and left to dry. When the paper bulk isdry, it is cut in half, removed, then reassembled with glue. Then, finally it is painted.
9)

Replanting of 34 hectares of communal forest will start in February 1996, and trees can be harvested
within 5 to 7 years.

16

WG-1 Economic Development in Laguna

Paete. The remaining 80% is sold outside Paete. The products are exported toother places in the Philippines and to foreign countries such as the U.S.,
Europe and Japan 10l . Since the woodcarving industry in Paete is highly
dependent on exports 11 l, they must take the rival producer countries such as
the other Asian producers into consideration. Therefore, manufacturers cannot
increase wholesale prices as much as material costs increase(Box 25).
The municipal office promotes direct exports, which means exclusion of
middlemen. Generally, only big manufacturers trade with foreign buyers. On
the other hand, small manufacturers have to depend on middlemen, because
output is too small to transport independently. It is the middlemen who
organize transportation and find foreign buyers 12l (Box 24).
Supporting Organizations

There was no organization to effectively promote wood carving industry
until Paete Chamber of Commerce and Industry (PCCI) was established in
1994. Because it is just a year since PCCI was established, it has not yet
developed the authority to influence manufacturers, particularly small ones.
The municipal office with PCCI plans to set up a trade center, which will be
used not only for transactions but for other purposes, for example, exhibitions
and skill training 13l .

3. Agricultural Sector
3.1 Rice Production
In Laguna, High Yielding Varieties (HYV) started to be introduced in 1965.
Since the International Rice Research Institute (IRRI) and College ofAgriculture UPLB, both located in Laguna, are leaders in the development of
new varieties of rice, the introduction of HYV was earlier than in other

10lInformation according to the secretary of mayor of Paete.

11)

Export is used as a word which include both domestic and foreign export.

12

In my research, only one manufacturer, which has two factories and around 300 workers, did a directlexport. But the other smaller manufacturers (1-30 employees) exported through middlemen.
13)

Information according to the president of PCCI.

17

WG-1 Economic Development in Laguna

provinces. At that time, HYV was not considered feasible among the farmers.
But the influence of agricultural technicians made HYV spread rapidly. The perhectare yield before the introduction of HYV was 1.7 metric tons, but had
increased to more than 4.0 metric tons in 1990. Some farmers' per hectare
yield is 6 metric tons in dry seasons.
As it is widely recognized, new inputs - fertilizers, pesticides and sufficient
supply of water - are required in order to make the most of HYV. That is why
irrigation systems were constructed by the National Irrigation Administration(NIA) and by some communities with the spread of HYV.
By increasing the number of irrigation systems, double-cropping has
become a commonly used method. However since actual field conditions for
HYV cultivation were different than in the laboratories, rice production did notincrease as much as the agricultural technicians predicted. The reasons indetail are as follows:
Insufficient Use of Pesticides

In the early years after introduction, HYV especially IRS, called "miraclerice", did not have strong resistance to pests and viruses. Once pests andviruses proliferate, so does the damage to yield (Box 42). In order to preventthe increase of pests and viruses , farmers had to use pesticide(Box 43). The
price for this is high. The HYV of the 1990s has stronger resistance than IRS.
However, the usage of pesticide is still essential (Box 38).
In Laguna, the biggest pest problem is the increase of golden snails, which
eat away rice seedlings.
Insufficient Use of Fertilizers

Most farmers use chemical fertilizers. Although fertilizer is crucial in orderto capitalize on the characteristics of HYV, their cost is high (Box 38). For thisreason, farmers cannot invest in adequate fertilizers to achieve high yield (Box35).
Poor Irrigation Management

The ratio between irrigated and non-irrigated area in Laguna is nine toone. This figure is high relative to other provinces. But due to the poor18

WG-1 Economic Development in Laguna

irrigation systems, water supply cannot be adequately controlled in dry
seasons (Box 34). Therefore, the irrigated area actually available for the
production is not accurately reflected in the statistics. The large yield gap
between irrigated and non-irrigated area leads to approximately double yieldfor irrigated area. This gap is relatively large compared with other regions.
Insufficient Post Harvest Facilities

It is generally said in Japan that with the Green Revolution the introductionof agricultural machines has advanced. However, it seems that the number offarmers who own machines is still very low. For example, very few people
have mechanical dryers. As they are expensive, small scale farmers cannot
buy them. Also the number of cooperatives or communities which own them isstill limited. For these reasons, most farmers dry their rice on the road where
tricycles pass over them, thereby destroying the quality of the rice.
Rice produced during wet season cannot be fully dried due to the lack ofdrying facilities. Thus, this rice has higher moisture content, which lowers
grain quality and results in low farm gate price.

3.2 Agrarian Aspects
Sporadic Agricultural Extension Service

Due to inadequate government extension, farmers who grow HYV are nottaught proper methods of HYV cultivation. Without such instruction (Box 20),
they are unable to attain the full benefits of HYV uptake, thus creating a barrier
to high yield rice production.
With regard to other crops, .the Center for Rural Technology Development(CRTD) and UPLB are major contributors to dissemination of new technology.
They emphasize the implementation of their projects within the context of local
resources, priorities and feasibility. These institutions often meet financial
difficulties, however. After devolution in 1993, many agricultural techniciansfrom the Department of Agriculture (DA) became Local Government Unit
employees. This move, however, failed to improve the provision of effective
extension services, contributing to inadequate farm management, which inturn lead to higher incidence of pests and plant disease. Furthermore, few
farmers engage in crop diversification, which contributes to sustainablecultivation.
19

WG-1 Economic Development in Laguna

Inaccessibility to Formal Credit

Thanks to legislative measures, there would not appear to be a shortage ofcapital in rural areas 14l . However, it is still difficult for small farmers to obtain
access to formal credit. Because loans from credit agencies such as the Land
Bank and the rural banks require not only strict conditions but also tedious
processing, farmers are often discouraged from applying. The Agricultural
Credit Policy Council (ACPC) controls the provision of credit projects for small
farmers to invest in post harvest facilities and farm inputs. However, so far thisprovince has benefited little from these projects.

3.3 Marketing Aspects
Unless the marketing system functions properly, farmers cannot reap the
profits of increased productivity. The investment required to ensure the efficient
operation of the marketing system is so huge that individual farmers cannot
afford it. Therefore it is necessary for cooperatives and Governmentorganizations to provide farmers with marketing services. The leadership of anumber of cooperatives have recognized marketing as crucial but theirmarketing capability is insufficiently developed. 15l This indeed explains the16

persistence of middlemen in the retailing of farm produce. l Somefundamental factors related to the inefficient marketing system are discussed
below.
Insufficient Infrastructure

Farm-to-market roads are generally poor and the means of transportationis small vehicles. Thus, when there is a good harvest, it is difficult to transport
more products to market. Further this may result in depressed rural prices 17l .
Concerning the communication system, farmers have extremely limited accessto telecommunication facilities. This is a great disadvantage to farmers since
time is a crucial factor in marketing agricultural products, especially
14)

The Agri Agra Law has mandated the allocation of 25% of the bank's total loanble funds to theagricultural sector. Thus there were about P212 billion available funds in 1993.
15)

For example, Staff of the San Benito Multi-purpose Cooperative explained that they lacked marketing

information on the prices of watermelon and had to contract unilaterally with foreign buyers.
15>

However, it will be more costly to exclude middlemen from the marketing process under the present

conditions. (Agnes R. Chupungco, 1992)
17)

We recognized the production of india-mango as feasible to increase farmers' income in Sta. Maria.

The mayor, however, was afraid of price depression due to overproduction, because the market is very
localised.

20

WG-1 Economic Development in Laguna

perishables.
Insufficient Post Harvest Facilities

As mentioned earlier, because of a lack of drying and storage facilities
most farmers sell low grade products to middlemen at harvest time, when
prices are lower than average. Even with post harvest facilities, many
products are lost due to improper storage and transportation 18) •Ineffective Government in Extending Marketing Services

Though the National Food Authority (NFA) is in charge of all aspects ofmarketing in the agricultural sector, due to its budgetary constraint it can not
influence farm prices. It can handle only 5 % of rice trade and is thus unable to19

maintain sufficient buffer stocks l . While there are 5 NFA buying stations in
Laguna they are not integrated properly.
Inactive Cooperatives

The marketing capability of cooperatives is generally fragile. Mostcooperatives lack post harvest facilities, much less the ability to collaborate
with other cooperatives. Some organizations are, however, striving toestablish an inter-coop distribution network or integrated market center 20l .
According to the Philippine Medium-Term Cooperative Development Plan for
1993 to 1998, the Cooperative Development Authority (CDA) is detailed toencourage cooperatives to construct inter-cooperative networks and post
harvest facilities. It is doubtful, however, whether these projects are being
implemented properly.

4. Social Aspects
4.1 Influence of Surplus LaborIn the Philippines the number of industrial workers reached 4,115,000 in
18)

According to research by Yorobe, the loss in palay due to poor and inefficient post production isabout 10 to 37% of total harvest.
19)

To be effective, the support price mechanism must be implemented for as much for as 12% or

between 10 and 20% of the amount needed to be procured.
20l

The National Confederation of Cooperatives (NATCCO) is promoting intercoop trade to enableproducers and consumers to meet for direct commercial exchange.
21

WG-1 Economic Development in Laguna

1995. According to the latest statistics, the percentage of men and women is
16.7% and 14.2% respectively in the industrial sector. On the other hand,
unemployment rates increased in seven regions, especially in Laguna which
is a part of Region IV, Southern Tagalog, as can be seen by the change of
unemployment rates from 8.7% to 9.2%. The increase of unemployment
means surplus labour, leading to (1) increase of contract workers (2) flow of
workers to Agro-industry and (3) seasonal employment.
Moreover surplus labour leads to intensified competition between workers
in seeking jobs. This situation gives employers an advantage over employees
concerning working conditions (Box 44).

4.2 Case Study: Working Conditions in lnstafood Inc.
lnstafood Corporation of the Philippine is a wholly-owned subsidiary of
San Miguel. This case study on lnstafood focuses on labour conditions on an
assembly line.
In lnstafood there are two plants. Plant I manufactures instant foods suchas chicken curry, pork & beans, and Plant II produces Nata de Coco. The
whole process of Plant I is 1) preparation 2) blanching 3) cooking 4) filling 5)
sealing 6) cooking. In this process, assembly line is from 1) to 4). Male/Female
ratio for each section is given as follows 1) male 5% female 15% 2) m 10% f
0% 3) m 5% f 5% 4) m 5% f 30%. Total percentage between male and female
is male 25% female 50% in the assembly line.
For Plant II the process is 1) dicing 2) soaking 3) sorting 4) boiling 5) filling6) sealing 7) cooking. Assembly process is from 1) to 6). As regards to
manpower in each section 1) male 8% female 2% 2) m 4% f 1% 3) m 5% f
35% 4) m 5% f 5% 5) m 3% f 17% 6) m 7% f 3%. Total percentage between
male and female is male 32% female 63% in the assembly line. Derived fromthis situation is that more women are engaged in the assembly line than men
in lnstafood.
Moreover concerning other working conditions, most of workers inassembly lines of both plants are temporary workers. One reason for this isalmost all of the workers are high school graduates and college drop outs.
Therefore there are unlikely to be promoted in the company.
22

WG-1 Economic Development in Laguna

In the assembly line, 15 workers are engaged under 1 leader. 90% of theleaders are male, the remaining 10% being female. This may be due to thefact that employers think women are docile, patient, and possess hand
dexterity. In short , women face more hardships than men in obtaining
promotion.
According to collected data the workers hope their wage will go up. The
reason why promotion is important is because after promotion workers canobtain more money. However in lnstafood there is no promotion examination.
It is up to their supervisor's judgement. Because of this, assembly line workers
are rarely promoted. So a more transparent and objective system of skill
education and preferably a fixed examination should be introduced toincrease promotion opportunities for assembly line workers (Box 44).

5. Integration and Conclusion
In this final part of the research, we would like to integrate all of the aspects
presented hitherto, i.e., the macro-economic aspect, the industrial aspect,(divided into three sections - foreign direct investment, technology transfer
and rural industry), the agricultural sector (also divided into three sections marketing, agrarian and managerial aspects and rice production), and social
aspects. Although each section of the research may seem independent , all ofthem formulate the Laguna economy, and therefore are interrelated in many
ways.
Employment Linkage
Firstly, in accordance with A. Lewis' "Unlimited Supply of Labour" theory,

despite recovering economic growth (at 4.3% for 1994), there is a surplus oflabour in the western part of Laguna, which is a relatively developed area, as
well as in the eastern part of Laguna, which is being developed under the
CALABARZON plan initiated by the government. The mechanism behind this,i.e., high unemployment rates are observed both in rural and relatively
developed areas, is attributed to the fact that foreign transnational corporations
operating inside EPZ and industrial estates are not absorbing as much labouras they were expected to. It was hoped that such foreign investment would23

WG-1 Economic Development in Laguna

achieve significant unemployment reduction through smooth sectoral labour
flows. The reasons for this disappointing inelasticity of labour to GDP growth
are as follows;a) Because foreign firms tend to employ capital intensive and laboursaving technology, their effect on employment seem to be low in proportion to
the size of investment.
b) Because their operation period in the Philippines is still short,21

llocalisation has not progressed much yet. In fact, many TNCs are still
importing all parts and materials and exporting them to the foreign markets asreported in section 2.2. Consequently, the impact of FOi upon local industries
is still considered to be small.
On the other hand, it is pointed out that SMFs which use relatively
labour-intensive technology have a larger impact upon the local labour
markets than big transnationals.
One implication derived from the analysis above in terms of labour flow
linkages is the role of rural industry discussed in 2.4, which are generally
located in rural areas and use labour intensive technology. According to thecase study on handicraft industry conducted in Paete, it seems that thehandicraft industry is contributing to the rural economy by absorbing labour
surplus in rural areas as well as to the urban economy in that it contains
internal migration, thus mitigating rapid urbanisation.
The second implication in terms of employment generation is the role ofagro-industry in rural development of Laguna. Although some agro-processing
firms are located in industrial estates, they have a significant impact upon the
Laguna economy. In many cases, the technology used in agro-processing
industries is labour-intensive. In addition, agro-industry offers off-farm incomesto farmers, which could reduce fluctuations in farmers' income.
The third implication is that due to surplus of labour supply, bargaining on

21l

FOi in-flows started booming in 1992. Furthermore, most of EPZs and industrial estates were

formulated in the 1990's.

24

WG-1 Economic Development in Lagunalabour conditions is likely to be dominated by employers, which is detrimental
to the labourers' welfare, as argued in section 4.
Market Linkage
It is often said that agriculture plays significant roles in the early stage ofdevelopment. One of them is called "market contribution". That is to say,generally in developing countries, the demand for manufactured products is
not very vigorous in urban areas since the level of income is not very high.
Furthermore, most of the population in developing countries live in rural areas.
Roughly assuming that the market size is defined as the number of population
multiplied by the level of income per capita, the rural area has a critical role asa market for manufactured products, which are still not very competitive
internationally.
In this sense, the income level of the rural area where majority of dwellers
are engaged in agriculture could play a substantial role for industrialisation.
The income level of the western part of Laguna is relatively high in comparison
with other provinces due to overseas remittances and citrus production. 22 lThus, it appears that the western part of Laguna is contributing to thedevelopment of the industrial sector by functioning as a market for products
manufactured in the eastern part of the province.
On the other hand, the industrial sector contributes to the rural agricultural
sector in two ways. It is often pointed out that the food processing industry
accounts for approximately 40% of total value-added in the Philippine
industrial sector 23l . It is presumed that a large share of outputs in the
agricultural sector is absorbed in the industrial sector. In this fashion, theindustrial sector contributes to the agricultural sector. Conversely, low
productivity in the agricultural sector has a detrimental impact on the industrial
sector.
Secondly, it can be said that development of the industrial sector
contributes to the rural agricultural sector through reducing costs for farm
inputs such as tractors and chemical fertilizers owing to a productivity increase
22)

However, it is assumed that the level of income in the Western part of Laguna has been declining

recently due to a decreasing level of citrus production because of virus.
23lY. Sakakibara 1994

25

WG-1 Economic Development in Lagunain the modern industrial sector. Conversely, low productivity in the industrial
sector imposes relatively high costs upon the farmers through high agricultural
input prices.
One implication derived from the picture above in terms of market linkage
lies again in the rural agro-industry. That is to say, those inputs used in ruralagro-industry are purchased from the local market, namely, the ruralagri-market, which can improve the income of farmers.
Capital Linkage
The third linkage between the urban modern sector and rural agricultural
sector lies in the sectoral flows of capital. As mentioned earlier in this report, amajority of the population in the Philippines lives in the rural areas and isengaged in agricultural production. In other words, a large share of the nation's
capital is derived from the agricultural sector. 24l In this respect, the low level ofcapital formation owing to low level of saving ratio can be attributed to the lowlevel of income in the agricultural sector. One implication drawn from this isthat raising the income level of farmers is one of the most effective ways toimprove the nation's saving ratio as well as to ameliorate B&P position.
Concluding Remarks
Unlike previous three years, our research analyses not only themechanism behind the vicious cycle of poverty but also highlights themechanism behind the benevolent cycle of the economy. This is simply
because the Philippine economy has been gradually recovering from the paststagnation. Although presently the economy is demonstrating good
performances, high economic growth is likely to entail B&P deterioration due
to import surge of capital goods as well as inflationary pressure. In fact, B&P
position is already deteriorating and inflationary pressure rose in 1994.
However, with the political situation stabilised, the Philippine economy isbreaking away towards a new era for industrial development.

24>

The saving ratio of the Philippines is low -15% in 1994 - in comparison with the corresponding figure

for the other ASEAN countries - 25 to 30% on average. High saving ratio is normally observed in many
countries in the take-off period.

26

WG-1 Economic Development in Laguna

References
ACPC 1994 Performance Report Manila ACPCADB 1993 Gender Indicators of Development and Pacific Countries Manila ADB
ADB 1995 Asian Development Outlook Manila ADB
ADB 1995 Key Indicators Manila ADB
Agribusiness System for Statistical Information Services and Technology 1994 Market Bulletin
Series No 13 Manila Philippine Statistical Association, Inc.
ASSIST 1994 Market Bulletin Series No 21 Manila Philippine Statistical Association, Inc.
ASSIST 1994 Market Bulletin Series No 22 Manila Philippine Statistical Association, Inc.
Canlas, D.B 1990 Studies in Economic Policy and Institutions Tokyo Institute of Developing
Economies
Committee for Asian Women January 1995 Asian Women Workers Newsletter vol 14 No 1
Manila CAW
OLE 1995 Labor and Employment Statistical Report Manila DLB
Economic Planning Agency 1995 Asia-Keizai 95 Tokyo EPA
IBRD 1994 The East Asian Miracle N.Y. IBRD
Krugman, P 1994 "The Myth of Asian Miracle" in Foreign Affairs N.Y.
Lym, J.Y. 1992 Decentralization and Economic Development in the Philippines Tokyo IDE
Meier, G.M e.d. 1995 Leading Issues in Economic Development N.Y. Oxford University Press
Montes, M.F 1988 National Development Policies and the Business Sector in the Philippines
Tokyo IDE
Montes, M.F. 1989 Philippine Macroeconomic Perspectives: Development and Policy Tokyo
IDE
NEDA 1995 Statistical Year Book of the Philippines Manila NEDA
NSO 1995 Integrated Survey of Households Bulletin Series No 81 Manila NSO
NSO 1991 Family Income and Expenditures Survey Manila NSO
Ohno, Kand Y. Okabayashi 1995 E.C, NAFTA, Higashi-asia to Gaikoku-toshi Tokyo IDE
Paete municipal office 1995 Concise 5 years Development Program, Municipality of Paete
Manila PMO
Quesada, Eugenio C 1978 Paete- Sketchbook of a Filipino Town Manila Vera-Reyes, Inc.
Romeo B. Obedoza, Jr. 1995 Discussion Paper No 35 GSID Nagoya Univ.
Sakakibara, Y. 1994 Economic Development in Philippines Tokyo Nihon-hyoronsha
The Philippine Lumberman 1990 EEC-CITEM to Develop Philippine Woodcraft for the World
Market The Philippine Lumberman
U.N. 1994 World Economic Prospects N.Y U.N.
UPLB Rural Development Study Team 1991 Philippine Rural Development Problems, Issues
and Directions Manila UPLB
Umehara, Hiromitsu 1992 Philippine no Nouson Tokyo Kokinsyoin

27

Problem Structure Diagram :OFW. WG 1.a(37)ta A- ... 1,...,,1.;...,_ C';..J .... \28. Inactive CooperativeI
Ii)Markeling Networkiii)Market Information.

J27.Marketing Problems-

36.Low Degree
Diversification.~ 32. Low Level of Income I•Iofr------------------------------ ---------------------------------: 134.Poor Irrigation Management~ 33.Unstable Rice Production I
39.Inappropriate Farm~-------------------...
Management
,.

I
I
I
I
I

29.lnadequateMarketing service
from Government!)Price Policyli)Buying Stationsiii)Market Information
NOi)

30. Infrastructure to Support
Agriculturel)Transporationii)Lack ofTelecommunication
Facilitiesiii)Road Conditions to Market

i

(14)

I
I
I
I
I
I
I
I
I
I
I

1-tI
I
I
I
I
I
I
I
I
I
I
I
I

31 .Insufficient Post Harvest Facilityr,i)WarehouseIii)Dryersiii\Rir.P.mill~

35. Insufficient Use of Fertilisers

i---

1""1
I
I

I

--------------------·

1

I

~

(36)

~

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~
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42.lncrease of Pest and Plant,.......... Disease

t

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38.High Cost of Agricultural

37. Low Accessibility to Formal, - - Credit for Small Farmersi

Process of Formal Credit Sourcecs

(13

.g

Chemicals

:3
~10)

I

41.Strict Requirements and Tedious

0
.....

. 43.lnsufficientUse of Pesticides
~

I
I
I
I
I
I
I
I
I
I
I

40 .Sporadic Agricultural~

Extension Service

-

T

(20)

-------(Rice Producton )---------------------

~

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Probelm Structure Diagram:OFW.WG 1.b-I

13.1rtigh b,».ifSttrvlce Ratio

12.Low Level of
Productivityr - - - - _----,( FOi )

I

14. Inadequate
1Infrastructure

Urban Modem sectot
5. Inappropriate 1111onetary PolicyI!-t{30)
I

I
I
I

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(38}

co

,

(4 u_jg_Underdeveloped Local

Mlsm$Cteh

of

Compar-'ve

JA<:111~ With lndu&try PromotedJ.e••
Capital 'lntenstve ltldUslryr-----------------,

1145. Labour Condition

I------~---------'
N

2.

I

6. High Inflation

15. t.ow l,evel Of fOl IN-I I :10.Underdeveloped Capital
Goods Industry

11 .B&P Poblem

1.ll'd..-lal Policy Based against
AfirleliUal $ectOr bl.It 1n tavoor or

I

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0

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I

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3. High Unemployment RateI

44. Labour Supply Surplus(TT)

19. Inactive Private Sector
for Technological
Development

4. Low Level of Income
20.Slow Commercialisation
Diffusion of Technology

inl :8. Low Level of
Investment

Ir

17. Uniqueness ofTechnology Used

l3J r

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7. Low Saving Ratio

r-

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126. Small Profit

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18. Low Compatibility ofForeign Technology

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25.
International
Competition

Price!~

I~----------------------------------~

24. Insufficient Supply of
j22. Import Cost } - . j23. Appreciation of Wood Price.-jWood_________________________________________________ J

OFW.WG 1.Proposals of the Agriculture and Non-agricultural Sectors
Proposals

Co)

0

Fostering Capital Goods Localisation Promotion Unique Wood Face
Better Channel for
Industry
Zone
Technology Transfer
Objectives•
To reduce import•
To develop local•
Direct transaction with•High accessibility to newdependency ofindustry, especiallybuyer
technology
industrial structure
supporting industries.
•
Monitoring of communal •Speedy•To alleviate B&P
forestcommercialisation andproblem•Establishment of tradediffusion of new•
To improve absorptive
centretechnology
capacity•
Promotion of tourism•
To up-grade industrial
structure•
To ameliorate debt
Q_roblemTarget Population/Area Local firms
Labour Force
Handicraft manufacturers in SMEs
Paete
Local Firms
Executing Agencies
DTI
PEZA Regional Office
Municipal Government and DOST Regional Office
Provincial Governments
DTI Regional Office
Other related agencies
Manpower Implication
Local Firms
SMEs
Designers for innovative
Engineers
Foreign Capital Goods Firms
products
Financial Implication
Tax Incentives
Local Private Capital
Credits
DOST
Industrial Establishments
Export Earnings
Remarks
Emphasis on partnership
Till trade centre has been
between foreign andestablished, middlemen
domestic firms
should not be abolished.

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Issues of Construction
Program for
Bonds
Diversification
To utilise and mobilise
To make more funds
local resources
available for the
To promote multiple
improvement ofcropping for high valueinfrastructure at
added products
municipality and city

Proposals

Program for Marketing

Objectives

intensify the• Toestablishment•of new
coops•
Establishment of• integrated
marketingcentreEstablishment of post
harvest facilities
Target Population/Area Farmers
Coops

•

Executing Agencies

Manpower Implication

DA CDA ACPC NFA

on Coops CDA DA
Marketing

Financial Implication

Remarks

Specialists

ACPC LBP CRB DA DTI••levels.
Farmers
Coops

c.,

.....

•

Activating Stock and
Financial Markets
To supply adequate
capital forindustrialization
To reduce foreign capitaldependency

DA CARD PBSP UPLB

Agricultural Technicians for
Diversification
CRTD
DA LSD RCBs ACPC

Needs to consider thelocation for the production of
Q_erishables-~~

Households
Domestic and Foreign PortDomestic and Foreign Port- folio Investors
folio Investors
Department of Finance
Department of Finance
Department of Public Works Financial establishments
and Highways
Provincial Governments
Financial Specialists
Financial Expertise
Government Officials

0
:::,
0

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~

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Department of Construction
Provincial Governments
Department of Public Worksand Highways
Activating financial markets

Households

Deregulation of financial
markets and transaction

Program of Working Group-1a: Agriculture (OFW '95-PHI)

September

27
28
29
30

Wed.
Thu.
Fri.
Sat.

October

3 Tue.
4 Wed.
5 Thu.
6 Fri.
-7 Sat.

----9 Mon.
10 Tue.

(,)

A.M.

P.M.

Barangay Colaran, Sta. Maria (Green Revolution)
Barangay San Benito, Sta. Maria (Cooperative)
Barangay Talangka, Sta. Maria (Livestock and Cooperatives)
CEC, UPLB (Briefing by NGOs)

Barangay Colaran, Sta. Maria (Green Revolution)
Barangay San Benito, Sta. Maria (Cooperative)
Barangay Talangka, Sta. Maria (Livestock and Cooperatives)
CEC, UPLB (Briefing by NGOs)

Nag Carlan (Vegetable Production and Cooperative)
Alaminous (Fruit Production)
Rural Bank
Asian Development Bank (ADB)
Dayap, Calauan Cooperative under NATCCO

Calauan (Pineapple Production)
Bay (Flower Production)
Pasig, Rizal Agricultural Credit Policy Council (ACPC)The National Confederation of Cooperatives (NATCCO)
Dayap, Calauan Cooperative under NATCCO

-~
~

g
0

Calamba (Cooperative Development Authority Region IV Office) Calamba (Cooperative Development Authority Region IV Office:
A_g_ro Forestry.. __ _____________
Agro Forestry

N

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28
29
30

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Thu.
Fri.
Sat.

October

3 Tue.
4 Wed.
5 Thu.
6 Fri.
7 Sat.
9 Mon.
10 Tue.

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Coconut Oil Firm (Frank Baker), Cocomilk Industry
Wood Carving, Taka Production
Department of High Way (Provincial Office)Sari-Sari Stores

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P.M.
Nata de Coco Firm (lnsta Food)
Furniture Shop
Construction Site, Hardware Shop
Car Repair Shop

Jeepney Industry, Tricycle Industry
Public Market Management
Rural Bank
Asian Development Bank (ADB)
NGO (People Power)

Jeepney Management, Tricycle Management
Local Supermarkets
Pasig, Rizal Agricultural. Credit Policy Council (ACPC)
Department of Trade and Industry (DTI)

Laguna Techno-parkIndustrial Park

Coconut Oil Firm (Frank Baker)

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WG-2 Human Resource Development: Education and HealthWorking Group 2

Human Resource Development:
Education and Health

1. Introduction
Education and health services are expected to play major roles intransforming the Philippines into a newly industrialized country throughdeveloping human resource and their utilization. The type of human resourcesin demand is changing dynamically in Laguna where the economy is shiftingfrom a predominantly agricultural to an urban industrial base. Laguna has thesecond largest population in Region IV at present due to its prominent location
for rapid industrial growth. Annual growth rate of population averaged 3.05 %in Laguna against the national figure of 2.3 % during the period between 1970
and 1990, with tremendous impact on human resource management in theprovince. We looked into problems in the education and health sectors bymulti-faceted sector analysis which examines equity, efficiency, and relevanceof the sectors at the national, regional (Region IV and Laguna Province),school and hospital levels. The purposes of this report are to identify problems
and their linkages and to provide bases for policy recommendations in both
sectors.

2. Education
2.1 Overview
The focus of this fieldwork ·is mainly on general secondary education andtechnical and vocational education at secondary and post-secondary levels in
Laguna where the universal provision at the elementary level is nearly
achieved. It has also been proved in the recent literature that secondary
education has great significance in providing labor force to the growing
34

WG-2 Human Resource Development: Education and Healthindustry and service sectors in the economy. As to the elementary level, we
look into multi-grade classes and multi-shift schools, which represent a
trade-off between equity and quality of education.
We consider limited human resource development as a core problem andclarify the relationship between causes and effects in the problem structure(Figure 1). The linkage of causes and effects is shown in the clock-wise
direction, starting from administration and finance, followed by internal andexternal efficiency and finally leading to limited human resource development(Box 41 ).
The education system in the Philippines consists of 6 years of primary

s

g
e

1

education, 4 years of secondary education and 2 to 4 years of tertiary
education. Secondary education is free but not compulsory. Enrollment insecondary education has been increasing recently (Box 6). In 1994, 4,762,523
students were in secondary education, nationally up 18% from 1990. Thirty
two percent of the total students were in private schools in 1994. Total
enrollment in Region IV is 699,973, up 19.27% from 1990, and of which 39%

(

0

)

is in private institutions. In Laguna Province, 112,941 students were enrolled
in secondary schools in the school year (SY) 1994-95 and 46 % of them werein private schools.

2.2 Administration and Finance
Perennial population increase and incomplete reform of central
government have aggravated financial constraints in the national budget for
education in the Philippines (Box 1-3). Pressure of rapid population growth
accelerates increasing ratio of enrolling students up to 6 % annually on
average from 1991 to 1994.
The Department of Education, Culture and Sports (DECS) is the executive
agency responsible for administration and supervision of the education systemin the Philippines. DECS is currently reorganizing its structure to establish
Department of Basic Education (DBE), Commission on Higher Education(CHED) and Technical Education and Skills Development Authority (TESDA)
respectively by separating the administrative bodies of basic education, higher
education, and vocational education. In 1990, the Congressional Commission
on Education (EDCOM) was created to examine Philippine education as a35

WG-2 Human Resource Development: Education and Healthbasis for setting up legislative agenda.
Financial constraints on the education budget are rooted in two factors.
First, the heavy burden of debt service, which absorbed over 40% of thenational budget in 1991, limits the appropriation to education. In addition,
Internal Revenue Allocations (IRA) to Local Government Units (LGUs), enacted
by the new Local Government Code (LGC) of 1991 has increased theincidence of IRA transfers from 4% of the national budget in 1991 to about
12.4% in 1993. As a result, the education sector receives a rather modest
share of the national budget, which is 13-14% of the total expenditure in the
period 1991-1994, equivalent to 2.6% of GNP. For the SY 1994-95, P37.8
billion was allocated to DECS, which amounted to 11.8% of the national
budget.
Nevertheless, government commitment to education has consistently
expanded education outlays since the Free Secondary Education Law in 1987
and nationalization of high schools (Boxes 4,7). In 1988, the public secondary
education budget went up to P4.241 billion, representing a 180.68% increase
from 1987. Thus, its share of the total national budget went up to 23.97% in
1988, then in 1989 to 34.12% and in 1990 to 34.59%. Budget allocation forsecondary education in 1994 is P7 ,069,934 or 16.7% of the total, that is morethan five times of that of 1987. The allocation of educational budget for Region
IV was P 4,482,661,000

in 1994, corresponding to 12% of the total

educational budget and was one of the largest among the regions. The
nationalization of high schools in 1988 reduced the role of local government in
the financing of public education. Central government took over the finance ofthe nationalized high schools and the increasing personnel expenditure suchas teachers' salaries. However, lack of adequately sustained financial
commitment on the part of central government led to a rapid erosion of
resources to finance secondary education.
Meanwhile, in accordance with the LGC of 1991, the construction ofschools has been devolved to Local School Boards (LSBs). However, LSBs
have failed to take the responsibility for the construction of schools due to thelimited funds and the paucity of engineers and architects outside the Metro
Manila area. On the part of the central government, due to the increasing
share of personnel expenditures in the educational budget after the36

WG-2 Human Resource Development: Education and Healthnationalization of high schools, capital outlay and Maintenance and Other
Operating Expenditures (MOOE) per student have been decreasing, and theirfinancing is becoming dependent on scarce LGU and private sources (Box 8).
Thus, devolution has generated winners and losers among LGUs in delivering
educational services.
jr

On top of the high enrollment share of private schools, privatization of
education is supplemented by the government subsidy to private education.
This subsidy is known as the GASTPE (Government Assistance to Students
and Teachers in Private Education) program and has two components:
Educational Service Contracting scheme (ESC) and the Tuition Fee
Supplement (TFS) program. It is funded through the DECS budget to enable
youth from low income households to attend private high-schools andcolleges. To cope with the overflow of newly entering students (Box 5), DECS
has implemented the ESC since 1986, whereby students who can not be
accommodated in public high schools would be given a place in a private highschool and would pay tuition fees granted by the scheme at the rate not higher
than the cost per student in a public high school. From SY 1991-92 to
1994-95, the number of ESC grantees increased from 157,095 to 228,757. To
encourage further participation by private schools into the ESC scheme,
bureaucratic flaws such as the delays in implementation should be ironed out.
Another financing scheme is the TFS program which has been implemented
from 1989. In SY 1991-92, the government allocated P290 million forsecondary tuition fee supplement of one million private high school students.
However in the 1995-96, the number of TFS beneficiaries shrank to half amillion and the amount of allocation to P160 million.

2.3 Internal Efficiency
We assess internal efficiency of the education sector in terms of accessand quality criteria (Boxes 12, 13). Our main focus is on how to attain universal
access to quality education. However, many access and quality problems arefound in the education sectors at present.
AccessAccess to secondary education has increased dramatically since the Free
Secondary Education Law was enacted in 1987. However, the cohort survival
rate still remains at 72.47% in public secondary schools. Thus, universal
37

WG-2 Human Resource Development: Education and Healthaccess to basic education has not yet been attained at the national level.
Those who have not completed formal schooling become out-of-school youths(OSYs), and have limited access to formal job opportunities. Definig access to
education as equal opportunity to participate not only in schooling but also in
education of good quality, it is clear that access to quality education has notbeen universalized and guaranteed.
In Laguna, lack of classrooms is very acute (Box 9). There are two reasons.
The first is high enrollment growth due to free education and increasing
immigration, especially from Metro Manila. The second is the constraints
derived from incomplete devolution. Responsibility for building classrooms
was passed from the central DECS to LSBs. But funding does not match thedevolved functions. In consequence, there appear many overcrowded classes
and double or triple shift classes in urban areas. During our field survey, we
found classes of more than 67 students, far bigger than the DECS's standardof 56 students in a class. It brings very negative impacts on the quality of
instruction and students' achievement. At multi-shift schools, which we visited,schedule of school activities is divided into two sessions of morning classes
and afternoon classes. Although the teaching time is the same as that of single
shift schools at the elementary level, there is a problem in that low performing
students are forced to take afternoon classes which are often instructed by low
performing teachers. On the other hand, we also found combination classes
and multi-grade classes in rural schools because of low enrollment. In themulti-grade classroom, grade 1 to grade 3 students attend the same class andgrade 4 to grade 6 also study in the same classroom. As one teacher takes
care of students of three different grades all day, the teacher faces a heavy
work load. To mitigate the situation, sufficient training for multi-grade teachers
should be provided and teachers should be given additional incentives orcompensations for their hardships.
While tuition for both elementary and secondary levels is free, there still
exist other direct and opportunity costs (Box 10). The direct costs include
transportation, school uniform and materials. Transportation, in particular, is
one of the biggest financial burdens for poor households.
Many private schools are more cost-effective and internally efficient in theirdelivery of education services than pubic schools, which is indicated by their38

WG-2 Human Resource Development: Education and Healthbetter students' performance and low unit costs. However, access to theselSschools is limited to children of middle class families and above due to hightotuition fees and other direct costs incurred. Thus, cost-effectiveness and highininternal efficiency of private schools justify government subsidies to children of::>tpoor families who wish to enroll, so that universalization of basic education
can be achieved in the near future. However, there are some shortfalls in thegovernment subsidy schemes such as ESC and TFS. As to the ESC scheme,s.

better private schools, unable to collect their full operating costs from ESC~

beneficiaries, are withdrawing from the scheme. As to the TFS scheme,ssealthough it aims to maximize the number of beneficiaries, the tuition fees it
TFS students are required to pay the difference between subsidized tuition,5

fees and actual costs, which eliminates a large segment of the targetepopulation.

grants are substantially below the actual cost of private schools. As a result,d,fQualityj,

The ten-year length of basic education in the Philippines, which is shortersegthan many other countries, adversely affects subsequent performance atlo/regarding educational quality. Various policy reports examine the current four:,

year program and argue that the length of secondary education should be~

extended from four to five years. However, extending the current four-yearjsystem of secondary education to five years is an extremely controversial:,

issue. Especially for private tertiary schools, which mainly depend on their{tuition fees for revenues, lack of enrolling students in the year of extending:,

secondary education cycle would affect them adversely for subsequent years.

r

post-secondary and higher education (Box 11 ). The length of secondary
education is not only an access issue, but also one of the serious policy issues

The financial data of sample public schools which we visited shows thatbudget of capital outlay is zero. Maintenance and improvement of facilities isentirely financed by parents of students, whose incomes are low in rural areas.
Thus, disparities of school facilities and equipment have been widening
among schools.
According to the DECS standard, the textbook-student ratio is 1 : 1, but due
to dysfunction of the distribution system, universal provision of textbooks insome subjects has not achieved (Box 9). DECS has the capacity to publish
39

WG-2 Huma.n Resource Development: Education and Healthtextbooks for all students at 1 : 1 ratio, but schools do not have means oftransportation such as jeepneys to acquire them. Therefore, students in rural
areas have to share textbooks at around 1 : 2 ratio.
In addition, low quality of science and mathematics education impedes
further development of science and technology (S& T) manpower. The causesof the problem are three-fold. First, there is a large disparity in the provision ofequipment and facilities among schools. Particularly, science laboratories inpublic schools are in poor condition compared with those of private schools.
Second, the medium of instruction for science and mathematics is English,
followed by the bilingual educational policy (Box 11 ). Lastly, there is a
shortage of qualified science and mathematics teachers.
Quality of education, to a large extent, relies on effective performance ofteachers. In Laguna, there were 212 applicants for teaching occupation (male30, female 182) in 1995. However, the level of salaries as well as the working
conditions of teachers are very low. Although teachers' basic salaries were
upgraded by 76% under the 1989 Salary Standardization Law, recording afour fold increase between 1985 and 1995, teachers' salaries still start at
P4,900 a month, which is slightly above the poverty line. It also lowers thequality of new applicants to teaching occupations as well as the number ofstudents entering teacher training institutions (Box 9). Low salaries also cause
teacher vacancies for certain subjects.
The failure rate on the Professional Board Examination for Teachers(PBET) is as high as 70% on average between SY 1992-94. The PBET
should be reconsidered for its validity and appropriateness as a measure of
professional competence. It was enforced as a hiring requirement in 1994.
However, it is found that the non-PBET teachers still remain in many schools.
To enhance the knowledge, skills and competencies of teachers within thelimited budget, in-service training should be reinforced. DECS and teacher
training institutions conduct training programs at each of national, regional,
district and school levels. Nevertheless, its implementation involves a numberof deficiencies. For instance, training period is only 2 days to 1 week and it isconducted only once a year at provincial or school levels. There should be
more school-based in-service training, with schools involved in theidentification of their own training needs. Furthermore, it should be delivered40

WG-2 Human Resource Development: Education and Healthdirectly to classroom teachers, particularly to those without appropriatequalification and training in the multi-grade and science classes.

2.4 External Efficiency
External efficiency of the education sector is determined by the relationshipbetween education and its political, social and economic impacts. The
dysfunction of the educational system indicated in low internal efficiency
usually leads to the poor external efficiency such as limited empowerment ofsociety, low level of social mobility, irrelevant skills and low productivity ofgraduates. We will focus on vocational and technical education in detailbecause external efficiency is particularly important in this field. We consider atwhat costs graduates are produced and how they perform in the labor market.
First, empowerment of society is the most up-to-date issue. Empowerment
is attained through the process of education. Education is expected to promoteparticipation in political activities, conscientization and identification as a civil
person. However, as internal efficiency of the educational system in terms ofaccess and quality is low, education can hardly play its role to empower
people (Box 19).
Second, in spite of tuition-free policy of secondary education, opportunity
costs and direct cost of education still remain a heavy burden for low-income
families. Children are regarded as valuable labor force and therefore can notseek further educational opportunities. This constrains their opportunities togain occupations with high income potentials. Thus, most children in the
low-income families end up with low social mobility (Box 20).
Third, educational prevalence has strong relationship with economic
growth, whichshouldbe examinedfrom both supply and demand

perspectives. At the supply side, formal and non-formal education is essential
for developing manpower bases. Above all, vocational and technicaleducation play a central role in providing occupational skills. At the same time,
low quality of vocational education and irrelevant skills lead to low productivityof graduates (Box 21). At the demand side, in the adverse economic
environment, there are persistent problems such that human resources can
not be fully utilized. As elaborated later, the most serious problem in thePhilippines with regard to human resources, is the lack of employment41

WG-2 Human Resource Development: Education and Healthopportunities in the country, which pushes people to seek employment as
overseas contract workers (OCWs) and leads to brain drain.
Technical and vocational education is currently provided by threeagencies (up to December 95) : DECS at the secondary level; TESDA which
was transferred from the National Manpower and Youth Council (NMYC)
taking charge of the post-secondary level and OSY; and CHED which focuseson the tertiary level. However, the overall quality of training is still low on thewhole because of irrelevance of training programs, shortage of facilities, lackof funds and so on. High costs of updating technical and vocational education
programs compound the problems (Box 9). Training programs are no longer
relevant to the changing skills needs in industry. There is a serious problem ofmismatch between the graduates from training institutions and the demand of
the industry. Furthermore, delivery system of training programs is not adequate
and training opportunities are not available in some urgently required areas. In
1992, the proportion of mismatched skills still stood at 95.1 % and matchedskills remained as low as 4.9% at the national level.
It should be noted that some private training institutions are committed toproviding updated programs conducive to the changing needs in industry as is
adopted by Dual Technical Center in Don Radon A. Yulo Campus and Don
Bosco School in Calamba. The dual training system is an innovative
vocational training program that combines two places of learning - the school
and the factory. It is expected to enhance the quality of skills provided while
matching the needs of labor market and boost the employability of thegraduates. However, this kind of training center is still scarce. To upgrade theskills of graduates and enhance their trainability, close cooperation between
schools and companies should further be established.

2.5 Human Resources and Labor Market
The size of the labor force in Region IV ranks second in the country at 3. 7
million (12.9 % of the national labor force), of which 3.38 million are employed.
The Labor Force Participation Rate (LFPR) in 1995 registers 64.6 %, up by
0.9% from 1994. On average, LFPR in rural areas is higher than that in urban
areas.
In 1995, 25.2 million (or 43.3%) of the employed labor force in the whole42

WG-2 Human Resource Development: Education and Health

)

1

s

3

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country had finished only elementary education, 8.22 million (32.6 %)secondary education and 5.2 million (20.48 %) higher education. The bulk of
elementary graduates are absorbed by agricultural or manufacturing sectors
as farmers or unskilled labors. While those laborers without sufficient skills andeducation have limited access to scarce formal job opportunities in thedomestic labor market, those with advanced skills are not fully absorbed by the
economy due to low wages and poor working conditions (Boxes 14,15). This
poor condition of domestic employment adversely affects the labor force.
Highly qualified workers such as engineers and medical doctors and others
who can afford to go abroad take overseas employment in order to get better
payment and thus constitute Brain Drain or OCWs (Box 16).

f
f

3
~

In addition, OCWs, who are originally semi-skilled workers and some
professionals like school teachers, have become a significant issue (Box 17).
The number of OCWs has increased dramatically, especially in the Middle
East. In Region IV, the number of OCWs was 144,000 in 1992 and most ofthem were male. It was also found that OCWs increased by 184% from theyear 1984. From the economic point of view, OCW workers help the Philippine
economy through their remittances to the country, however, it often involves
negative social problems such as dispersion of families and loss of needed
professionals such as teachers and technicians. These overseas employment
opportunities impede establishment of middle-layers in the Philippine society.
Therefore, government should consider macro economic policy measures ofcreating more domestic employment opportunities in the formal sector, and at
the same time regulate minimum wages and improve working conditions.

3. Health
3.1 Overview
The status of health in the Philippines has improved gradually, althoughprogress has been slower than· that in other Southeast Asian countries, largely
because of limited financing for adequate health care. The LGC was passed
in 1991 and has been implemented since 1993. All the Department of Health(DOH) facilities at the local level such as barangay, municipality, provincial
and cities were devolved. This devolution is expected to bring improvements

43

WG-2 Human Resource Development: Education and Healthin that local government will be more accountable for the services provided
and adopt these services to local needs, and that inefficiency of the central
bureaucracy will be corrected at the local level. On the other hand, LGUs are
inadequate in resource management, which means potential increase in costand adverse impacts for the poor. This section will mainly discuss the impactsof devolution on the health sector in Laguna, in terms of three aspects: 1)
administration and finance; 2) health care; and 3) family planning.

3.2 Administration and Finance
Changes in Management

Since the Philippines has chosen a radical restructuring of health service
organizations, changes in sector management remain uncertain. In theprocess of the devolution, LGUs are required to establish a Local Health
Board (LHB), which consists of provincial health officers, NGO representatives
and DOH personnel. It is the advisory body for policy-making. However, in
Laguna, they have never held meetings to discuss policy issues including thecontroversial policy on family planning. The functions and effectiveness of theboard should also be discussed. In terms of operations and maintenance of
health services, DOH sends representatives to monitor and evaluate theprograms. It is however crucial for LGUs to establish their own effective
monitoring and evaluation systems for the health sector.
Fiscal Impact of Devolution

After three years of implementing LGC '91, budgetary constraints are asignificant issue, especially in LGUs with poor resources. In most LGUs, theissue is more serious now than before the introduction of LGC '91. Because of
inadequate local financial resources, LGUs cannot afford sufficient health andrelated services. The national government's IRA is provided to the different
levels of LGUs. While provinces and cities receive the same share of IRA,
provinces shoulder 60% of the total cost of devolution for health services andthe cities shoulder only 2.5%. Thus there appears to be a mismatch between
IRA allocation and expenditures for devolved functions.
Devolved Health Manpower

At the beginning of devolution, about 45,000 DOH employees weretransferred to the more than 1,700 LGUs. However, many of those devolved
workers were forced to join LGUs which were not ready to accept them. In
44

WG-2 Human Resource Development: Education and Healthterms of salary allocation, 50% is provided by the national government andanother 50% by LGUs. It is hard for 5th and 6th grade municipalities to pay thesalaries of their health personnel.
NGO Participation
LGUs encourage private sector participation in the delivery of healthservices. NGOs and people's organization take part in LHBs. It is critical for
LGUs to establish productive relationship with NGOs in order to make up forthe gaps in the coverage of health services, which arise from the limited
target areas of NGOs (Box 31 ).

3.3 Health Care
The 1994 health status of the province of Laguna is shown by the following
indicators: the crude death rate was 2.29/1000 (compared to the national
average of 6.76/1000); infant mortality rate was 18.39/1000 (national rates,
53.95/1000); and maternal mortality rate was 0.29/1000 (national rate,
3.5/1000 in 1993). Thus Laguna is faring much better than the nation's
average. However, there is room for further improvement.
Maternal & Child Health Care (M.C.H)
The place and attendance of delivering children is important for maternaland prenatal health. For 1994 in Laguna, only 22.29% (5,358) of the 24,037
births were in governmental or private hospitals and 77.17% (18,549) weredelivered at home. These births were administered by midwife (58.70%),
trained or untrained "Hilot" a traditional midwife in the Philippines (31.40%),other than doctor (7.70%), or nurse (2.20%). Most home deliveries, which
account for 77 .17% of the total deliveries, are risky because of insufficientequipment and poor sanitation.
Health programs such as immunization and food and micronutrient
supplementation have been carried out; however, these are still insufficient interms of their sustainability.
Water and Sanitation
Laguna has achieved the rate of 85.46% of households served by safe
drinking water and 85.13% equipped with sanitary toilet facilities. Although45

WG-2 Human Resource Development: Education and Health

Laguna Province shows among the highest provincial percentages, intensified
and well-coordinated efforts by LGUs are still needed to fully eradicate
incidence of results from the vicious cycle of disease, malnutrition and poor
environmental sanitation (Box 35).
Facility and Equipment

As of 1994, there are 167 Barangay Health Stations (BHSs) out of 673
barangays in Laguna, with the ratio to population 1:9,357. When villagers can
not receive treatment at BHSs due to insufficient medicines and inadequate
medical equipment, they have to go to a hospital or to another BHS which has
doctors and appropriate medical supply and facilities. Accessibility is of criticalimportance when acute problems arise (Box 43).
Including both governmental and private facilities, the hospital bed topopulation ratio was 1: 1,117, slightly higher than the standard ratio of 1: 1,000.
However, disparity in occupancy rates exists between governmental hospitals.
Governmental hospitals have. also suffered from poor maintenance andinsufficient medical instruments and supplies. Private hospitals usually havesufficient health facilities and equipment, but they are expensive for the poorand middle income families (Boxes 32-35).
Health Manpower

Numbers of medical personnel are also insufficient in Laguna. For
example, from 1993 to 1994, only the number of dentists increased. In order toincrease trained manpower, especially in rural areas, training programs areneeded for midwives and health workers (Box 30). Furthermore, absorptive
capacity for highly trained manpower is low (Box 29). According to a professorof the School of Health Science, University of the Philippines, Manila (UPM),
most graduates of UPM prefer to work abroad. Even if they work in thePhilippines, there are not so many professionals willing to work in rural are~s,
because of low salary, low job security, insurgency, preference for urban life,
and insufficient medical facilities and equipment which constrain full use of
their technical ability. Insufficiency of trained and highly trained personnel aswell as health facilities, equipment, and supplies are largely attributed to thelimited political will and financial capacity of LGUs (Box 23).

46

WG-2 Human Resource Development: Education and Health

3.4 Family Planning

The goal of family planning programs is not only to reduce fertility but also
to improve and maintain health of mothers and children by providing accurate
and timely information and services.
Demographic Picture
The population in Laguna increased rapidly from 1.25 million in 1991 to
1.56 million in 1994, making it one of the most populous provinces in thePhilippines. Although this population growth (1.24%, in 1994) is mainly due tointernal migration, especially from Metro Manila, fertility rate is still highespecially in rural barangays (Box 40).
Low Contraceptive Prevalence
Although contraceptive prevalence rate in Laguna is 28.3% in 1994, that at
the national level is 40% which is the lowest in Asia (Box 39). LGUs are
directed by DOH to promote artificial contraceptive methods rather thannatural ones. On the contrary, the newly elected governor of Laguna decided
to prohibit artificial contraceptives in 1995. He is a member of "Opos Del",
which follows Catholic Church teachings opposing artificial contraceptives(Box 37).
The other factor accounting for the low contraceptive prevalence rate is the
men's negative attitude to using family planning methods (Box 38). Womenare forced to take contraceptive methods which may have side effects, forexample, IUD, pills, tubal ligation, because men are usually reluctant to use
condoms in family planning. According to key informants we met, it is also
believed that using condoms is associated with prostitution and AIDS. It is
important to introduce proper education programs on AIDS into familyplanning.

3.5 Information, Education, Communication, Motivation (I.E.C.M.)
I.E.C.M. is one of the most important components of health care and familyplanning. Lack of I.E.C.M. also causes less accessibility to health services andfamily planning information. Some organizations, for example, DOH and
UNICEF, practice mass information campaigns. However, they are weak atmonitoring and evaluation. Although seminars such as mother's classes are
sometimes held, the number of seminars is few, and attendance is also low as
47

WG-2 Human Resource Development: Education and Healthmothers are busy.
As a whole, most people are not interested in the condition of their own
health. Unless they go to hospitals or health stations by themselves, theycannot gain access to health services. To promote I.E.C.M., it is necessary to
train health workers, promote community based information and education,and increase coverage of house to house services (Box 35).

4. Concluding Remarks
As we have discussed, the process of developing human resources
involves many issues in both education and health sectors. Especially, with aview to sustainable socio-economic development, utilization of humanresources is another key issue; that is, educated and healthy human resources
developed by the education and health sector will be wasted unless they are
well-utilized in the economy (Box 18). However, in fact, the absorptive capacityof the formal sector in the domestic labor market is extremely limited, and onlya small portion of workers occupy these positions. Among the rest of humanresources, some flow overseas either as Brain Drain or OCWs, and others takejobs in the informal sector or remain unemployed. Simultaneously, thecapacity of human resources must be maximized through the social sectors,
and also developed human resources must be fully utilized.

References
Adriano A. Arcelo, Alcestis M. Guiang, et. al., Secondary Education in Asia: A ComparativeStudy
Of Alternative Patterns Of Develpment, Finance And Positioning 1960-1990,
Case Study: Philippines.
Andrew Burke and Peadar Mccann, 1993, Teacher Education and Teaching in the Philippines,
Metro Manila: Asian Development Bank.
Antoine Schwartz, 1995, The Philippine: Cost & Financing Issues In Education, Education andSocial Policy, Wshington, D.C.: The World Bank.
The Congressional Commission on Education (EDCOM), 1993, Basic Education vol.1, The
Educational Ladder, Book Two, Making Education Work, Quezon City: Congressional
Oversight Commission on Education.
The Congressional Commission on Education (EDCOM), 1993, Post-Secondary Education And
Training vol.2, The Educational Ladder, Book Two, Making Education Work, Quezon
City: Congressional Oversight Commission on Education.
48

WG-2 Human Resource Development: Education and Health

The Congressional Commission on Education (EDCOM), 1993, Governance And Management
vol.4, Areas of Concern in Philippine Education, Book One, Making Education Work,
Quezon City: Congressional Oversight Commission on Education.
The Congressional Commission on Education (EDCOM), 1993, The Financing of Philippine
Education, vol.5, Areas of Concern in Philippine Education, Book One, Making
Education work, Quezon City: Congressional Oversight Commission on Education.
DECS Region-IV, 1994 and 1995, DECS Region-IV (Facts & Figures).
Department of Health, 1993, Reponding to Questions on Devolution of Health Services, Metro
Manila: Department of Health.
Department of Health, 1995, The 1994 DOH Annual Report, Metro Manila: Department of
Health.
DOLE Bureau Of Labor & Employment Statistics, 1992, Labor Supply-Demand Profile, National,
1992, Databank.
Dualtech Training Center, Dual Training System: A Primer, Inkwell Publising Company, Inc.
Gems & Jewels of Devolution in Health, 1994, 3rd Anniversary Celebration Local Government
Code Implementation 10 October 1994.
Laguna Provincial Health Office (LPHO), 1995, Laguna Provincial Health Office Annual Report
1994, Santa Cruz: LPHO.
Ntional Statistics Office, 1994, National Safe Motherhood Survey 1993, National Statistics
Office, Metro Manila: National Statistical Office.
National Statistics Office, 1995, 1994 Philippine Yearbook, Metro Manila: National Statistics
Office.
The World Bank, 1994, Philippines Devolution and Health Services : Managing Risk andOpportunities, Washington, D.C.: the World Bank.
UNICEF, 1995, Progress of Provinces of the Philippines 1995 Mid-Decade Goals for Children,
Metro Manila: UNICEF.
UNICEF, 1992, Situation of Children and Women in the Philippines, Metro Manila: UNICEF.

49

Figure 1. Problem Structure Diagram
Education and Health {WG-11)!Ed~B<t8fti101rr1 ~~1c«Gft1g1[1'lrliei~!ft~u S00foo11r

1
Administration& Finance

4

5

OVerflowof

6

Immigrants

3 lncompleted Reform of

7

Central Government

31

LimitedParticipationof NGOs

2

22

Inadequate
National Budget

r

LGU

32

14 15

Specialized Private Hospital

23 Limited Financial

2 g Low Absorptive
Capacity of Highly
Trained Manpowe(Doctors Nurses)

33 TertiaryHigh Occupancy Rate

(24

Low Salaries(25 Lack of Training

)

(JI

0

InsufficientEquipment & Facility

Secondary

38 Lack of(21 Lack of Medicines)

Trained
Manpower(Midwife. H.W.)

28
Govemo(sProhibition of
Artificial
Contraceptives

II

Lack ofClassrooms

6

Internal Efficiency

External Efficiency

Limited Provisionof School

11

Equipmentf---+ 6
Maldistributionof Textbooks

19

LimitedEmpowerment(Political)

Low Level ofResource
DevelopmentJ

I I fl 2

Non Universal
Access to Education
(OSY)

I

\

Out of date &irrelevantTraining Program
Low Teachers·
Salaries

I

JI

Poor Health

1B
High Birth Ratet-------------__J

Unulilized
Human

21

Low Productivity(Economic)

I I 11

LimitedQualifiedTeachers

JI I

39
35 Primary12, 13~·:~!:~

11,.--Bilingual

c:;;~~n~~)Legacy of
Catholic
ChurchOverseas Employment

38

Low
Consciousnessof Men forContraception

16

Brain
Drain

Overseas
17 Contract
Workers

3

<I>

::i

~

g.
::i
II)

Cl..

1
1~;;:

Education Policy

37

.g"

::i

15

LimitedFormal Job
Opportunities

C)
<I>
<I>

~

Low Qualityof Education( Low Achievement in
Science, Math.,
Tee., Voe.)

Tuition Fee

conditions(Low Wages&
Job Security)

C:

C:

Ir

1I

14 Poor working

::n

<I>

Ct)

0

~

JI I

Resources

Labor Market

Inadequate I.
E.C.M.

I

I

Social Mobility(Social Equity)
/

11 I

13

36
48

19

I

:r:
C:
~::i
0<I>

41 Limited Human~8 Municipal Disparity)

~

g

41

26

16 17

~

OUUay
and Maintenance ~ - - - - - - ' • , - - - - - - - - - ,t)Unprepared

Nationalizationof High Scool

8 Insufficient Capitalt

Pressures of
School-aged
Population
Expansion

capacity of LGU

Expensive

Increasing
Enrolment

Excess Financial
Burden on DECS

for Social Sector

H.C . & F.P. - - - - - 1

2

Short Periodof Bask:
Education

OFW '95-PHi
Graduate School of International Development, Nagoya University

:r:
<I>
II)

s

I

j

I \._ ~, . ., ) \.

I

Workers)I

I I '- ---"""" / I I

OFW '95-PHi
Graduate School of International Development, Nagoya University

Table 2.

Proposals of the Education and Health Sector

Pro poss ls

Capacity Building for Resources
Management

Universal Access to Quality
Education

Private Sector
Involve

Access to Family Planing andPrimary Health care

Capability Building andMobilization of Local Health
Board

Objectives

1) Increasing Capital Outlay &Maintenance and Other
Operating Expense throughMobilizing Resources
2) Enhancing Managerial
Capacity of School
Administrators

1)Extending Length ofSecondary Education from 4 to 5
years2) Assistance to Reduce Direct
Cost3) In-service Teacher Training

1) Rectify Mismatch of Skills by
Combining School and In- Plant
Training Program (Dual Tech)
2) Fulfilling the Abilities andValues Conducive to Productivity
and Competitiveness1) Increase and Sustain the
Program of F.P. and P H.C.
2) Training Program for Rural
Health Personnel
3) Maximize Participation ofPrivate Sector

Strengthen the Capability of LHB
and Activate the LHB Role (1) in
Social Mobilization to Improve
Health Services, (2) Coordination
among DOH, LGUs, and NGOs,and (3) Monitoring and
Evaluation.

1) Schools of disadvantaged
conditions
2) School principals andprovincial/district officers, Local
School Boards

1) Secondary & Tertiary Schools
2) Students from Low-income
Family3) Multi-Grade Teachers
Science & Math Teachers

TargetPopulation/Ares

1) &2) OSYs, Secondary
Graduates, Existing Labor Force

1) People who Need F.P. and
P.H.C.
2) Midwives and Social Workers,
Local Administrators
3) Private Sector

LHB Members, DOH Officers,
Local Chief, NGOs Executives

~

I\)

t

~::i
lJ

(!)

er,

Executing
Agencies....

1)DECS and Local Government
Units2)Training Institutions (e.g.
Asian Institute of Management,
MBA Course)

1) DECS, CHED
2) DECS Division/District
Offices, LBSs, Schools
3) DECS, Teachers Training
Institutions, UPISMED, RSTCs

1)&2) TES DA, Private Technical& Vocational Schools, Industrial
Establishments

1) Local Government Officers,
School Principals, Teachers,
Parents, Community Leaders
2)1nstructors of Training
Institutions

1)DECS, CHED
Planners/Researchers,
Politicians2)DECS District Officers, School
Principals, Custodians,
Education Cooperatives, Related
Private Sectors, PTAs
3)Supervisors, Teacher Training
Instructors

1) Industrial Coordinator in
Monitoring Training, Training
Instructors, Churches

1) Local Companies,
Communities, PTAs
2)DECS, Training Institutions,
Overseas Funds

1) Increased Budget for
Secondary School (25%), Lossof Entrance & Tuition Fees forHigh Education Institutions,
Overseas Funds
2) Local Funds
3) Local & Overseas Funds

1) Industrial Establishments, Tax
Incentives
2) Industrial Establishments,
Training Institutions

1) ,2) IRA, Municipality Funds
Raising, Foreign Aid (USAID,UNFPA, UNICEF, JICA)
3) Coorperate Funds

IRA, Provincial Funds.Foreign Aid1)0ptimum Allocation of
Mobilized Resources is
Required.
2)Evaluation of Managerial
Capacity is Required1) To Mitigate Political Factors is
Required2) Monitoring and Evaluation is
Essential
3)Direct Delivery to theClassroom Teacher Level

8 mths. Basic Theoretical
Training at School, and 20 mths
Practical Training in Plant'Involvement of Men in F.P. andImage of Contraceptive Useshould be Improved.
'IRA should be Allocated to the
Poor LG Us Until the Devolution
Process is Completed.
'Further Reserch will be Required
at UPLB to Identify the Effectsof Devolution in the Province.

Close Coordination among DOH,
LGUs, NGOs is Essential.

1) Regional Health Office2) DOH, PGH3) NGOs

DOH, Provincial Health Office,
NG Os

c::

rl

(!)

CJ

(!)

a;

U1

Manpower
Im pl/cations

01) Baran gay Health Workers,
Midwives, Barangay Captains
2) Medical Instructors3) Supervisors(DOH, LGUs,
NGOs)

Provincial Health Offcers, DOH
Staff, NGOs Staff, Management
Training Consultants

.g
3

(!)

::i
!"'!"

~
~

a"·

::i
II)

Financial
Implications

Remarks

::i

0.

::c

(!)
II)

§:

Program of Working Group-2a: Education (OFW '95-PHI)

A.M.
September

27 Wed.
28 Thu .
29 Fri.

October

3
4
5
6

Tue.
Wed.
Thu.
Fri.

P.M.

Office of the Planning Services (DECS)
Department of Basic Education
DECS Region IV Office
National Manpower and Youth Council (NMYC)
Department of Labor and Employment (DOLE)

Technical Education and Skills Department Authority (TESDA)
National Educational Testing and Research Center (NETRC)
Asian Development Bank
UNICEFDECS Office in Provincial Government OfficeSecondary School (Urban), Elementary School (Multishift)
Vocational School (NMYC), Vocational School (TESDA)
Teacher College (Public), NGO (pre-shool)

Secondary School (Rural), Elementary School (Multigrade)
Secondary School (Private)
Technical School (Private)
JICA Project Office (Science and Math Education, U.P. ISMED)

~I\)

f
:0
Cl)
(/)

0

c::

0Cl)
9 Mon.
1O Tue.

U1

Collecting Supplementary Information (DECS)
Collecting Supplementa_ry Information (DECS)

~

!

I\)

g:

!""!"

Program of Working Group-2b: Health (OFW '95-PHI)~

A.M.
September

October·P.M.

27 Wed.
28 Thu.
29 Fri.

Department of Health (DOH) (on the Implementation of LGC '91 & Health Care/ Family Planning)
Philippine General Hospital (PGH)
U.P. Diliman
WHO
UNICEF

3 Tue.
4 Wed.
5 Thu.
6 Fri.

DOH Office in Provincial Government Office
Provincial Hos_pital
Municipality Hospital
Barangay Health Centers (2 Urban and 2 Rural)
NGOs (Health Care/ Family Planning/ AIDS)

9 Mon.
1O Tue.

Collecting Supplementary Information (DECS)
Collecting_ Supplementary Information (DECS)District Hos_pital
Private Hospital

!i1
g.
::,

~

Q.

l

~

WG-3 Environment and Infrastructure

Working group 3

Environment and Infrastructure

l)U)

) ()
J LJ..J

:i

e.
C:

.Q

<ti
E
,_

0

C:

~

cu

C:

Q)

E
Q)

0..

g-

:i

I

)C)

!~
)0

) ()

Members

ii~

: I-

....

>10

1

2
3

4

5

Student#

Name

Nationality

WG

95105
95120
95217
95115
95211

Kamo,Sachiko

JaQan

3a

Yamada,Yoshiyuki

JaQan

3a

Pongyelar,SUQQakarn

Thailand3b

Toyoshima,Kaori

JaQan

3b

Tsuchi~a,Takahiro

Japan

3b

53

WG-3 Environment and Infrastructure

Working Group 3

Environment and Infrastructure

1. Introduction
Working Group 3 carried out research on environment and infrastructure
problems in Laguna. This report focuses on the following 5 aspects - forest,
water, land use & housing, and urban service/garbage. Laguna Province has
two important characteristics relating to our concerns. First, it has rich natural
resources - Mt. Makiling, Laguna de Bay and the forest surrounding it - whichmeans that it has to take care of them. Secondly, population also has been
expanding continuously with high growth rate. According to the JICA report(1991 ), the social population growth rate in Laguna province was predicted tobe 3.4%, contributing about 97% in the total population growth rate of 3.5%.
This rapid population growth has brought about a variety of urban andenvironmental problems, including urban sprawl, deforestation and waterpollution in the province. In the following sections we consider thesequestions, and then put forward five policy proposals. Instead of waiting fornational government programs, we suggest alternatives taking into accountthe limited capabilities of LGUs, especially in terms of finance.

2. Environment
2.1 Forest
Deforestation
One fifth of the Asian and Pacific region's lands is forested. However, theforest is disappearing at the rate of nearly four million ha per year, largely
because of the need of a growing population for fuel and cultivable land.
Trees are replanted is at only half that rate. Countries that were once major54

)WG-3 Environment and Infrastructure

exporters of wood are now net importers. At current rates of harvesting, theregion's remaining timber reserves will disappear in less than 40 years. Suchdeforestation has been partly responsible for air pollution, soil erosion,
degradation of watersheds, and disappearance of wild animals. Forests aresites of vital ecological activity, so if they disappear, many problems will
occur 1l.
In the Philippines, too, deforestation or too much cutting of trees is a crucial
national problem. Forest resource depletion is taking place at an alarming
rate with the growing population in the country today. Out of the original 15
million ha of forest lands, only 6.46 million ha are left. Approximately, 6.5
million ha of open and denuded lands need immediate rehabilitation.

Nonproductive land accounts for 1.79 million ha. Less than 1 million ha are oldgrowth of virgin dipterocarp forest 2l . Deforestation causes soil erosion, which
is one of the most pressing national problems. One of the major causes of soil
erosion is farmers' activities in upland areas. Since the agricultural capacity oflowland areas has decreased due to slash and burn and other destructive
farming methods, the lowland farmers are forced to move to the uplands andcultivate using lowland agricultural techniques. Furthermore, the land tenure
situation aggravates the problem. Poor upland farmers do not have any land
tenure, so all of their activities are illegal. As the farmers do not have long term
control of the land, they practice destructive ways of farming without
considering their sustainability. This puts further pressure on the alreadyfragile upland ecosystem, and the upland farmers become poorer.

Government Programs and Projects
To answer these crucial problems, the Department of Environment andNatural Resources has been carrying out various programs and projects likethe Integrated Social Forestry Program (ISFP), Community Forestry Program(CFP), National Forestry Program and so on. Especially the ISFP aims to
uplift the socio-economic condition of forest occupants and at the same time
maximize the use of forest land and ensures ecological stability. This programprovides forest occupants, like upland farmers, security of tenure over the landthrough a long-term stewardship contract. The participants are given technical1)
2)

DST, "The Environment Program of The Asian Development Bank." Asian Development Bank.
The data are indicated by Department of Environment and Natural Resources (DENA).

55

WG-3 Environment and Infrastructure

support and offered livelihood opportunities. Involvement in the programsmeans that the upland farmers' activities are regulated. However, all over thePhilippines, there are still many similar problems in forested areas and thedegradation of forest is still going on.
Problems in Laguna Province
In Laguna province, our working group observed serious degradation of
the forest/watershed. One of the crucial causes of degradation which theworking group observed was squatters' activities in the uplands (Box 5). The
term "squatters" refers to those occupants who do not have any legal land
tenure. Due to industrialization and rapid urbanization in Laguna Province(Box 20) , the poor have been forced to leave their original land. The modern
industrial sector generates few employment opportunities for them. Hence,some of them have moved into the upland , where they practice "slash andburn" farming (Box 6) and illegal cutting of trees (Box 2). As an alternative,these squatters should be provided with other appropriate livelihood
opportunities through training on agro-forestry or given security of tenure
under ISFP. However, in the case of Mt. Makiling, the land is owned by the
University of the Philippines Los Banos (UPLB), and mountain residents try to
get tenurial agreement from UPLB authorities. No satisfactory agreement has
yet been reached.
A further difficult environmental problem is the temporary garbage
dumping site at Mt. Makiling (Box 12). This dumping site was selected by themunicipal government of Los Banos. However, its location will affect the water
quality of Laguna de Bay. According to the municipal government, there is noland available to relocate this dumping site, because about 60% of the land in
Los Banos is owned by institutions like UPLB and the International Rice
Research Institute (IRRI). Our working group also observed uplandscavengers at the dump site. They select valuables to sell and dump leftovers
directly into the creek. Such action is dangerous for the watershed andquality of water. However, this activity is their livelihood.
In the case of Los Banos, inadequate monitoring system and poor project
management by the local government unit have contributed to theperpetuation of the above problems.

56

3

WG-3 Environment and Infrastructure

2.2 Water
Laguna de Bay is located in CALABARZON region, which is a growthcenter of the Philippines. Under the rapid urbanization and industrialization
Box 20), the lake is used for various purposes such as navigation, reservoir,
ouseholds, fishery, power plants, industry and agriculture. These humanactivities are damaging the water quality of the lake, and countermeasures areas yet insufficient. Our working group observed water use by industries,
households, a poultry house, a piggery and a fishery. These are certainly
contributing to deterioration of the lake environment through water pollution,siltation and flooding.
Water Pollution

There is a common consensus that Laguna de Bay is dying due to waterpollution. According to Laguna Lake Development Authority (LLDA), thepollution sources and their contributions are the following; industrial waste
30%, domestic waste 30% and agricultural and animal waste 40% (box 19)3l.
Particularly, the influence of industries on water quality is critical because they
contribute not only to organic pollution but also toxic and hazardous
contamination.
Of the industries around the lake, only 69% have wastewater treatment
facilities. However, some of them operate their treatment facilities only when
they are inspected by the regulating agencies. A researcher of a blue-chip
entrepreneur said that manufacturers have been able to dump waste wateranytime without processing because monitoring is rare. Moreover, there aremany small industries not counted or included in official monitoring, which
discharge waste water into the lake.
Siltation

The condition of Laguna de Bay is intimately linked with the watershed in
the mountain areas around the lake. Denudation of the watershed areas due
to illegal logging and farming (Sox 2, 6) directly affects the quality of the lake inthe form of soil erosion (Box 7). The lake is gradually becoming shallower. Its
depth is now only 2.8m though it was 7m previously.

31

LLDA, "Laguna de Bay : problems, issues and proposed solutions" Laguna Lake Development

Authority.

57

WG-3 Environment and Infrastructure

Flooding
After heavy rain, flooding can be seen in some coastal areas of Laguna deBay. This is a recent phenomenon. Denudation allows water to pass directly
into the lake. Due to siltation, the shallow lake cannot absorb the increasing
volume or quantity of water. Besides, the Manggahan Floodway, constructedto divert the flood waters from Metro Manila, does so at the expense of thesurrounding communities.
Economic Costs of Laguna de Bay Degradation
These degradations have negative impacts on economic activities (Box15). Water pollution severely decreases fishery and poultry productivity.
Annual fish production has fallen from 80,000 metric tons in 1964 to 8,376
metric tons in 1989. As a result, the number of fisherfolk working the lake
decreased from 13,000 in 1964 to 8,620 in 1983.

Poultry industries inbarangay in Calamba also decreased from 80 in 1994 to 10 in 1995 because
pollution of the water killed a large amount of shells which are feed for poultry.
In the long run, contaminated water also will affect human health.
Flooding contributes to decreasing agricultural productivity. In most of the
agricultural areas situated to the west and south of the lake, flooding generally
occurs 1 to 2 times a year resulting in a 10% reduction of yield. In severely
flooded areas, flooding lasts from 2 to 5 weeks. Yield reduction of crops isabout 60%.

Flooding also interrupts road transportation and may cause

sanitation problems4l .
Conflicting Use of the Lake
As shown in the problem structure diagram, each cause of degradation is
the result of more fundamental factors.

These are short term profit

maximization due to low public awareness (Box 26) and overall low capabilityof government (Box 3, 4, 8 and 9).
Many people do not realize or care about the impact of their activities on
the environment. Some fisherfolk believe that the more feed they give for fish,
the bigger the fish become. Their short-term profit maximization results in

4l

LLDA, "Laguna de Bay : problems, issues and proposed solutions" Laguna Lake Development

Authority.

58

1

1,

1

t

WG-3 Environment and Infrastructure

water pollution, and they lose long-term profit. Even those who are aware of
he deterioration of the lake do not cooperate with each other to improve water
quality because they never seriously mind water pollution until it directlyreduces their own economic profit. Therefore, inter- and intra-economic
sectors have been unable to overcome their short-term conflicts of interest. On
the other hand, regulating agencies like LLDA and DENR which should play
an important role to coordinate conflicts of interest are incapable of
implementing their proposed standards due to inadequate facilities,
personnel, funds, and political feasibility.

3.lnfrastructure
3.1 Land Use & Housing
Land speculation (Box 27) and urban sprawl including illegal land
conversion and squatter settlements (Box 21) are observed in Laguna
Province. These are mainly due to industrialization and rapid urbanization inthese areas (Box 20) which are receiving the spillover of population from
Metro Manila, and in-migration due to the lure of employment opportunities inthis province. As a consequence of land speculation, the housing supply for
low income households is decreasing. On the other hand, squattersettlements in the province are expanding (Box 28). Land speculation also
stimulates land conversion, including illegal uses. For many areas there areno land use plans, and even when land use plans exist they do notnecessarily work to control such informal land conversions, since they are
frequently outdated (Box 17).
Land Use Plan

Industrialization and rapid urbanization have also caused an explosion of
garbage (Box 16), waste waters (Box 19), and squatters in upland areas (Box5) . Furthermore, as mentioned above, there are no land use plans for many
areas, and in other areas land use plans are outdated. This hinders
sustainable land use and results in problems including inadequate road
network (box 18) and temporary garbage dumping sites (Box 12). In theprovince, only 17 out of 30 municipalities have land use plans. Further, forexample, the latest land use plans of Calamba and San Pedro municipality59

WG-3 Environment and Infrastructure

were drawn in 1981 and 1982 respectively. In addition, since a new roaddevelopment project for the province has been studied at the national level,
even rural municipalities should immediately start the formulation of land use
plans. In sum, municipalities, including even those in remote areas, should
quickly update and/or formulate their land use plans.
Housing
Subdivision developments have been implemented by the private sector
and by the National Housing Authority (NHA). Some subdivisions put up by
NHA are for households below the poverty line. However, there are somesubdivisions where people actually live in only about 80% of the lots and theremaining 20% are for land speculation. In effect, those subdivisions are for
middle/high income households including the Overseas Contract Workers(OCW). Actually, low income households have not been able to afford the"low-cost" houses due to skyrocketing land prices and costs for building
materials.
In Laguna Province, many squatters have settled in various places. One
case is along the Philippines National Railways (PNR) lines. Since thesesquatters have "approval" from influential persons under the name of PNR,
they can live there. However, newly migrating people can not get the"approval." Influential people living around there rent houses or rooms tothem. In another case, a squatter in Macabling, Santa Rosa, rents a house toanother squatter. The reason many squatters are living in Macabling is thegood environment for children, such as air, water and education. But on
weekdays some fathers of the children stay elsewhere, near to theirworkplaces (eg, in Manila,) and they come home only on weekends. The
other case are the squatters living in the lakeshore of Laguna de Bay in Pila
Municipality. These squatters face the problem of losing their houses andlands on account of the law which says that the lakeshore areas aregovernment lands. Presently discussions are being held to make them legal
land owners through the help of some institutions and NGOs. Furthermore, theOCW are popular even among squatters. Many people have built or have
improved their houses in the subdivisions or slums by the remittances fromtheir family members working abroad.

60

WG-3 Environment and Infrastructure

,d

d,
;e
Id

Government & Individual
Government agencies have inadequate capability to monitor urban sprawl(Box 9). Coordination among related agencies and inhabitants is also weak
(Box 3). Government units have not successfully hammered out an effective
strategy to promote housing provision for the poor. As mentioned earlier, local
governments have been required to formulate/update their respective land use
plans which are a basic tool for controlling urban problems. On the otheror

hand, "people-centered development" should be considered together with)Y"community-centered development", because people tend to recognize the19term as "individual-centered development.",eor

3.2 Urban Services I Garbage

rs

Waste disposal is a subject of dispute all over the world. The Philippines is,eno exception. Population growth and change of life styles have brought agvoluminous increaseingarbage.

LagunaProvince

has two criticalcharacteristics with respect to the garbage problem. First, Laguna Province
contains Laguna de Bay. Laguna de Bay is becoming polluted because of,einsufficient garbage disposal systems in the municipalities surrounding it. The

39

denudation of the watersheds also triggers off pollution of water resources

R,(Box 14). Second, Laguna Province faces rapid population growth, mostly due

19o migration, which contributes to the increase in the amount of garbage (Box

to

16).

to

adequate garbage disposal technology and collection services (Box 10, 11 ).

he

The subdivisions are sometimes established without any thought for effective:miirgarbage disposal and collection, thus resulting in the putting up of temporary

Many newly constructed subdivisions have had difficulty introducing

garbage dumping sites (Box 12).

he

'ila

AdministrationndSince the enactment of the Local Government Code of 1991, all cities andreunicipalities (LGUs) have already been responsible for their own garbagegal'1l anagement.

The following observations are based on the fieldwork at

theCalamba, Los Banos, San Pablo, San Pedro, and other municipalities.

veoreover, it must be noted that these LGUs are located in the western part ofDmaguna Province which is facing rapid urbanization.
Admittedly, National Government Agencies (NGAs) give no financial
support to LGUs.

However many of them show concern with the garbage61

WG-3 Environment and Infrastructure

problem by formulating guidelines, and sometimes exert authority with respect
to this problem. For instance, LLDA has the power to close the open dumping
sites which might cause pollution of Laguna de Bay. The NGAs in charge ofpreparing and approving land use plans, such as the Housing and Urban
Development Coordinating Council (HUCC) and the Housing and Land Use
Regulatory Board (HLURB), also require systematic waste and garbage
disposal schemes. LGUs attend a meeting in Manila once a year conductedby the Presidential Service Office (PSO), the monitoring agency under direct
presidential control. LGUs must submit reports on garbage and receive someadvice from the PSO. However, there is no information exchange between
LGUs.
Garbage Collection
In general, the LGUs we studied have a few garbage collection dumpcars
and one garbage dumping site each. They provide garbage collection
service, but this is limited mainly within the central town area. In two
subdivisions we visited, one received the service from the municipality once amonth, and the other was negotiating to be included. In order to dispose theirgarbage, inhabitants sometimes hire a private contractor or dig pits in theirbackyards where garbage is placed. We also saw the same situation in otherbarangays. LGUs are unable to set up the necessary systems to keep up withthe extremely rapid urbanization.
Garbage Disposal
According to the officer in Calamba, there are three alternatives for
garbage disposal. These are as follows; 1)"Zero waste management"2)incinerator 3)sanitary landfill. "Zero waste management" is a kind of
campaign and an effort to reduce garbage by recycling it. The scheme wasoriginally implemented in the municipality of Santa Rosa. Though it is a very
attractive scheme, implementation is not easy on a wide scale without
increasing public awareness. The incinerator is the best way for garbage
disposal in the long term perspective. The problems are huge construction
costs and residents' opposition. Sanitary landfill is described as the mostfeasible way to carry out garbage disposal. Actually, LGUs have dumping
sites. However, many of them remain open because filling land also costs toomuch to maintain. In general, garbage disposal is so expensive for LGUs withthat they are unable to introduce the requisite technology. At open dumping62

WG-3 Environment and Infrastructuresites, many scavengers are engaged in garbage selection, as mentioned
oefore.
Perspectives

Although some LGUs have the over-optimistic vision that present dumping
sites will be usable for the next 50-100 years, alternative projects are being
planned or implemented in some spearheading municipalities. As mentioned
earlier, "Zero Waste Management" has been examined in Santa Rosa. San
Pablo plans to construct an incinerator-cum-electricity generation systemhrough the BOT scheme, to be supported by USAID. In Barangay Macabling,nhabitants managed to collect garbage as a part of the barangay
development plan. They pay P10.00 a week as a contribution on a voluntarybasis. Oildrums are also provided for garbage and jeepneys are lent for
garbage collection. River cleaning is also done. In this way, they are
struggling to manage the increasing garbage problem within their limited
capabilities and not depending on overseas funds.

3.3 Transportation
Infrastructure plays an important role in supporting the resumption of urban
growth and industrialization in the Philippines.
Roads, one of the most essential infrastructure elements for the promotion
f economic

development, is the prime mode of transportation in
ALABARZON area. Jeepneys and tricycles serve as the prime means ofansportation.
According to the JICA report, a basic transport system exists in the
CALABARZON region except Quezon province, with relatively better standards:,,an in other regions. The characteristics and deficiencies noted are as
ollows:- The mismatches in demand and supply in a number of locations of thetransport system. That is, there is insufficient capacity andsub-standard structures of the existing roads in several heavy traffic
sections- Inadequate intra-CALABARZON road transport network- Inadequate maintenance63

WG-3 Environment and Infrastructure

As observed by this working group, the existing problems especially in
Laguna province are basically the same as cited in the JICA report, namely,
the mismatch between road development and numbers of vehicles (Box 22)
which also leads to the problems of traffic congestion (Box 29) and air
pollution (Box 23). The main causes of these problems can be classified into
three categories as follows:
HardwareThe "hardware" problem of transportation in the Region IV area is mainly
caused by the inadequate and unbalanced road development and planning
network. In the national road level, the spill-over of Metro Manila population
has been increasing the volume of traffic in Laguna province. However, thenational government units involved in easing the problems are implementing
four main road projects to decongest Metro Manila as well as the adjacentprovinces. These are the following:- the widening of the existing Calamba - Los Banos - Bay Jct. roadproject- Manila - Cavite toll expressway project ( completed in Sep.1994)- Ternate - Kabien road project- Laguna - Quezon - Famy road projectAt the municipal and barangay road level, according to the 1991
Devolution Code, municipalities are responsible in monitoring and financing
the road construction including maintenance on their own.
Another problem found is that despite the guidelines, road networks
among subdivisions are not integrated with those of existing networks or withnew projects because they fear that their roads might be damaged andinterfered with by high volumes of outside traffic (Box 18).
Moreover, at the barangay level, due to financial constraint, roads are all
one-lane partly paved with concrete. In the harvest season, the road space isutilized for grain drying, which can slow down the in-out barangay traffic.
Furthermore, the use of re-conditioned engines and the improper
maintenance of jeepneys and other public vehicles because of the need tomaximize profit by the owners (Box 24) are also taken into account as one of64

WG-3 Environment and Infrastructure

e main causes of air pollution.
Software

Aside from the above mentioned "hardware" itself, "software" such as traffic:ontrol system and management: traffic lights and signs (which are said to beeasily damaged by the heavy rainy season and floods) are hardly found inaguna province. Traffic signals for all vehicles are manually managed byattic policemen despite the shortage of the police force in most of the areas.
For instance in San Pedro Municipality, there is only one policeman per 3,000
opulation. For that reason the traffic volunteers are required to guide theraffic in particular areas. Moreover, there is inadequate training and... ommunication system for them to properly and effectively guide such heavy
attic.
One more important issue that must be mentioned here is weak regulationand law enforcement.

For instance, the vehicles are improperly registered-Box 25), particularly with respect to jeepney capacity. That is, jeepneys are
1jesigned to be 8-seaters but actually are accommodating as many as 20
oassengers. This results in far higher smoke emissions. This is one of the..,.,ain causes of air pollution.
umanware"Humanware" is among the extremely important factors identified as theoot of various problems obstructing development activities. Social aspects,
orms such as the low awareness, individual characteristics, and the lack of
j 1scipline of both drivers and pedestrians, also induces the occurrence of the..,;, oblems discussed.
Lastly, one more root problem is the weak coordination efforts among
ational government offices and local governmental units. This , for example,..esults in delays in various project studies such as road and traffic system
maintenance, and consequently to the making of ineffective policies due to thernproper identification of relevant problems.

65

WG-3 Environment and Infrastructure

4. Proposal•LAWA LAGUNA 96
Looking for Alternative Waste Approach in Laguna
As mentioned earlier, the Los Banos municipal government does not havean appropriate dumping site, and this situation is the same all over Laguna
Province. As population rapidly grows, more dumping sites are needed, but
now it is difficult for municipality to find appropriate, safe dumping sites. The
other problem is that current dumping sites are hazardous for the environment.
Hence, our working group proposes that preliminary studies on potential
dumping sites in Laguna Province should be done by national level agencies.

• Eco-stamp
The targets of this project are industries located around the lake. Though
the number of the industries is smaller than other polluters like households
and farmers, industrial effluents have worse effects on the environment.
Therefore, first priority should be put on the industries, for maximum benefits
with minimum effort.
Eco-stamp project, which gives an "eco-stamp" to environment-friendly
products, can give these industries the incentive to improve their waste water
treatment facilities through the market mechanism and also can enlighten agreat number of consumers in the Philippines on environmental issues.
• GARBAGE 21
Government Assistance in Rural Barangay for Alternative Garbage Education
Garbage 21 is a kind of public education on garbage treatment. In Laguna
Province, people pay scarce attention to the negative effects of their own
garbage. They sometimes throw their garbage anywhere (mountain, river, lakeand so on) particularly in rural areas. It is important to develop not only anefficient garbage treatment system but also to increase public awareness.
Through subjects and training programs in elementary schools, pupils
would enhance their awareness on the garbage problem. As well as
increasing their awareness of garbage problems and learning effective
techniques in school, people should put this knowledge into practice as the66

WG-3 Environment and Infrastructure~::Jation demands.

•JESTRON_eepney Stops & Road Network in Laguna

e

a

Jt

e
t.
l1

h

s

In order to decrease traffic congestion, planning and coordinating road
networks, especially in the subdivisions, should be promoted. Bay areas for.!eepney (bus) stops on major roads in Laguna and in subdivisions should;. so be established. This project needs the coordination of related agencies,.:"'"l ainly in each of the municipalities. Moreover, traffic education for Jeepney I
13 .is drivers and passengers is also needed.

•Jeep Cap '96..,eepney Capacity Control '96
Municipalities are encouraged to formulate a proper public vehicle"egistration procedure, with particular attention to passenger capacity.

s
References

V
Ha~JB, ''The Environment Program of The Asian Development Bank." Asian Development
Bank.
JST, Participatory Environmental Conservation and Development.
--DA 1994, " Accomplishments" Laguna Lake Development Authority."_LOA 1995, "Accomplishments" Laguna Lake Development Authority."..LOA, "Laguna de Bay : problems, issues and proposed solutions"Laguna Lake
Development Authority .
..,!CA Study Team 1991, The Master Plan Study on the Project CALABARZON,Japan

a

,
e
n

International Cooperation Agency.
DPWH, "Project Profile of Construction, Improvement and Concreting of Alternative Roads."
Department of Public Works and Highways (Region IV-A).
HLU RB 1994, National Urban Development and Housing Framework 1 993-1998 , Housing andLand Use Regulatory Board.

:,

e

67

Figure 1. Problem Structure Diagram

0[ru(Q] ~w~(Q] M@O

Environment and Infrastructure (WG-111)

1
Few Employment
Opportunities
in Modern Sector

,,

6
' l

~@[?@:,,~1!

9, 26

+

12

Practice of
Slash & Burn
Farming

Insufficient
Garbage Collection
Service

'

1'

+

4

-•

23

Risk of Forest I Watershed
Degradation

13

-

3

10, 14, 19,22t

4
Insufficient
Financial Resources
and Equipment
Insufficient
Human Resources

_..

9

•

14

Deterioration of Laguna de Bay
Siltation
Water Pollution
Fishery
Flood
Eutrophication
Fewer Fish Species~tDeteriorationof Opportunities
of
Economic Activitiesf5, 12, 14, 19, 2325,31

+8

.
1,

'W@i!@[?

•

Land Speculationt~,_4
Decreasing
Housing Supply for
Low-income Households

~3.9

,r

t

1·

~--

Graduate School

3(1)
~

~4

J
2

~3,9,26()

C:

Air Pollution

~

29

(b

Traffic
Congestion~

3, 4, 8, N4l~... ~6

0.

S{I)

23

~9,26
24 lmpropec
tllehicle Maintenanc

25

1

~

~~

Mismatch between
Road Development &Number of Vehicles

Damageof Roads

30

Waste Waters
Industrial
Agricultural
Domestic

Squatter
Settlements

Illegal Land
Conversion

3, 4, 8, 9 ___.,
19

~

l)

,19

Poor Compliance
22of Road Network~
among
Subdivisions~29,30

27

:::,

'

18

~5

Inadequate
Monitoring

7, 10, 14, 17,~ 1 9 . 22, 28-30@@W@[?[ru ul])@[ru1!

-'

14, 18, 19,25

Weak Coordination ~23,29~29,30among
Related Agencies
Ineffective
8
and Inhabitants
Policies/Projects.__
Poor
Implementation

t

~

28

I f
_4
r--17
21
Outdated I Absence
Land Use Plan
Urban Sprawl~(Municipality)

River
Ground Water
Pollution

l

19

~

~

Temporary
Garbage
Dumping Sites

Industrialization
andRapid Urbanizationin Laguna~Industrial/Domestic

~1
i l

9 ...

ExplosionofGarbage--Upland Farmers
Scavengers~

Externalization of Social Costs
Profit Maximization

20

16

Inadequate
Introduction of
Garbage Disposal
Technology

Squattersin Upland

Illegal
Logging

_. 7

10

~ 5

~t

2

0)
Cl)

,20

Low Public Awareness51 lL@lru(Q] GD@@, ~ ~@()l]@~[ru(g)

,,

3.4.

@@[?~@@@

,,

• 15

26

Improper Vehicle
Registration(Overcapacity)

4, 8, 14._a,9,26

31

Overloading

- +9

-

IJ[?@[ru@[P)@fltr@i!~@[rup-12, 14, 19, 23-25-

"U

"U

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0

en

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Ill
:::,1
0

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<O

3
12.
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Ill

i

g_

::r

"U

O"
Ill

iii"
3

(")
Ill

en
.._

'<

e1npn1JSf1JJU/ pue JU0UJUOJ/t\U3 S-EJM

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Ill

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CD
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69

Table 1 Proposals of the Environment and Infrastructure Sector
Proposals

Objectives

.....
0

LAWA Laguna '96
Looking for Alternative
Waste Approachin LagunaEco-stamp•Preliminary Study on
Potential Dumping Sites
in Laguna Province•Recommendations ofProper Dumping Sites
for Municipalities•Rewarding EnvironmentFriendly Products(Reduction of Industrial
Waste)•Raising Public Awarenesson Water Pollution®

GARBAGE 21
Government Assistance in
Rural Barangay for
Alternative Garbage
Education

JESTRON
Jeepney Stops& Road Network
in LagunaJeep Cap '96
Jeepney Capacity
Control '96•Garbage Treatment
Education•Enhancing Public
Awareness of Garbage
Collection/Disposal• Planning/Coordinationof Road Network•Design/Establish Bay
Areas for Jeepney (Bus)
Stops•control on Public Vehicle
Capacity(Registration Procedure)•Guideline for Jeepney Operators
to Realize Problems Related toOvercapacity

Target•Laguna Province
Population/Area•Industries around the Lake •Pupils in Elementary•Consumers
Schools(Philippines)(Laguna Province)•Subdivisions•Major Roads in Laguna•Jeepney (Bus) Drivers•Jeepney Assemblers•Jeepney Operators(Laguna Province)

Executing
Agencies•DENA ,LLDA•LGUs•Local NGOs

•DENA, LLDA, NEDA, DTI
•LGUs
•NGOs

•DENA, DECS
•Municipalities(Laguna Province)•Municipalities(Laguna Province)•HLURB, LTO, DPWH

•Vehicle Registration Office(Municipalities)•LTO

Manpower
Implications•Environmental Engineers•City Planners•Land Surveyors•Community Organizers•Mass Media•Illustrators•PR Section of Respective
Companies•Teachers of Home
Economics•Municipality Offices•Garbage Experts• Urban Planners•Technical Assistanceof National/Provincial
Gov 't Agencies Concerned•Vehicle Registration Officials(Municipalities)•LTO Engineers•Jeepney Drivers' Associations

Financial
Implications•Overseas Funds•Normal Budgets of
Respective Entities
Concerned•Municipality and DECS
Budgets•Municipality Budget•Developers Fund•Higher Investment Required•Low Maintenance Cost

Rom arks•Based on the Study,
Municipalities will SelectProper Dumping Sites•Eco-stamp Design Contest •Training Programs are•Putting the Eco-stamp on Developed by LGUs in
the Environment-Friendly
Accordance with their
Products
Garbage Situations•Seminar for Private
Developers•Traffic Ed. for Jeepney(Bus) Drivers/Passengers•Support from LGUs and Agencies
Concerned outside the Pilot
Area

~
~

~

:S.

a

::,

:3
(1)
::?.
ll)

::,
Q..

s......

iil
(/)

2
0

C:

a:

Program of Working Group-3a: Infrastructure (OFW '95-PHI)

A.M.
September

27 Wed.
28 Thu.

Laguna Lake Department Authority (LLDA)
Department of Agrarian Reform (DAR)
Department of Public Work and High Way (DPWH)

29 Fri.
October

3 Tue.
4 Wed.
5 Thu.

-

6 Fri.
7 Sat.

P.M.

Department of Environment and Natural Resource (DENR)
Department of Tourism (DOT)
Housing and Land Use Regulatory Board (HLURB)

Calamba Municipal Office
National Housing Authority (NHA)
Lumbres Motorworks and Machine Shop
San Pedro Municipal Office
Eco-tourPeople's Coalition (AKLAS)
Low-cost Housing
Crossing-Real Tricycle Operators
Pobla~ion Tricycle Operators & Driver's Association
NGO (KASAMA)
Eco-tour

~

Ci.)

gi

:s.

9 Mon.
1O Tue.

~c3::JLand Transportation OfficeSelf-help Project

3(l)
~

Ill

::J

Q.

S-

J

Program of Working Group-3b: Environment (OFW '95-PHI)

fJ)

A.M.
27 Wed. Laguna Lake Department Authority (LLDA)
28 Thu.
Department of Agrarian Reform (DAR)___________
D_e,__pa_rt--'-m_:_::_en'--'-'t=-=-of Public Works and Highways (DPWH)
29 Fri.
September

October

P.M.

Department of Environment and Natural Resource (DENR)
Department of Tourism (DOT)
Housing and Land Use Regulatory Board (HLURB)

3 Tue.
4 Wed.
5 Thu.
6 Fri.
7 Sat.

Los Banos Municipal Office
People's Coalition (AKLAS)
Community Environment and Natural Resource Qffice(CENRO) Dumping Site in Mt. Makiling Forest
Industrial Estate (Ebara-Benguet, Coca Cola)
Duck Industry, Piggery
Paete Municipal Office
NGO (KASAMA)
Eco-tourEco-tour

9 Mon.
1O Tue.

Paete (Wood Carving, Taka Industry)
San Pedro Municipal Office

Fishermen's Organization

2
()

C:
<ti

WG-4 Institution Development

Working Group 4

Institutional Development

Members

1
2
3
4

5
6
7

National it~

WG

AmyCa~manUSA

4aAndin Hadiyanto

Indonesia

4a

Tomoki Hirose

Ja~an

4a

Etsuko Kawasaki

Ja~an

4b

Hideaki Baba
Scarlett Hui-Tzu Yang

Ja~an
Taiwan4b

Yuko Hamada

Jae.an4bStudent#

Name

95205
95102
95215
95106
1
95121
95317

73

4b

WG-4 Institution Development

Working Group 4

Institutional Development

1. Introduction
Institutions play important roles in the pursuit of development. In the recent
development decades, both Local Government Units(LGUs) and Non
Governmental Organizations(NGOs) have been at the forefront ofdevelopment. With the enactment of the Local Government Code of 1991,
these institutions have the capability to play an even larger role in thedevelopment process.
Through the Local Government Code, various powers and functions weredevolved to Local Government Units to enable them to become self-reliant andself-governing bodies as well as effective partners with the national
government in development pursuits.
Another aspect of the Code, empowerment, is to be promoted throughNGO participation in various levels of Local Development Councils and other
LGU organized activities. NGOs have also been provided with a means topromote empowerment on both the individual and the community level.
Within this context, Working Group IV has investigated the organization,functions and the development promotion aspects of these two institutions. A
summary of the problematic situations and the proposals of both working
groups (IVA and IVB) are presented below.

74

WG-4 Institution Development

2. Development Administration and Finance(Government Organizations)2.1.

Introduction
Development administration and finance in Laguna Province is an
integrated part of local government development in the Philippines. The
constitutional legal basis of local government is section I, article X of the 1987
Constitution which provides that political subdivisions of the state are theprovinces, cities, municipalities, and barangays. As local governments arecommunity-based political institutions, they are closer to the people than any
other branch of the government. The primary functions of these multi-tiered
local authorities are interest articulation and political representation, including
socio-economic development, all designed to improve the quality of life of theirconstituencies.
While the constitution guarantees the existence of these Local Government
Units, they perform their functions and tasks guided primarily by the provisionsof the Local Government Code of 1991 (Republic Act No. 7160), the mostcomprehensive legal document concerning local government administration in
the Philippines.
The premise of the Code is devolution, meaning the transfer of certain
powers and authority from the· national government to LG Us. In other words,
the extent of devolved power and -authority largely measures the degree of
local autonomy. Local autonomy, in an ideal sense, implies that LGUs enjoy ahigh degree of independence in managing, deciding and planning their own
administrative, fiscal and development affairs, and that the national
government reduces its power over them to one of minimum supervision. The
move toward local autonomy involves the recasting of highly centralizedadministrative structures to allow and encourage local initiatives in planningand decision making on matters which affect the community as well as
enhance the technical and administrative responsibility and accountability of
those who plan, decide, and implement local development projects andprograms. They involve the transfer of resources, personnel, equipment andother assets from the central to the local level. On top of this is one crucial
element, the transfer of power itself.
75

WG-4 Institution Development

2.2. Devolution of Functions to the LG Us
Under the Code, many powers and functions have been devolved. The
Code mandates the LGUs to be primarily responsible for delivering basic
services and facilities such as agriculture, environment and natural resources,
health, public works, public building and other facilities, social welfare anddevelopment, telecommunication, tourism, and others within their respective
jurisdictions.
The Code also devolves regulatory functions to LGUs. One major
regulatory function is that of the reclassification of agricultural lands which had
already been classified for non-agricultural use before the enactment of theComprehensive Agrarian Reform Law(CARL). This involves the authority todetermine whether a piece of agricultural land may have greater economic
value for residential, commercial or industrial purposes, a function that before
the enactment of the Code was solely under the Department of Agrarian
Reform (DAR).
In the area of revenue-raising power, though numerous changes havebeen made, much has been left unaffected. New powers generally take theform of increases in tax rates and local revenue sharing schemes (internal
revenue allotment). The local tax base and taxing powers of LGUs, however,remain almost completely unaltered, for the Code retains the local tax basewhich the repealed local tax code (PD 231, as amended) provided.
Traditionally, local governments have managed economic enterprises or
public utilities such as public markets, water works systems, the telephonesystem and, to a limited extent, energy generation. Under the Code, the powerof local authorities to manage local economic enterprises has not only beenstrengthened but also expanded to include such economic schemes asbuild-operate and transfer (BOT) management, repair-operate and owningand others which are encouraged by existing laws. This is an area ofparticular interest to local authorities as more business information needs tobe collected and business management techniques need to be more fully
developed.
To enable the LGUs to become self-reliant, self-governing bodies, as well76

WG-4 Institution Development

as effective partners with the national government in development pursuits, theCode also created committees or other bodies to perform definite functions for
the LGUs. There are five such bodies, namely, the Local Development
Council(LDC),
the
Local
Prequalification,
Bids
andAwardsCommunity(PBAC), the Local School Board(LSB), the Local Health Board(LHB), and the Local Peace and Order Council(POC). Of these bodies, onethat is to play an important role in local development is the LDC, the special
body created to assist the sangunian(Local Government Council) in setting thedirection for both economic and social development as well as coordinating
the development efforts within its territorial jurisdiction. The rationale for the
LDC stems from the Code's mandate requiring each LGU to formulate acomprehensive multi-sectional development plan to be approved by thesangunian.
Lastly, the Code further mandates that local chief executives takeresponsibility for human resource development in the LGUs. All personnel
actions are to be in accordance with the constitutional provisions on civil
service, pertinent laws and rules and regulations including policies, guidelines
and standards set by the Civil Service Commission(CSC).

2.3. Problems of LGUs
Given these changes and challenges, Working Group IVA conducted astudy of local government administration and finance in Laguna Province. The
group visited various LGUs, including the Laguna provincial government andseveral municipalities and barangays to further understand the issues andproblems LGUs are presently facing. This examination included investigationof the service delivery of such things as social forestry, cooperatives andagriculture as well as assessment of functions like planning, personnel andfinance management. This investigation led to the identification of a number ofproblems which are administrative, financial and technical in nature. These
problems, which are summarized in Figure 1, are discussed below.
Though Local Government Units in Laguna are working hard to bringabout increased local development in the province, the low capacity of
government organization reduce their effectiveness in this pursuit. First, thislow capacity is caused by weak intergovernmental coordination for promoting
integrated provincial development . There also exists a weak coordination77

WG-4 Institution Development

among National Government Agencies(NGAs) and, similarly, a weak
coordination between these agencies and the LGUs. Some examples of thisare a non-compliance of Memorandum of Agreement(MOA) between NGAs
and LGUs, a lack of integrated planning on the provincial level, weak
monitoring and evaluation systems, and unclear regulatory functions, which
can be seen in the case of environmental management where there exists anunclear delineation of regulatory powers among the Laguna Lake
Development Authority(LLDA) , the province, cities, and municipalities.
Another reason for low capacity is the poor delivery of devolved
government services and functions. The financial resources at the disposal of
the LGUs are insufficient for two reasons.

The first is insufficient Internal

Revenue Allotment(IRA). After devolution, IRA increased from 20% to 40%, yetin considering that LGUs must now finance devolved functions, this amount isinsufficient for maintaining these functions. The second reason is inefficient
local tax collection on the part of the LG Us.
In addition to this, there exists a human resource management problem.
This is partly due to the nature of the current selection and recruitment system
in which a number of employees are taken in not based on merit but rather onaccommodation or political patronage. A further reason is the weak technicalability of employees due to insufficient training programs. Many staff members
undergo training only once a year and in many municipalities employees are
required to pay their own expenses for the various seminars and training
opportunities offered outside of their office.
Another cause to be mentioned is weak administrative machinery. Thereis unbalanced staffing in the LGUs, as some offices are quite overstaffed,
especially with casual workers, and some, like agricultural extension offices
and tax collection departments.are very much understaffed. This unbalanced
staffing stems in part from the fact that the organization is outdated, not having
undergone restructuring in a number of years.
A further problem area is the improper utilization of resources. There isboth an under and over utilization of manpower as well as unbalanced budget
allocation for development projects, as projects with environmental
implications such as waste disposal and Integrated Social Forestry(ISF) are
78

WG-4 Institution Development

often given less priority, or neglected, in order to fund other types ofdevelopment programs.
LGU project implementation capacity has proved to be inadequate,
specifically in the areas of infrastructure development and social service
delivery. In many municipalities there is no proper waste disposal system, andmore support for such facilities as health care is needed.
Lastly, the present agricultural support system is inadequate. The LGU is
unable to provide adequate services in the agricultural sector, especially tosmall farmers.

Agricultural extension services are inadequate due to an

insufficient allocation of operational funds by mayors.

This means poor

technology transfer to farmers due to a shortage of operational funds and theinability of technicians to operate extensively and effectively in the field.
Furthermore, there is poor support for the organizing of cooperatives and, forsmall farmers, the problem is of access to credit facilities and services. Thereexists a system of "available yet inaccessible" credit for small farmers.resulting
from.among other things, the farmers' lack of collateral and the hassle ofgoing through the complex lending procedures of banks.
In response to the current situation of Local Government Units in Laguna
Province Working Group IVA has drawn up various proposals for the
improvement of local government capacity, specifically in the areas ofdevelopment administration and finance. These proposals are discussed indetail in Section 5 below.

3. Roles of NGOs in Development
3.1.

Introduction : NGO Functions
NGOs are considered to be one of the most important actors in theimplementation of development in the Philippines. Both the 1987 Constitution,
drafted by the Aquino government, and the Local Government Code of 1991
stress the importance of Non Governmental Organizations(NGOs). The Codeeven goes on to state that Local Government Units shall promote theestablishment and operation of Peoples Organizations(POs) and NGOs to79

WG-4 Institution Development

become active partners in the pursuit of local autonomy.
The term NGO includes a wide range of organizations, from businessorganizations to religious groups. Yet for the purpose of this study, NGO is
defined as follows: a private voluntary organization, a social development
agency, or an organization not belonging to government.
There are six main functions of NGOs. The first is that of a resource
provider and mobilizer, providing and mobilizing resources through credit
assistance, marketing transactions, human resource training, livelihood
mobilization and savings mobilization. Second is that of a proponent
developer, helping to create and strengthen effective local organization
capable of planning, implementing and sustaining development activities,
such as the establishment of cooperatives through community planning. The
third is that of a technology developer and disseminator, working to increase
productivity and reduce costs by increasing the income of target beneficiaries.
The fourth function of an NGO is that of a research and information provider,
contributing to planning as well as implementing and monitoring development
activities. The fifth is networking, contributing to the exchange of suchinformation as technology or marketing data. These functions, along with thesixth, advocacy, empowering poor people to become actors in development,
make the NGO an important player in development activities.

3.2. Activities of NGOs in Rural Development
Rural development is the p'rocess of transforming the poverty sector into abetter quality of living. Many NGOs engaged in rural development promote
cooperatives or Grameen Bank type NGOs. Their major activities include suchthings as promotion of income generation, delivery of social services,
community organization through credit assistance, livelihood projects andmicro-enterprise supply of farm inputs and training, the most important project
among these being non-collateral credit assistance for members.
In the case of Grameen Bank type NGOs, the objective is to provide loan
access to the poor, especially women, in order to start small scale enterprises.
Before being allowed to borrow money, the members must be trained , andthey must also present a detailed account of how they plan to use borrowed
funds. The system is very strict, as money lent must be repaid weekly. The
80

WG-4 Institution Development

cooperative system, on the other hand, is less strict. Members are able toborrow money not merely for starting new enterprises but for a variety of
purposes. Cooperatives also provide many market related services such aspurchasing rice from farmers, selling fertilizer, allowing farmers use of thecooperative owned rice mill, warehouse, dryer, etc. In addition, they also
provide management training, leadership training and planning training fortheir cooperative members.
As for evaluation, many primary NGOs are small and act individually. The
rate of repayment for Grameen Bank type NGOs is high, at about 95%. Most
members can raise their income through small scale enterprises. As they
continue to grow and become successful, more and more institutions begin to
support them and financially encourage their small-scale enterprises.

3.3. Problems of NGOs
Working Group IVB visited numerous NGOs/POs including development
NGOs/POs to investigate their role in Laguna province. Focusing on poverty
alleviation in rural areas, this investigation examined the activities of theseNGOs/POs and their development roles. It also led to the identification of thefollowing problems.
In the rural areas of Laguna, NGO activities are focused on the income
generation of weak people such as small farmers, women or the poorest of thepoor. It is difficult for government to support such people individually, thus the
NGO role in rural development is definitely important. Still, NGOs have someproblems, the most fundamental being a shortage of funds which, in turn,leads to an insufficient number of staff members and inadequate facilities.
Due to this fact, NGOs cannot provide adequate services for theirbeneficiaries.
Also, because of the weak marketing system in the Philippines, low-level
post harvest facilities, a lack of market information, transportation difficulties,
etc., NGOs and their beneficiaries cannot provide their products efficiently.
This means a lack of competitiveness of products and a loss of profits in theend.
To solve these problems, it is important to promote a collaboration among81

WG-4 Institution Development

NGOs. Yet, in the Philippines, there are few organizations to coordinate NGO
activities as an integrative authority or as an information exchange center.
Furthermore, NGOs tend to act independently, meaning that their activities arelimited to the small group level.
As for the GO-NGO collaboration, some NGOs do better with government
support, especially financial support, and information. Though some technicalsupport to NGOs from the government exists and the Local Government Codeof 1991 provided for GO-NGO collaboration with the Local Development
Council, there are still many problems in the GO-NGO relationship. (These
problems will be referred to later in this report.)
As mentioned above, though there are numerous difficulties which must be
overcome in order to make NGO activities more effective, NGOs do play animportant role in helping poor people who wish to improve their livelihood.
Working Group IVB has constructed a list of proposals for increasing NGO
effectiveness in their activities. These proposals are presented in Section 5
below.

4. GO-NGO Relationship
Before the enactment of the Local Government Code of 1991 (Republic Act
No. 7160), many NGOs/POs were performing development work without any
financial or technical assistance from either the national government or local
governments. Government officials seemed uninterested in cooperating with
NGOs/POs and NGOs/POs were impatient with the bureaucracy.
However, as can be seen in the integrated problem structure diagram
presented in Figure 1, the low level of government support to NGOs/POs
directly influences the insufficiency of marketing services, the minimal accessto information among NGOs/POs and the low level of training. Therefore, thislow level of government support has a direct impact on the livelihood of therural poor in terms of insufficient rates of return to these marginalized people
and low competitiveness of their products.

82

WG-4 Institution Development

In 1991, the Local Government Code was proclaimed. The Code calls for
democratization of the decision-making process through the participation ofNGOs/POs. Further, utilization of the NGOs/POs' network or information is
expected. According to section 34 of chapter 4 of the Code, LGUs are topromote the establishment and operation of NGOs/POs to become active
partners in the pursuit of local autonomy. Moreover, according to section 107
of title six of the Code, no less than one fourth of the members of the Local
Development Council (LDC) shall be composed of NGOs/POs representatives .
Since the implementation of the Code in 1991, some cooperatives haveaccepted technical and training assistance from the Department of Agriculture.
However, some reasons for NGOs/POs unwillingness to cooperate with thegovernment remain.
For example, the decision-making process ofgovernment still tends to be a top-down approach, which some NGOs/POs feelto be different from their style. Also, many NGOs/POs are still impatient withthe bureaucracy. Even in the LDC, mayors tend to choose NGOs/POs
representatives with which they have links rather than those which fully
represent the local NGO community. Therefore, because of the limited numberof NGOs/POs members and the existence of close links between mayors andthe local elites, effective LGU and NGOs/POs collaboration through the LDC
has yet to be fully realized.

5. Proposals
Responding to the various problems which have been identified anddiscussed above, Working Group IV recommends the following:• Strengthening coordination between NGA and LG Us
Though the Local Government Code mandated LGUs to be partners of
NGAs in local development, this has yet to be realized. Thus, thestrengthening of coordination between the two is proposed, the objective
being to establish a coordinating committee comprised of both NGA and LGU
officials in order to realize an integrated development approach for Laguna
Province. As this is to be a provincial based committee, the provincial
government is to be the executing agency.

83

WG-4 Institution Development• Provincial Revitalization
There is a need for a reorganization of the local bureaucracy, especiallynow since devolution, in order that it function more efficiently. Under thisprovincial revitalization, not only are LGU functions to be revitalized but
administrative and technical training is also to be provided to increase theeffectiveness of government personnel. NGAs, specifically the Department ofInterior andLocal Government(DILG)
and the
Civil
ServiceCommission(CSC), are to take the lead in staff training and the LGUs are tobear the responsibility of this training coordination.
•Revenue Generation
Revenue generation is the principle component of self-reliance andself-government, one of the premier aspects of the Code. Still, there is clearlya need for more revenue generation on the part of the LGUs. Thus, astrengthening of tax collection efficiency on both the national level to increase
IRA, and on the local level by, for example, periodic updating of the local tax
maps, is proposed. In addition, there is a need to strengthen the political willof the LGUs to use the new tax powers granted under the Code and for the
LGUs to move toward revenue generation from non-traditional or newly
devolved sources (i.e. BOT, credit financing). A proper monitoring system
must also be implemented to help curb corruption.
•Efficient and Effective Service Delivery
It is clear that though various service functions were devolved through the
Local Government Code, most have not proven successful due to, among
other things, a lack of funds and personnel. Thus, a move for more efficientand effective service delivery is needed. This is to be realized through an IRA
increase to the LGUs, a mechanism to ensure that all devolved programs
receive the funding and staff necessary to function properly and are not be
neglected due to the priority of other types of development projects, as well as
an in-house monitoring system and technical training for personnel, both ofwhich are to be coordinated by the appropriate National Government
Agencies.
•Agricultural Support Mechanism
In considering that many parts of Laguna are still predominantly
agricultural and that many small farmers have no access to agricultural credit84

WG-4 Institution Development

and limited access to other support mechanisms, this proposal calls for anagricultural support mechanism in the form of a collaborative effort on the partof the LGU, DA, the Land Bank and cooperatives to extend credit and training
to small cooperatives, farmers associations and individual farmers throughcooperatives. The government should recommend that credit be provided by
the Land Bank to cooperatives, which would in turn lend to the above
mentioned groups or individuals. Furthermore, a comprehensive training
system must be developed under the organization of the DA regional office incoordination with the provincial agricultural office to extend training toprovincial, municipal, NGO, PO and agricultural college technicians. Alltrained technicians are to be registered with the province, and cooperatives
are to be charged with direct agricultural technical assistance to farmers.
•integration of Cooperatives
In order to make Cooperative activities workable, efficient and effective, it isnecessary to strengthen the linkages among Coops. CDA(Cooperative
Development Authority) and NATCCO(National Confederation of Coops, Inc.)
exist as cooperative integrative institutions. However, their integrative function
seems to be weak. It is necessary to vitalize 2-3 tiered coops. If coops cancooperate, they will be able to use economy of scale and exchange
information as well as utilize resources more effectively and efficiently.
•Promotion of Rural Private Enterprises
Financial support by coops and NGOs is mainly targeting individuals. In
order to increase productivity or income, rural enterprises must be supported
by NGOs or banks. By promoting rural enterprises, individual businessactivities will improve and in turn be organized into group businesses such as
garment factories, slipper makers or agro-industries.
• Rural Bank/Land Bank and Coops Collaborative Work on
Management
Capability Building
In Japan, there is a system to support small and medium sized enterprises
by banks in order to build mutual trust. Cooperation between the Land Bankor rural banks and cooperatives is necessary to improve the management andfinancial stability of cooperatives.

85

WG-4 Institution Development•Proper Representation of NGOs to the Local Development
Council(LDC)
In strengthening the voice of the people, it is necessary to establish
standard criteria for selecting NGO representatives to the LDC, with theselection procedure being not in the hands of the LGUs but the NGOs
themselves. In addition, it is necessary to devise a system which guarantees
freedom from political influence of LDC members.
•Establishment of NGOs/POs Data Center
The Security and Exchange Commission(SEC) works as the registration
institution for NGOs. However, there are few institutions which provide
information on such things as technology or marketing data for NGOs. Thus, inorder to strengthen the linkage among NGOs, it is necessity to establish an
information center.

6 .Conclusion
The potential of institutions ·to promote development is determined by theircapability and the problems and issues they confront in the process ofmanaging development. Through our research, we have found that
institutions operate not in isolation, but rather as a part of a bigger system, in alarger context. Cooperative undertakings, coordination and integration are
integral components for the effective pursuance of development. Thus, thepotential to promote development, through coordination and integration, by theinstitutions we examined must be strengthened further. The proposed reformsof Working Group IV include, among others, organizational, fiscal, humanresource and structural reforms. We believe these proposals will serve tostrengthen the above mentioned institutions both independently andcollaboratively, allowing them a greater and more credible role in local
development.

86

WG-4 Institution Development

References
Constitution of the Philippines1987
Local Government Code of 1991. Republic Act No. 7160, Manila National Printing Office, 1991.
Brillantes, Jr.,Alex B., Development Administration in the Philippines, paper, 1991.
Brillantes, Jr.,Alex B., Reinventing Local Government Management in the light of the Local
Government Code: A Perspective from the Local Government Academy.
Gaudioso C. Sosmena, Decentralization and Empowerment , Local Government Development
Foundation, 1991.
Tabunda, Manuel S., and Gakang, Mario M., "Primer Question and Answer: Local Government
Code of 1991", Manila, 1991.
Arao, D.A. "NGO Grid for Local Governance." Kabalikat. Council of People's Development,
December 1992.
Carada, W.B. "From Collaboration to Animosity: Residents, Non-Governmental Organizations
and Quasi-Public Agencies in the Delivery of Local Services."
Farringdon, J. ed., Non-Governmental Organizations and the State in Asia., Routlledge, 1993.
Kimura, H., "The Limitations of ODA and the Possibilities for NGOs.", International Development
Forum, 1992.
Mesa, F.J. "NGOs Break the Power Circle." Kabalikat. Council of People's Development,
December 1992.
Tanunda M.S. & Galang M.M. "The Hows to[']s of Power Sharing." (reprinted from Bayani, First
Quarter 1992, Vol.1, No.1,pp.20-22).

87

Figure 1. Problem Structure Diagram
Institutional Development (GO-NGOs)--WG-IV

I
17 *Insufficient rate of returns t>

Lo~marginalized groups

18 *Low•

productivity*Wait and see*Insufficient

attitudecapability

22 *Low level of marketingT--machine

24 *Low level*Insufficient

farmers--Inaccessibility to credit

deliverysocial service
for small*Unbalanced*Inadequate agri/agro extensive services--School building--Poor transfer of technology to farmers--Sanitation

bu:lgetallocation--Health

13 *Ineffective project

support-----28 *Insufficient-/POs organization

information among NGOs/POs•
for rural development*Low level of training-*Shortage of staffs·~*Weak functioning

6 *Human resource
management problems

T-

7 *Poor recruitment
8 *Weak*Improper

administrative

representation dmachineryNGOs /POs to LDC

T
9 *Outdated

30 *Past failure of NGOs
/POs

...

32 *Insufficient bu:lget

29 *Poor management---131*Low level of GO support IIr

I 1 *Low capacity of government organizationTI

infrastructure,--

11 0 *Poor implementation of LGC

,-

I ·~

of resources...

-

27 *Weak authority of Coopfederation*Minimal access t>

11 *lnproper utilization

implementation

25 *Low ability to build 2-3 tiered Coops~TT
15 *lnadquate agricultural

T.

12 *Manpower

--ISF

'

informationcollecting ability*Weak linkage among NGOs /POs

infrastructureservices--Bias toward agro-industry and larger

23 *Insufficient--irrigation

26 *Low level of NGOs _NGOs/POs

14 *Poor

farmersT

facilities--warehouse~y*Lack of rural enterpriseallocation*Insufficientbuilding

0:,0:,

individuals

20 *Improper fundparticipation*Dependent on middlemen*Direct deal by•

1 9 *Lowof service
by NGOs/
POs*Improper
creditdeliveryto smallarmersI

21*Lack of competitiveness of products

16 *Inadequate credit facilities cm

organization

2 *Lack of coordination
among NGAs&
between NGAs cm
LG Us

and selection

T--Continued

3 *Non-complianceexistence dtoMDApolitical*Lack of integrated

patronage

planning*Weak technical*Weak monitoring &abilityevaluation system--Insufficient*Unclear*Unbalanced

manpower

regulatory

staffing

training

function

~

.J..
SC/)

~
&·
:::,
CJ

I

(1)

<i3

.g
T

4 *Insufficientrevenues

T
5 *Insufficient
local tax
collection*Insufficient IRA--Inefficient tax
collection dnational
govemmant--Bias for large
municipalities

3~

WG-IV : Institutional Development
Table 1 A Proposals : WG-IV--Governmental Organization
Proposals

Strengthening coordination Provincial Revitalization
between NGA and LGUs
(reorganization)

Objectives

To establish a coordinating

Revenue generation

To realign functions of LGUs a,d Strenghten political will to use new To provide adequate service

To coordinate local government and DA for

taxing power and strenghtendelivery through increased IRA, cooperatives to provide credit aid training b

and LGU officials for realization technical training 1o increase

collection efficiency

a safety-net for devolvedof ai integrated development

To help NG Us generate revenues programs, constant monitoring

committee

composed of NGA provide administrative a,deffectivenessapproach to Provincial Medium

from non-traditional sources

Term Plan

Target Population/

Efficient and effective service Agricultural support mechanism
delivery

Local Government Unit

small cooperatives, farmers associations

and individual farmers

and administrative and technicaltrainin~ersonnel

Local Government Unit

Local Government Unit

Local Government Unit

Small farmers

5"

Area
Executing00(0

Provincial government (LGU)

Local Government Unit

Agencies
Manpower•

National agency staff•

Implications•

LGU staff•

Local Government Unit
National Government

•
•
•
•
•

(/)

Local Government Unit

Local Government Unit

Local Development Council
National government

Financial••
NationalGovemment Agencies

Willingness of

to attend meetings is a crucial
element to success•

Department of agriculture•

Provincial government•

Cooperatives•

Department of agriculture staff•

LGU staff

National government staff•

National government staff •LGU funds•

National government funds••

LGU funds•

NGAs(DILG & CSC)

Efficiency 1o be increased through •lmJJ..fications•

LGU staff

Agencies

Remarks~.i,.

Provincial government staff•

Agricultural technicians

NGA funds•

Department of-agriculture funds

LGU funds•

LGU funds

Amend the LDC 1o•Training to be coordinated through theshould take the lead in staff a proper monitoring system a,dincrease IRA to LGUs

training

provide updating of LGU tax maps •Monitoring to beextended 1o LGU, PO, NGO,

LGUs should be the

Revenue generation from non-conducted by NGAs

agricultural collage and technicians

training

traditional sources such as BOT,

facilitator/coordinatorcredit financing, etc.

•

provincial agricultural office a,dAll agricultural technicians will be
registered with provincial agriculture
office

~
5·

:::,

~
<ii

.g
3(l)
::?.

WG-IV : Institutional DeveloRment
Table 1B Proeosals

WG-IV--Non Governmental orsanizations

Proposals

Integration of Cooperatives

Objectives•

To establish stra,glinkage among coops for
efficient ard effective
implementation ofdevelopment programs

Target Population/Area
Executing Agencies

co0

Manpower Implications

Financial Implications

Remarks

•
•

•
•
•
•
•

•
•
•
•

All types of coops
CDA
NATCCO
Local governments themselves
CDA officials
Staffs of related coops

Government funds
Coops funding
contributions
Economy of scale
Information exchange
and resourcecomplementation•

Harmonization of Coops
relationshiQ

Promotion of Rural Private
Enterprises•••

To increase productivity
or incomeTo make morecompetitive products
To earn more profits

RuraVLand Bank -Coops
Collaborative Work on
Management Capability
Buildin••••NGOs/Coops engaged•
in community organizing •ard business orientation •Business managers of•• NGOs/Coops•
Business organizing• consultants/experts•
Rural entrepreneurs• Village/Barangay• officials• Overseas funds• Rural/Land Bank•
• Commercial banks •••Transforming
individual• business activities b •
•
•

•
•

Poverty sector womengroup business activities
Resource sharing
Team building

To improve
management system ofCoops
To build mutual
relationship between
Rural/Land Bank ands

Proper Representation ofNGOs to the LDC (Local

Establishment of NGOs IPOs
Data Center

Development Council)

•
•

•
Bank
•
Rural bank or Lard bank •Local government
•
Coops
Coops
Rural/LandTo establish standard
criteria for selecting
NGOs representative b
the LDCTo voice out people's
needs through NGOs
LDC
NG Os
National government
Local government

•

•
•
•

To strengthen linkage
among NGOs/Pos
through exchange ofsubstantive andnecessary information(technology, marketing
da1a, etc.
NGOs/POs
NGOs/POs themselves
SEC(Securities andExchange Commission)

~

.i..

s~-

(/)

a"·

:::i

CJ
(I)
Local government officials •Managers of Rural/Land
Banks
Executive directors d
Coops

•
•

Rural/Land Bank budget
Local gov't funds
Coops' contributions
Execution dmemorandum ofagreement

National government
officials
Staffs of LGUs
Presidents of NGOs

•
•

•
•
•
select NGOs'•• Torepresentatives
to the•LDC by themselves
Avoid
political affiliation••

Presidents ard staff dNGOs/POs
SEC officials

Government funds
Overseas funds
NGOs/POs contributions
Information exchange
Close relationshipamong NGOs/POs
Updated information
links

cl;

.g
3(I)
::?.

Program of Working Group-4a: Government (OFW '95-PHI)
P.M.

Sta. Maria Municipal OfficeSiniloan Municipal Office
Sta. Maria Municipal Office
CE:C, UPLB (Briefing by NGOs)

Sta. Maria Municipal OfficeSiniloan Municipal Office
Sta. Maria Municipal Office
CEC, UPLB (Briefing by NGOs)
Sta. Cruz Provincial Office
Sta. Cruz MuniciQal Office
Pasig, Rizal Agricultural Credit Policy Council (ACPC)The National Confederation of Cooperatives (NATCCO)
Dayap, Calauan Cooperative under NATCCO

September

27
28
29
30

October

3 Tue.
4 Wed.
5 Thu.
6 Fri.
7 Sat.

Sta. Cruz Provincial Office
Sta. Cruz Provincial Office
Rural Bank
Asian Development Bank (ADB)
Dayap, Calauan Cooperative under NATCCO

9 Mon.
10 Tue.

Calamba (Cooperative Development Authority Region IV Office) Calamba (Cooperative Development Authority Region IV Office:Agro Forestry
Agro Forestry....co

Wed.
Thu.
Fri.
Sat.

A.M.

~.l,..
s~

(/)

5·

::,

tJ

(l)

c6
~

Program of Working Group-4b: NGOs (OFW '95-PHI)

A.M.
September

27
28
29
30

Wed.
Thu.
Fri.
Sat.

October

3 Tue.
4 Wed.
5 Thu.
6 Fri.
7 Sat.

--

9 Mon.
10 Tue.

P.M.

Sta. Maria Municipal OfficeSiniloan Municipal Office
Sta. Maria Municipal Office
CEC, UPLB (Briefing by NGOs)

Sta. Maria Municipal OfficeSiniloan Municipal Office
Sta. Maria Municipal Office
CEC, UPLB (Briefing by NGOs)

San Pablo, (Center for Agricultural and Rural Development (CARD))

CARD Chapters
CARD Chapters
Pasig, Rizal Agricultural Credit Policy Council (ACPC)The National Confederation of Cooperatives (NATCCO)
Dayap, Calauan Cooperative under NATCCO

Rural Bank
Asian Development Bank (ADB)
Dayap, Calauan Cooperative under NATCCO

Calamba (Cooperative Development Authority Region IV Office) Calamba (Cooperative Development Authority Region IV Office·Agm Forestry_ _ _ __ _ _____ __ Agro Forestry

3(l)

;:;.

Integration and Policy Direction: Synthesis

Integration and Policy Direction: Synthesis

Hiroshi Kakazu
Project Director

1. Methodological Problems
How do we identify development problems?
This section attempts to integrate development problems and possible
solutions identified in the foregoing four sections. Before we venture into
integration, we need ourselves to question about how we have identified
problems and how we have derived solutions. If our method of identifying
problems are based on biased assumptions and concepts or biased sampling,
then our conclusions and policy implications based on identified problems arealso considered to be biased and wrong. It is always true that policy
prescriptions based on wrong assumptions and wrong sampling are worse
than nothing.
As our OFW groups have experienced, there are basically six channels to
identify problems, they are:(1) interviews and discussions (or dialogue)(2) direct observations(3) encountering problems directly(4) questionnaire surveys(5) published materials and secondary information(6) intuition through past history and experiences.
In our OFW exercises, (1) and (2) are the most important and critical forformulating workable assumptions from which possible policy direction can bederived. This can be illustrated as follows:93Integration and Policy Direction: Synthesis

Assumptions
Factfinding through fieldwork(sampling)
Inference

Conclusions

Fact (Testing)Viable Policy

There are two possible ways that we may end up with the wrong
conclusions. One is "error of omission," that is to say an error excluding a large
body of households from sample survey or interviews. This can be illustrated
from a particular barangay sampling survey in the following diagrams:

No. of Sample

Status~~~~~~~"""'""""""""""""'-~~~~~---'-~~~~~~~~-""'~---~- Household
1ncomeA,
M,
B,
Aspirations

welfareDole-out

Proposals

self-efforts

1

program

Cooperatives

Charity

NGOs

NG Os

Rural Banks

GM bankdrive for development

Investment in
Human Resources
Information
Networking

194

sustainability

I: Strenghten tax collection: enforcement
I CARPI

Integration and Policy Direction: Synthesis

If we sampled only a few households which belonged to the poorest group
A in the barangay, then our analysis, derived conclusions and proposals will
be quite much different from the unbiased sampling as is illustrated in the
diagram. This will tell us that the sample size must be adequate toapproximate the above normal curve and they must be taken at random
without the influence of the barangay captain and our counterparts. My
reasonable hunch is that most samples taken at various barangays are biased
because of arbitrary selection of sampled households.
The second error is arisingfrom "logical inference" from given

assumptions. We often heard that private moneylenders in a poor barangay
were exploiting small, poor farmers through imposing exorbitantly high interest
rate. This kind of conclusion, quite often, is based on false assumptions andinference (analysis). A simple financial theory tells us that high interest rate
reflects high lending risk (or high default rate) and high transaction costs. As asurvey conducted by the Agricultural Credit Policy Council (ACPC) reveals,
small, poor farmers usually do not possess viable collateral to secure loans
and their default rates are very high compared to borrowers in the formal
financial sector. We should realize that the private moneylenders are the lastresort for those small, poor farmers who cannot be taken care of by formalbanking sector because of their lack of collateral and credit worthiness. Of
course, there are always some moneylenders whose business practices areout of social norms, particularly when they are in dominant positions in avillage community. Therefore, policy direction is not to abolish the privatemoneylenders, but to bring these needy farmers to cheaper, safe, and formal
credit facilities. Like moneylenders, merchandising middlemen are also, quite
often, targeted as undesirable, exploitative actors in the poor community.
Before we conceive such false assumptions, we should ourselves question therole and rationale of these moneylenders and middlemen in the poor, informal
community.
Another example of this kind of inference error was the industrialization
through import-substitution policies which devastated Philippines' ruraldevelopment as well as the urban industrial sector. It seemed logicallyappealing when a policy maker said 'we need to substitute our own
domestically produced consumer products for imported ones to generate more
job opportunities as well as saving our precious foreign exchange.' The policy
95

Integration and Policy Direction: Synthesis

consequence was completely opposite. In order to substitute imports, theyneeded to import expensive, labor-saving capital goods which absorbed lesslabor while creating more trade deficits which in turn led to mounting foreign
debts. Protected factories were burdened by underutilization of theirproductive capacity because there was not enough domestic demand for theirproducts due mainly to stagnated labor income, while their products werepriced out of international markets.

2. Why Do We Need Integrated Approach?
An ADB Project Economist, Mr. Masahiro Otsuka, who briefed our OFW
group on Integrated Rural Development Project (IRDP), justified the integrated
approach because nobody wants "disintegration." Of course, this is not thegenuine reason. We need an integrated approach because development
goals or objectives have multi- faceted dimensions, and they cannot be
addressed by single discipline. Furthermore, what is critically important is apossible trade-off between development goals. Take, for example, theMedium-Term Philippine Development plan (MTDP) for 1993-1998 which
listed following four important goals of the goals:(1) growth of real per capita income(2) environmental conservation (sustainable development)(3) poverty alleviation (social equity)(4) peoples' empowerment (participatory development).
These goals are also carried in local development plans.
Nobody would dispute these ideal goals. The problem, however, iswhether these objectives are mutually consistent with one another or not.
Take, for example, the relationships between growth of per capita income,poverty alleviation and environmental conservation. Simon Kuznets had
empirically "discovered" a long time ago that here was an unavoidable
trade-off between the growth of per capita income and income distribution(social equity) in the early stage of development process as is shown in thefollowing diagram.

96

Integration and Policy Direction: Synthesis

GINI Coefficients
QOL
Trade-off ........
.--- - - ...
.~ Complementary

0.6
exus

0.5

Poverty Nexus

0

$800

$1000

$?

Per Capita Income

If we take per capita income on the horizontal axis and Gini coefficients on
the vertical axis as to measure the degree of income inequality, the "Poverty
Nexus" indicates that there might be a trade-off between them until the percapita income reaches to $1000. Since nominal per capita income of thePhilippines is about $800 in 1993, promoting economic growth might
deteriorate its income distribution. The same relationship may hold true
between the growth rate of per capita income and environmental conservation
as is indicated in "Environment Nexus." It is also an interesting subject toexamine whether there is any trade-off between economic growth andpeoples' empowerment. If answer is "no", then economic success stories in the
Asian NIES under the authoritative politico-economic system cannot bejustified. The reason behind these possible trade-offs is not difficult tounderstand. In the initial stage of development process, rapid capital
accumulation and investment are required to raise per capita income which
normally takes place at the expense of fair income distribution andenvironmental conservation. As per capita income reaches at the certain level,
however, the growth rate is constrained not only by growing social andenvironmental imbalances, but also by changes of peoples' consciousness
about development process.
The integrated approach has been adopted in the Philippines rural
97

Integration and Policy Direction: Synthesis

development to achieve the above objectives simultaneously. The approach isa direct consequence of the failure of "trickle-down approach" which assumes
economic growth would automatically bring benefits (trickle down) to the poor
masses in the form of jobs and other socio-economic opportunities. The
integrated approach is the right direction for the alleviate poverty andenvironmental disruptions through participation from the local level in thedevelopment process. The approach, however, accompanies a myriad ofproblems including financial and institutional issues as summarized in thefollowing section.

3. Problems Identified, Solutions and Constraints
The four most important development problems identified by our four OFW
groups for the Laguna Province are summarized in the following table inaccordance with "problems priority."Group 1:(1) high dependency on imported capital goods(2) heavy external debt
(3) underdeveloped supporting industries(4) underdeveloped agro-industries.
Group 2:(1) heavy financial burden(2) insufficient teacher training(3) inadequate IECM (Information, Education, Communication, Motivation)(4) unutilized H/R. (Human Resource)Group 3:(1) incomplete land use plan(2) traffic congestion and pollution(3) temporary garbage dumping site(4) deterioration of Laguna de Bay
Group 4:(1) poor coordination among Government agencies(2) weakness of coop finance(3) crisis of decentralization(4) over-expansion of coop across the board.

98

I

Problem Finance
Priorities
WG-1
Agriculture
Non-Agriculture

WG-2
Education
HealthWG-3
Infrastructure
Environment

Identified Problems, Causes, Solutions and Constraints
Characteristics of Problems
Institution
Human Resources_{!11c. Gov't & Non-Gov't)

Policies(Management)

Technology & Information

21 Mounting external debt

3
4

Underdeveloped agro-industries

1 Excess financial burden
2 on DECS, DOH
Limited teacher training
3
4

2
3
4

High dependency on
imported capital goods
Underdeveloped
supporting-industries

Inadequate IECM
Unutilized H/RIncomplete land use plan
T. congestion & pollution

1

Others:i"liil

Temporary garbage dumping site
Deterioration of
Laguna de Bay

g.
::)

§
Q.

U>
U>

WG-4
Institution
Empowerment

Causes of Problems

Solutionsshort-mid termlong term

Constraints"1l

Coordination with gov't development plan
21Weakness of coop finance3 Crisis of decentralization policies
4
Expansion of coop across the board
Poor W. conditions
Lack of funds for small
Inability of PG to draft
Limited formal job
farmers/Low saving rate/ its own DP throughopportunities
High D/S ratio/Devolution coordinating municipal
may cease to function
and national plans
due to lack of funds.
Limited financial support
Organizational weaknessof coop.
NP needs to coordinate Overseas employment
CB, RB are too big to
Creation of domestic
with PG andfinance small farmers.
municipalities/Institutejobs
Credit through coop
ODA/Tax collection/
IADP/Nationwide
association of coop
Exports
Can IRA be increased
immediately?
Ability of tax collection
Misallocation of funds
Decentralization

Possible sabotage for
Low economic growth
National agencies
interventions
Difficulties in coordinating
diversifying coop.

0

~

'-:::

CJ

~-

g.

Ill-conceived industrial
Low awarenesspolicies in the past
Distortions in Res.
allocation/Overvalued
pesos/Inadequate
monitoring/Insufficient
H/R
Correct pricing distortion Fund raising
Dismantle monopolies More NGO involvement
Liberalization of trade(agri inputs)

Rent-seeking
Legacy of Churchlack of coordination/
Superstition
Unclear policy direction Inadequate familyplanning/Weak LGU
policies

Neglect of CG ind.
Lack of R/D

~

~

s:
(I)
(/)

en·

Increase local contents
by promoting SME.

Low TT and R&D
development

Integration and Policy Direction: Synthesis

These problems are obviously interrelated. External debts, which arebrought out by high dependency on imported capital goods, are major causeof heavy financial burden on all sectors of rural communities which have been
deprived of their capacity for development both in human and natural
resources and institution building.
Each OFW group was requested to find out major causes of the identified
problems according to the development agenda listed on the top of table. A
lack of funds and weak institutional capability as well as ill-conceived policies
are major causes of problems. Although possible solutions to these problems
can be easily spelled out such as providing adequate funding facilities,
strengthening institutional capability, tax collection, NGO participation,
promotion of exports and SMEs and correcting various market distortions, etc.,
actual implementations of these measures is entirely a different story. This iswhere our frustration creeps in. There are multitude of constraints for thesolutions such as historical legacies, rent-seeking activities, poororganizational systems which cannot be removed with one stroke of the ax.
After all, development process is time- as well as space-bound. In view of thelong-run perspective, policy direction to remove these constraints is utmost
important in the context of the Laguna Province.

4. ODA
Promote self-help or create dependency syndrome?
Effectiveness of ODA in achieving development objectives was discussed
intensively in the course of our OFW exercises, ODA in the Philippines has
been justified on the two grounds (aside from humanitarian reasons). One
ground is to supplement a shortfall of domestic savings which have been far
below of required domestic investment. The other ground is to supplement
foreign exchange shortage.
Assuming, for simplicity, all capital inflows are in the form of ODA, therequired capital for development can be expressed as follows:
ODA= domestic investment (Id) - domestic investment (Sd).
Let us assume the following parameters for the Philippine economy based on100Integration and Policy Direction: Synthesis

MTDP:
domestic saving rate (sr)=20%

capital-output ratio (k)= 3%required GDP growth rate (g) = 8%.
Then the following formula will give the required ODA/GDP ratio which will betranslated in turn into the amount of ODA needed:(sr=20) +(ODA/GDP=?)g=8=
k=3
ODA/GDP= kg - sr = 4%.
Therefore ODA required for 1994 is $2,245 million (4% of GDP).
As far as I know, almost all development plans in the Third World havebased their calculations for external sources of development finance on thissimple formula. The Philippines is no exception. The formula can be used forboth national as well as regional plannings. What wrong with this formula? Amajor problem will be a possibility of trade-off between domestic savings (Sd)and ODA which has been observed in many small island economies. In thiscase,

ODA wouldbesubstituted

for domestic

savings

insteadofcomplementing it as the model implicitly assumed. We do not know yet
whether or not there is a trade-off in the Philippines or in the Laguna Province.
It is surely worthwhile to investigate the matter. If there is evidence of a
trade-off between ODA and Sd, then ODA does discourage the self-help
efforts of the people as many cause-oriented NGOs have voiced for.
The way ODA is disbursed in the Philippines should be modified so as tofocus more on human resources development and institution building insteadof concentrating on infrastructure needs. But I must question the wisdom to
disbursing all ODA funds through POs or NGOs as some advocates proposed.
It is up to the democratically elected national government whether or not ODA
funds should be disbursed through NGOs or POS. If , for example, theJapanese government attempts to directly aid the poor farmers through NGOsin the Laguna Province, there is a clear and unexcusable act of foreignintervention into the country's domestic affairs which must by all means be
avoided.
1 01

Integration and Policy Direction: Synthesis

5. For Further Improvements of O FW
We have concluded the OFW-PH'95. This was the fourth OFW followed by
Cavite in the Philippines (third) and Thailand (first and second). It is time, I
believe, to assess ourselves, like any other projects to determine, whether or
not the OFW exercise has been a success or failure. Even if it has been a
success story, as I firmly believe it is, we need to work toward further
modifications and improvements.
The basic idea of OFW is to provide GSID students (not only Japanese
students) with a means to learn or unlearn about development issues throughstudents-initiated, action-oriented fieldwork, and let them think of feasible
solutions to the identified problems in a multidisciplinary or trandisciplinary
fashion. Development problems are multifaceted and highly interrelated one
another, so that our OFW participants' backgrounds have also been
multidisciplinary in nature. The multidisciplinary approach, however, is easy to
say than actual implementation. How can we expect students, who are noteven trained well in their respective disciplines, to integrate multifarious
development problems and solutions? What I have found through this year's
OFW exercise is sheer weaknesses of students' analytical capability. Without
this capability, problems synthesis by using a problem structure chart is awaste of time and money.
In concluding, let me say this: Although the OFW has been conductedseriously and intensively, the exercise is strictly for the purpose of students'
academic training. We should not dare be arrogant to think that our teamproposals, which are based on half- baked information and analysis, areuseful for the local government and municipalities.

102

OFW 95-PHI: Part 2

INTEGRATION OF GROUP REPORTS

OFW95-PHI: PART 2
KIMURA Hirotsune

Preface
From the beginning, the GSID OFW program has had a researchframework. Our focus has been regional development focusing on policy
directions to respond to the widening gaps between urban and ruraldevelopment, and between industry and agriculture during the development
procedure. From the outset, the notion of regional development has been
inclined toward rural development and agriculture. In the earlier stages, being
termed the Integrated Rural Development Project(IRDP). As I will argue, ruraldevelopment should not be considered only from the agricultural aspect.
Rural areas should be developed in an integrated fashion, not only combining
agriculture with rural industry and the service sector, but also with humandevelopment such as education and health, environmental protection and soon. Rural development is to have at its core a rural urban(rurban) center which
combines the region's economy. Thus rural development should not ·only berural but rather regional development.
Eventually, this kind of argument has been made and implemented in theform of the Integrated Regional Development Project (IRDP). Yet, in thePhilippines, as the term "Region" has been used differently, for example
Region IV, the term Integrated Area Development Project (IADP) has instead
been adopted. My argument is· based upon the framework of IADP in the caseof Laguna Province where we conducted our month-long fieldwork .

1 General Framework of IADP
The IADP has been developed in the Philippines context for decades, asummary of which can be found in Andres A.Limcaoco, Integrated Rural
Development Philippines, Sterling Publishers, New Delhi, 1989. But here, I'd103

OFW 95-PHI: Part 2

like to start from the general framework of IADP.
IADP Matrix (1) Integrated Farming

better rice production
horticulture (vegetables and flowers)

1

livestock and poultry(2)Agro-industry
Rural industry in the non-agro-sector (industry and service
sector)subsidiary companies/branches and large factories(3)development of the core rural urban (rurban) center(4)Public Administration Support system•economic infrastructure: transportation for marketing, credit
system•social infrastructure: education, health•administrative infrastructure: civil service, law and order,
IADP starts

withwith three factors:

integrated

farming

where

better rice production,

farming

is combineddevelopment of horticulture(vegetables and flowers), and livestock and poultry (sometimes agriculture
and others).
As an extension of integrated farming, various kinds of agro- industry,
such as food-processing, also should be promoted. There is no clear
boundary between agro-industry and rural non-agricultural sector
development, in industry furniture, fishing nets and kitchen utensils , and in theservice sector sari- sari stores, mini shops, eateries, car repair/parts , jeepney
and tricycle drivers. Both agro-industry and the non-agro-sector have a varietyof scale from cottage to small and medium size industry.
Subsidiarycompanies/branches and large factories are also developed in which
management comes from outside the region , from such areas asMetro-Manila. Employment in such companies is another income raising
opportunity as well as a part of .regional development.
These economic activities depend upon

infrastructure, transportation

for marketing, and the credit system. Thus, here, the role of governm ent
organizations or public administration is far reaching . Public adm nis rati on isto provide a fundamental support system for "development to take p ace . This
104

OFW 95-PHI: Part 2

support system consists of 3 aspects.
(1) physical infrastructure : roads, bridges, drainage, public markets,electricity, waterworks, telecommunications, irrigation,(2) social infrastructure : educational institutions for human resource
development and health services, family planning and nutrition
extension,(3) administrative infrastructure ( the existence for promoting better
government services) : town halls, law and order, garbage collection andother sanitation services, agricultural extension /veterinary service system,
social service (as written in (2) )etc.
These are the major components of the IAD system. During our OFW,
Working Group l(WGI) examined economic activities, WGIV the service
system of government organizations, WGII some government services(education and health) and WGIII studied about another component ofgovernment services (environment and infrastructure).
During the many experiences in the accumulation of IADP, two difficulties
became clear. One concerns the disintegrated bureaucracy. The other isIADP's ineffectiveness in helping the rural poor.
(l)For promoting regional development as an integrated set, many
government offices should be coordinated, not only the central government
departments and agencies, but also the provincial and municipal
governments. The central government departments are highly decentralized
and vertically organized. They function vertically without coordination withother departments and sometimes even local governments where particular
projects are implemented. Due to the low level of capability of local
governments, they have less ability or experience to combine scattered
government services in their administration. Eventually, IADP has come tohave a notorious reputation , with many saying "Integration just doesn't work."(2)For promoting IADP, infrastructure building has been given a highpriority. For narrowing the gap between urban and rural development, themajor government services for promoting rural areas were road construction ,electricity and irrigation. In the case of the Philippines, almost 70% of thebudget has been used for that purpose while providing credit and105

OFW 95-PHI: Part 2technical/managerial extension services came second and third, respectively.
Though infrastructure is important, it seems to benefit the rich. For example, if
the government constructs an irrigation system, those who have more land
benefit more and those who have no land to till or a very small amount of land
benefit less. Agricultural production increase is important and I do not deny theimportance of infrastructure. Still, credit and organization capacity are also
important. Credit borrowers have been limited largely to "haves" because of
the necessity of collateral. Quite often an, organization's merit such as thecredit and technical extensions of cooperatives has been absorbed by"haves." Though many Rural Development Projects have been practiced
formally under the slogan of poverty alleviation the reality , oftentimes, hasbeen very different.
IADP does not have a strong reputation on account of these difficulties.
Yet, without pursuing integrated projects, you must live with patchwork
projects. The goal should be IADP and the problem is, thus, how to improve
the framework for overcoming the present difficulties.

2 IADP Approach in Laguna Province
We were able to see the same difficulties of IADP during our OFW in
Laguna Province. Government credit for promoting the agricultural sector islargely utilized by the "haves" in rural areas, partially utilized by cooperatives
and farmers, and largely does not reach the rural poor. The governmentorganizations are far from well coordinated . Now, even after the introductionof Local Government Code (LGC) in 1992, which was recognized as the major
drive for devolution and capability building of local governments. The numberof local government officials increased to a mere 25%, up from 17% and the
majority of officials remain national government employees. National
government departments are highly decentralized and vertically organized.
Moreover, they are severed from implementing their services in the local field.
These powers are now in the hands of local government units (LGUs). Yet,
LGUs, especially mayors, still have a low capability and weak integration
ability to implement their services. The central government budget (IRA:
Internal Revenue Allotment) attached to devolved personnel and their services
is far from sufficient especially in terms of operation funds. Eventually,106

OFW 95-PHI: Part 2

devolved functions like public hospital management from the Department of
Health, social forestry projects from the Department of Energy and Natural
Resources and agricultural extension services from the Department ofAgriculture, are being found difficult to implement.
The power of city and Municipal mayors is relatively strong to theProvincial governor for under the new LGC, Parliaments didn't want Provincial
governor to be stronger than congressmen. Therefore, inter-governmental
coordination among national government agencies, provincial offices andmunicipal governments is just no good under the decentralized central
government agencies.
Low level of budget disbursement is seen in almost every country. Yet, for
the Philippines, having experienced two decades of economic stagnation andthe accumulation of a large foreign debt during the Marcos dictatorship,
though it has reduced from more than 40% during Aquino administration(1986 - 1992), debt service still occupies 30% of the national budget.
A high level of illegality is another difficulty for the Philippines. There is acoexistence of various regulations and their negligence in the Philippines.
The corruption level of public officials is said to be very high. Squatters can beseen almost everywhere. According to the 1990 Census, the number ofpeople illegally migrating to uplands to cultivate land has reached 8.5 million.
One third of the residents of Metro-Manila are squatters. Over 50% of
Metro-Manila's waterworks is not claimed. This is not only due to leakage, butalso due to illegal connections and "under reporting" by charge collectors. In
the municipality of Santa Cruz, the capital town of Laguna Province, WGIV
members were informed that the municipal government uses 85% of its budget
for personnel services despite the regulated ceiling of 45% and the two DILG
(Department of Interior and Local Government) personnel serving as
monitors.
Within this context, we attempted to find a better policy orientation. The
development problems of Laguna Province can be divided into three
dimensions.
The first is the Western District (see the map) which is affected by the spill107

OFW 95-PHI: Part 2

over effect of Metro-Manila. Three municipalities in this district are full of
subdivisions and thus needing connection roads to national highways,
waterworks, garbage collection, elementary schools, etc. It is necessary for theProvincial and Municipal governments to follow up on the urbanization. In theWestern District there are 5 international class industrial estates, all national
projects needing housing areas for laborers and other public services to beextended by local governments.
According to the provincial planning and coordination officer, they havemuch difficulty in following up these services. As the major development
aspects come from the spill over effect from Metro-Manila and as it isnecessary that the various development aspects be coordinated or integrated,
the ADP in the Western District should be coordinated and implemented not by
Provincial Government but rather the National Government as a part of theMega-Manila Development Project. Here, Mega-Manila includes not only
Metro-Manila, but also the Western District of Laguna Province, Northern
district of Cavite Province, the districts along the Marikina-lnfanta Road
(Rizal-Laguna-Quezon Provinces) as a part of the Calabarzon Development
Project and the Central Luzon Development Project, including the risingindustrial estates in Subic and Clarkfield (former US military bases).
The second development dimensionof Laguna Province is thedevelopment problem of Laguna Lake. The highly polluted Laguna Lake isbordered by the Provinces of Laguna and Rizal and by Metro-Manila. As aresult, the problemof Laguna Lake was handed to the Laguna Lake

Development Authority(LLDA), which was to be the coordinating office.
Unfortunately, until now it has been a very weak authority, conducting analysis
while the lake is dying. Although Laguna Province sends a representative to
the LLDA Committee Board, the level of consultation is low. According to the
Laguna Province Planning and Coordination officer, he attends the committee
meeting, eats lunch, decides the schedule for the next meeting, receives ahonorarium, and returns to his office.
Now it is clear that the major factors which cause pollution of Laguna Lake
can not be curbed in the near future. Soil erosion from the su'"rounding
uplands can not be stopped considering the present infant stage of andstagnation of social forestry · projects. With the continued use of many108

OFW 95-PHI: Part 2

chemicals for agriculture there is a low prospect for converting the present
agricultural pattern into organic agriculture. Waste water from household swill
not be well treated in the near future either. As for waste water from industry,though industrial estates are requested to prepare environmental facilities
even in light of the fact that local governments have poor monitoring systems,
small and medium size industries which are promoted by national government
for social equity are not requested to prepare them. The treatment of solid
waste by municipalities is disregarded and rain flows into the lake directly
through dumping sites. Thus, much time is needed to prepare proper dumping
sites in the areas surrounding Laguna Lake.
In the near future, there is an unlikely prospect that the environmental
degradation of Laguna Lake will be stopped. The lake is dying and it will die
unavoidably. The present problem is not one of engineering but of politics.
Within approximately 1O years it will be necessary to think of the development
problem of an already dead lake. The answer will be, undoubtedly, thereclamation to rescue a terribly congested Manila by constructing a second
Manila, or even a third Manila, but considering the increasing presence ofenvironmentalists , it will be a difficult political decision to make. Still, this is aproblem unable to be managed by the Laguna Provincial Office.
The third dimension of the development of Laguna Province is the Eastern"agricultural district" (districts3&4). Though this district is labeled anagricultural district the term "agricultural district" connotes less importance tothe development strategy of the non-agricultural sector (rural industry andservice sector), a sector more important for income raising activities of the local
people and for changing "rural development" into "area development." That
was my impression when I interviewed the Provincial Planning and
Coordination officer. Here in Laguna Province, the ADP approach is weak andnot well coordinated.
Another problem I found in the Eastern District is that use is not made of
the proximity of the district to Metro-Manila. Many still cling to the notion of
better rice production. Though some farmers plant citrus and other crops,
trading them directly in Metro-Manila, they are still small in number. Laguna isvery suitable for such foods as vegetables, fruits, flowers, and dairy products.
Although the possibility of vegetable cultivation seems far behind the Mountain109

OFW 95-PHI: Part 2

Province, this trend should be pursued more systematically. It is not necessary
to attain "Self-sufficiency" of rice production in the province. "Self-sufficiency"
should be considered at the national level, thus including the "food basket" of
Mindanao.
As for the second shortcoming of IADP, the alleviation of poverty, we were
happy to discover three trial efforts: the proliferation of Grameen Bank typesocial forestry projects, the lending system to farmers byactivities,
cooperatives.
Largely, the non-agricultural sector is still dominated by individual "haves"
who can prepare collateral to borrow capital from the Land Bank, Rural Banks,and commercial banks to develop such businesses and ventures as rice-mills,
construction operations, transportation projects, commerce, furniture making,etc. They , in addition to small and medium size enterprises, are the real
beneficiaries of the government policy to prepare funds for rural development.
On the other hand, for small farmers or for the poor, "Agricultural funds areavailable but not accessible." This is due to the fact that: (l)they cannot preparecollateral, (2)their borrowing scale is too small for the bank loan to handle, and3)the bank's red tape often delays the disbursement of loans which thencannot be in time for the cropping season. Eventually, farmers turn to privatemoney lenders even though the interest is far higher.
Grameen Bank type lending activities overcame the collateral barrier byrequesting borrowers to organize 5 member groups with joint responsibility forrepaying borrowed funds. They also combine this activity with poverty
alleviation, as only the poor (and largely women) can be members. There are
19 organizations of this type in the Philippines, with 3 in Laguna Province. As
in Bangladesh, where the first Grameen Bank was constructed, these banks
are very successful.
Social forestry presents another bright prospect for the alleviation ofpoverty. Those who migrated to the uplands are largely poor. For years, they
have been regarded as illegal squatters and the destroyers of natural forests.
Now, they are able to have a 25 year(plus 25 years) contract with thegovernment to work the land (an average of 4 hectares) under the stipulationthat a certain portion of the land area be planted with trees. The government is
110

OFW 95-PHI: Part 2

to provide seedlings and agricultural extension services/loans for income
raising. Now, they are promoters of afforestation.
A new lending scheme for cooperatives has been proposed by WGIV.
Presently, the government extends agricultural loans without collateral throughcooperatives which capital coming from the Land Bank. Cooperatives are
regarded as having the ability to qualify borrowers because they areneighbors. The policy of the Land Bank is to lend only to the coops with arecord of good management; having at least 50 members. Thus, coops withless than 50 members are unable to lend to members. Many farmers
associations, the stage before becoming a coop, exist. Their members are also
not eligible for government lending. Furthermore, the many farmers notbelonging to either of these organizations are also not eligible for government
lending. The government of the Philippines policy for the promotion ofcooperatives is currently at a very low level and scattered. The Cooperative
Development Authority Region IV chief stated that the integration of coops isnecessary for their vitalization .. So, WGIVs proposal is to extend the lending
functions of good coops to non-members. In so doing, these coops will be able
to absorb other coops, farmers associations, and individual farmers. Providing
loans to farmers and strengthening coops can be combined under this project.
I would be very happy if any ideas for the promotion of a better Integrated
Area(Regional) Development Project could come out of my above discussion.

111