PJPA 2014 No. 2

PHILIPPINE JOURNAL OF PUBLIC ADMINISTRATION
Volume LVIII July-December 2014 Number 2
Page
Lessons on Policy Transfer:

The Philippine Experience ...................... Minerva S. Baylon 113
Enhancing Performance in Philippine

Public Enterprises: A Revisit of Recent
Reforms and Transformations ........... Maria Fe Villamejor-Mendoza 139
Social Enterprises and Development Management:

A Socialist Partnership between State and
Non-State Duty Bearers and Social Service
Providers in Vietnam ............................. Pham Tien Nam 158
and Oscar Ferrer
The Philippine Bureaucracy:

Prospects for Administrative Reform
and Indigenization ........................ Ma. Carmen V. Pefialosa 195
Editor's Notes
In the late 1970s and the early 1980s, the then College of Public
Administration (CPA) of the University of the Philippines Diliman
advocated the importance of Policy Studies in the field of Public
Administration (PA). Stalwarts like Professor Romeo B. Ocampo, former
Dean of the CPA, has exhorted scholars of PA and related disciplines to go
beyond administrative organization and management analyses, to examine
policy as a central focus and a research problem in assessing the impact of
government.
However, scholars in Public Administration know too well how

context can play a crucial role in determining the final shape of policies of
the state. Three of the papers in this issue examine public policies
involving the private sector, another actor in the field of public
administration and governance, aside from the state and civil society. The
fourth paper is aligned with the continuing paradigmatic challenge of
searching for indigenous contextualization of public administration studies
in the Philippines.
The work of Minerva S. Baylon presents a policy analysis focusing on

the importance of understanding the institutional contexts within which a
policy reform is designed. In her paper, "Lessons on Policy Transfer: The
Philippine Experience," Baylon shows how international financial
institutions and other international organizations have acted as agents of
policy transfer, which, to a large extent has influenced the formulation of
the Electric Power Industry Reform Act or EPIRA law in the country. The
study gave empirical bases for revealing how policy transfer can challenge
the independence and integrity of institutions like the legislature and the
executive branches of the government.
Likewise, the paper on "Enhancing Performance in Philippine Public

Enterprises: A Revisit of Recent Reforms and Transformations" by Maria
Fe Villamejor-Mendoza looks at various reform measures that have been
in place to rationalize, reengineer, and instill financial discipline among
the Philippine public enterprises (PES) or the government owned and/or
controlled corporations (GOCCs). One gets to revisit how reforms for
governing the GOCCs may have affected their performance through the
years. Using secondary data and reports, Mendoza's study shows the
issues and challenges ahead related to public corporate governance in
order to contextualize implications for more accountable and performing
PES while contending that the prospects for GOCCs in the country may be
bright with a right mix of accountable systems, good managers and high
sense of nationalism and ethical administration, among others .
While Mendoza's study examines governance of big private
corporations, a third study in this issue delves into the entrepreneurial
practices of smaller social enterprises in Vietnam, from which public
organizations can draw lessons. Pham Tien Nam and Oscar Ferrer's
study, "Social Enterprise and Development Management: A Socialist
Partnership between State and Non-State Duty Bearers and Social Service
Providers in Vietnam", explains how social enterprises, more generally
referred to as civil society organizations in liberal capitalists nations, act
as non-state partners in nation-building by sharing and rendering social
services especially to people in the margins in Vietnam. The findings of
the study document how social enterprises in Vietnam are more
supportive of the state's mission towards social development, compared
with other civil society organizations who tend to be more adversarial.
A more cardinal challenge highlighting the need for a deeper

understanding of context in Public Administration research is tackled in
Ma. Carmen V. Pefialosa's, "The Philippine Bureaucracy: Prospects for
Administrative Reform and Indigenization." The article calls for the
indigenization of public administration and nails what Dr. Raul De
Guzman, another pillar of Public Administration in the Philippines,
contends that the dynamism and pattern of evolution of administration
may be determined by the sociocultural, economic and political setting in
which public management operates, which is often offered as an area to
investigate. Pefialosa attempts to illustrate how the indigenization
movements or schools of thought in Philippine Social Sciences, specifically
the Pantayong Pananaw,Sikolohiyang Pilipino and Pilipinolohiya,call for
a revisit of the literature on Philippine bureaucracy in order to put
administrative reform agenda in the context of Filipino society, culture
and history as potential theoretical paradigms for reforming the Philippine
bureaucracy.
All in all, the continuing discourse on the meaning of context serving

as the fulcrum in the tangent where policy research may swing from the
context affecting public administration systems or these public systems
affecting changes in the sociocultural and political contexts is worth giving
a closer look as one reads through the articles in this issue.
Philippine Journal of Public Administration, Vol. LVIII No. 2 (July-December 2014)
Lessons on Policy Transfer:

The Philippine Experience
MINERVA S. BAYLON*
The article looks into how globalization has taken on forms

that tend to challenge the internal governance of countries. One
such form is referred to as policy transfer, defined as a "process
by which knowledge of policies, administrative arrangements,
institutions and ideas in one political system (past or present) is
used in the development of similar features in another."
Deregulation and liberalization is an example of policy transfer.
Although some literature on the subject matter highlight its
positive aspect, that of lesson drawing, other researchers point
out the constraint posed by incompatible political systems and
differences in the contexts on the success of such a policy
transfer. In the Philippines, deregulation is a conditionality
imposed by donor countries and international organizations. A
case study of the formulation of the Electric Power Industry
Reform Act or EPIRA further illustrates how pressure and
influence from the international financial institutions and
other international organizations, as agents of policy transfer,
determined the final shape of the policy. This study is an
addition to the body of literature that lends support to
conceptual and empirical researches advocating the importance
of taking into account the political and administrative,
socioeconomic and cultural contexts of policy transfer. It also
shows how policy transfer can challenge the independence and
integrity of institutions like the legislature and executive
branches of government.
Keywords: policy transfer,deregulation,policy formulation, EPIRA
Introduction
Globalization has taken on various meanings and forms. One such

form is referred to in the policy literature as policy transfer, defined as a
"process by which knowledge of policies, administrative arrangements,
institutions and ideas in one political system (past or present) is used in
the development of similar features in another" (Dolowitz, 2000, p. 3).
Although some literature on the subject matter highlight the positive
aspect of policy transfer, that of lesson drawing, other researchers point
out the constraint posed by incompatible political systems and differences
*Associate Professor, National College of Public Administration and Governance,

University of the Philippines Diliman
in the contexts on the success of such a policy transfer (see Dohlman &
Halvorson-Quevedo, 1997; Benson, 2009). In many instances, policy
transfer tends to challenge the internal governance of countries,
especially that of the integrity of the institutions.
Globalization, or the integration of the world economy, has put

pressures on governments to develop their respective countries' competitive
edge over other countries. Economic and institutional reforms were put in
place to facilitate the introduction of private capital, address the fiscal deficit
(in the case of highly indebted nations, the fiscal discipline imposed by
international financial institutions), and reduce inefficiencies of the private
sector (in the case of market failure) or the public sector (in the case of
government failure). However, according to Rodrik (n.d., as cited in
Raghavan, n.d.) "developing countries which adopt an external strategy of
opening up to the world, but without an internal strategy of institutional
reforms risk exposing themselves to the kind of protracted crises from which
many of them have begun to recover only recently" (Raghavan, n.d.,
"Globalization needs strong internal institutions").
It can be said that policy transfer is not a new phenomenon. A liberal

application of it can be made in countries that have been under colonization.
Policies, institutions, systems and procedures of the colonizers are imposed
upon the subject country. Development administration, which emerged from
the ruins of World War II, was instrumental in promoting policy transfer of
economic reforms from the US and other developed countries to the less
developed nations primarily through the development aid.
However, in the context of globalization, policy transfer has

developed more rapidly and more widely. This has been partly attributed
to transnationalization of policy problems, interdependence and the
increasing importance of international governance bodies such as the
World Bank, International Monetary Fund (IMF) and European Union.
Deregulation and liberalization are examples of policy transfer. In

the Philippines, deregulation is a conditionality imposed by donor
countries and international organizations in sectors and industries such as
electricity, water, telecommunications, banking, transportation and oil.
Objectives of the Study
This study aims to document and illustrate the experience of a

developing country like the Philippines in introducing and implementing
economic and other reforms in the different sectors governed by
conditions set by international financial institutions. The Philippines has
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LESSONS ON POLICY TRANSFER
incurred and continues to incur huge debts from these institutions. It also
seeks to show how policy transfer can challenge internal governance,
including the independence and integrity of institutions like the
Legislature and the Executive branches of government.
A case study of the formulation of the Electric Power Industry

Reform Act or EPIRA was conducted to further illustrate how pressure and
influence from the international financial institutions and other
international and bilateral organizations, as agents of policy transfer,
could determine the final shape of the policy. It is an addition to the body
of literature that lends support to conceptual and empirical researches
advocating the importance of taking into account the political and
administrative, socioeconomic and cultural contexts of policy transfer.
The Experience of the Philippines
The Philippines is one of the countries that has introduced

comprehensive reforms in the way the economy is organized and managed
since 1986. It is a response by the government to certain international as
well as domestic requirements.
It may be recalled that, in 1986, the country had just emerged from
more than 20 years of martial rule, characterized by an economy that was
almost bankrupt and dependent on loans and aid. In December 1965, the year
Marcos became president, the country's foreign debt stood at below US$1
billion (Padilla, 2004). When Cory Aquino assumed the presidency in 1986,
the Philippines' foreign debt amounted to estimates ranging from US$21.5
billion (Bello, 2008) to US$28 billion (Padilla, 2004). Succeeding presidents
continued the country's foreign debt policy, resulting in foreign debt
amounting to US$59 billion during the first quarter of 2013 (PhilStar Global,
2013). As of September 2013, PhP5.61 trillion total debt has been registered,
of which 65 percent or PhP3.68 trillion came from local lenders, while 34.4
percent or PhP193 trillion came from foreign creditors office (Dela Pefia,
2013). The government forged ahead with its strategy to borrow more from
local sources given the excess liquidity in the domestic market. Debt
guaranteed by the government decreased by 2.6 percent month-on-month.
The country borrows from foreign sources through sale of bonds and loans
from development institutions. The government's outstanding debt was
estimated to be equivalent to around 49.5 percent of the country's gross
domestic product (GDP) as of June 2013. A lower debt-to-GDP ratio means
the country's economy is growing faster than its debt, and the budget deficit
is being contained. The B.S. Aquino administration's goal is to bring down
debt to 40 percent by 2016 when he steps down from office (Dela Pefia, 2013).
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To make the country globally competitive and sustain economic

growth with equity, the Philippine government, starting with the Cory
Aquino administration, has adopted the market economy approach as a
strategy (Proclamation 51, s. 1986). It has introduced policy reforms that
included privatization and public sector reforms, trade and investment
liberalization, and deregulation of various sectors such as oil,
telecommunications, banking, transportation, water and power. These
reforms also form part of the loan conditionality imposed on recipient
countries by international financial institutions (IFIs) such as the World
Bank (WB) and the Asian Development Bank (ADB) (Kirkpatrick, Parker,
& Zhang, 2004; Corpuz, 1957; Carino, 1994; Veneracion, 1988).
Results of LiberalizationInitiatives
The assessment of the results of these liberalization and deregulation

initiatives has been mixed. As early as 2002, Austria (2001) concludes in
her study of the air transport industry that the liberalization of the civil
aviation sector has "undoubtedly" brought genuine competition in the
domestic air transport industry, resulting in lower airfare, improvement
in the quality of service and efficiency in the industry in general, while
that of the telecommunications industry has created an environment
conducive to growth and investment resulting in the entry of new players
and availability of new technologies and services (Baylon, 2010).
Other studies on the privatization program of the government,

however, say otherwise. A study on public enterprise reform and
privatization by the Center on Policy and Executive Development (2002)
showed that privatization as a source of government revenue is neither
reliable nor sustainable. Since its proceeds are non-recurring, they tend to
distort the long-term fiscal situation of the government. For the fiscal
year 1994-1995, the privatization proceeds contributed tremendously to
the improvement of the budget situation, including the lowering of public
sector borrowing requirement. However, the budget reverted back to a
deficit situation from 1995 onwards. The number of saleable assets
declined and there was a 74 percent shortfall in privatization proceeds.
There was also evidence that the concentration of ownership of Philippine
industry has been exacerbated with the government assets being sold to
the cronies of former President Marcos, hence defeating one of the
objectives of privatization, which is to broaden the ownership base.
In the case of the oil deregulation, both the positive and negative
effects have been cited. One of the positive gains being claimed is the
increasing market share of small oil companies from 30 percent in 2012 to
34 percent in the middle of 2013 (Gamboa, 2013). This has been attributed
July-December
to the Republic Act (RA) 8479 or the Oil Deregulation Law, which provides
for generous incentives to interested new players. The competition in the
oil industry has been described as very much alive, "aggressive and
fierce." This has however not translated into lower oil prices.
The other side of the story recounts that whenever the law was being
deliberated in Congress, its ardent proponents presented it as "the policy
that will end the domination of the Big Three oil companies, namely
Petron Corporation, Pilipinas Shell, and Chevron Philippines (formerly
Caltex), over the local downstream industry.., and that by encouraging
free competition, deregulation would promote competitive petroleum
prices that will benefit the consumers and the economy" (Padilla, 2012, "14
years of oil deregulation is enough!"). Fifteen years after deregulation, the
dominant position of the Big Three remains intact, if not stronger, while
consumers continue to bear the high prices of oil products (Padilla, 2012).
The negative impact of privatization on employment has also been

raised (Patalinghug, 1996). There have been repeated calls for the repeal of
the Oil Deregulation Law, re-nationalization of Petron, formerly a wholly-
owned government corporation but was partially sold in 1994 and the review
of the country's commitments to the World Trade Organization by various
sectors due to their perceived adverse impact on the economy, employment
and the people's income. Some members of Congress have actually called for
a stop to the country's commitments to the WTO, citing as among their
negative effects, mass layoffs and the death of domestic industries as a result
of unrestricted foreign imports. Six representatives from three party-list
groups in the House of Representatives promised to prioritize bills that would
roll back deregulation and market-friendly measures in the then newly
opened 1 3th Congress (Bulatlat, 2004, as cited in Baylon, 2010).
There is a growing realization that the interest of the powerful few

and not that of the general public is being served by the government's
program of privatization, liberalization and deregulation. This failure of
policy may be partly due to the inadequate participation of and/or lack of
meaningful consultation with the stakeholders, who are much greater in
number but have much less influence in the formulation of policies. This
has, in turn, led to a growing clamor for greater citizen participation as
well as transparency and accountability in public decision making.
How Policy Transfer Challenges Effective Internal Governance
To what extent have these conditionalities affected the internal

governance of the country? During the Marcos martial law regime, among
the conditions of its standby arrangement with the IMF in 1984 was that
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the national government would assume private loans of Marcos cronies to

ensure their repayment (Padilla, 2004). This arrangement highly
contributed to the ballooning of foreign and domestic debts of the
Philippine government and economic crisis in the country.
The passage of the Oil Deregulation Law during the Ramos

administration was another well-documented case. Originally passed in
1996 as RA 8180, it was replaced by RA 8479 enacted in 1998 to address
the Supreme Court's decision on the unconstitutionality of a provision.
Padilla (2012) alleged that the passage of the said law and even its content
have been "tied to a loan of almost US$1.04 billion that the Philippines
contracted with the IMF in 1995 under the multilateral institution's
Extended Fund Facility (EFF)" (Padilla, 2012, "14 years of oil deregulation
is enough!"). The said deal with the IMF involved five other major areas,
namely, tax reform, import liberalization, financial sector reform, foreign
investment liberalization, and privatization, covering 43 specific measures.
The then governor of the Bangko Sentral ng Pilipinas (Central Bank of the
Philippines) Gabriel Singson was quoted to have said that "the IMF wanted
these provisions in the Oil Deregulation Law in order for the country to
exit from the IMF 'on a secure footing"' (Padilla, 2012, "14 years of oil
deregulation is enough!"). The IMF had also pushed for automatic price
adjustment and elimination of any form of subsidy as among the main
provisions of the law. It was also alleged in the study that to access some
US$300 million in the first tranche of the EFF, as well as another US$300
million in loans from the Japan Export Import Bank (JEXIM), the IMF had
first to approve the then newly enacted RA 8180 (Business World, 1998,
cited in Padilla, 2012).
The challenge to the integrity of the legislative and executive

branches became more pronounced as both the executive and legislative
branches had to give in to the IMF. Citing reports from Business World
(1998), activist and researcher Arnold Padilla (2012) argues that:
[t]he timing of full deregulation also became a contentious issue

during the deliberations in Congress. The Senate and the House
of Representatives were then pushing for a transition period
before full deregulation takes place but the executive was
rejecting the proposal because the IMF requirement was
immediate liberalization of the oil industry. To accommodate the
IMF conditionality, the Ramos administration lobbied for an
acceleration clause. Congress, in the end, passed RA 8479 with
such clause, stated in Chapter VI Section 19, which authorizes
the President to accelerate the start of full deregulation (which
the law states shall start five months following the effectivity of
RA 8479) except for socially-sensitive oil products (i.e. LPG,
regular gasoline, and kerosene). As expected, Ramos exercised
this prerogative and accelerated the implementation of full
deregulation (earlier by four months) to hasten the approval of
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fresh loans worth $1.6 billion under the IMF's standby credit
facility (Padilla, 2012, "14 years of oil deregulation is enough!").
The Case of the EPIRA Formulation1
The formulation of the Electric Power Industry Reform Act or EPIRA

illustrates how pressure and influence from international financial
institutions and other international organizations, as agents of policy
transfer, determined the final shape of the policy. It lends support to
conceptual and empirical researches advocating the importance of taking
into account the political and administrative, socioeconomic and cultural
contexts of policy transfer. It also shows how policy transfer can challenge
the independence and integrity of institutions like the legislative and the
executive branches of the government.
Background on the EPIRA
The EPIRA is one of the controversial economic and regulatory

reform policies adopted by the government. It is one of the most discussed
and debated deregulation policies in the history of Philippine legislation
before and, more so, after its adoption. It was claimed by no other than
former President Gloria Arroyo that the power industry restructuring
paved the way for the "biggest privatization undertaking in the [ASEAN]
region" (Arroyo, 2001). Other articles described it as "the fiercely debated
[and]... by far, the most ambitious and advanced reform program in
Southeast Asia" (Sharp, 2004, as cited in Baylon, 2010, p. 6). United States
Agency for International Development refers to it as Asia's most extensive
power sector reform to date. It is therefore not surprising that the bill
took seven to nine years (depending on whose reckoning), spanning three
presidents (Ramos, Estrada, Arroyo) before it was finally enacted. It was
one of the first major legislations to be passed under the Arroyo
administration. The filing of a bill to restructure the power sector was a
joint response by the executive and legislative branches on a long-term
basis to the power crisis that hit the country in the late 1980s and early
1990s. Although the Power Crisis Act of 1993 was the first legislative
initiative to address the power crisis, the said law was more of a palliative
and short-term response.
Enacted in 2001 as RA 9136, EPIRA was intended to address the

problems of the power industry and reform it in order to provide for the
power requirements of a growing economy on a long-term basis. Hence, it
can be characterized as comprehensive, and to a certain extent, radical, as
it introduced major and far-reaching reforms in the electric power
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industry. It provides for a "framework for the restructuring of the electric

power industry, including the privatization of the National Power
Corporation (NPC), the transition to the desired competitive structure,
and the definition of the responsibilities of the various government
agencies and private entities" (Sec. 3). The restructuring of the electricity
industry calls for the separation or unbundling of the different components
of the power sector into generation, transmission, distribution and supply
while privatization of the state-owned NPC involves the sale of its
generation and transmission assets. The law defines the organization and
operation of the electric power industry, the role of the Department of
Energy (DOE) under the restructured set-up, and the regulation of the
industry by the Energy Regulatory Commission (ERC). The restructuring
does not, however, result in the full deregulation of the power industry.
Dynamics of EPIRA Formulation
When EPIRA was finally signed into law, public reactions consisted of
skepticism, if not outright opposition and disagreement, with the final
version of the bill. That early, many, including the sectors which
participated actively in the formulation process, predicted that the policy
would be a failure. Barely a year after the EPIRA's passage, bills seeking
to amend the EPIRA were filed in both houses of Congress, with some of
the sponsors of the EPIRA during the previous Congress who were re-
elected as authors of these amendatory bills. However, two years after
passage of the Law, representatives of a partylist in the House of
Representatives filed a bill calling for the repeal of the EPIRA on the
ground that "it is not only a dismal failure at serving the public interest
[but] it even attacks the very interest of consumers and the rest of the
Filipino people" (House Bill 6195, 1 2 th Congress, 2004).
An examination of the dynamics of the formulation of the EPIRA

revealed the confluence of economic, political, institutional and cultural
factors that affected the process and its final outcome, which is what
became of the bill when it was finally enacted. The extent of the
bargaining power and influence of the stakeholders in the formulation of
the Act was a function of several interdependent factors that include
resources at their disposal, access to policy and decision makers both through
formal and informal means, and access to information and/or expertise. In
the events that followed, they point at the conditionality of the IFIs and the
influence of foreign consultants as the two most significant factors that
determined the final shape and substance and ultimately the enactment of
the law. Earlier bills that sought to address the power situation in the
country called not for the restructuring of the power industry but for less
radical options such as partial privatization of NPC's assets.
July-December
The interests of the industry players, meaning electricity power

companies, were promoted by the IFIs like the ADB, WB and the JEXIM
and other bilateral organizations. These institutions have direct influence
over the policy and decision makers. It was an open secret that one, if not
the most, compelling reason for the passage of the EPIRA was that it was
part of the loan conditionality (as documented in various minutes of the
meeting of the cabinet and Legislative-Executive Development Advisory
Council [LEDAC]).
According to the Freedom from Debt Coalition or the FDC (interview

with FDC power campaign coordinator Maris De la Cruz, 29 April 2004),
President Estrada gave his administration four months to pass the power
bill. The same claim was made by freelance journalist Earl Parreno in an
interview on 19 April 2004. The passage of the EPIRA imposed by the IFIs
would allow the Philippine government to draw the needed resources from
the former's credit facilities. Due to the very tight financial condition of
the country, the government's only main source would be the
international funds. The passage of the Omnibus Power Bill was a
condition for the release of the program sector loans of ADB and the
JEXIM Bank amounting to US$400 million as budgetary support to the
national government (Memorandum for the President, 31 March 1999).
The ADB and the JEXIM Bank withheld the release of the second and
third tranches of the Power Restructuring Program loans after the
government failed to pass the power bill in June 1999 (Minutes of the
Cabinet Meeting, 13 April 2001). As to the IMF, NGOs like the Employees
Consolidated Union (NEWU) of the National Power Corporation (NPC) and
the FDC referred to a 1999 letter of the IMF addressed to Congressman
Arnulfo Fuentebella, chair of the House Committee on Energy which made
the early passage of the bill a condition for the release of US$300 million
in rehabilitation loans (Philippine Daily Inquirer, 2001, as cited in Baylon
2010). During a cabinet meeting one-and-a-half years after the filing of the
power bills, the secretary of the Department of Finance "called the
attention of the body on the need for Congress to pass the Power Bill
before the end of the year... as it was one of the government's
commitments in the letter of intent to the IMF for the release of US$380
million under the special drawing rights" (Minutes of the Cabinet Meeting,
13 January 2000, as cited in Baylon 2010, pp.159-160).
The official development assistance (ODA) was not the only factor
that could explain the special interest shown by the IFIs. Their
representatives also had personal stake as creditors of the power
companies. Perez-Corral's (1996) study described the changes that
occurred in ADB, particularly its private sector operations. It claimed that
the ADB was hard-pressed to find a niche in the overall development
financing arena, which in the last two decades saw private financial flows
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overtaking ODA as the primary source of development financing. To

address this, the ADB set in place a redefined private sector and co-
financing strategy which gave a greater role to the private sector in
development efforts. This redefined co-financing strategy aimed at mobilizing
additional private capital for developing member countries and continue the
promotion of co-financing. During its reorganization in June 1995, the ADB
created the Private Sector Group to focus on five key activities, including
infrastructure investment, capital markets, and privatization. The new
private sector strategy also included the improvement of the policy
environment for the private sector and provision for direct investment in
private sector firms in its developing member countries. Most often, these
activities required legislation and strengthening of relevant regulatory and
supervisory agencies (Baylon 2010, p. 160).
The Philippines was one of the ten countries where private sector
operations, amounting to US$1.2 billion, was concentrated from 1986-1995.
It was second to Pakistan in terms of private sector loans for the period
1983-1995, accounting for 20 percent of the total. The ADB's redefined co-
financing operations focused on traditional infrastructure projects, with
the energy sector receiving the biggest share at 50 percent. The largest
co-financing transaction in the Philippines amounted to US$523 million.
This involved a private sector venture in power generation, the Hopewell
Energy Phils. Corporation, which started in 1989 and ran for 12 years
under the build-operate-transfer (BOT) scheme. In 1993, the ADB funded
another two BOT power plants in the country. Among the ADB's largest
official co-financing institutions were the JEXIM and WB (Perez-Corral,
1996 in Baylon, 2010, p. 190).
It was also claimed that Meralco, the largest power distribution utility
company in the Philippines, was able to access ADB facilities when then
President Ramos, barely two months into office, lent the government's credit
standing to the Lopez firm and asked ADB for a US$138 million loan to
expand and upgrade Meralco's distribution system. Since the amount was
higher than the amount allowed under the ADB's private sector window, the
Philippine government through its Philippine Export and Foreign Loan
Guarantees Corporation, acted as loan guarantor (Samonte-Pesayco, Coronel,
& Rimban, 2004, as cited in Baylon, 2010, pp. 160-161).
The dictates of the industry players, IFIs and bilateral organizations,

on the direction and shape that the restructuring and privatization of the
Philippine electric power industry took was further perpetuated through
the foreign and local consultants who, more often than not, were provided
by the IFIs and bilateral agencies themselves.
July-December
The extent of the participation of independent power producers or

IPPs and distribution utilities (DUs), both foreign and local, and a bilateral
agency in the technical working group (TWG) workshop normally reserved
for government representatives only would bear this out. In addition to
Committee on Energy (CoE) members and senior government officials of
government agencies, the participants of the TWG workshop held in Subic2
included top officials from 12 large power companies, majority of whom
had been engaged in the power industry in the country for quite
sometime. They were: (i) three local companies-Meralco, First Gas and
Trans-Asia Power Generation Corporation; (ii) three UK-based
companies-National Grid UK, PowerGen UK and National Power UK;
(iii) three US-based companies-Southern Energy Phils, PGI and
California Energy International/CalEnergy Philippines; (iv) one French-
based company, the Electricite de France; (v) two local association of
DUs-Philreca and PEPOA; (vi) World Energy Council; (vii) USAID; and
(viii) Romeo Bernardo, consultant of Rep. Fuentebella, the House CoE
chairman (Baylon, 2010, p. 173). Rep. Fuentebella justified the presence of
the private sector as a "little innovation from public hearings," which put a
time limit and prevented the full process of consultation. Fuentebella also
said that "the process really is the extent of participation of many members
whose interests are varied and whose qualifications would differ from one
another." However, when asked by a consultant from Philreca about the
representativeness of the group due to the absence of civil society, labor and
environmental groups which in the past had broadened and enriched the
range of perspectives on the subject matter, the response of Congressman
Fuentebella revealed the general attitude of the Committee throughout the
formulation process, that is, the consumers would not be able to understand
the bill and therefore would not be capable of making recommendations
(Minutes of the TWG Workshop, 14 April 1999, in Baylon, pp. 173-174).
The same unpatronizing attitude towards the consumers seemed to

permeate the Senate CoE. Only the major industry players and concerned
government agencies were invited during the initial hearings, with the
private sector being given priority. Two organizations representing the
consumers were invited only on the very last part of public hearings due
to public clamor expressed in the forms of street protests and news reports
calling for more participation and transparency (interview with a technical
staff of a senator who was a member of the CoE). The National Association
of Electricity Consumers for Reforms (Nasecore) was invited and attended
only once, while FDC attended four times (Baylon, pp. 176-177).
The capture of the formulation process by the industry players was

further facilitated by the nature and magnitude of reforms that the bill
sought to introduce and the lack of local experience and expertise in
undertaking these reforms. The highly technical and complex nature of
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the proposed restructuring of the industry made the legislators rely

heavily on the knowledge and expertise of the industry players and the
foreign consultants and a few local experts while practically excluding the
consumers from the process.
The presence and influence of consultants, who were mostly foreign,

in all the faces of the enactment process could not be overlooked. In
addition to the attendance sheets during meetings and hearings, several
interviewees mentioned that legal and financial consultants were present
in all the meetings. In the Senate, the Credit Suisse First Boston (CSFB)
and its local consulting firm, the Arthur Andersen/SGV & Co. were
contracted by the Senate CoE to study principally the privatization of NPC
pursuant to Sec 35 of Senate Bill 2000 (Baylon, 2010, p. 181).
Even before CSFB and SGV became Senate CoE consultants, their
respective representatives have attended one of the earliest hearings
conducted by the said body (21 August 1998), and several hearings
thereafter (Senate CoE hearings 15 and 30 August; 20 and 28 September
2000). A few months after the passage of the EPIRA in June 2001, Lopez's
Benpres announced that it had appointed CSFB as financial adviser to
assist in the review of strategic alternatives available to the company,
particularly its indebtedness and capital structure (Benpres Holdings,
2001, as cited in Baylon 2010, p. 181).
Another consulting firm, Navigant Consulting, after insistent request

from the office of then Rep. Loretta Rosales, presented to the Senate CoE
and NPC representatives, the results of its study on the consumer impact
assessment of electric power restructuring in the Philippines on
vulnerable consumer groups. Navigant, in collaboration with the dean of
the School of Economics of the University of the Philippines, prepared the
report for NPC with US$700,000 funding from ADB ( 2 nd Reading House of
Representatives, 5 April 2000). The study claimed that the consumers
would get a fair share in the restructuring. FDC and Association of the
Philippine Electric Cooperatives (APEC) however alleged that the study
was not valid because it was based on the wrong assumption that a
"perfectly competitive" electricity market existed, and it did not factor in
cross-ownership, the prevalence of bilateral contracts and the 70 percent
market control of the distribution sector by Meralco. This led FDC and APEC
to conclude that "the authors of the much-heralded study apparently never
read the Power Bill in trying to identify possible mitigating sections" (Diokno-
Pascual & Corral, 2002, as cited in Baylon 2010, pp. 181-182).
As a result of the high confidence placed on the consultants,

especially in the Philippine Senate, the participation and contribution of
the energy executive agencies like the DOE and the NPC were greatly
July-December
diminished. It would not be an overstatement to say that the consultants

and industry players who doubled up as resource persons practically
drafted the Power Bill.
On the part of the legislators, they were given briefings and

orientations mostly by foreign consultants that were not really adequate for
them to understand the industry. It could also be said that these briefings
even contributed to the information asymmetry since these consultants
highlighted only the merits of restructuring and privatization and promoted
the model/s espoused by their sponsors with very little regard as to their
appropriateness to the conditions prevailing in the country. Lessons to be
learned from the practical experiences of model countries which were visited
by the legislators could have been more instructive in this case.
The technical nature of the bill also gave the legislators and, to a
certain extent, the executive officials, an excuse not to involve the
consumers. Very little effort was exerted by both Congress and the
executive branch to educate the consumers on the provisions and issues at
hand so that the latter could take an informed position. The media also
failed to provide a good channel to ventilate the issues. In addition to
charges that some of the media people were under the payroll of the
industry players and even some government officials and legislators, some
media people exhibited the same condescending attitude towards the
capability of the ordinary consumers to understand the issues. The
absence of organized consumer groups also weakened the bargaining
power of the groups of stakeholders. Moreover, the two groups advocating
the consumers' interest had positions totally opposed to those of the
industry players and the policymakers, which made it difficult to arrive at
a compromise. They were opposed to the very ideology espoused by the
bill, that is, to deregulate the industry and privatize the NPC.
Transparency and accountability suffered when closed door meetings

were conducted by the Senate CoE and the bicameral conference
committee. There were instances when particular groups of stakeholders
were excluded for arbitrary reasons. Among the phases of the formulation
process, the reconciliation of the House and Senate versions by the
bicameral conference committee proved to be the most crucial. It was in
this important phase of the process that executive officials who were
involved in the drafting and had shepherded the bill were not invited to
participate. The DOE, the policymaking body for the energy sector, was
excluded by the committee chairman because of the Department's
opposition to some contentious provisions and its officials' personal
differences with the chairman. These actions and decisions of the
committee chairman, with the consent of the other legislators, revealed a
very wide, almost unbridled, discretionary power enjoyed by the chairman.
2014
On the part of the other stakeholders, the decision of the CoE chairman to
choose the stakeholders who could attend meetings and public hearings
deprived them the inputs that could have been used to improve the bill.
The treatment accorded to the DOE provided a picture of the role of

the executive branch in the whole formulation process. Its engagement
appeared to have occurred at two levels. One emanated from the political
leadership-the President, his Cabinet and economic advisers-while the
other came from the bureaucracy, represented by the technical staff of
concerned government agencies. This resulted in a situation where the
executive branch seemed to be speaking in two voices. While most former
presidents and legislators tried to steer clear of the practice, then
President Joseph Estrada did not seem to see anything wrong to call on
the leadership of both Houses of Congress to report the status of the
Power Reform Bill and to get their commitment for its early passage. It
appeared that Pres. Estrada's main concern was the passage of the bill so
that his administration could have access to the foreign loans, and that he
had no particular interest on the provisions of the bill.
The bureaucrats, on the other hand, were at the forefront of the

deliberations at the technical level. Due to their opposition to
amendments concerning contentious provisions such as cross-ownership
and stranded cost recovery by the distribution utilities, which were at odds
with the position of the industry players, its relationship with the CoEs of
both the House and the Senate, especially the chairmen, became strained
as deliberations progressed. As core members of the TWG of the House
CoE, they felt betrayed by its chairman as they waged their own battle.
Without the support of the president and the CoE chairman, the result
became inevitable. The positions espoused by the bureaucrats were
overruled. The delay in passing the bill, despite the flurry of
communications and meetings that accompanied the deliberations of the
bill-tantamount to exerting pressure on the legislature-and the
cooperation and seeming deference shown by the legislators when they
agreed to report to the president, also revealed the uncanny relationship
that existed between these two branches of government.
Family or blood relations and personal ties exert a great influence in

the way Filipinos do things, even on an official level. The "connection" of
the industry players in terms of business and personal ties with the key
policy and decision makers ensured the protection and promotion of the
former's interests. For example, former President Estrada and Manuel
Lopez, then chief executive officer of Meralco, a dominant generation and
distribution company and director of several of the Lopez companies, are
in-laws. Influential businessmen who were members of the policymaking
bodies such as the Economic Coordinating Council (ECC), the top executive
July-December
policymaking body during the Estrada administration had, in one way or

the other, business connections with the Lopez group of companies.
Another family engaged in the power business, the Aboitiz, is believed to
be staunch supporters of then President Arroyo. The President's social
secretary, a highly personal and confidential position, was the wife of one
of the Aboitiz scions (Flores, 2004).
Another contributory factor was the length of time it took for the bill
to be finally enacted. While this may have afforded more time for wider
consultation and gave the stakeholders an opportunity for a more in-depth
study of the bill and the issues, it likewise provided the opportunity for
the players to employ strategies to further consolidate their hold on the
policymakers who saw to it that their interests were protected and/or
promoted, and to have a better leverage for bargaining. The legislators
were able to gain favor for themselves (e.g., foreign trips to observe
"model" countries) or their constituencies (e.g., partnership to put up
windmills). Even the Freedom from Debt Coalition, a nongovernment
organization, claimed that it was able to cause delay in the enactment of
the bill. Unfortunately, it also cost the country potential investments.
It is therefore not surprising that the most contentious issues in the

bill which have a direct bearing on the industry players were resolved in
their favor. These include anti-market abuse measures such as cross-
ownership and bilateral contracts, and stranded cost recovery by the DUs.
It was in the issue of cross-ownership and recovery of DU's stranded

costs that the positions of the industry players and the executive branch
were opposed. The DOE cited the case of the Lopez companies to illustrate
its basis for absolute prohibition of cross-ownership. On the generation
side, Lopez has the First Philippine Holding Corporation (FPHC), which
owns 20 percent of the 200 MW First Private Power Corporation (FPPC),
50 percent of the 75 MW Panay Power Corporation, and 100 percent of the
1500 MW First Gas Power Corporation or a total control of 2000 MW. On
the distribution side, it owns 30 percent of Panay Electric Company
(PECO), and 16 percent of Meralco. On system generation supply, Meralco
has 50 percent and 20 percent shares on the Luzon and national markets,
respectively. Not mentioned by the DOE was the fact that FPPC, as the
lead company of FPHC in its non-gas power generation projects, has
invested in Bauang Private Power Corporation (BPPC) under a BOT
scheme with NPC in 1993. BPPC operates one of the largest bunker-fired
diesel power generation facilities in the world and has a generating net
capacity of 225 MW. FPPC is owned by FHPC (40 percent, and not just 20
percent), Meralco (also 40 percent) and JG Summit (20 percent). PECO is
an IPP of FPPC. FPPC delivers power to PECO, its distribution company
under a PPA for 25 years (Meralco, n.d., as cited in Baylon, 2010, p.195).
2014
As defined in RA 9136, "stranded contract costs of distribution

utilities is the excess of the contracted cost of electricity under eligible
contracts of such utilities over the actual selling price of such contracts in
the market" (Sec. 33). The law, as provided by Sec. 45, also allows
companies or related groups 30 percent cross-ownership (own, operate or
control) of the installed generating capacity of a grid and/or 25 percent of
the national installed generating capacity. "Related group" includes a
person's business interests, including its subsidiaries, affiliates, directors
or officers or any of their relatives by consanguinity or affinity, legitimate
or common law, within the fourth civil degree.
Closely related to these two issues is the bilateral supply contract.

Despite empirical bases that showed transfer pricing3 could occur, and did
occur in some cases where affiliate or associated companies entered into
bilateral contracts, still this was allowed under the Act. As shown in the
preceding paragraph, there are many instances when affiliate generation
and distribution companies have interlocking directorates, which make it
difficult to distinguish them as separate entities.
A safeguard incorporated in the law against abuse is a provision

requiring these supply contracts to be subject to the review of the Energy
Regulatory Commission (ERC) (Sec. 33). In their desire to pass the bill, the
separation of powers between the executive and the legislature had been
blurred, together with the supposed checks and balances. For example,
during the Estrada administration, the highest officials and members of
Congress and their respective CoEs were called to the meetings of the
ECC. In these meeting, they were made to commit the date when the
Power Bill would be passed, bypassing the LEDAC, which is the
appropriate body that handles legislative concerns. The media also fell
short of serving as a watchdog.
In order to arrive at a policy decision that is an approximation of

public interest, several conditions must be satisfied, including free
competition of ideas and interests, wide distribution of power, and a well-
organized political system in which the policy process is essentially driven
by public demands and opinions. Unfortunately, these conditions were not
present during the EPIRA formulation. For a regulatory policy like the
EPIRA, bargaining and negotiation are crucial because a direct choice to
determine who will be indulged and who will be deprived needs to be
made. While it is true that many sectors appeared to have been consulted
as shown in the list of attendees to meetings and public hearings, most of
them had interests allied to those of the industry players, with only two
groups given minimal voice championing the cause of the consumers.
July-December
Although the objectives of the power industry reform policy appeared to

strike a balance between the interests of the industry players, on one hand,
and the consumers and the general public, on the other hand, the
overarching rationale behind the restructuring had been dictated by the
liberalization and deregulation thrusts adopted by the government largely
under the pressure of the IFIs and bilateral agencies. It may be inferred that
the bias for the interest of the investors and utility companies had been built
into the economic and regulatory framework of the policy.
The passage of the EPIRA has been touted by government officials and
legislators as a product of extensive consultations and is therefore presumed
to have taken into account the interests of the various stakeholders in the
electricity industry. When asked the question: "for whom was the EPIRA
enacted?", those responsible for its enactment answered it was for both the
consumers and the industry players. A former energy official, who initially
drafted the bill considered as the predecessor of the EPIRA and therefore saw
the enormous transformation of the bill, was not so sure about it and could
only hope that it was for the consumers and the industry players alike. After
his term ended, the said official was recruited as a top executive in a private
power generation company.
EPIRA Revisited
In her 2009 State of the Nation Address (SONA), then President

Arroyo cited the EPIRA as a reform measure that would eventually lead to
lower electricity rates. However, an alternative assessment of said SONA
claimed that "affordable power remains to be a dream" under her
administration (Rimando & Balea, 2009, p. 5).
Almost nine years after its enactment of the EPIRA, Baylon (2010)
revisited the law and made an initial assessment of the attainment of
EPIRA's objectives. The assessment concluded that the law was greatly
wanting, if not a failure. The highlights of the study include the following:
1. In terms of the objective of ensuring reliable, adequate and

quality electricity services, power outages continue to affect
Visayas and Mindanao, and rotating brownouts lasting from one
to three hours in Luzon, including Metro Manila starting March
2010. This happened despite the assurance of the DOE secretary
that there would be no power outages in Metro Manila at least
until June 2010. The assurance of a steady supply of electricity
became more urgent in light of the May 2010 elections. A
suggestion was made by an opposition legislator that emergency
2014
powers be granted to the president but only in Mindanao.

President Arroyo declared a state of calamity in Mindanao in
March 2010. The alarming forecasts on the danger of major
power outages again occurring in the country have been
continually raised by legislators, private sector industry players,
and the media.
2. EPIRA has not resulted in lower, hence more affordable,

electricity rates. A study by the Philippine Center for
Investigative Journalism (Pabico, 2007) claimed that after six
years of implementation, residential power rates doubled what
they were when Arroyo came to power in 2001. In fact, the law
continued to be blamed for the continuing high cost of electricity
in the country. One lawmaker claimed that it was the highest in
Asia according to a survey by American investment bank JP
Morgan Chase (Rimando & Balea, 2009, p. 5). If such was the
case, the situation seemed to have worsened, as statistics cited
during EPIRA's deliberations placed the Philippines as second to
Japan in terms of high power rates. Businessmen also claimed
that electricity accounted for over one-third of operating costs,
and thus had negative impact on industry profitability and
competitiveness.
Using the 2007 DOE data, a comparison of the power rates of 13

countries in the Asian region for 2005-2006 showed that the
Philippines has the third highest electricity prices for residential
users and highest in the region in industrial power rates. It has
the second highest average selling price of electricity among
ASEAN countries, next to Cambodia (2004-2007 data from Heads
of Asean Power Utilities Association [HAPUA] through NPC).
The business sector has always cited high power rates as a main
contributory factor in the continuing deterioration of the country
in competitiveness.
3. EPIRA provides that open access should commence three years

after its passage, subject to five conditions. By 2008, only the
first three pre-conditions had been met, namely: (i) founding of
Wholesale Electricity Spot Market (WESM); (ii) unbundling of
transmission and distribution charges; and (ii) removal of cross
subsidies for generation. Its major achievement was meeting its
targeted 70 percent privatization of NPC's generating assets (1 3 th
Status Report on EPIRA Implementation, 2008, p. 4, as cited in
Baylon, 2010, p. 282).
July-December
4. While it is true that new domestic as well as foreign companies

have entered the power industry, it could not be said that it
resulted in the broadening of the ownership base. It could not
also be said to have created a level playing field and promoted
competition in the electricity industry. Two giant companies, the
Philippine Long Distance Telephone Company (PLDT) and San
Miguel Corporation (SMC) have entered the industry by buying
shares in Meralco and the Government Service Insurance System
(GSIS), respectively. A monopoly before the deregulation of the
telecommunications industry in the 1990s, PLDT is also engaged
in information technology, infrastructure, and healthcare, among
others. SMC is the biggest food and beverage conglomerate in the
country and is owned by Eduardo "Danding" Cojuangco, a known
crony of the late dictator President Ferdinand Marcos. It was
SMC's first entry into the power sector as it pursued
diversification strategy into strategic industries including oil, gas
and water (Dela Pefia, 2009).
While the group of companies owned by the Lopezes has reduced

its investment in the distribution sector by divesting most of its
shares in Meralco, it meanwhile acquired ownership of NPC
power generation companies privatized by PSALM and the EDC,
a former subsidiary of the government-owned Philippine National
Oil Company (PNOC). With a total capacity of 1,199 MW, the
geothermal production of EDC represents over 60 percent of the
country's total installed geothermal capacity of 1,905 MW. It is
the world's second largest producer of geothermal energy. The
EDC is majority-owned by First Gen Corporation through Red
Vulcan Holdings (Gatdula, 2009, as cited in Baylon, 2010, pp. 285-
286). Whether this has violated the 30 percent ceiling on cross-
ownership between generation and distribution companies
mandated in the EPIRA has not been raised as an issue.
5. The restructuring and privatization of the power industry was also

blamed for the job loss of more than 2,000 NPC employees and
workers of some industries. These industries closed down due to
production uncompetitiveness caused by high electricity rates and
the inability of the companies to give wage increase for many.
Critics of the EPIRA alleged that the response of the government to

the power situation was not to build the necessary infrastructure but to
contract out power generation to IPPs. The FDC, which continues to
monitor the EPIRA after its enactment, attributed the high electricity bills
to a confluence of bad governance, corruption, mismanagement, rent-
seeking and unaltered policy framework governing the power industry.
2014
Conflicting Pronouncements by Executive and Legislative Officials
The slow pace of its implementation and the seeming failure, so far,
of the law to achieve its objectives have elicited moves to amend it. In
2007, nine bills were filed in Congress (five in the Senate and four in the
House) seeking to address the issues on electricity rates as well as the
implementation of open access and retail competition, the final objective
of which is to lower the cost of electricity.
Foreign investors and IFIs openly expressed that they were not in
favor of amending EPIRA. In a letter to President Arroyo dated 27 May
2008, officials of the Joint Foreign Chambers of Commerce (JFC),
representing American, European, Japanese and other foreign investors in
the country urged the President not to amend EPIRA and appealed to the
executive and legislative branches to focus their efforts instead in
implementing EPIRA in a timely fashion (Domingo & Avendano, 2008).
The letter said that amending EPIRA will have negative consequences
including dampening the confidence, if not driving away, investors and
will result in a "highly unstable legal framework for the industry and
investors" (Reyes, 2008, p. 8, as cited in Baylon, 2010, p. 295). The official
position of the JFC entitled "JFC Calls for EPIRA Implementation" was
posted on the website of the European Chamber of Commerce in the
Philippines. The ADB also expressed reservation on the proposed
amendments to the EPIRA (Ho, 2008). Members of the Philippine
Independent Power Producers Association (PIPPA) and the Philippine
Electric Plant Owners Association (PEPOA) were also opposed to it
(Sunstar, 2009, as cited in Baylon, 2010, p. 296).
The influence of the JFC could be seen in the sudden turnaround of

the original position of the House CoE chair, Rep. Juan Miguel Arroyo,
son of President Arroyo. When he assumed the chairmanship in 2007, Rep.
Arroyo assured everybody that all sides would be heard in amending the
Power Act. He authored House Bill 3124, the principal bill that sought to
amend the EPIRA. Rep. Arroyo co-authored HB 1889, which sought to
reduce the 70 percent privatization level requirement in order to
implement competition and open access (Ho & Bordadora, 2007). The
following year, Rep. Arroyo announced that his committee would no longer
push for amendments to the EPIRA ostensibly on the ground that was
really needed was to strictly implement the provisions of the Power Act.
The members of the House CoE even signed a manifesto rendering the
proposed amendments "moot and academic" after industry players agreed
to accelerate the implementation of open access (Afionuevo, 2008). This
sudden change of position after Rep. Arroyo met with the JFC, with the
suggestion that the government should instead remove barriers to entry
for those who wish to invest in alternative sources of energy.
July-December
The same indecision and lack of a firm stand seemed to pervade the
Arroyo administration. In 2007, President Arroyo declared that one of her
legacies would be to amend the EPIRA (Cruz, 2008) and renewed her call
for Congress to amend it (Dalangin-Fernandez, 2007). Then in her
characteristic turnaround decisions, Pres. Arroyo announced that the
government would stop pushing for amendments if open access was
allowed. Then Akbayan Party-List Rep. Risa Hontiveros interpreted this
move of Pres. Arroyo as catering to the interest of the large industries,
the main beneficiaries of open access. Hontiveros proposed that cross-
ownership be banned to remove oligopolistic interests in the power sector
(Gov.ph, 2008 May 25, as cited in Baylon, 2010, p. 299). One columnist
agreed that open access and cross-ownership are the biggest flaws of the
EPIRA and attributed the inclusion of these provisions to the lobbying of
power distributors (Cruz, 2008).
Concluding Remarks
After almost more than nine years of implementation, the reforms

envisioned in the EPIRA, which are intended to bring about competition in
the power sector, have not been realized nor have resulted in the
achievement of the law's objectives of providing adequate and reliable
supply and affordable electricity. Power outages and rotating brownouts
continue to persist in some parts of the country. It has not resulted in lower
and more affordable power rates. In fact, it was alleged that after six years of
implementation, the cost of electricity had doubled, making the Philippines
as having the third highest electricity prices for residential users and the
highest electricity prices industrial users among the 13 Asian countries.
The controversial provisions during the deliberations on the passage

of the EPIRA such as cross-ownership and open access continue to be
regarded by many as stumbling blocks in the attainment of its objectives
and are therefore subjects of proposed amendments to the law.
The landscape of the power industry has not really changed. Large
power firms, both domestic and foreign, continue to exert their dominance
and influence on government decision and policy making.
The influence of foreign investors, acting as one solid force as

members of the JFC, and IFIs such as the ADB, could be seen with the
complete turnaround from the initial position of the House of
Representative Committee on Energy chair Rep. Mikey Arroyo to amend
the law. Despite acknowledging the high cost of electricity, government
officials and legislators were not amenable to amending the law after
almost nine years of implementation. There was no official assessment of
2014
the effectiveness of the Power Act in order to come up with a

comprehensive and integrated set of reform measures.
The more important task for our policy and decision makers is to
have an honest-to-goodness official review and assessment of the
implementation of the law as provided for in the law itself, that will serve
as a sound basis for resolving the issue of whether to amend the EPIRA.
Or strictly implement its provisions to achieve its objectives. Or introduce
reforms that will not necessitate amending the law. It is hoped that this
time the government will conduct a more pluralist consultation in
conducting the review and assessment of the Act. The stakeholders should
learn from the EPIRA experience so that meaningful and feasible policy
reforms can be finally introduced in the power sector for the benefit of the
electricity consumers and the public in general.
The study showed that the social, cultural, economic and political
milieus serve to facilitate the "capture" of the policy formulation process,
resulting in a legislation that contains and entrenches the positions of the
elite. Because of weaknesses in the political system and institutions of
governance that affect the effectiveness of reform policies, political
capture is likely to persist. Understanding the institutional contexts
within which a policy reform is designed and adopted is crucial in ensuring its
effectiveness and responsiveness to the issue being addressed and therefore
its success. These contexts help explain how the reform policy evolved into
its final form, which oftentimes deviate from the original intent of the reform
and how implementation of the law became problematic.
On a practical level, it is hoped that the findings of the study will

inform, most especially the country's policy and decision makers and their
consultants, to exercise caution in adopting models in policy transfers.
Learning from the experiences of countries whose electricity industry has
gone through the process of restructuring and privatization but whose
economic, administrative, political and legal conditions greatly differ from
those of the recipient countries should provide a good starting point. Since
the IFIs appeared to have exerted the strongest push for these reforms, as
the case study shows, and continue to be a major influence in instituting
policy and institutional reforms in the electricity industry in the country,
empirical studies like the EPIRA will bring to their attention the realities
existing in developing and transitional economies that need to be
considered in formulating their organizational policies affecting these
economies. If indeed their objective is to help these countries attain
economic and social development, then understanding and allowing them
to adapt the policy/ies and administrative arrangements to local conditions
both in terms of substance and phasing must be exercised, rather than
forcing them to simply adopt policy reforms using loans and aids as a
July-December
conditionality. This way, policy transfer will most likely result to reforms
that will go a long way in ensuring that their assistance translates into
the institution of effective and responsive reforms.
In a developing country like the Philippines where wealth, which is

almost always equated with power, is in the hands of the few, the
government has a very important role in creating a level playing field that
will give every Filipino citizen equal access to economic opportunities and
productive endeavors through responsive and appropriate reforms. A
government beholden to the donors and creditors will not be able to do this.
Endnotes
This case study on the EPIRA draws from the book of the author entitled The
Political Economy of Regulation in the Philippine Power Industry published in 2010.
2 The secretary general of the Association of Power Electric Cooperatives (APEC),

in a newspaper article, identified Enron as one of the participants in the workshop. The
list of attendees was not attached to the copy of proceedings provided to the author. The
author based the attendance on the proceedings.
3 Transfer pricing is the setting of the price for goods, services and intangibles sold
between controlled or related legal entities within an enterprise. For example, if a
subsidiary company sells goods to a parent company, the cost of those goods paid by the
parent to the subsidiary is the transfer price ("Transfer pricing", n.d.).
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July-December
Enhancing Performance
in Philippine Public Enterprises:
A Revisit of Recent Reforms
and Transformations
MARIA FE VILLAMEJOR-MENDOZA*
Over the years, reforms have been in place to rationalize

and reengineer, instill financial discipline, and make the
Philippine public enterprise sector (PES) or the government
owned and/or controlled corporations (GOCCs) in local
parlance, more accountable and performing. Gains have been
evident and this paper aims to revisit these recent reforms and
transformations (pre-2001 to present) in the PES and assess the
enhanced performance it has been experiencing at present. This
article inquires, based on secondary materials and reports, on
the changed status of the GOCC sector in terms of performance
and accountability, and the issues and challenges ahead related
to public corporate governance and reform. It also briefly
reviews past reforms in the PES in order to contextualize
implications for future directions.
Keywords: public enterprises, GOCCs, reforms and transformation,

corporategovernance, enhancing trust and performance
The Philippine public enterprise sector (PES), or the government

owned and/or controlled corporations (GOCCs) in local parlance, was
created to be potent tools of development. They are supposed to perform
governmental/development and proprietary/business functions and be in
areas which are pioneering in nature, where the investment required is
large, and the gestation period is long. In the commanding heights of the
state, they have been almost everywhere, e.g., in industries related to
financing, public utilities, agricultural development and trading, even in
social, civic, educational and scientific endeavors, and gaming and
gambling. The ubiquitousness of GOCCs has led to observations that the
sector has been crowding out the private sector, has been financial
millstones and venues for corruption and abuses, and has become
irrelevant without any performance to speak of.
*Professor and Dean, National College of Public Administration and Governance,

University of the Philippines Diliman
Over the years, reforms have been taking place to rationalize and
reengineer, instill financial discipline, and make it more accountable and
performing. Gains have been evident and this article aims to revisit these
recent reforms and transformations (pre-2001 to present) in the PES and
to assess the enhanced performance it has been experiencing at present.
This study inquires, based on secondary materials and reports, on the
changed status of the GOCC sector, in terms of performance and
accountability, and the issues and challenges ahead related to public
corporate governance and reform. It also briefly reviews past reforms in
the PES in order to contextualize implications for future directions.
Nature, Problems and Challenges

of the Philippine Public Enterprise Sector
State-owned enterprises (SOEs), public enterprises (PEs) or

government-owned and/or controlled corporations (GOCCs) in Philippine
terminology, are defined in Presidential Decree (PD) 2029 of 1986 and
restated in Administrative Order (AO) 59 of 1988 as "stock or non-stock
corporations... performing governmental or proprietary functions.., owned
or controlled by government directly or indirectly through a parent or
subsidiary corporation, to the extent of at least a majority of its
outstanding capital stock or its outstanding voting capital stock."
These enterprises have been organized and operated because of actual

or presumed weaknesses or failures of the market. Particularly during the
"commanding heights" era, GOCCs were created to provide certain activities
that are pioneering in nature, especially where the investment required is
large and the gestation period is long (Tabbada, 1989).
Prior to 1972, GOCCs were formed to respond to long-established

strategic needs such as
1) rehabilitation and restructuring after the war;

2) those requiring large scale indivisible investments;
3) a basic industry that provides high forward linkages;
4) there is public sentiment to keep the industry free from
foreign control because of its impact in the economy; and
5) the private sector is unwilling or unable to put up the capital
to establish the industry (Tabbada, 1989, p. 4; Alvendia, 1991, p. 4).
Later, GOCCs became "major arenas for the consolidation of

economic and political power" (Dytianquin, 1985, as cited in Mendoza,
2007, p. 156). There were instances where GOCCs were abused and used
as "laundry services and tools to transfer public resources to the hands of
cronies and the private few" (Briones, 1985, p. 372).
July-December
ENHANCING PERFORMANCE IN PHILIPPINE PUBLIC ENTERPRISES 141
GOCCs face unique governance challenges that make the path to

reform even more difficult than the private sector. PEs are institutions
that presuppose a mix of public and enterprise dimensions that seek to
place within the same organization the character of a business
organization and that of national policy (Fernandez & Sicherl, 1981). For
Sherwood (1971), they are bastardized organs of the state, which
unfortunately can neither optimize self-interest nor fully serve the public
interest because they perform business functions but at the same time are
entrusted with certain socially relevant goals (Tabbada & Baylon, 1991).
As such, GOCCs have multiple and oftentimes conflicting objectives

(e.g., proprietary and development, profit and service), are subject to
excessive political interference, and lack transparency, accountability and
productivity (Mendoza, 1995). GOCCs also often acquire bad habits:
burdensome bureaucracy, confused objectives, directors owing
responsibility not to the public but to the state or ministry or even to
individuals within government or a political party (Bati, 2005, as cited in
Mendoza, 2007, p. 155).
Moreover, the following problems have hounded the PE sector in the

past (Mendoza, 1995; Mendoza, 2007):
1) In the 1950s, the Office of Economic Cooperation, the agency

entrusted with supervision of state enterprises found GOCCs
exhibiting "rampant corruption, mismanagement and
inefficiency" (as cited in Tabbada, 1985). Nepotism was also
observed (as cited in Teodosio, Palafox, & Barranco, 1988).
2) In addition, the sector, according to the Presidential Commission

on Government Reorganization (1986) suffers from three
fundamental problems. These are:
a) lack of clear policy when the government will intervene

in the economy or when to use the corporate form;
b) inadequate overall monitoring and control system due to

the presence of a number of "privileged" corporations
owned and/or controlled by Marcos cronies; and
c) poor corporate performance because of poor oversight and

coordination, and lax financial controls.
From the 1970s up until the 1980s, the GOCCs were notoriously used
to serve as milking cows of the Marcoses and their cronies, thus
subverting national interest. They were found to constitute a heavy drain
2014
on scarce resources and to have contributed to fiscal and budgetary burden

of the national government (Manasan & Buenaventura, 1985; Briones,
1985; Amatong, 1985; Tabbada, 1989).
Rather than serving as focal points for collecting financial resources

for their own investments or for other purposes, the GOCCs have
generally become a financial millstone on the government. They have
been financially performing poorly and continue to impose a heavy burden
on the national treasury. As of 2005, the sector accounted for some 40
percent of the consolidated public sector deficit and owed some Php3.89
trillion debt as of June of the same year (Department of Finance, 2005, as
cited in Mendoza, 2007).
As of 2009-2010, the GOCCs accounted for a significant percentage of

the assets, liabilities and expenses of the government. Some 28 percent of the
national government expenditures were attributed to GOCCs. GOCC assets
were some Php5.557 trillion vis-A-vis the national government's Php2.879
trillion. They also account for 91 percent of the total inter-agency receivables
of the national government (Drilon, 2011).
GOCCs are also widely perceived as mismanaged, with salaries of its top
executives higher than their private sector counterparts or of the President
of the Republic, but with less accountability for performance and results
(Senate, 2005, as cited in Mendoza 2007). In recent years, there have been
various reports about high-ranking officers of GOCCs being charged with
graft for misappropriation of government resources, dispensation of bloated
salaries, unauthorized purchase of assets, and abuse of power.
Revisiting Recent Public Enterprise Reforms

(pre-2001 to present)
Reforms have been undertaken to reshape, redefine, and redirect the

GOCC sector. Among these were policy reforms to ensure financial discipline,
guidelines for the creation/definition of GOCCs, disposition, salary reforms,
performance evaluation and audit, and privatization (Mendoza, 2007). The
more recent of these reform initiatives include rationalization and the
enactment of the Corporate Governance Act of 2011.
Policy Guidelines for the Creation/Definitionof GOCCs
The predominant public policy in the country on state intervention

using the corporate form has been minimalist. It is not usual for the state
to go into business per se, except in areas that are strategic and
July-December
pioneering in nature, and in which the private sector is either not willing
or able to do. Such areas should also be crucial in preserving national
security and should form part of an ideological commitment of the
government (Tabbada, 1989). This philosophy has been religiously adhered
to, except during the Marcos years when the GOCCs grew unbridled not
only in number, size and resources but also in political clout (Briones, 1985).
Thus, in response to this policy problem, PD 2029 reiterates that

"direct state intervention in the economy is justified only when there
exists a demonstrated need for greater flexibility in its operations, and
when financial viability (capacity to support own operations) can be
reasonably expected."
In addition, PD 2030 and Proclamation 50 and 50a s. 1987 collectively

state that
The government has no business in business and has to privatize to

(a) reduce the financial burden of government due to losing and
inefficient GOCCs; (b) reduce involvement of government in
economic activities; (c) promote greater efficiency in government
operations; and (d) raise funds to finance major development
projects like the Comprehensive Agrarian Reform Program
(CARP).
These policies were meant to curtail the growth in number of the

GOCCs and limit the creation of new ones only to those strategic in nature
such as those for national defense, for public interest and welfare, and for
which financial viability is manifest.
EnsuringFinancialDiscipline
These policy reforms aim to reduce the financial dependence of

GOCCs on the national government, make them self-sufficient and capable
to shape up financially, and expose them to competition by withdrawing
cushions not usually availed of by private sector counterparts.
Specifically, these initiatives include:
1) Imposing a ceiling on public sector investments and centralizing

investment fund allocation to all entities under the National
Economic and Development Authority (NEDA);
2) Issuance in 1983 of Letter of Instruction (LOI) 1340 to improve

the control mechanism over borrowing of GOCCs. It provides that
a GOCC, including any of its subsidiaries, "may borrow only when
2014
the funds raised are used for activities or projects that will yield
the necessary return on investment and generate the necessary
cash flows in order to enable the prompt repayment of interest
and principal on the borrowings as they fall due." It also
mandates the board of directors of GOCCs not to approve any
borrowing without a "conclusive showing of return on investment
and cash flow adequacy;"
3) LOI 1366, which limited the approval of foreign loans and other
foreign obligations to highly meritorious projects, mandated all
government financial institutions (GFIs) and GOCCs "not to
extend or issue guarantees, counter-guarantees, standby letters
of credit and other forms of guarantees to secure foreign loans
and other foreign obligations of the private sector;" and
4) A series of cost-cutting measures (Carague, 1991, as cited in

Mendoza, 2007, pp. 176-177), which include, among others:
a) reduction of the number of government enterprises to

only those, which are necessary for specific economic and
social purposes;
b) granting of equity contribution only for start-up

capitalization requirements and only to the extent that
GOCC's internal cash generation and borrowings could
not meet the deficit financing required;
c) restriction of subsidy support to the financing of

operating and maintenance requirements of nonprofit
GOCCs and to projects that are not financially viable but
are necessary to promote the welfare of disadvantaged
members of society;
d) elimination of tax exemptions enjoyed by GOCCs. Instead

of outright tax exemptions, tax subsidy is given but only
for specific activities with high social impact;
e) imposition of interest charges on all government

advances for the servicing of re-lent or national
government-guaranteed GOCC loans. Aside from
promoting fiscal discipline, this practice aims to enable
the national government to recover, to some extent, the
cost of money for the delayed repayments of GOCCs; and
July-December
f) enforcement of the requirement that public enterprises

declare and remit dividends to the national government
of at least 10 percent to 50 percent of their net income.
Compensation/Salary Reforms
These policy reforms were complemented by policy initiatives aimed

at setting the internal operations of GOCCs right, mainly through more
appropriate compensation and position classification systems. These
include the Salary Standardization Act (SSL) of 1989 to 2012 and
Memorandum Order (MO) 20, 2001.
Salary Standardization
The SSL standardized all compensation and position classifications in

the bureaucracy, including those of the GOCCs. It aims to provide
compensation systems that would enable GOCCs to attract and retain some of
the best and competent human resources, and to limit the packages so that
compensation in GOCCs does not fall too far out of line with the general level
of compensation in the government bureaucracy. Before these measures, the
salaries of the employees of GOCCs were "50-80 percent higher than those
received in the regular bureaucracy" (Tabbada, 1989).
Perks and Pay
In 2001, then President Gloria Macapagal-Arroyo issued MO 20, entitled

"Directing Heads of Government Owned and Controlled Corporations
(GOCCs), Government Financial Institutions (GFIs) and Subsidiaries
Exempted from Or Not Following the Salary Standardization Law (SSL) to
Implement Pay Rationalization in All Senior Officer Positions." The MO was
issued in response to the findings of the preliminary review conducted by a
management consulting firm on the pay practices of certain GOCCs, GFIs,
and subsidiaries, which found that the compensation package in these sample
entities are much higher, such that their officers receive at least twice what
comparable positions receive in national government agencies. The study also
found that heads of some of these GOCCs even exceeded the average salary of
their counterpart positions in the private sector in the Philippines and in the
Southeast Asian region.
MO 20 ordered said GOCCs to immediately suspend the grant of any

salary increase and new or increased benefits. It mandated them to
prepare a pay rationalization plan for senior officer positions and members
2014
of the board of directors/trustees "to reduce the actual pay package to not
exceeding two times the standardized rates for comparable national
government corporations."
Performance Evaluation and Audit
Performance Evaluation
Like any other enterprises, PEs must be evaluated. The absence of a

good performance evaluation is a source of the general impression that
PEs are inefficient. Evaluation in the Philippine context is needed to
improve the operations, simplify the linkages, and clearly define the roles
of the components of the PE system.
However, the initial evaluation system (ES) instituted was merely to

check on the financial performance of some heavily indebted GOCCs. The
ES was meant primarily to curb government borrowing, especially,
external borrowing. More specifically, it was intended to monitor
corporate financial condition, investments, capital expenditures, and
borrowings. It was mainly a financial tool and not a performance
evaluation system, where non-financial and social indicators of
government performance, efficiency, and effectiveness are assessed. (De
Guzman & Reforma, 1994)
The Government Corporate Monitoring and Coordinating Committee

(GCMCC) is the oversight body for the monitoring and evaluation of
GOCCs. It was created in 1984, reconstituted in 1986, strengthened in
1987, transferred from the Department of Finance (DOF) to the Office of
the President/Presidential Management Staff (PMS) in 1993 and back to
the DOF before 2011.
Among the functions of the GCMCC were "to balance accountability

and adequate operational flexibility among the GOCCs." (MC 64 s. 1993).
MC 64 also mandates the establishment of "an effective performance
monitoring and coordination system for all GOCCs, which does not curtail
their operational flexibility but rather encourages GOCCs to perform their
functions without undue interference from the National Government."
Audit
The performance and financial audit of all GOCCs and their

subsidiaries lie within the ambit of the Commission on Audit (COA). A
constitutional body with a dedicated corporate group to oversee accounts
July-December
of GOCCs and their subsidiaries, it goes where government resources go.

The COA examines, audits and settles all accounts pertaining to the
revenue and receipts of, and the expenditures or uses of government funds
and property (Philippine Constitution, Art. IX-D, Sec 2).
For several years, the COA's orientation has been towards traditional
auditing, e.g., financial and compliance audit. However, in the 1990s, with
the help of the Canadian Institute of Chartered Accountants, the COA
shifted to the value for money (VFM) mode (COA Report, 1995). It is also
known as performance audit or the three-E's audit, i.e., the independent
assessment of the extent to which an organization operates efficiently and
effectively with due regard to the economy. Its components include:
economy and efficiency audits, which determine whether agency

resources (personnel, money, machines, materials, methods and
management systems and control) were acquired at the lowest
possible cost to achieve the maximum output in terms of quantity
and quality; and
effectiveness audit, which determine the extent to which program

or agency achieves its objectives or intended effects or legislative
intents.
Privatization
Privatization has always been associated with free market and

liberalization. It has been implemented in the country as part of our
structural adjustment programs with the International Monetary Fund
(IMF) and the World Bank.
The World Bank (1996, as cited in Sta. Ana, 1997) defines

privatization as "any action that moves an enterprise or an economy in the
direction of private ownership or that tends to make the behavior of state
enterprises more like that of private entities. It is also the divestiture by
the state of enterprises, land or other assets" (p. 65).
In the Philippines, it has evolved from a purely divestiture to "get-

the-government-out-of-business" mode to a mechanism for governance,
implying a redefinition and reduction of the role and scope of the state and
GOCCs in development.
It came to mean as "the divestment, disposition and liquidation of

non-relevant and non-performing assets and corporations." Its four-fold
objective include to:
2014
1) reduce the financial burden of the government due to losing and

inefficient public enterprises;
2) reduce the involvement of government in economic activities;
3) promote greater efficiency in government operations; and
4) raise funds to finance major development programs like the CARP
(PD 2029, 2030; Proclamation 50, 50-A, s. 1986; 82, s. 1987).
Later, it evolved into a strategy for governance, with the

participation of other sectors of the society, particularly, business. EO 37
series of 1992 expanded the modes of privatization to include, in addition
to the sale of physical and other assets, "lease, management and
maintenance contracts, and build-operate-transfer (BOT) schemes."
E.O. 298 series of 1996 provides for alternative and/or intermediate

modes of privatization pursuant to Proclamation 50, to include:
1) joint venture, whereby the Asset Privatization Trust (APT)

arranges for the APT-held asset to carry on a specific business
enterprise with another person/entity for their mutual benefit,
using their combined funds, land, resources, facilities and
services, either through a joint venture, corporation or as
separate personalities;
2) BOT schemes, whereby the APT finds proponents who will

undertake infrastructure and/or development projects using the
APT-held asset;
3) management contract, whereby a corporation undertakes

to manage or operate all or substantially all of the business of an
APT-held asset; may also be designated as a service contract or
operating agreement;
4) lease-purchase, whereby the lessee of an APT-held asset

would have the right to purchase the same; and
5) securitization, whereby the form of the APT-held asset is

changed or modified, such as from physical form to equities or
certificate of participation. (EO 298, s. 1996)
Rationalization
In line with the government's aim to limit the GOCCs' focus on their
core functions and strengthen their financial strategies, the national
government have been implementing the rationalization of GOCCs since
2001. The rationalization would restructure the organization and financial
systems of GOCCs and improve the delivery of their services to the people
and attain long-term sustainability (Department of Budget and
Management, 2005).
July-December
The rationalization program also involves performance audit

particularly of those GOCCs that are experiencing financial difficulties.
This will determine the appropriate action the government has to take to
ease their problem, whether to abolish, deactivate, consolidate, regularize
or merge functions.
Focus on the GOCC Governance Act of 2011:

Transformation to New Paradigm in Corporate Governance
Despite these reforms, the GOCCs and their executives have

remained embroiled in scandals after scandals involving among others,
graft for misappropriation of government resources, dispensation of
bloated salaries, unauthorized purchase of assets, and abuse of power.
These seeming unconscionable abuses and the mismanagement of the PES
led to the enactment of Republic Act (RA) 10149, otherwise known as the
GOCC Governance Act of 2011.
RA 10149 aims to provide greater transparency, periodic disclosure

and evaluation of operations and finances, creation of appropriate
remuneration schemes, and clear separation between the regulatory and
proprietary activities of GOCCs. It was also intended to promote financial
viability and fiscal discipline in GOCCs and strengthen the role of the state
in its governance and management to make them more responsive to the
needs of public interest.
The Act is touted as the new "daylight"-where things are not done in
the dark, where transactions will be clear, honest and transparent, and
where there is full accountability. It underscored the need to enhance the
ability of GOCCs to act as stewards of the people's resources by adhering
to the highest standards of corporate governance and thus put an end to
issues such as weak board governance, lack of transparency and
accountability, incoherent disclosure practices, poor oversight and multiple
and conflicting mandates (Governance Commission for GOCCs, 2011).
Creation of the GCG
The marked transformative value of the Act is the creation of the

Governance Commission for GOCCs (GCG) within the Office of the President,
to serve as "the central advisory, monitoring, and oversight body with
authority to formulate, implement and coordinate policies" over the GOCC
sector. In the past, these reform initiatives were enshrined in different
statutes, guidelines and oversight bodies. Since 2011, these initiatives were
all entrusted in a central body, for better planning, direction and evaluation.
2014
The GCG is entrusted with the following duties:
1) GOCC evaluation - creating performance evaluation systems,

conducting periodic examination, and identifying GOCCs for
reorganization, merger, abolition or privatization (in consultation
with the department or agency to which the GOCC is attached), and
repairing a semi-annual progress report for submission to the
President and Congress (Sec. 5a);
2) GOCC streamlining - implementing the reorganization, merger,

abolition or privatization of the GOCCs (Sec. 5a);
3) GOCC classification - classifying GOCCs into the following

categories: (i) developmental/social corporations; (ii) proprietary
commercial corporations; (iii) government financial, investment and
trust institutions; (iv) corporations with regulatory functions; and
(v) others (Sec. 5b);
4) GOCC Manual - creating an ownership and operations manual and

government corporate standards governing GOCCs, which shall be
no less rigorous than those required by the Philippine Stock
Exchange, the Securities and Exchange Commission (SEC), Bangko
Sentral ng Pilipinas, as the case may be, and consistent with the
Medium-Term Philippine Development Plan issued by the NEDA
(Sec. 5c);
5) GOCC accountability - recommending to the board of directors or

trustees of the GOCCs the suspension of their member/s who
participate (by commission or omission) in the approval of an act
giving rise to a violation or non-compliance with the GOCC Manual
(Sec. 5d);
6) GOCC nomination - identifying necessary skills and qualifications

required for appointive directors and recommending to the
president a shortlist of suitable and qualified candidates for
appointive directors (Sec. 5e);
7) GOCC compensation - conducting studies, developing and

recommending to the president a competitive compensation and
remuneration system (i.e. the Compensation and Position
Classification System) that would attract and retain talent, and at
the same time allow the GOCCs to be financially sound and
sustainable (e.g., disallowance of retirement benefits to directors
and trustees of GOCCs) (Sec. 5h and 8); and
July-December
8) GOCC adviser and coordinator - providing technical advice and

assistance to the government agencies to which the GOCCs are
attached in setting performance objectives and targets,
monitoring GOCCs performance vis-A-vis established objectives
and targets, and ensuring GOCCs' operation are aligned and
consistent with the national development policies and programs
(Sec. 5i) (also in Butalid, 2013).
Board of Directors, CEO and Officers of GOCC
The Act also introduced the fit and proper rule in determining who
are qualified to become members of the board, chief executive officer
(CEO), and officers of GOCCs with due regard to one's integrity,
experience, education, training and competence (Sec. 16). GOCC officers
are expected to serve as fiduciaries of the state and always act in the best
interest of the GOCC (Sec. 19 and 21). Thus, they are expected the highest
standard of extraordinary diligence in their fiduciary duties as officers.
They should maintain a term of one year, unless sooner removed for
cause (Sec. 17, RA 10149). These improvements from past reforms
underpin the need for criteria and higher qualification standards for
GOCC officials. They should not only be competent and qualified; they
should also be morally fit and prudent in their spending.
Full Disclosure
In the spirit of public accountability and right of the public to receive

public information, the Act likewise promotes complete disclosure of
public information through posting in the GOCC websites of the following:
1) latest annual audited financial and performance report within 30

days from receipt of such report;
2) audited financial statements in the immediate past five years;
3) quarterly annual reports and trial balance;
4) current corporate operating budget;
5) complete compensation package of all the board members and
officers, including travel, representation, transportation and any
other form of expenses or allowances;
6) local and foreign borrowings;
7) performance scorecards and strategy maps;
8) government subsidies and net lending;
9) all borrowings guaranteed by the government; and
10) other information or report the GCG may require (RA 10149,
Sec. 25).
2014
Creation and Acquisition of a GOCC
Learning from the past misdeeds of former GOCC officers, the Act
now also makes stringent requirements for government agencies seeking
to establish a GOCC, a subsidiary or affiliate corporation, or purchase or
acquire controlling interests in another corporation. Accordingly, they are
now required to submit their proposal to the GCG for its review and
recommendation to the president (for his/her approval). The SEC shall not
register the articles of incorporation and by-laws of a proposed GOCC or
subsidiary of affiliate, unless the application for registration is
accompanied by an endorsement from the GCG stating that the president
has approved the same (Sec. 27 and 28, RA 10149).
Transformations and Enhanced Performance of GOCCs
These reforms-from privatization to policy guidelines in creating

GOCCs or using the corporate form; from performance audit and evaluation
to rationalization, salary reforms and financial discipline; to rationalization;
and the Governance Act of 2011-which were started in the 1980s and were
aggressively pursued in the last decade until the present, have contributed to
the new paradigm in public corporate governance.
Presently, GOCCs assume the corporate form only when compelling

reasons are present and only if proposals have undergone a review process
by a central GCG to abolish, regularize or privatize existing GOCCs. A
performance scorecard is also being refined. Monitoring of the financial
and other status of GOCCs is now rigorously being attended to. Members
of the boards of GOCCs are now screened through the fit and proper rule.
Compensation and perks are now standardized. Values of professionalism,
love of country, and financial stringency are now emphasized. GOCCs are
now shaping up and being disciplined. These augur well to better
corporate governance anchored on the core values of transparency,
accountability, professionalism, ethical administration and performance.
As of 2010, the number of GOCCs has been rationalized to 157 from

three before the war, 13 after the war, 65 before Marcos administration,
303 by 1984 when state capitalism under martial rule was still in effect,
225 before the end of the Aquino administration (1989) and 125 in 2004
(Mendoza, 2007; GCG, 2011). As of 2013, the number of GOCCs stood at
128, broken down into the following sectors or categories: 66 financial
institutions; six educational and cultural; two gaming; 16 under the energy
and materials sector; 12 under the agriculture, fisheries and food sector;
and 26 under the utilities and communications sector (GCG 2013). Of the
53 GOCCs under the list of the GCG, 20 are either inactive or non-
July-December
operational, one has been dissolved or abolished, one has been disposed,
and 21 were excluded from the coverage of GCG (GCG, 2013).
Table 1. Salient Points of the Effects

of Public Enterprise Reforms
Problem or Concern Before Reform (pre-1986) After Reform (1986-present)
Creation of GOCCs Legislated by Congress or Streamlined; back to the philosophy of creating
created by Presidential Decree; GOCCs which are strategic in nature, for
no seeming philosophy or national defense, public interest and welfare,
guidelines used during martial and for which financial viability is manifest;
law, but the tradition has been others are regularized, privatized, reclassified.
minimalist before and after
martial law.
Number of GOCCs tlhree to 65 to 303 124 to 157 to 128 (of 181); though it is difficult
to tell whether this is now the optimum number;
Financial discipline Financially dependent on Still financially dependent on the national
national government for government (see Table 2); however, there is
subsidies, grants, guaranteed consciousness now that they should spend their
loans; not conscious that though resources more prudently and wisely; also, they
they may be performing remit dividends to the National Treasury more
developmental functions, such regularly.
is not an excuse to be in the red.
Compensation and The salaries of the employees Salaries were standardized for all employees of
qualification of and officials of GOCCs were the government; however, some GOCCs were
officials "50-80 percent higher than able to get exemption because of their Charters.
those received in the regular Senior officials' perks and pay were rationalized.
bureaucracy." Recently, the fit and proper rule was
implemented in appointing board members of
GOCCs for a fixed term. Also, a Compensation
and Position Classification System (CPCS) is
being proposed. There are, however, issues of
unconscionable and exorbitant allowances given
to board members as bonuses compared to those
received by the rank and file and the GOCC's
publics, e.g., pensioners, dependents.
Accountability Performance evaluation was Performance evaluation is financial plus
only done for financial performance of mandate sealed through a
compliance; heavily indebted performance agreement negotiation (PAN). A
GOCCs were monitored. transparency seal and full disclosure policy is
also in place where websites of GOCCs are
supposed to contain financial and other
information.
Overall concern Addressed by different agencies In 2011, all GOCC concerns are to be addressed
of the government, by one central advisory, monitoring, and
oversight body with authority to formulate,
implement and coordinate policies related to the
sector.
As of December 2010, the total assets of GOCCs have reached almost

Php5 trillion or over US$116 billion. This increased to Php5.7 trillion in
2013. Their total liabilities have increased from Php3.2 trillion in 2009 to
Php3.46 trillion in 2010. It however decreased to 2009 level in 2013. Net
worth is around Phpl.476 trillion in 2010, up to Php2.5 trillion in 2013.
Subsidies have significantly increased by 493 percent from Php9.064 billion
in 2000 to Php53.7 billion in 2011; so did the equity (infusion) and net
lending. Dividends from GOCCs however have increased on the average of
2014
33 percent in the last five years with a net remittance of Php28.7 billion per
year (GCG, 2011). This increased to Php39 billion in 2013 (GCG, 2013) (See
Table 2).
Table 2. Financial Profile of GOCCs

Particulars 2000/2009 2010/2012 2013 Change
Total assets PhP5T PhP5.7T increase
(US$116B) (US$125.7B)
Total liabilities PhP3.2T PhP3.46T PhP3.2T same
Net worth PhP1.476T PhP2.5T increase
Subsidies PhP9.064B PhP53.7B PhP63.1B increase
Equity I PhP900M PhP750M decrease
Dividends/remittances I PhP28.7B PhP42.2B PhP39B increase
Source: GCG, 2011, 2013
These reforms and figures may provide only a slight turnaround and
improved financial performance among the GOCCs. However, the PEs and
their officials and staff have been incrementally influenced to shun their
bad habits and to behave as real pillars of economic growth in the country.
The transformation has started in the sense that being in the GOCC is not
construed as perks and benefits from the spoils system but as public
service for the common good. Financially, they are now being made to be
more disciplined and judicious in spending public resources and if they
earn profit, remit to the Bureau of Treasury more regularly. Fitness and
proper rule is now in place and hopefully, meritorious and qualified people
with the love for country and public interest will be appointed officials of
the GOCCs. Transparency and full disclosure policy is now being adopted
by agencies of the government, including GOCCs, such that transactions
and the like are now accessible to the public via their websites. The GCG
as the central coordinator and regulator, however, is a lean and new
creation. Thus, it may not have enough human resources, experience and
expertise at this point to fully and effectively implement the tasks it was
assigned to do.
Nevertheless, with the right corporate governance principles,

systems and processes in place; with the right managers imbued with the
values of professionalism, love of country and ethical administration; with
vigilant monitoring not only from the government hierarchy but also from
the public served by GOCCs; with the renewed facilitative environment for
new corporate paradigms, the future for GOCCs in the Philippines is
bright. Their transformation into real agents of social and economic
development may happen in our lifetime.
July-December
Endnotes
'Like ENRON in the US, insurance firms like Pacific Plans, retail corporations like
Uniwide Sales, and public-private initiatives like the PEA-Amari and IMPSA-BKK in the
Philippines.
2 Some 417 enterprises which were not capable of repaying loans or were not in any
way in position to incur loans from GFIs are suspected to have availed of loans at the behest
of Marcos and/or his cronies (Philippine Daily Inquirer, 29 October 1992). They are thence
called behest loans. The COA (1988, as quoted in Philippine Daily Inquirer, 16 May 1993),
meanwhile defines "behest loans" as those wherein any of the following exist:
a) little collateral was posted;
b) the borrower firms were undercapitalized;
c) "marginal notes" of high government officials were present in the formal loan
documents;
d) the stockholders of the borrower-firms were closely associated with Marcos; or
e) the loan proceeds did not go to their intended purpose/s.
3 See studies of the Asian Institute of Management and the Institute of Corporate
Directors.
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2014
Social Enterprises and Development

Management: A Socialist Partnership
between State and Non-State Duty
Bearers and Social Service Providers
in Vietnam
PHAM TIEN NAM AND OSCAR P. FERRER*
In the context of the fiscal tightening of the Vietnamese

Government to reduce its debt, the state leadership has
encouraged social enterprises to undertake initiatives that
support the comprehensive sustainable development of the
country. People's engagement in social reconstruction and
development is indispensable. Social enterprises in Vietnam
have social development orientation and play an important role
in the provision of social services, in perticular, to vulnerable
groups. Business activities serve as tools to meet social
objectives by reinvesting profit generated to cause-oriented
organizations and underprivileged communities. Thus, the
objective of this study is to determine how selected social
enterprises in Vietnam function as non-state partners in nation-
building by providing social services to young people. Utilizing
a qualitative descriptive research methodology, this study
features case studies of three social enterprises in Hanoi City,
namely, Hoa Sua School of Economics and Tourism, Know One,
Teach One (KOTO), and Tea Talk. By analyzing their
experiences, the study aims to contribute to the study and
practice of social development administration and participatory
governance in a socialist country like Vietnam.
Keywords: social enterprise, social development and administration,social

services, civil society organizationsin Vietnam
Introduction
Social enterprises, as non-state partners of government, play an

important role in social development endeavors. These places their social
mission as the top priority by using business activities and fair
competition as tools to meet social objectives, and re-investing profit
*Lecturer, Social Work Department, Thanglong University, Hanoi, Vietnam; and

Professor, College of Social Work and Community Development, University of the
Philippines Diliman; respectively.
SOCIAL ENTERPRISES AND DEVELOPMENT MANAGEMENT IN VIETNAM 159
generated from business activities into the organizations, communities

and social objectives. In the context of the current economic crisis in
Vietnam, the Government has decided to restructure, undertake fiscal
tightening and reduce government debt, so as to face increasingly complex
social and environmental issues (Nguyen, Luu, Pham, & Tran Thi, 2012).
It is essential to develop and encourage social enterprises in support of the
development of a comprehensive and sustainable country. In a country
like Vietnam where there is a strong social work and social development
thrust, social enterprises as non-state partners are supportive of the
government in its social welfare delivery system, and they can become
effective partners of the state in achieving social objectives. This social
work and social development orientation that support government goals is
common among the small number of civil society organizations (CSOs) in
Vietnam. In contrast, civil society in other countries is characterized by an
activist tradition usually opposed to government or even critical of the
latter's performance.
In Vietnam, the general understanding and appreciation of social

enterprises as non-state partners in the provision of social services to
vulnerable groups are still inadequate. At present, this kind of
organization is still unfolding and being shaped. If there is less research
on social enterprises, in general, in the predominantly liberal capitalist
countries, there is almost no knowledge and understanding of this sort of
social enterprise in Vietnam. This is understandable due to the nature and
typology of the Vietnamese government, which has a centralized planning
under the leadership of the Communist Party. Social enterprises play an
important role in the successful provision of social services to vulnerable
groups in Vietnam.
Notwithstanding the introduction of the reform economic policy in

1986, alongside increased economic development, Vietnam is also
witnessing increasing social problems that pose challenges to social
development and nation-building. These include: (1) a widening gap
between the rich and poor, between urban and rural areas and between
different parts of the country; (2) an increasing number of vulnerable
people such as those in need of special protection, lonely elderly, people
with disabilities (PWDs), people affected by HIV & AIDS, drug users and
sex workers; and (3) a declining traditional family patterns of interaction
(Nguyen, 2002; Hugman, Durst, Le, Nguyen, & Nguyen, 2007).
Therefore, this study is very essential in Vietnam's context

nowadays. It elaborates and analyzes the development management of the
researched social enterprises in Vietnam and the relationships between
the researched social enterprises and the state in sharing and rendering
2014
social services to young people, especially the disadvantaged youth,

community, and society in Vietnam.
The study design was qualitative and descriptive in nature, utilizing

case studies that focused on individual subjects, i.e., social enterprises,
and analyzed in depth and in detail the subjects through case analysis.
Data collection was undertaken through primary and secondary

sources. The methods of gathering information and data included
participant observation, in-depth interviews, FGDs, secondary data
reviews and documents.
This research focused on three social enterprises in Hanoi City: Hoa

Sua School of Economics and Tourism, Know One Teach One (KOTO), and
Tea Talk. The criteria used for choosing these social enterprises are the
following:
(a) doing business activities in the hospitality industry to share and

render social services to young people, especially disadvantaged
youth, community, and society;
(b) located in Hanoi City, Vietnam with an operating license issued

by the state; and
(c) willing to help the researcher complete the data collection.
Focus group discussions (FDGs) with six respondents from each social
enterprise were conducted. Key staff or volunteers of the social
enterprises being studied who are willing to answer the questions were
chosen as respondents.
In-depth interviews with three respondents from each social

enterprise have also been initiated. Selected respondents should have
more than three years working for social enterprises, and occupy core
positions.
Secondary data and documents such as the progress and

accomplishment reports, publications such as brochures and newsletters,
magazines, articles, manuals, powerpoint presentations and online
documents of the social enterprises were also scrutinized and reviewed.
In addition, the facilities, equipment, goods and services of selected social
enterprises were examined.
July-December
Viewpoints on the Concepts
Social Enterprise
Social enterprises have various definitions and interpretations in

different parts of the world. In the United States, social enterprises are
closely associated with an entrepreneurial culture, where the focus is on
the individual entrepreneur rather than on being collective or communal
(Chell, 2007). In parts of Europe, social enterprises are autonomous
organizations, which benefit the community with group objectives, shared
aims and a decision-making power that is not based on capital ownership
(Bull, 2008). Social enterprises are social organizations that achieve social
objectives through trading business with the whole surplus principally
reinvested for purpose in the business or in the community, rather than
for shareholders and owners to maximize profit. It is clear that social
enterprises differ from traditional enterprises, whose aims are profit, and
charity organization, which are for welfare. "A social enterprise is not
defined by its legal status but by its nature: its social aims and outcomes;
the basis on which its social mission is embedded in its structure and
governance; and the way it uses the profits it generates through trading
activities" (New Economics Foundation & Shorebank Advisory Services,
2004, p. 8).
In Vietnam, "social enterprise is a concept that refers to the work of

social entrepreneurs under different legal entities depending on specific
purposes and operation conditions. Social enterprises directly target the
social benefits, and are led by a strong entrepreneurial spirit to achieve
both social benefits and economic returns" (Nguyen et al., 2012, p. 20).
This definition illustrates that social enterprises are linked social
entrepreneurs, with emphasis on the role of the founder who can
harmonize social innovations with social entrepreneurship. Currently, in
Vietnam, social enterprises register under various forms with different
legal status to maintain their operations because there are no policies and
legal framework from the state to recognize officially the roles and
benefits of social enterprises. Social enterprises must create social values
through innovative business models and achieve sustainable development
(Nguyen et al., 2012). This definition is quite open to develop further
social enterprises over time in Vietnam.
In Vietnam, social enterprises play a vital role to foster pathways for

integrating socially excluded populations through participation and
empowerment. Social enterprises are open, independent, and autonomous,
but they must be supportive of the state in the nation-building programs.
Indeed, social enterprises endeavor to create social value through
innovative business models.
2014
Development Management
For this study, development management refers to the way and process
of managing social enterprises using the elements of human rights-based
approach such as empowerment, participation, equity, and equality. Nation-
building is always a major thrust in developing a country. As such, all the
chores, services and programs that accrue to the citizen are tantamount to
creating opportunities for the total development of the human potential.
Indeed, gleaned from a rights-based framework, development is an endeavor
that is akin to delivering all the goods, services and opportunities to the
citizens, so that they can fully develop as humans. Who ensures that these
are done or who is the duty bearer? The people or the citizens are definitely
the rights claimants. Certainly, the state is the duty bearer, since it is the
only body that is the mandated to take care of its citizens by delivering the
goods and services to ensure their well-being.
The emphasis of the social development reform policy of Vietnam is

to uplift and build the nation through economic endeavors that would
particularly benefit the people, contrary to economics via profit earned by
an elite few. In this context, social enterprise plays a key role in that
nation-building initiative. On one hand, social enterprise facilitates citizen
productivity. The total products from such productivity are expected to
contribute to the gross national product of Vietnam. On the other hand,
social enterprise would now serve as a tool for social participation and
inclusion. Everyone is encouraged to work towards being a productive
citizen. Participation and inclusion are then strengthened as fundamental
human rights. Thus, by promoting nation-building initiatives, which are
reliant on enterprise and business development, national development will
be similar to managing the development of peoples and their rights.
The Disadvantaged
According to the definition of International Labour Office or ILO

(2011), the disadvantaged are "not just those who are suffering from
economic factors, such as income poverty or lack of experience in and
poor understanding of the formal job market, but also social factors such
as gender, racial, ethnic or migrant background, and geographical
isolation with poor access to quality education and job opportunities" (p.
1). This definition is almost similar to that of Mayer (2003). According to
Mayer (2003):
The concept of disadvantaged that we heard was not centered

primarily on those causes traditionally cited: race, ethnic group,
poverty, or sex. Rather, the concept of disadvantaged was focused
on denied access to the tools needed for self-sufficiency. (p.2)
July-December
For this study, the disadvantaged refers to young people, aged

between 16 and 22, who are more likely to encounter discrimination or
other human rights violation than others. Or more exactly, the youth are
marginalized in the reconstruction because the adults are the prime
targets of the welfare services, housing, health and other governmental
development programs. As such then, the latter are not the priority in
terms of development opportunities. The adults are the priority because
they have to work and be productive so that the Vietnamese society will have
food to eat, money to spend and human resource to recover all losses.
The Relationship between the State and Social Enterprises
Non-state partners refer to individuals and private sectors that

support the state in the development of a comprehensive and sustainable
country. For this study, the relationship between the state and social
enterprises refers to cooperation and supportive complementation, where
the latter is challenged to augment whatever the state is doing and
endeavoring to deliver the goods and services to citizens. The social
enterprises, on the other hand, will always fill up the vacuum which
cannot be responded to and addressed by the state.
In the context of socialist countries, social enterprises are non-state

partners, which are supportive of the state in its nation-building
programs. Unlike in liberal capitalist countries, the social enterprises are
independent of the state. They play the role of cause-oriented groups or
civil society organizations that either protest the programs and policies of
the state or oppose its existence. In Vietnam, social enterprises are always
challenged and may not have the chance to fight or oppose the state. They
see the state as overburdened, so they are encouraged to assist and
support the state, which is mandated to be responsible of taking care of
the citizens. Thus, complementation and coordination between both bodies
characterize the connection between them.
A Brief History of the Evolution

and Development of Social Enterprises
Social enterprises first appeared in UK in the 1 7 th century. Models of

micro credit, cooperatives, and social housing have been established and
replicated in Eastern Europe and North America countries in the
succeeding centuries. In the early 1980s, social enterprises have grown
significantly beyond countries' borders and have become a social
movement with global impact and scale (Nicholls, 2006). The trend is for
the state to share and transfer part of its functions of providing social
2014
welfare to third sector organizations that stand in between public sector

and private enterprises (Nguyen et al., 2012).
The 2004 Global Entrepreneurship Monitor (as cited in Nicholls,

2006, p. 3) reports that emerging social enterprises are developing at a
faster rate than conventional and commercial ventures in the UK.
Mahabir Pun of Nepal, a prominent social entrepreneur, has helped

improve the quality of life for people living in mountain areas by providing
internet access. The mountain villagers are now able to communicate with
doctors and teachers via the internet instead of going down to the capital
city of Kathmandu. They are now able to sell native products and develop
a tourist destination. In India, Kejriwal is known as a proponent of the
Right to Information Act. As a result of protest rallies and signature
campaigns, graft and corruption cases in India are reduced and the people
are now more empowered to demand information from their government
on how their money was being spent (Alampay, 2009).
According to Bornstein (2004), the areas where social enterprises

have created change include poverty alleviation through empowerment,
health care for the poor, education, training and democratization of
knowledge transfer, environmental preservation, community regeneration,
welfare projects and advocacy, and protection of human rights.
Vietnam's Social Enterprisesin Retrospect
In Vietnam, social enterprises are not officially recognized by the

state, but they are using business strategies as tool to serve and benefit
the community, especially the vulnerable populations. A study by Centre
for Social Initiatives Promotion (CSIP), British Council, and Spark Center
in 2011 collected data from 167 social enterprises and identified three
characteristics of social enterprises as follows:
* Social mission is the top priority.
* Business activities and fair competition are used as tools to meet

social objectives.
* Profit generated from business activities are re-invested into the

organizations and communities to meet social objectives.
In addition to these, most social enterprises possess characteristics,

such as: (i) a structure of social ownership; (ii) income generated from
business activities and sponsorship; (iii) impact assessed on both economic
July-December
and social sides; (iv) in the service of the need of the base of the pyramid
groups, who are poor, vulnerable, and marginalized; (v) initiatives with
bottom-up approach; (vi) open and linkage; (vii) closely associated with
social entrepreneurs; and (viii) have paid employees and social workers
(not volunteers).
The development of social enterprises in Vietnam can be divided into

three periods, illustrated in the succeeding sections (Nguyen, 2012).
Before Reform "Doi Moi" (1986)
In the mechanism of centralized planning, only the state was

responsible for delivering social services to people who participate in
community activities through mass organizations, such as women and
youth unions under the leadership of the Communist Party. During this
period, nongovernment organizations (NGOs) were not allowed to operate
in Vietnam. Only the state and the collective economy were recognized as
the two key economic sectors of the country.
Before "Doi moi" (1986), social enterprises in Vietnam operated as a

cooperative model to serve the special needs of disadvantaged communities,
with the spirit of cooperation, sharing, and mutual benefit. Cooperatives were
regarded as organizations that belonged to the community. A cooperative
organization was an independent economic unit that can be considered as the
earliest social enterprise model in Vietnam. The state formulated policies to
encourage the development of the cooperativesl in the early years of socialist
construction in Northern Vietnam. By 1987, there were approximately 74,000
community-based cooperatives in the whole country operating in various
fields to meet pressing needs of the communities. Some of the cooperatives
provided job opportunities for vulnerable people, especially those with
disabilities, in the field of craft.
From 1986-2010
After Doi Moi reforms, models of social enterprises using business

activities to achieve social goals were developed. New economic sectors
such as state capitalist economies, private capitalist economies, and small
business owners began to be recognized. The role of individuals and
communities were being recognized and the provision and exchange of
services were developed to meet people's needs. Funds from foreign direct
investment (FDI) and official development assistance (ODA) increased as a
result of the open-door economic policy. After the United States' embargo
was lifted in 1994, hundreds of international humanitarian and
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development organizations entered Vietnam with non-refundable

humanitarian aid and huge ODA funds. From 2005 to 2010, the total ODA
funds committed for Vietnam reached US$31 billion.
During this period, the state had formulated policies and a legal
framework to promote the development of non-state economic and social
organizations. Decree 71/1998/ND-CP on democracy at the grassroots level
and legal documents issued in 1998 were the first documents that
encouraged the participation of social organizations and citizens in the
process of building, implementing, and supervising policies and programs
in their communities. To promote the participation of people in the
process of building and developing community, the state promoted
cooperation among different organizations by enhancing the power of mass
organizations. Decree 35-HDBT (1992) recommended some solutions to
encourage individuals to set up science and technology organizations.
Decree 177/1999/ND-CP and then later, Decree 148/2007/ND-CP, provided
inputs to establish social and charitable foundations. Community-based
organizations played an important role in providing basic services such as
water resource management, poverty reduction, primary health care, general
education, and environmental protection. The state encouraged cooperation
between international and local NGOs, and local governments as well.
The policies as stated above helped organizations and enterprises

participate in community development. There were more than 1,000 NGOs
and 320 associations operating at national level, and 2,150 associations
operating with voluntary and autonomy principles at central and local
levels (Nguyen et al., 2012). Most of these organizations received financial
donations from international NGOs and donors to maintain their
operations in the provision of social services to communities. In addition,
there were thousands of community-based organizations such as
recreation centers, clubs, and mass organizations such as women union,
veteran associations, associations of persons with disabilities, and
thousands of other units providing social welfare. These organizations
either had the characteristics of social enterprises or had the capacity to
eventually transform into social enterprises in the future. With the open-
door economic policy, the state improved the field of public service by
utilizing a socialization approach. Such approach called for the investment
and participation of economic sectors, individuals, and collectives to share
the state's burden in providing public service, especially in poverty
reduction, education, and health care. A large number of non-state
partners in the field of education, health care, culture and art were set up
to deal with social problems and meet the pressing needs of people.
The period between 1986 and 2010 provided a great opportunity for
the development of non-state partners, especially social enterprises that
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chose the organizational form and legal status as NGOs, and received
funds mainly from foreign organizations. Social enterprises, then,
operated as a successful combination of business models and organizations
for achieving social goals, which also paved way for the development of
third sector social enterprises in Vietnam.
From 2010 to Present
Vietnam has become a middle-income country. The quality of life for

citizens is improving, and the poverty rate is going down. Consequently,
bilateral development organizations such as the Swedish International
Development Cooperation Agency (SIDA) and the Ford Foundation have
closed their operations in Vietnam. Denmark and the United Kingdom have
reduced their ODA for Vietnam and have moved to poorer countries. Having
been used to infusion of external aid, Vietnam has to cope with a serious
shortage of capital for future development. In addition to this, the
mobilization of funds and capital from the community are quite limited in
Vietnam. Luckily, charitable contribution in Vietnam in a way has started to
reflect that the potential contribution capacity of people and enterprises are
quite large (Nguyen et al., 2012). However, most of the charitable activities
are spontaneous and limited in scale within small communities due to the
lack of appropriate policies and information on charitable institutions.
Therefore, the lack of capital for operations has put pressure on thousands of
NGOs in Vietnam and projects for community development in the future.
The Centre for Social Initiatives Promotion (CSIP), in collaboration

with the British Council and the Spark Center, has put forth social
enterprises as a solution to this challenge. In the current context, it
appears to be one of the best ways to achieve both social and economic
goals. The social goals, however, must be the main objective for such
arrangements. Through economic endeavors, social benefits are achieved
by such organizations, which serve as tools for sustainable development.
From 2010 to 2014, Vietnam's social enterprises have shifted their

finance mobilization strategy from tapping external aid to developing
enterprises according to market principles.
Conceptual Framework
In Vietnam, social enterprises play a vital role to foster pathways for

integrating socially marginalized populations through participation and
empowerment. Empowerment approaches of social enterprises increase
the voice of the marginalized and influence the state's policies. Social
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enterprises are open, independent, and autonomous but still contribute to

Vietnam's social development and nation-building programs including poverty
reduction, the development of tourism and service sectors, the development
of the social work profession, and the protection of children and youth under
special circumstances.
Based on social initiatives, social enterprises in Vietnam use business

activities to generate sustainable outcomes such as organizational and
financial autonomy, efficiency, and scale of social impacts. Social enterprises
carry out their roles and responsibilities in sharing the burden with the state
and they are mandated by the state to deliver social welfare sources directly
to people, particularly the socially excluded.
Development Management
To examine the social enterprise's development management, the study

reviewed and analyzed the social enterprise's organizational chart. Also
observed in the operations and practices of the social enterprises being
studied are different values such as empowerment and participation, equity
and equality, and the intertwined dynamics of business and social activities.
One aspect of the development management of social enterprises is to

satisfy the needs of the bottom of the pyramid (BoP) group, including the
poorest and most disadvantaged people who make up at least two billion
individuals with incomes of less than US$2/day. Marginalized groups
including people living in mountainous and remote areas, people with
disability, people living with HIV/AIDS, street children, drop-outs and
released prisoners are not part of the BoP group, but could easily fall under
this group. It is for this reason that they are also part of the target group of
social enterprises (Nguyen et al., 2012). Social enterprises are based on a
bottom-up approach to meet the needs of socially-excluded populations at the
grassroots level.
Social enterprises need to combine business and social management

skills to create a sustainable social impact. Therefore, it is important that
social enterprises must have the capacity for strategic management, long-
term vision, an ability to identify and exploit market opportunities,
innovative marketing strategies, and organizational skills to work effectively
with the community. At the same time, these enterprises must possess an
excellent ability for financial management. Social businesses require much
better management skills than in the operation of an ordinary business.
As regards the development management of the social enterprises

being studied, a human rights approach is key to enable young people to
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participate in education and training programs and become core agents in

societal change. Empowerment is provided to young people through their
participation in vocational training and psychosocial educational services
where a bottom-up approach, rather than a top-down approach, is used. As
a strategic human resource investment, the youth are privileged vis-A-vis
development programs, welfare opportunities and other innovative social
interventions. This is on account of the fact that the old vanguards-the
Vietnam War veterans who created the present socialist state-are getting
older. They have to prepare the young generation who will inherit and
sustain the gains of the revolution. Otherwise, there is the risk of
spinning back to the old dysfunctional and inequitable society that brought
non-progress, poverty and disparity-the core and rationale for the
people's revolution. Thus, the youth focus is more or less overemphasized
in terms of social programs, particularly on social enterprise and
capability building. In that way, the youth are now being primed to take
over the management of the next threshold of social development.
Significantly, social enterprise initiatives, a key strategy in the

development of socialist Vietnam, juxtaposed with capital business
development devoid of any tinge of capitalism, are hoped to uplift the
productivity of the citizens towards economic development. By and large,
social enterprise prioritizes the people and human development, avoiding the
exploitation of people for business purposes, and giving due respect to human
dignity. Social enterprises are envisioned as antidote to capitalist
individualism, the exploitative tendency of profit, and the non-nurturing
spirit of the market. The development of the country is hinged on developing
the business and social enterprise potential of the young people. This is the
context of the Doi Moi policy's reliance on the youth and their participation in
nation-building. Thus, social enterprise development is akin to development
management of the country. This is ingrained in all the case models that
were studied where the social enterprise-implemented as a business
model-is intertwined with social activities and programs. In this way, the
business model is not profiteering. Rather, social responsibility and value for
social individuals are highlighted.
Thus, social enterprises in Vietnam apparently are in the same vein as

the state. The social enterprises covered by the study are independent but
supportive of the state. Development management can be carried out more
conveniently if the state provides inputs and supports to these organizations.
Equity and Equality, Empowerment and Participation
Overcoming poverty is not a gesture of charity. It is an act of justice.

It is the protection of fundamental human rights. Everyone has the right
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to live with dignity, free from fear and oppression, free from hunger and
thirst, and free to express himself or herself and associate at will (United
Nations Development Programme [UNDP], 2013).
People suffering from poverty do not only lack income but also lack
education, access to health care, and lack opportunities to participate in a
community. Thus, fighting against poverty in all its dimensions is not an act
of charity but a matter of civil, cultural, economic, political, and social rights
for all people. It is the state's responsibility to ensure that there are national
development programs and policies that uphold and protect human rights.
Adopting human rights framework as a social policy is often referred to as
mainstreaming human rights in society. It is particularly focused on being
people-oriented. It is biased for vulnerable people, and is consciously
promoting empowerment, participation, equality, equity, self-reliance,
transparency, and accountability.
Relationship with the State
The relationship of social enterprises with the state is seen in the

engagement and linkage with government organizations: a social enterprise's
permit and license to operate, official recognitions, policies and laws
governing service to young people, especially the disadvantaged ones, and
land donations.
Vietnam is a socialist country, with the Communist Party as the sole

political party. The state is directly involved in creating and operating
social enterprises. Though still among the developing countries, Vietnam
has embarked on a new stage of development. Its economic growth process
poses many emerging social and environmental issues. Its population is
approximately 24 million-28 percent of which are in need, including poor
households, people with disability, children with special circumstances,
people released from prison, people living with HIV/AIDS, and the elderly.
In light of these challenges, it is necessary for the State to form a close
relationship with social enterprises as non-state partners in social
development to share the load in the provision of social services. Social
enterprises can support the state in achieving its social objectives. The
issuance of legal documents serves as a regulatory framework, which
officially recognizes and sets out specific policies to encourage and support
social enterprises, as well as institutionalizing the implementation of
those policies. It is, therefore, important to study and evaluate social
enterprises and their relationship with the state.
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Social Services
Development management and its relationship with the state are

intertwined to create an output-sharing and rendering social services.
Social values adhered to by social enterprises covered in this study are
measured by the social services rendered which impact on the target
groups within the society and nation-building programs in Vietnam's social
development.
According to CSIP, British Council, and Spark Center (2011), social

enterprises in Vietnam created the following social values:
(1) nurturing and/or providing material aids to disadvantaged
people through charity programs;
(2) contributing to hunger and poverty reduction, life
stabilization, and income improvement through education,
vocational training, knowledge equipment, and skill
improvement;
(3) improving public awareness on social, environment,
education, and health problems for targeted communities;
(4) caring health and spirit through activities such as health
care, networking, community integration and capability
enhancement;
(5) creating opportunities to acquire lawful rights and benefits
for beneficiary groups; and
(6) others such as creating good staff for community
development and contributing to build and implement the State's
orientations and policies. (p.16)
Sustainability
It is essential to evaluate the sustainability of social enterprises to

develop solutions and develop strategies over time. Sustainability is a
foundation for developing social enterprises and nation-building programs
in social development in Vietnam. Thus, it is necessary to identify issues
and challenges of variables' indicators of social enterprises being studied
to enable the development of solutions and ensure their sustainability.
CSIP, British Council, and Spark Center (2011) identified the

following weaknesses of social enterprises in Vietnam:
(1) quality of goods/services had not yet met the planned

requirements;
(2) low competitiveness;
(3) low financial capability;
(4) poor material and technical bases: lack of modern
equipment, obsolete technology, insufficient manufacturing
area, low capabilities to carry out complicated projects and
works;
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(5) lack of business management skills and experiences;

(6) lack of high-quality human resource or a part of labor force
has not met job requirements;
(7) labor force has low awareness and poor health;
(8) labor's living conditions and income are still low;
(9) ineffective organizational structure and management
mechanism;
(10) weak relations with state organizations, local authorities,
partners, and others; and
(11) others: newly established and small scale organization (p. 21).
The CSIP, British Council, and Spark Center (2011) report also listed
the following as threats to social enterprises development and
sustainability:
(1) fierce competition;

(2) lack of capital and capital accessibility to invest and
develop;
(3) unstable labor force: difficult to recruit and sustain labors,
labor's prejudice about the job;
(4) limited accessibility to high technology;
(5) difficulty to sell goods/services: market limited, goods soon
outdated due to fast technology development;
(6) increasing customer requirement;
(7) lack of information;
(8) adverse impacts of macroeconomic environment: economic
crisis, inflation, high interest rate, high price of inputs, impact of
market mechanism;
(9) adverse impacts of nature and environment: climate
change, disasters, floods, epidemics;
(10) decreasing assistance sources;
(11) lack of collaboration and assistance from the state, local
authorities, relevant organizations, individuals;
(12) low public awareness on the organization activities;
(13) legal system is still not transparent enough to solve the
weaknesses. (p. 24)
The main beneficiaries of selected social enterprises are young

people, especially the disadvantaged youth and their communities. The
beneficiaries also give back to the development of social enterprises and
contribute to the sustainability. Beneficiary teachers, restaurant and hotel
owners and managers who gained skills from the training programs in
turn support new trainees. The selected social enterprises in the study
provide good examples of processes that develop and support Vietnam's
nation-building programs in social development such as poverty reduction,
the development of tourism and service sectors, the development of social
work profession, and the protection of children and youth under special
circumstances.
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Summary of Findings
Case Study 1: Hoa Sua School of Economics and Tourism
The Hoa Sua School of Economics and Tourism has developed an

innovative model to help reduce poverty in Vietnam and meet the
demands of the tourism and service sectors. It is the first and continues to
be the leading private vocational training school in Vietnam. Established
in 1994, Hoa Sua has developed a reputation in Vietnam for its high
quality restaurant and cafe products and services. In addition, it provides
disadvantaged and disabled youth with free vocational training and
employment opportunities in the food service and tourism sectors and
small business management-with close links to local enterprises using an
effective and sustainable business model (Hoa Sua School of Economics
and Tourism and World University Service of Canada [WUSC], 2012).
Figure 1: Organizational chart

of Hoa Sua's Restaurant Group
Source: Hoa Sua School of Economics and Tourism, 2013a
Development management. The organizational chart of Hoa Sua's

restaurant group reflects the strategy of the board of directors in training
Hoa Sua's graduates to become skilled laborers in tourism and services
sector. More time is allotted for practice through on the job training
(OJT). During internships at Hoa Sua's training outlets, the students
receive support and guidance from restaurant's staff, with each training
outlet having a supervisor for the students. The office of finance and
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accounting, Hoa Sua training outlets management, and the testing board
of training qualifications ensure that the students have the opportunity to
regularly practice the skills they learn in the restaurants and coffee shops.
With these arrangements, the students are prepared from the start to a
strict working environment in the tourism and service sectors.
Empowerment and participation.The admission criteria are not based

on the ability to pay tuition but on the students' desire to learn, their
drive for independence and self-reliance.
During the orientation phase, potential students have the chance to

meet the teachers, talk to old students, and get more information about
all the training programs. Students are selected based on the interest and
enthusiasm they show through active participation in this stage.
To achieve the quality of graduates, Hoa Sua students undergo two

training periods to meet training and enterprise standards (Hoa Sua
School of Economics and Tourism, 2013a). During the Phase 1 of the
training, students are taught knowledge and professional skills at the Hoa
Sua School. They are then then tested and assessed. Qualified students
will move on to Phase 2. At Phase 2, students practice advanced
professional skills at Hoa Sua training outlets or at other enterprises.
Students who meet the qualifications based on the assessments and tests
graduate from the vocational training program.
Students must undergo the whole process of practicing the skills they
learn from their major in the vocational training program. By undergoing the
rigorous process, the students are hoped to become professional workers with
moral standards, aspirations, deep consciousness with their work, and
competence in the tourism and service industries.
The following are the major courses offered in the vocational training
programs of Hoa Sua:
* Major in food processing technology: knife grinding a knife, cutting,

food processing and catering, use of basic equipment in food
processing, and knowledge in hygiene and safety in food handling
Major in table service: table preparation in restaurants (polishing

glasses, knives, forks, and cups, and table arrangement), customer
care (welcoming, communicating with customers, and proper taking
of food orders), food serving, assisting in receiving payment, and use
of basic equipment
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* Major in housemaid service: arranging trolley, serving chambers

(cleaning the steps, removing and replacing sheets, bed decoration,
and dusting), cleaning bathrooms, and laundry.
* Major in patisserie and baking: weighing of ingredients, mixing,

incubating, baking, and decorating, and knowledge in hygiene
and safety in food handling.
In addition, the students are encouraged to create new menus in

processing food and making cocktails. During internship at Hoa Sua training
outlets and other enterprises, the students are in charge of major and
important roles. The internship is an opportunity for the students to
demonstrate competence, improve skills, and be familiar with the working
environment. After the internship, some of them become regular staff at the
enterprises.
Students' participation in the vocational training provides students,

particularly the disadvantaged youth, with a "fishing rod" instead of "fish"-
one of the core principles taught to social work and development
professionals as a fiat to empower vulnerable groups.
Equity and equality. Hoa Sua is a private vocational training school as

well as a social enterprise, supporting the state in its poverty reduction
strategy that promotes the rights of all people, particularly the disadvantaged
youth, and envisions to ensure equity and equality in Vietnamese society.
Hoa Sua supports the disadvantaged youth as they struggle for their
right to participate in practical skills-based training. Mindful of gender
equality, 55 percent of the school's graduates are women, including young
women who are victims of abuse and trafficking, allowing them to become
financially stable and independent individuals. In addition, the school has
developed a tailoring and embroidery training program specifically
catering to the hearing impaired and disabled youth, who face additional
barriers to employment. By enhancing their skills, the youth can have the
chance to lead an independent life (Hoa Sua School of Economics and
Tourism and WUSC, 2012).
Hoa Sua has policies governing the subsidies provided to students

who choose to enroll in its training program. Following the principle of
equality and equity, Hoa Sua classified youth students availing of its
training programs based on their capacity to pay into the following
categories (Hoa Sua School of Economics and Tourism, 2013a):
* Category 1: 100 percent free of charge for professional and social

training. The beneficiaries include: (i) youth from poor families
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with registration and youth of poor families according to Decree

9/2011-TTg; (ii) youth under the auspices of social agencies such
as SOS children's village, social protection, and charity center;
(iii) youth from ethnic minorities in remote areas and islands; (iv)
youth who are children of Vietnam War martyrs and Agent
Orange victims; (v) youth whose parents are with disabilities or
limited finance; and (vi) youth from near-poor families according
to Decree 9/2011-TTg in Hanoi.
* Category 2: 75 percent free of charge for professional and social

training for youth with divorced parents who are abandoned or
staying with their grandparents in difficult circumstances.
Category 3: 50 percent free of charge for professional and social

training for youth from ethnic minorities, poor families, and
youth with hearing impairment and disabilities, youth with
incapacities (1/4 and 2/4) and illnesses (1/3) due to the war.
Category 4: 25 percent free of charge for professional and social

training for youth with illness due to the war (2/3 and 3/3), with
incapacities due to the war (3/4 and 4/4), orphaned youth, youth
of near-poor families, and abused and trafficked youth or youth
who are victims of a natural disaster.
In addition to subsidies on professional and social training according

to category level, the disadvantaged youth benefit from Hoa Sua's other
policies such as access to uniforms, accommodations, meals,
transportation allowance, health care and psychological consultations,
sports and cultural activities, scholarships, and employment opportunities
(Hoa Sua School of Economics and Tourism, 2013a).
Dynamics between business and social activity. In addition to the main

training facility where the dormitory is located, Hoa Sua also has
restaurants, cooking classrooms, embroidery shops, caf6 and bakeries, and
catering services within the vicinity. The restaurants offer set menus of
French and Vietnamese cuisine. There are also coffee shops around the city,
including the shop called Croissant and Cafe Smile. Knowledge on
Vietnamese cuisine and tips on food presentation are imparted to those who
enroll in Hoa Sua's cooking classes. The bakeshop Baguette & Chocolat
produces cakes and pastries, with quality comparable to those made in Paris,
which are sold at very reasonable prices. The revenues generated from these
businesses help the school remain largely self-sustaining.
The school also provides opportunities for the students to gain

industry experience and sharpen their craft and skills. Students work in
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the network of training outlets to acquire on-the-job experience. In

return, the school's alumni contribute, to some extent, to the increase in
school revenues and profits that help sustain the school program to train
more underprivileged youths.
Relationship with the state. Hoa Sua is a private vocational training

school. However, government formations such as the Hanoi People's
Committee, the Department of Education and Training-Hanoi, the
Department of Labour, Invalids, and Social Affairs (DOLISA)-Hanoi, the
Department of Foreign Affairs-Hanoi, and Linh Nam Ward People's
Committee oversee and guide the school's operation.
Hoa Sua works with different social organizations and agencies in the
entire country such as the Red Cross, the DOLISA, and SOS Children's
Villages, as well as schools, social protection centers, and population,
family, and children committees in communities, to gather updated
information about the profile of disadvantaged youths. The information
becomes the basis for the school's policy on the criteria of accepting
disadvantaged youth into their training program.
The categories that were used to subsidize Hoa Sua students earlier
mentioned are based on the following policies and laws of Vietnamese
government:
(1) Joint Circular 16/2006/TTLT-TB-XH, TC, GD-DT on

educational and training incentive for people credited with
revolutionary service and their children;
(2) Decree 102/2009/QD-TTg on direct support policies for the
poor living in difficult areas;
(3) law on persons with disabilities;
(4) Decree 13/2010/ND-CP amending Decree.67/ND-TTg on
support policies for those living in social protection center;
(5) Joint Circular 3/2012/TTLT-BGDDT-BTCBLDTB&XH on
support policies for children, pupils, students of ethnic
minorities; and
(6) a project by the prime minister on educational development
for ethnic minorities from 2010 to 2015 (Hoa Sua School of
Economics and Tourism, 2013b).
In support of the state, Hoa Sua aids disadvantaged people to

integrate into society through vocational training and employment
generation (Hoa Sua School of Economics and Tourism, 2013a). Hoa Sua's
operation is officially recognized according to standard management
system 9001:2008 (Hoa Sua School of Economics and Tourism, 2013a).
The school follows the joint circulars, decrees, and laws of the Vietnamese
government to serve disadvantaged youth in its vocational training
program.
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Hoa Sua has a permission and a license from the state to operate as
a private vocational training school in Vietnam, offering training programs
according to different levels (Hoa Sua School of Economics and Tourism,
2013b). Vocational primary level (six to 12 months) includes Asian and
European food processing technology, table service, restaurant service,
patisserie and baking, house help service, and tailoring and embroidery for
the youth with disability. Vocational secondary level (18 months) consists
of food processing technology, and reception. Professional secondary level
(two years) includes food processing technology, restaurant management,
and trade accounting.
The state has supported and affirmed the contribution of Hoa Sua. Hoa
Sua's founder has been honored as "excellent teacher" in 1992 and has
received a medal in 1995 from the Ministry of Education and Training for her
contribution to education in Vietnam. Hoa Sua School has been awarded the
Prix des Droits de l'Homme by former French Prime Minister Dominique de
Villepin in 2005 and several other awards by the Vietnamese Government for
its contribution towards poverty reduction in Vietnam.
Hoa Sua's headquarters sits on a land, with a total area of around

10,000 square meters, granted by the Vietnamese government and the Hanoi
People's Committee (Hoa Sua School of Economics and Tourism, 2013a).
Social services. Hoa Sua's founder has developed an innovative

model that provides disadvantaged youth with vocational training,
employment support, and basic life skills education with its course
offerings directed specifically towards the development of tourism
industry.
Hoa Sua's students, because of their disadvantaged background, have

limited life skills and social knowledge. These limitations are addressed by
providing the students with counselling services, through its student's
affairs office, which are useful in harmonizing the relationships of the
students with their classmates, teachers, and enterprise owners.
Hoa Sua is the first and the largest non-public vocational training
institute and the first tourism occupational skills assessment center in
Vietnam. Hoa Sua has an annual admission of 750 students in tourism and
restaurant services, with 100 percent of graduates finding employment
right after graduation. Since 1994, the school has trained over 6,000
students in the tourism and service sectors, of which over 100 now own
successful hotels and restaurants. Most of them work at luxury hotels,
resorts, restaurants and supermarkets. The majority of Hoa Sua's
professional teachers are also former students. The school has achieved its
aim to reintegrate graduates, especially those from rural and minority
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areas, back to their home regions and economies (Hoa Sua School of
Economics and Tourism & WUSC, 2012).
Sustainability. Hoa Sua's progressive program for the disadvantaged

youth supports the service delivery mechanism of the state, where Hoa
Sua as a private vocational training school as well as a social enterprise,
reinforces the state's poverty reduction strategy that promotes people's
rights, particularly those of the disadvantaged youth.
One of the successful graduates of Hoa Sua is Shu Tan, founder and
manager of Sapa Ochau, the first Hmong-run program supporting local
communities in Sapa. Graduating as a waitress in 2004, Shu returned to
her Hmong community in Sapa where she founded the Hmong Minority
Education Centre, which provides basic education and skills training for
Hmong people with the goal of helping Hmong people find stable
employment in the formal sector. (Hoa Sua School of Economics and
Tourism and WUSC, 2012)
Hoa Sua has pioneered a model of social enterprise in Vietnam. The

school complements the development strategy of Vietnam's tourism and
service sectors by training the disadvantaged youth to become skilled
workers entering the job market. Hoa Sua has demonstrated how a private
training school or social enterprise can significantly contribute in the
achievement of the social objectives and national policies of the country.
Case Study 2: Know One, Teach One (KOTO)
KOTO International is a non-profit organization in Australia that

supports the KOTO Project in Vietnam, which includes the KOTO Hanoi
Restaurant and!Training Centre, and the KOTO Saigon Restaurant and
Training Centre. KOTO stands for "Know One, Teach One." According to
KOTO founder Jimmy Pham, "learning should be passed on and knowledge
is there to be shared." A Vietnamese-Australian, Pham opened a training
center in hospitality in Hanoi more than 10 years ago, giving street and
disadvantaged youth the opportunity to learn and strive.
Development management. KOTO International is managed in

Australia by a board of directors. KOTO International's responsibility also
includes liaising with partner organizations in Australia as well as
supporters and donors in the private and corporate sectors. KOTO
International processes all donations and sponsorships in Australia and
transfers all funds to the KOTO Project in Vietnam.
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Figure 2: KOTO Organizational Chart
Source: 2011 MOTO,
KOTO's general offi ce-inceluding finance, marketing, administration,

welfare, and human resource-sets policies and manages lower level
support in the foundation and enterprise.
Jimmy Pham, KOTO's founder, is in charge of the operational

management of the welfare and human resource of KOTO's general office
as well as the KOTO Foundation, which includes the Hanoi and Saigon
training centers. On the other hand, the chief executive officer of the
enterprise is responsible for the operational management of the finance,
marketing, and administration aspects of the enterprise and the general
office.
Empowerment and participation.In the late 1990s, Pham returned to
his birthplace in Vietnam to work as a tour leader. While in Hanoi, Pham
nurtured a friendship with a group of young people living and working on
the streets to support their families. He used his salary to help the kids,
but he knew this was only a temporary fix for a long-term problem. Pham
wanted to find a way to contribute to improving their lives without
handing out charity. The street kids needed skills, jobs and an income for
a better life. It was from this knowledge that the concept of KOTO was
born.
According to Pham, everyone needs to stand on their own feet and
live their own life. KOTO provides the disadvantaged street youth a
fishing rod instead of fish by equipping them through training programs
that can be life changing. Pham aims to empower disadvantaged youth by
providing them with necessary skills to succeed in their life and this
empowerment must be participatory.
July-December
KOTO's 24-month hospitality, English and life skills program enables

Vietnam's disadvantaged youth to acquire the skills to gain employment
and break the cycle of poverty. Trainees learn not only theory, but also
practice. After 17 months, they leave the KOTO House for an independent
life. By then, they have become stronger and better to cope with life's
difficulties. During the traineeship, trainees occupy management positions
in the restaurant. As a result, trainees are empowered to express their
capacities, as a contribution to KOTO development, by teaching essential
skills to new trainees who face similar circumstances.
As requirement for all trainees to graduate from the two-year

program, they need to complete a final project. In this final project, all
trainees are required to work in teams to create a detailed plan to run a
fundraising campaign on environmental issues. When the study was
conducted, a class of trainees made use of recycled paper to create
artworks. The artworks were auctioned to raise funds to support KOTO's
training programs. Dubbed as "Arts from Hands to Hearts," the project
was an opportunity for all trainees to work on various stuff from scratch
by themselves, with support and consultation from instructors.
KOTO provides a family-like environment where the trainees can

grow into happy and confident individuals. Young people are prepared for
the rigors of the hospitality industry. KOTO founder Jimmy Pham's
philosophy emphasizes that KOTO teaches not only hospitality and
communication skills, but more importantly, life skills to empower street
and disadvantaged youth, give them back dignity and provide them
opportunity to live their lives as well rounded people However, to be
empowered, the street and disadvantaged youth must have an aspiration
to succeed in their own life and must commit to fulfill KOTO's social
missions.
Equity and equality. The disadvantaged youth are in extremely

difficult circumstances in which their basic needs for food, shelter,
education, medical care, or protection and security are not met. They are
at great risk of suffering malnutrition, disease, and possibly death.
The street and disadvantaged youth have rights to survive, to

develop to the fullest, to be protected from harmful influences, abuse and
exploitation, and to participate fully in family, cultural and social life.
These rights are inherent to the human dignity and and are necessary for
harmonious development of individuals. Every country must set standards
in health care, education, and legal, civil, and social services.
As a social enterprise registered as a vocational training center/NGO

in Vietnam, KOTO ensures that its policies are based on and promote
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international human rights standards. KOTO recognizes and respects the

rights of the young people to promote their own development in
accordance with self-identified needs and aspirations.
Dynamics between business and social activities. KOTO's revenue

comes largely from its restaurants and catering service as well as its
trainee sponsorship program.
The KOTO enterprise plays an important role in supporting the

KOTO Foundation in providing disadvantaged youth with a 24-month
hospitality, English and life skills program. Customers come to KOTO as
they highly appreciate its products value, not as charity. In reality, the
KOTO Restaurants in Hanoi and Ho Chi Minh City are well known for
their mix of traditional Vietnamese, Southeast Asian and Western
cuisines. KOTO trainees who benefit from vocational training program
contribute mainly to the development of KOTO's enterprise according to
"KOTO-Know One, Teach One" philosophy.
Along with the KOTO enterprise, the KOTO Foundation is in charge

of caring for street and disadvantaged youth, focusing on raising funds to
support its cause through charitable activities and initiatives such as "Buy
a Brick" and "Build a Mural." The KOTO Foundation does not completely
depend on KOTO enterprise's support in terms of finance.
Relationship with the State. To carry out the process of recruiting

trainees smoothly, KOTO has received cooperation and support from
media agencies, local people and organizations such as the DOLISA, social
protection, humanitarian and charity centers, and government
organizations at community, district, city and provincial levels that verify
the profile of trainees and recommend them to KOTO. The local
government helps KOTO to visit the homes of suitable applicants. With
the support of the state, the process of recruiting trainee is quite strict.
KOTO's aim is to identify disadvantaged and underprivileged youths who
are from extremely difficult circumstances in society and to transform
their lives by providing them with a two-year training program.
As a social enterprise registered as a vocational training center/NGO

in Vietnam, KOTO ensures that its policies are based on and promote
international human rights standards and the policies and laws of the
Vietnamese government. KOTO recognizes and respects the rights of the
young people to adopt their course of development in accordance with self-
identified needs and aspirations.
In cooperation with Box Hill Institute in Australia, the state permits

and officially recognizes KOTO vocational training program to issue
July-December
international certificates in the hospitality industry for disadvantaged

youth in Vietnam. Thus, KOTO graduates have more opportunities to get
good jobs inside and outside of Vietnam. Some KOTO graduates continue
to earn higher education in the field of restaurant and tourism service.
Social services. Every six months, KOTO recruits up to 30 street and

disadvantaged youth, between the ages of 16 and 22, following
recommendations from a wide network of sources, including individuals,
local orphanages or other organizations dealing with poverty, trafficking,
physical abuse, alcoholism and other addictions (KOTO, 2012).
The orientation phase allows time for trainees and staff to get to know
each other and provides trainees the opportunity to become familiar with
their new routine and environment. Successful candidates are invited to a
four-week trial period. During this time, KOTO provides initial health
checks, vaccinations, uniforms, meals, and a monthly training allowance for
all trainees. Candidates who pass the orientation become official trainees.
The KOTO Foundation provides disadvantaged youth with a two-year

training program in hospitality at its training centers in Hanoi. The
training program builds the skills and capacities of the trainees, giving
them better opportunities for work in hotels and restaurants.
A unique aspect of the KOTO program is the combination of personal

development and skills development. Trainees often start as unskilled
individuals with low self-esteem. As they graduate through the phases,
they begin to transform, becoming better educated and more confident.
This is a result of an integrated approach of combining professional skills
training and English programs with a total of 36 life skills workshops.
KOTO's life skills workshops include topics on healthy living, personal
hygiene, anger management, personal financial management, sex
education, first aid, communication, and interpersonal skills.
Sustainability. As one of the pioneer social enterprises in Vietnam,

KOTO has a mission to provide vocational skills to empower street and
disadvantaged youth to find good jobs and secure a better future. KOTO
also contributes to nation-building programs, specifically on the protection
of children in special circumstances. KOTO has trained over 400 graduates
with 100 percent job placement. More importantly, abandoned, neglected,
insecure young individuals with low self-esteem were transformed into
empowered, knowledgeable and optimistic young men and women.
During their traineeship, trainees are required to do 15 hours of

compulsory community service per year. Their way of giving back to the
community includes visiting orphanages, feeding and caring for the
2014
elderly, and joining environmental protection projects. In addition to this,

trainees take part in their annual Winter Appeal activity where they
provide food, clothing and entertainment to a leper colony.
As a result of the training program, trainees become responsible,

employable, and self-sustaining young adults.
Case Study 3: Tea Talk
Established in Hanoi City, Tea Talk Vietnam is a social caf6 project

formed by Michael Ong, a Singaporean, in March 2012. Tea Talk aims to
enhance the well-being of Hanoi locals in the communities by making
psycho-educational services accessible through the use of innovative and
culturally engaging platforms.
Development management. Tea Talk consists of two main

departments: Tea Talk Business (TTB) and Tea Talk NGO/Center for
Counseling, Research and Empowering Community (CoRE).
Figure 3: Tea Talk's Organizational Chart

TEATALK
EAAKB NESTTB~ TETL NO CRE
r oe rat on C Coo ratn
Source: Tea Talk, 2013a
TTB is responsible for undertaking business activities and ensuring

the sustainability of Tea Talk. TTB is reinvesting in CoRE to implement
social projects and activities.
TTB includes business and program teams. The business team

focuses on increasing profit for Tea Talk, including the marketing of
beverage and food products. On the other hand, the program team
coordinates the volunteers, collaborators, clubs, the CoRE, and other
external social enterprises and organizations.
CoRE was established to carry out social activities on a larger scale

to fulfill the vision of TTB's founder Michael Ong. Tea Talk is not only a
caf6 but also a place where everybody can express themselves, share their
ideas, and receive counseling. CoRE assists people, especially the young,
July-December
to enhance their well-being. It creates an environment where young

people can have the opportunity to discuss pressing social problems such
as lesbian, gay, bisexual, and transgender (LGBT) issues, cancer
prevention, crisis management, and job hunting through talk shows,
cultural exchange, and skills training.
CoRE includes the project implementation, administration,

management of staff, finance, communication, and foreign affairs. CoRE's
staffing structure has three levels, namely, regular staff, interns, and
volunteers and collaborators.
The clubs form an important part of Tea Talk. While maintaining a

cooperation with TTB in developing the caf6's and CoRE's operations, the
clubs are independent from TTB. The clubs get five percent discount when
using Tea Talk's goods and services. The clubs can propose and collaborate
with CoRE to implement projects. They also have access to TTB's rooms for
meetings and trainings. When organizing events, the clubs need to negotiate
with TTB. Depending on their goals, anybody who has new ideas and wants to
set up a club can propose to the business and social managers.
Empowerment and participation.Tea Talk employs social workers at

the caf6 to engage in efforts to get rid of stigma young people are facing
through education and dissemination of information on specific social issues.
Young people are engaged in discussions through skits and presentations on
different social issues, especially those concerning the youth. Participation is
at the heart of Tea Talk as it employs innovative platforms such as
interactive skits and other creative activities. Engaging the young people to
participate leads to their ownership of project and their being empowered to
act. Tea Talk's idea is to regard each young individual as a client. Based on
social work principles, it is essential to empower and respect young people,
allowing them to become independent. Tea Talk's programs increase young
people's awareness about social issues. Young people are also provided with
counseling and psycho-educational services, increasing their receptivity to
these services.
By making psycho-educational services accessible through culturally

appropriate, innovative and engaging platforms, Tea Talk helps young
people to cope with psychological challenges, to work productively and
fruitfully, and to contribute to his or her community. Some of the
innovative workshops conducted by Tea Talk are: a workshop on exploring
the ways young people communicate love and concern towards loved ones;
a workshop on understanding the self and how to relate with others; a
workshop helping young people to make healthy and wise decisions about
love and sex; and a 10-session workshop equipping young people with basic
skills to be a peer helper.
2014
Equity and equality. The benefits of improving mental health and

fostering equity and equality for all people continue to be key themes
emerging in research and practice worldwide.
According to Tea Talk, young people suffering from mental illness

shall enjoy the same human rights and fundamental freedoms as all other
citizens. They shall not be the subject of discrimination on grounds of
mental illness. They have the right to professional, humane and dignified
treatment, and are protected from exploitation, abuse and degradation.
Tea Talk aims to eliminate prejudice and stigma surrounding mental
illness among young people, regardless of religion, age, gender, ethnic
group, or disorder, disability, and socioeconomic status.
Dynamics between business and social activity. While the youth are
the main beneficiary of Tea Talk, other customers however also have
access to the social services the caf6 provides. Tea Talk's core project is
Let's Talk. Let's Talk is an activity where a paracounselor talks to
customers to introduce counseling and psycho-educational services,
helping the customers to know more about the problems they are facing in
their family life. Through this activity, the customers gain access to
counseling services through Tea Talk's caf6 enterprise. The Vietnamese
people usually solve family problems by themselves as they feel ashamed
to ask professionals for counseling. Through Let's Talk, individuals who
need counseling are encouraged to avail of Tea Talk's counseling services.
The satisfaction of customers with Tea Talk's products and social

services is manifested in the frequency of their visit to the caf6 and their
referral of the caf6's services to their friends. As a result, Tea Talk
increased the number of its customers and supporters, their revenue and
profit, which are redistributed back into the social enterprise through the
provision of social services to vulnerable groups.
Relationship with the state. Tea Talk is registered as a limited liability

company (Ltd) for its business activities and Center for Counseling Research
and Empowering Community (CoRE) for its social activities. Tea Talk
observes and follows the policies and laws of the Vietnamese government
with regard to serving the youth who need psycho-educational services. Tea
Talk in essence boosts the youth's abilities to cope with psychological stress
so they can work productively and contribute to his or her community.
In addition, Tea Talk is supportive of the government in its provision

of social services to young people that are related to the field of mental
health. Tea Talk supports the Social Work Center of the DOLISA in
Quang Ninh province in establishing a counseling caf6 that is similar to
the Tea Talk model. This model caf6 provides psychosocial services for
July-December
people living in Quang Ninh province, especially young people who face
psychological difficulties and are interested in solving social problems.
Tea Talk has helped social work schools run by the state by offering
internship programs for social work undergraduates and social work
employment in non-traditional settings. Indeed, this is a major
opportunity for social work students whereby they acquire more
knowledge, skills, and experience to become professional social workers in
the future. Thus, Tea Talk contributes to the development of the social
work profession in Vietnam.
Social services. With the aim of reaching out to young individuals

through psychosocial-educational services, Tea Talk conducts a wide range
of social activities. For example, Tea Talk held a talk show called "20
Years Old and their Crises," which was attended by 100 participants.
Another talk show called "Silent Night," which drew 64 participants, was
conducted with the aim of raising awareness on the challenges faced by
people with hearing impairment. Over the past year, Tea Talk managed
over 20 counseling cases involving youth without any fees. It also initiated
and sponsored numerous activities and events that were beneficial to the
community (Tea Talk, 2013b).
At present, Tea Talk is training paracounselors, most of whom are

interested in social work, particularly in counseling, and have a
background related to social work. Apart from workshops, the
paracounselors practice counseling by providing counseling services to
customers while they serve as waiters in the caf6. Each training course
runs for six months and includes both theory and practice. Once the
interns graduate from their course, they can apply as full-time or part-
time staff at Tea Talk.
More importantly, Tea Talk's services have social impact on young

people, on the community, and on Vietnamese society as seen in their
activities that increase the awareness on social and mental health issues
in Vietnam. Tea Talk also offers social work employment in a non-
traditional setting, and internship programs for social work
undergraduates (Tea Talk, 2013b).
Sustainability. Tea Talk is a business enterprise that places a high

value on its social mission. As a business, Tea Talk provides quality goods
and services at affordable prices. Moreover, Tea Talk's aim is to reach out
to the youth through psycho-educational and psychosocial services.
Majority of Tea Talk's young clients are university students with low
purchasing power. Not surprisingly, Tea Talk suffered a loss of around
US$24,000 during its first year of operation. Nevertheless, Tea Talk is
2014
highly appreciated among social enterprises in Vietnam because of its

social impact and its contribution to the development of social work
profession in Vietnam.
Lessons and Insights
Corollary to the understanding of how social enterprises exist and

operate in partnership with the state in the context of Vietnam, it is of
utmost significance to highlight the general trends and features by
comparison, in order to have a grasp of the reality, niche, role, challenges,
issues and limitations of such enterprises. In addition, an analysis of how
state partnership can be sustained is very important.
The social enterprises taken as cases in this study are generally

anchored on helping and developing the youth as a dynamic base for
human resources towards community development (micro level) and
nation-building (macro level). Significantly, it has a partisan focus, that of
serving the underserved and disadvantaged youth. Similarly, it believes in
the significant role of the youth in poverty reduction, and more
substantively as core agents in societal change. It puts premium on young
people's capacity in supporting their family and community, and the
society especially in dealing with social problems. Fundamentally, service
provision to the citizens is a responsibility delegated solely to the state.
From a rights-based point of view, government as a public trust is the duty
bearer. On account of its overburdened role of service provision, it may
not perfectly fulfill this duty bearer role. Thus, the help and support of
social enterprises in such a socialist state can nearly be considered "state
extensions," despite their non-state status.
The thrust of social enterprise is to be a service-oriented entity with

business endeavors supporting its operation as a self-liquidating social
organization. It is a distinct non-state partner in delivering social services
to citizens. As such, it is strongly welcomed by the government-its
operations allowed and officially recognized by the state. In some cases,
the government even extends help through land donation or grants for the
domicile and physical operations of the enterprises. The government also
assists in providing network referrals, which are beneficial to enterprises
that do not immediately know where it can work, who to serve and what
niche will it occupy in society.
Indeed, social enterprises are considered non-state machineries in

delivering social services to society and the people of Vietnam. They are
supportive of the state in delivering social services to the society and its
people through vocational training and psychosocial-educational services.
July-December
As such, they serve dual targets: the government and poor people, with
the aim of improving the quality of life of poor people, especially the
disadvantaged youth. Government is served because social enterprises are
able to assist the government in its mandate to serve its constituents. The
poor disadvantaged youth are also served through the direct services
which are provided by social enterprises.
Based on the findings of this research, the social enterprises studied

are sustainable, contributing to the general development of the sector
itself in Vietnam, and as a result, contributing to nation-building programs
for social development in Vietnam. Such program aims at poverty
reduction, the development of tourism and service sectors, the
development of social work profession, and protection of children and
youth in special circumstances.
In sum, the social enterprises in this study, with their development

management, social delivery services and networks, provide a model of
how CSOs/NGOs-coined and constructed in the predominantly Western
thought-exist and function in the context of a non-liberal/capitalist state
(i.e., Vietnam as a socialist-centralized planning state), if they are to fulfill
their niche and social role in the realm of social development.
Table 1. Comparison of Liberal-Capitalist

and Socialist Centralized Planning
Sociopolitical Liberal-Capitalist Context Socialist Centralized Planning
Dimensions Context
Social role and A cause-oriented group and may Supports state program on social
function be critical of government services and nation-building
As influenced by Can be political and firm on its Silent on political agenda; Being
politics and ideological bearing; can be respectful and supportive of its
ideology critical of and disengaged from its government
government
Relation with Serves as a pressure group and Supportive of people and government
state fiscalizer/facilitator in favor of the
people
Program and Can be highly political and Business and social services
activities economic
Niche in nation- Takes the brunt of responsibilities Expected to help social work/social
building often left out, undelivered or development profession; can be a
unsatisfactorily done by precursor to systematizing or
government; Pressure group to professionalizing social work/social
government development, with accreditations,
evaluations, and standards
Social enterprises with their development management as their

lifeblood and foundation in general and in Vietnam in particular operate in
an entirely distinct way. The case studies support the state's social
delivery system and nation-building agenda, contrary to those in the
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Western framework that may function generally as cause-oriented

organizations that most often serve as pressure groups to governments.
The strong social development thrust that permeates existing

organizational orientation is common among the small number of CSOs in
Vietnam. This study highlights the trend in which social enterprises are
supportive of the state's nation-building program, are prioritizing social
mission which is their impact on society, have strong dynamic link
between business and social activity, are mindful of people's welfare and
rights, are open and connected, are models of social development, and in
its limited way, are contributing to the development of Vietnam's social
development management in a professional and innovative way.
In contrast, civil society in other countries is relatively characterized

by an activist tradition usually opposed to government or even critical of
the latter's programs and policies. The sample cases in this study appear
to be silent about political agenda, and most often manifest high respect
for their government. Thus, they support it by establishing support
enterprises and tapping external resources to serve disadvantaged groups
like the youth because government cannot do it alone.
However, the reality in Vietnam is that those organizing themselves

as non-state voluntary organizations are more supportive of the state.
They do not criticize and fault the government; they would rather put
programs that deliver services to vulnerable groups. This tendency of
social enterprises in Vietnam can be due to the deep influence of social
development thrust that is more concerned with delivering services for
the needy, a predominant framework of NGOs in Vietnam. They would
rather work than complain or talk. This is apparent in the case samples
that were studied, where the founders and their organizations are more
concerned with providing services to the disadvantaged.
NGOs in Vietnam are supportive of the government and the poor

people. This is to be expected because otherwise, they may be constrained
to operate if they are opposed and critical of the government. This reality
is indicative of the high regard and support to the government of those
who initiate social programs. This is understandable in Vietnam where the
people value the revolution that installed the new government. Those
critical of government, which are only a handful and may be out of the
country, would not risk opposing the state.
The cases cited in this study, and the others that wish to establish
enterprises in Vietnam, are expected to be precursors and supportive of
the development of the social work and social development profession.
Thus, the Vietnamese government has provided for a policy environment
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geared in that direction and expects other well-meaning organizations and

social enterprises to be inspired and encouraged by such social
responsibility. To iterate that thrust, Vietnam Prime Minister Nguyen
Tan Dung approved on 25 March 2010 the proposal to develop the social
work profession in Vietnam for the period 2010-2020.
Conclusion
Based on human right approach, the development management of

selected social enterprises enables young people to participate in
vocational training and psychosocial-educational services and to become
core agents of societal change. Social enterprises positively influence the
youth, fostering a more inclusive environment. This means that young
people, especially those who are disadvantaged and in special
circumstances, are not treated as outcasts anymore but are integrally
accepted in Vietnam society with their contribution to economic and social
activities recognized and appreciated. They are seen as participants in
social development and are not marginalized. In addition, the youth are
taking seriously their role and accountability in society by engaging in
youth services and social programs.
The social enterprises featured in this study have established a

relationship with the state. In the context of socialist countries like
Vietnam, social enterprises are good partners of the state. The state
provides inputs to and mandates social enterprises to deliver social
services for vulnerable groups, community and society.
Observing and following state policies and laws, social enterprises

studied in this research promote the human rights of disadvantaged youth,
community and society. They assist in the building and enhancement of
capacities of these target groups. Social enterprises collaborate with the
local government networks to identify who among the disadvantaged
youth in the community need their support and services the most.
Social enterprises selected for this study support the state to share
the burden of providing social services to young people, especially the
disadvantaged, to their community and the society in general. They
contribute to nation-building programs in Vietnam through poverty
reduction, the development of tourism and service sectors, the
development of the social work profession, and the protection of children
and youth under special circumstances. Because of this , the state has
become more receptive of social enterprises. Conversely, social
enterprises are supportive of the state's mission to develop the country
and its people.
2014
Policy Recommendations
Central to the concept of human rights is the relationship between the

rights holder and the duty bearer. States, and other duty bearers, have the
responsibility of ensuring the rights of all people are equally respected,
protected and fulfilled. This does not mean that the state is responsible for
providing everything. It does mean, however, that the state has an obligation
to create the conditions that enable other duty bearers, such as parents, the
private sector, local organizations, donors and international institutions, to
fulfill their responsibilities (Dandan, 2012).
The Vietnamese government is, therefore, finding effective ways of

delivering social services to the people while promoting equity and
equality. While there are no decrees, official recognitions, preferential
policies, incentives, departments/agencies, and laws that categorically
support and foster the development of Vietnam's social enterprise sector,
social enterprises in Vietnam, however, are supportive of the state in the
provision of social services to its people, community, and society and are
creating environmental, economic, and social impacts.
Results of the study point to the necessity of enacting a set of

criteria, at the initial stage, that would spell out the minimum
characteristics that social enterprises in Vietnam should possess and
which characteristics can be flexible. This set of criteria, codified through
a decree or law, needs to offer specific preferential policies, incentives and
support to social enterprises, as well as corresponding responsibilities and
requirements to regulate the sector.
With regard to social development administration, it is necessary to

set up an office within a ministry that is in charge of encouraging and
supporting social enterprises. Based on the operational functions of
ministries, an office responsible for social enterprises can be established
within the structure of the Department of Enterprise of the Ministry of
Planning and Investment. At this stage, the conditions may not be
sufficient to add a new type of enterprise to cover or include social
enterprises. However, this matter should be discussed during the
amendment of the law on enterprises. The concept and criteria to identify
social enterprises need to be added in the amendment of the Enterprise
Law and Investment Law in the future. In addition to this, the Vietnamese
government needs to develop a new sector that differentiates social
enterprises from government, NGOs, corporate social responsibility arm of
corporations, and the private sector (Nguyen Dinh Cung et al., 2012).
Social enterprises need to establish a lobby group that will advocate

to policymakers from the district level to the state level a social policy
July-December
agenda for sustainability and protection of social enterprises. In addition,

they should do more community-based programs to enhance people's and
local governments' awareness of the benefits of social enterprises. It is
hoped that these recommendations will help advance the social
development in Vietnam and in other countries with similar contexts
where citizens' empowerment and participation are given premium.
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potential. London: The Social Enterprise Coalition.
Nguyen, D. C., Luu, M. D., Pham, K. 0., & Tran Thi, H. G. (2012). Social Enterprise in
Vietnam: Concept, context and policies. Hanoi: British Council.
Nguyen Thi Oanh. (2002). Historical developments and characteristics of social work in
today's Vietnam. InternationalJournal of Social Welfare, 11(1), 84-91.
Nicholls, A (2006). Social entrepreneurship:New models of sustainable social change.

Oxford: Oxford University Press.
Tea Talk. (2012a). Tea Talk's diary. Hanoi: Tea Talk.
(2012b). Tea Talk's summary activity report. Hanoi: Tea Talk.
(2012c). Tea Talk's Social Cafe Project [Brochure]. Hanoi: Tea Talk.
(2013a). Tea Talk - New period [Powerpoint slides]. Hanoi: Tea Talk.
(2013b). Tea Talk celebrates I s anniversary. Retrieved from

http://teatalkvietnam.blogspot.com/2013/04/te a-talk-celebrates- lst-
anniversary.html
United Nations Development Programme. (2013). Human rights and poverty reduction.
Retrieved from http://www.undp.org/content/dam/aplaws/publication/en/
publications/ democratic-governance/dg-publications-for-website/poverty-
reduction-and-human-rights-practice-note/HRPN_(poverty)En.pdf
July-December
The Philippine Bureaucracy:

Prospects for Administrative Reform
and Indigenization
MA. CARMEN V. PENALOSA*
The prevailing view concerning administrative reform as

the simple replacement of "traditionalpatrimonial systems" by
"modern administrative systems" is examined in this article in
the context of Philippine history and the indigenization
movements in the Philippine Social Sciences with particular
reference to Pantayong Pananaw, Sikolohiyang Pilipino and
Pilipinolohiya as these have found resonance in the field of
Public Administration. The objective of the article is to review
the literature on Philippine bureaucracy in order to put
administrative reform agenda in the context of Filipino society,
culture and history, and, thus, finally possibly improve the long
term prospects for reforming the Philippine bureaucracy.
Keywords: administrative reform, modern administrative systems,

traditional patrimonial systems, Philippine bureaucracy, Public
Administration, indigenization movements
Introduction
Studies on the failure of bureaucracies in developing countries are

conducted to efficiently address the needs of their respective publics.
These are often derived from the perceived necessity to have what are
regarded in prevailing theory as "patrimonial systems," replaced directly
by "modern organization systems."1 The absence of the latter, believed to
be more rational and therefore efficient, is often used to explain the
persistence of political and bureaucratic corruption in these states. Thus
there is often a usual preoccupation with the merits of modern
organizations and the importance of shifting from the patrimonial system
to the bureaucratic form; 2 instead of focusing on how patrimonial systems
can be pushed toward modernity, or made to evolve into more rational and
3
efficient systems within their respective sociocultural contexts.
*Associate Professor, Social Science Department, College of Arts and Sciences,

Miriam College.
This article is derived from the review of related literature chapter of the author's
dissertation submitted to the U.P. National College of Public Administration and
Governance in 2014.
With regard to the Philippines, studies on graft and corruption

generally take the same approach. Although inquiries begin with a brief
look into the historical development of the Philippine State, these often
privilege the "legal-rational" definition (or "bureaucratic universalism") on
standard bureaucratic behavior (Alfiler, 1979; Bautista, 1979; Briones,
1979; Cariflo, 1979; CarihFo & De Guzman, 1979; De Guzman, Vifieza, &
Leon, 1979; CarihFo & Alfiler, 1986; Varela, 1995). By so doing, activities
that do not fall within this purview are labelled "parochial," "patrimonial"
(sometimes labeled as "folk instrumentalism with particularism") and are
thus considered undesirable following Weber's approach to the study of
organizations and political economy.
In the attempt to understand the pervasiveness of the problem, these

studies either point to the failure of the bureaucracy itself or to its
experience and actions in relation to the object of its existence-its raison
d'Otre-i.e., the public. Majority of these researches however refer to the
apparent dissonance between the supposed "modern," "legal-rational"
systems and the "traditional" Filipino and therefore more socially
acceptable bureaucratic norms as one fundamental factor largely to blame
for the pervasiveness of corruption in the country.
The Philippine Bureaucracy: A Review of Literature
The Workings of a Failed Bureaucracy
Here, the crux of the arguments often revolves around the idea that
graft and corruption continue to persist because of the weaknesses of the
Philippine bureaucracy and its timeless failure/s to reform. Sometimes the
persistence is blamed on structural limitations; oftentimes, on problems
that relate to the effective implementation of policies and programs.
Following the prevailing "public office-centered" definition of public
administration, decisions or behavior in government are judged as corrupt
4
using the norms or standards set by the public office.
Problems identified include inherent structural features in

government agencies, for example, in areas where boundary exchange
processes take place and in positions where a bureaucrat can exercise
powers and discretion (Briones, 1979). Particular types of social dynamics
and power relations, concomitant to one's employment in the bureaucracy,
impinge on bureaucrat-client encounters and are found to produce certain
forms of corruption (Cariflo, 1977). Revenue raising, revenue spending,
and regulatory government functions are those noted to be most conducive
to the inducement of corruption (CarihFo & Alfiler, 1986). Problems in
leadership, organizational instability, inter-agency relations and lack of
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ADMINISTRATIVE REFORMS AND INDIGENIZATION
resources have likewise been found to plague our long history of

unsuccessful anti-corruption campaigns (Alfiler, 1979). Administrative
inefficiency is said to provide fertile ground for corruption (de Guzman,
1979; Bautista, 1979; Reyes, 1982) while institutional ineffectiveness in
enforcing the wealth of accountability laws and mechanisms in the country
is also believed to be responsible for the failure to reverse corruption
(Carifio, Briones, Florano, & Follosco, 2005).
The continuing tendencies of the bureaucracy toward centralization,

despite concerted efforts to decentralize it, are also said to obstruct the
promotion of professionalization among bureaucrats (Sto. Tomas, 1995).
Other problem areas identified are the following: employee conduct and
performance monitoring mechanisms; internal systems and procedures to
delimit administrative discretion in official-client transactions (Tapales &
Alfiler, 1991); and problems in human resource management, such as the
failure to implement a truly rational merit system and to provide for
reasonable if not attractive compensation and benefit packages that would
ensure and reinforce competence as well as discourage graft and
corruption. In one study, individual employee values were also found to
possibly influence the administrative culture of corruption or its absence
in public organizations (Tapales & Enriquez, 1995a; Bautista, Alfiler,
Reyes, & Tapales, 2003); in another, it is the absence of a caring
bureaucracy (a humanized employer) that nurtures and perpetuates
incompetence, corruption and inefficiency in the country (De Leon, 1998;
Guina, 1986; Philippine Senate, 1988).
The Bureaucracy in Its Ecology: ProblematicEncounters
Not discounting the workings of a failed bureaucracy, some authors

also look to the role that its ecology plays in the fight against graft and
corruption. Since the demands of the bureaucracy are generally regarded
as contradictory to those of local culture, the overall bias for the public
office-centered definition of graft and corruption results in an apparent
inclination to point, if not to the political and economic conditions
impinging on the bureaucracy, to Filipino culture in general as the major
source of the problem.
As to external factors, some studies point to the huge arsenal of laws

and organizations on anti-corruption 5 itself as responsible for the failures
of the anti-graft and corruption campaign because the resulting
competition among concerned agencies, exacerbated by problems of scarce
resources and the inclination to focus on the purely legalistic methods to
fight corruption, actually weakens enforcement (Carifio et al., 2005). While
one looks at purely legal and juridical stumbling blocks (Olaguer, 2006),
2014
others zero in on how political pressures on bureaucrats affect the conduct

of anti-corruption drives (Alfiler, 1979). In fact, in a rather broad
appreciation of the role of the bureaucracy in a democratic environment,
the heart of the problem lies at finding the delicate balance between a
developing bureaucracy that shields itself from politics ("bureaucracy-for-
itself') and one that is accountable to political institutions as well.'
Finding this balance is indeed difficult as some studies show that the
issue of partisanship and lack of bureaucratic accountability to the people
continue to be largely responsible for the failure of civil service reforms
(Tancangco, 1986; Reyes, 1993; Carifio, 1986). The fact that the
bureaucracy is perennially hostage to political patronage makes it prone to
graft and corruption (Sto. Tomas, 1995). Thus, one author suggests that it
is more the failure to exact greater accountability from politicians than
from bureaucrats which is responsible for failures in government reform,
the former being the ones who set the tone for public accountability (Alfiler,
1995). In contrast, it is even suggested that in the advocacy of community
governance, patronage politics occurs when people passively allow the abuse
of government's role as supplier of basic services (Ferrer, 2005).
Other studies, in a rather comprehensive review of government,

blame the absence of good governance in the overall agenda of
government (Sto. Tomas & Mangahas, 2007). Interestingly, historical
interpretations of graft and corruption in the country even attribute the
pervasiveness of the problem to our colonial experience reinforced by
present day realities (Endriga, 1979).
On the matter of culture, one study suggests that bureaucratic

corruption in an agency is regarded as the consequence of prevailing societal
values weakening the effects of supposedly already partly internalized
Weberian norms of conduct (Carifio, 1975). In another, it is seen as resulting
not only from "the lack of congruence between what is sanctioned by law and
official pronouncement of politicians, and what society considers acceptable,
even valued, administrative behavior" but also from the administrative
machinery's indifference to this legal-ethical dilemma owing to the norms of
its own sociocultural environment (Carifio, 1979). The sources of corruption
according to one scholar are in the growing breakdown of societal values in
the country that breed social acceptance of corruption and cynical
helplessness towards its eradication (Constantino-David, 2007). In a similar
note, it is suggested that recent preoccupation with ethics, values, and
morality in the public service could be the result of the growing perception
that the values of people in the bureaucracy are problematic, owing probably
to similar problems in the larger groups they belong to (Cruz-Sta. Rita, 2008).
The political-social environment to which the bureaucracy is enmeshed is
even believed to provide more incentives rather than deterrents to
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corruption (Holmes, 2007). Thus part of the antidote to corruption is not only
good leadership and a clean government but also a corruption-intolerant
society as well (Boncodin, 2007).
In general, these studies find fault in Filipino culture, to the extent

that it does not provide an environment, within the bureaucracy and
outside it, that upholds the supposedly universal and timeless bureaucratic
ethos which springs from the West and is perpetuated, constantly
validated theoretically by Filipinos who are acculturated in the English
language-and-culture in varying degrees owing to their western education.
Incongruence of Bureaucraticand SocioculturalNorms:

The Root of It All?
On the whole, the overall tendency is to emphasize the incongruence

between legal bureaucratic norms and "Filipino culture," an incongruence
where the latter, whether operating within the administrative machinery
itself or in the larger social environment, is blatantly indifferent to it, if
not outrightly condoning the prevalent culture of graft and corruption or
negative bureaucratic behavior.
This incongruence is said to "motivate or even force people to deviate

from legal requirements"-i.e. seek "negative bureaucratic practices" (Lee,
1986). This incongruence stems from the fact that the system of
government and governance remains largely colonial (Caoili, 1989). It
appears that despite (or because of) our long history of colonization, both
our political and bureaucratic systems have not been adapted to local
conditions nor become part of the people's culture. In fact, along with the
division of society into a great cultural divide-i.e., that obtaining between
the western acculturated Filipino elites and the Bayan-the bureaucracy
has come to alienate itself from Filipino culture and the general public,
largely made up of Bayan or, in the language of the Left, the masses. This
great cultural cleavage is the result of our long history of colonization and
is manifested in the supposed identity crisis besetting Filipino elites and
the lack of national unity plaguing the country. On one extreme end of
this cultural divide are the largely unacculturated Filipino Bayan, while
on the other are the Filipino acculturated elites. The Bayan to the extent
that their acculturation is neither strong enough nor fully complete, owing
to their relatively weak exposure to the westernization process, retains
and nurtures in varying degrees indigenous Filipino values that define
their humanity and way of life in general. The elite on the other hand,
likewise hostage to varying but relatively stronger degrees of
westernization, are informed by western civilization in their ideals, the
latter manifesting itself in the society that they are able to organize and
2014
reinforce, owing to the fact that many of them are situated, if not strongly
entrenched, in centers of social, political and economic power, particularly
in institutions of government and governance. Depending on the
contrasting levels of acculturation, and primarily indicated by their
internalization of the western language and way of life, the Bayan and
Filipino elite may in fact share some values indigenous to the culture (and
therefore in transitory unity at certain periods of Philippine history) but,
being largely defined by two different cultural sets, oftentimes find
themselves at opposite ends. One fundamental proof of this is the
dissonance between bureaucratic and social norms, and the former's
apparent subversion of the latter (not only within the bureaucracy but also
in its overall sociopolitical millieu). The bureaucracy, not having been
indigenized, remains an unfortunate Filipino elitism rooted in the
Americanization of the Filipino elite (resulting in its "damaged culture").
It thus perpetuates an alienated mechanism of governance detached from
or indifferent to the sociocultural realities of the majority of Filipinos.
And so, while preoccupations in the West continue on the matter of

defining the "public," the "public" in the Philippines has in fact come to be
regarded as something that has to be accepted and dealt with unavoidably,
inevitably, and to the government's advantage but never accepted and
appreciated in itself and for itself, as instruments of and object for general
welfare. In the first place, the language of the bureaucracy continues to be
that of the last colonizer-i.e., English-and that of the previous one
which was in Spanish. Its systems remain not adapted to Filipino culture.
This fundamental language barrier serving to marginalize majority of
Filipinos from any meaningful involvement in government, without any
padrino or intermediary (Carifio, 1979; Briones, 1979), remains a potent
tool for the perpetuation of their disempowerment (contrary to official
development agenda on sustainable development) and thus, nurtures a
breeding ground for corruption. Laws, policy pronouncements and
government programs up to the present are formulated, legislated and
implemented in English. Even basic government forms that have to be
accomplished in order for the citizenry to avail of public goods and services
are in English, to the disadvantage of the greater number of Filipinos. The
problem moreover is that this entire system of government and
governance is perpetuated by an entire educational system that, also in
English, is likewise still colonial in character and essence.
Although the UNDP calls our attention to the importance of cultural

expression and liberty as human development ends in themselves and
challenges social scientists and policymakers to the critical role of cultural
accommodation in development thinking and practice (UNDP, 2004), the
cultural appropriation of the bureaucracy and the integration of Filipino
culture in the system of governance has yet to be truly achieved. Not only
July-December
does the Philippines remain far from a democracy that actually empowers
its people and allows them to participate in state affairs (Brillantes, 1987),
it is likewise farther still from a bureaucracy that, mindful of its role in
social development, is truly people-oriented (Bautista, 1991). In fact,
Philippine democracy in political science parlance is often referred to as
"elite democracy" or "oligarchical democracy." Up to now the real
environment that Public Administration provides is neither "truly
responsive" to the needs of the public nor enabling.7 Despite the best
intentions, it continues to be culturally alienated and alienating. Public
policies and programs developed and evolving throughout decades
following western trends and mainly through incremental policy and
decision-making thus remain elitist and marginalizing.
And so while some studies suggest that the Philippine bureaucracy

has already acquired in the course of its constitution throughout history a
particular character owing to its being implanted on Philippine soil and its
having been informed by the country's historical development trajectories
and that it is nurtured by the Filipino cultural mindset, these studies may
be regarded in fact as validations of the elitist system carried out,
wittingly or unwittingly, by products of the same system. This is the main
reason why the alienation of the elitist system continually perpetuates
itself. In this regard, understanding the Filipino bureaucrats' psyche (as it
remains captive to the great cultural divide) and its implications to the
workings of administration becomes crucial. While there is Public
Administration in the Philippines, we strongly doubt if there is already a truly
Philippine Public Administration in the sense of its being "of the Filipino, by and
for the Filipino." For in order for any bureaucracy to be effective and efficient, it
must grow out of and be consistent with the sociocultural context in which it
operates. In a situation where the administrative machinery is a foreign
imposition accepted and perpetuated by an acculturated class and is thus neither
understood nor accepted completely by the majority of Filipinos, in order for such
machinery to work in the new sociocultural environment it has to be indigenized.
This indigenization is not merely a continuation of the tradition of Harrison and
his "Filipinization" of the bureaucracy (which was in actual fact, acculturation of
the Filipino elite to American thought and therefore instrumental to American
imperialist designs), but in the sense of the indigenization movement that has
been sweeping the Philippine Social Sciences these past five decades.
Indigenization of the Philippine Social Sciences

and Public Administration in the Philippines
In a general concern for finding relevance of specialized disciplines in

the Philippines such as Public Administration, amidst the institutionalization
by the Americans, the Social Sciences have not been entirely unmindful of
2014
their American bias as is evidenced by indigenization movements as early

as the 1970s. Attempts at contextualizing social science knowledge
through conscious decolonization or the reorientation of academic by
favoring the interpretation of social phenomena from the perspective of
the "national self' using one's own referents of language-and-culture have
led to three major indigenization movements in the Philippine Social
Sciences.9 The PantayongPananaw ("for us, of us, among ourselves, about
ourselves and others") was developed in Historiography. Sikolohiyang
Pilipino (Filipino Psychology) sprung out of Psychology, and Pilipinolohiya
evolved from the discourse of Area Studies.
Pantayong Pananaw is a school of thought in history brought to

fruition by Zeus A. Salazar in the 1970s (Navarro, Rodriguez, & Villan,
2000). It may be understood in its four important aspects: (1) as
perspective and method in research whose core tenet is the "centering" of
Filipino language-and-culture; (2) as philosophy of the formation of
nationality, particularly that of the Philippines; (3) as an analysis of
contemporary Philippine culture-and-society characterized by a great
cultural divide between western acculturated elites and the greater
population Bayan resulting from the country's unique double-colonial
history; and (4) as an agenda towards a new Filipino socio-political-cultural
entity. Central to Pantayong Pananaw's discourse on indigenization is the
politics of pagbubuo or unification. The idea is to constitute a unified
nation (pambansangkabuuan) from a fractured national identity, by way of
emphasizing shared cultural characteristics and in the process helping to
forge a sense of pagkakaisa (oneness/unity) pertinent to any task of nation-
building. Crucial to achieving this fundamental thrust is deconstructing
western discourse (which is essentially racist and divisive/destructive)
borne out of our colonial past and whose vestiges remain dominant in
society and its institutions, particularly in the system of education; and
the positive reconstruction of Filipino identity and nationhood grounded in
the Filipino pook/kapookan (context) as the locus/focus of determination.
Here appropriation of foreign elements is not entirely eschewed. It is
however, the Filipino pook/kapookan or context that defines the central
test of relevance and necessity to appropriate those that are alien to it.
The first step in this process of cultural borrowing is translation of the
foreign element, not only into the Filipino national language but also into
its culture, thus reinforcing what Pantayong Pananaw proposes as a
"closed circuit" of interaction (Navarro et al., 2000).
Similar to Pantayong Pananaw is Sikolohiyang Pilipino's principle of

"indigenization from within," which rejects the colonial framework
completely, and replaces it instead with an entirely Filipino paradigm.
Sikolohiyang Pilipino, initiated by Virgilio G. Enriquez, sprang from the
discipline of Psychology and remains anchored in that discipline, except
July-December
for the fact that it is an indigenized or rapidly indigenizing psychology

resulting from the legitimate scientific concerns arising from the cultural
and eventually sociopolitical realities of its locus or pook, the Philippines
(Pe-Pua & Protacio-Marcelino, 2000). This phase in the development of
Sikolohiyang Pilipino was characterized by the campaign "to critique the
very premises and assumptions of a universal, transcultural psychology
that had sought to define and measure 'the' Filipino against its norms and
tenets" (Mendoza, 2007, p.5). The impetus is to challenge the prevailing
western paradigm that had cast the Filipino in his/her own cultural
context, as the "other," denigrated and marginalized. With alternative
evidence from various sources, historical, ethnographic, and
ethnolingguistic, Sikolohiyang Pilipino placed a premium on first-hand
research using indigenous theorizing and culturally sensitive approaches.
Because Sikolohiyang Pilipino refers to psychology derived from the
experience, knowledge and orientation of the Filipino based on the use of
Filipino language-and-culture, many of its preoccupations have been and
continue to be identical with Pantayong Pananaw.
In point of fact, this is exactly what both Sikolohiyang Pilipino and

Pilipinolohiya (in contrast to Philippine Studies as an international area
studies in English) also advocate and practice. For its part, Pilipinolohiya,
which was developed by Prospero R. Covar, refers to the "systematic study
of (1) Filipino psyche, (2) Filipino culture and (3) Philippine society...
eschewing cultural representations, views, and theoretical agendas set by
others that don't address the needs and concerns of Filipinos, first and
foremost" (Covar, 1991, p.37). In this sense, Pilipinolohiya would/should
encompass both History with a Pantayo Perspective and Sikolohiyang
Pilipino, if not also Public Administration itself, if it comes to acquire an
informed Filipino language-and-culture perspective. In such a case, of
course, Public Administration would quite naturally retain its disciplinal
autonomy in the same manner as, for instance, Sikolohiyang Pilipino.
These national projects on theory revision would generate discourse

on indigenization that would eventually find their way into the field of
Public Administration in the Philippines, largely due to the
interdisciplinary engagement of its scholars at its very inception in 1952
up to present. This has been manifested in its faculty recruitment,
curricula, research orientation and even library collection (Alfiler, 2001).
Not only is it unlike its original American model, which is still heavily
shaped by political science; it has likewise been slowly veering away from
a mere "borrowing field" (as indicated by the initial interdisciplinariness of
its course offerings) and an "applied discipline" (i.e., being predominantly
descriptive-prescriptive rather than theoretical-predictive in its research),
into one that is multidisciplinal in character as it encourages its students
to take electives in various disciplines, inspires flexibility through the use
2014
of methodological pluralism and seeks relevance through grounded

research geared towards theory development.1" Indeed, it has become an
"eclectic field"11 incorporating methods and knowledge from such fields as
psychology, economics, sociology, history and even operations research
(Reyes, 2003), so that any attempt even at defining public administration
"would be either so encompassing as to call forth the wrath or ridicule of
others, or so limiting as to stultify its own disciples. Perhaps it is best it is
not defined" (Mosher, 1956, as cited in Caiden, 2007, p.10).
It is therefore not surprising that challenges for the Filipinization of

Public Administration in the Philippines would eventually be posed by
Raul P. De Guzman, 12 the major pillar of the discipline after Carlos P.
Ramos, 13 which later would continue to be problematized by numerous
other pillars in the field. 14 A part of the Social Sciences, Public
Administration in the Philippines could not remain indifferent to
nationalist and ideological sentiments that arose out of the colonial
experience and which by the time of Martial Law would already become a
movement towards social transformation. Within the same academic
circles, Public Administration could not help but notice major strides in
the indigenization movements shaped by Pantayong Pananaw and
Sikolohiyang Pilipino, eventually manifesting itself in an uneasy
awareness of the need to find its own meaning and relevance to the nation
that it serves, which for the two major movements of indigenization
mentioned above would have to be aimed at contributing to the unification
of a still fragmented nation (pagbubuo ng Bansa) brought about by a
seemingly unsurmountable cultural divide ("dambuhalangpagkakahating
pangkalinangan")between the westernized elites and the greater majority
who comprise the generally unacculturated or incompletely acculturated
Bayan. This included the act of consciously asserting one's own locus of
determination (pagpopook) and the privileging of one's own language and
socio-cultural meanings ("pagpapahalaga sa wika-at-kalinangan") in
knowledge production and national discourse formation (Mendoza, 2006).15
In the context of this paper, Filipino ideas on the indigenization of

the social sciences discussed above are not different from those of Wilson,
the father of modern American Public Administration (Wilson, 1887), in
his call for indigenization of European public administration into America.
Indigenization in Wilson's sense requires the foreign science to be firmly
and uncompromisingly rooted in the language-and-cultureof the society
appropriating the science. Therefore adopting and transforming it "not
formally, in language merely, but radically, in thought, principle, and aim
as well" (p. 202) and following the political and historico-cultural context of
the appropriating country in order for it to be a meaningful and potent
tool for addressing the needs of the country. Thus, for Wilson the science
of administration can indeed be borrowed "with safety and profit" if and
July-December
only if fundamental differences of condition are read into its essential

tenets (p. 219). It has thus to be "filtered"through a "slow fire of criticism"
in order to "distillaway its foreign gases." By keeping clearly in mind the
distinctions between what is foreign and what is one's own, with the
privileging of one's own fundamental ideologies and practices, Wilson
asserts that American Public Administration "...can learn without error what
foreign systems have to teach... [and]... scrutinize the anatomy of foreign
governments without fear of getting any of their diseases into our veins;
dissect alien systems without apprehensionof blood poisoning" (p. 220)
Talking about the Americanization of European Public

Administration, Wilson propounds that:
The principles on which to base a science of administration for

America must be principles which have democratic policy very
much at heart. And to suit American habit, all general theories
must, as theories, keep modestly in the background, not in open
argument only, but even in our own minds-lest opinions
satisfactory only to the standards of the library should be
dogmatically used, as if they must be quite as satisfactory to the
standards of practical politics as well. Doctrinaire devices must
be postponed to tested practices. Arrangement not only
sanctioned by conclusive experience elsewhere but also
congenial to American habit must be preferred without
hesitation to theoretical perfection. In a word, steady, practical
statesmanship must come first, closet doctrine second. The
cosmopolitan what-to-do must always be commanded by the
American how-to-do-it. (pp. 220-221)
In other words, looking at the beginnings of modern American Public

Administration and the fundamental principles that has guided its
foundation, we see how important translation 16 is as the first step in the
adoption of theories and western ways, and the privileging of one's own
praxis over foreign theories that may eventually be made useful to the
advancement of one's own society and culture.
In the meantime, this same appropriation of American Public

Administration from European Public Administration, both as discipline
and praxis, did not occur in the introduction of the field in the Philippines,
largely due to our colonial heritage and the Filipino elite's bias for the
American language-and-culture. Thus the present Philippine Public
Administration continues to be nourished primarily by the acculturated
sector of Philippine society-i.e., the Filipino elite that has shaped and
continues to give form to our national culture based on the language-and-
culture of the Americans. Unfortunately, Public Administration in the
Philippines continues to be separated from the "public"-i.e., from the
language-and-culture of the majority, not only as a discipline but also in
praxis. The pillars of Public Administration in the country acknowledge
2014
this reality in critical reflection of its own field and its relevance to
Philippine society (Sto. Tomas & Mangahas, 2007).
Numerous calls, although largely unheeded, have been made for the
reevaluation of the fundamental assumptions upon which public
administrative interventions in general have been based. It is in this light
that challenges to the continuing relevance of public administration
persist, many from pillars of Public Administration in the Philippines
themselves (Sto. Tomas & Mangahas, 2007). Precisely because of the low
level of epistemological inquiry that had characterized the discipline, calls
for more theoretical research that could inform applied research (Ocampo,
1982; Tapales, 1988) continue. De Guzman, the Father of Public
Administration in the Philippines, recognizing that the discipline is
"inevitably ethnocentric or culture-bound" and that "[t]he sociocultural,
economic and political setting in which public management operates.... [is]
a major determinant of the patterns of administration that evolve," in the
same way as "...public administration is an increasingly strong
determinant for changes in the system," observes in a rather grand
manner that "[tihere is still the continuing problem of achieving relevance
and realism in the teaching of public administration in the country" (De
Guzman, 2003, p.10). According to De Guzman (2003), this can be
addressed with, among others, the production and use of indigenous
teaching materials and the formulation of more relevant models and
analytical concepts. The matter becomes more complicated when amidst
our continuing ignorance of self (i.e., our personhood, culture and society)
and incessant failure to face the challenges of our continuing past, we are
already confronted with the urgent need to take a look at the challenges
brought by the third millennium (Briones, 1997).
Of the studies in graft and corruption, particularly on the matter of

incongruence, numerous calls for finding a solution to this problem have
been made (Lee, 1986; Varela, 1995)17 and some attempts at basic
research, although very few, have been conducted. According to Cariflo,
debates on graft and corruption have intensified precisely because most of
the theoretical formulations have remained hypothetical and are not based
on extensive empirical research (Carifio, 1986).
On the matter of Filipinizing the bureaucracy as well as the field of

public administration (that nurtures the former through policy and
program consultancy; and the training and education of would-be
bureaucrats and public servants), indigenization efforts had begun during
the early 1990s but was not sustained by any institutional program. The
hard fact is that indigenization is a daunting task. Although the benefits
are long term, in the meantime it carries with it very little personal
reward or remuneration. But the challenge is there (Brillantes &
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Fernandez, 2008) and it is now placed in the hands of the younger

generation of Filipino Public Administration scholars and practitioners. 8
Conclusion
It has become increasingly clear in recent years that the Philippine

State cannot be viewed from the simplistic dichotomy of the "patrimonial"
state and its theoretically desirable opposite, the "modern" state (De
Guzman, 2003). Proof of the matter is the persistence of political and
bureaucratic corruption despite the preoccupation of scholars of Political
Science and Public Administration to understand its nature and causes as
bases for recommending remedies, as well as numerous legal
pronouncements and statutes to prevent if not discourage politicians and
bureaucrats from committing graft and corruption. This is not to mention
a long list of government reforms/reengineering and "moral recovery"
programs intended to exact conformity to legal-rational bureaucratic
behavior. The challenge to relevant public administrative reforms is one
that has been commonly placed at the doorstep of Public Administration,
being the primary field of study that attends to the management of the
state and its affairs.
However, applied interventions intended to address graft and

corruption generally focus on short term concerns that reinforce the
administrative machinery and the bureaucratic ethos on one hand, and
completely disregard the more fundamental matter of trying to resolve the
legal-ethical dilemma or the dissonance between bureaucratic and social
norms on the other. In fact, the inclination is to further aggravate the
incongruence by continuing to insist on interventions informed by western
theorizations. Even as Public Administration responds to the changing
sociocultural realities peculiar to the country, the solutions proposed
continue to be drawn from supposedly global, but in truth, western
intellectual trends.
The task becomes more daunting when it is realized that basic to

resolving this incongruence is a clear understanding of not only the
bureaucracy, which is of recent western import and informed by the
intellectual tradition of American Public Administration, but also and
more importantly the Filipino culture. With regard to the latter, Public
Administration has done very little in trying to understand the cultural
context in which the bureaucracy operates, save to accept as "truths" and
"givens," the supposed Filipino traits culled from western social science
constructs advanced mainly by Ateneo's Institute of Philippine Culture.19
This is unfortunate, because western social science continues to nurture
and dominate academic disciplines in the Philippine educational system,
rendering the latter's implicit epistemological base with "blatantly racist/
2014
colonialist discourse" (Mendoza, 2006, p. 46; Enriquez, 1994). Not

surprisingly therefore, many of the so-called Filipino traits upon which
generalizations until now on administrative culture in Public
Administration literature have been based are regarded as lacking in
psychosocial and historical depth by Pantayong Pananaw and Sikolohiyang
Pilipino scholars.
Moreover, Public Administration has not attended to the task of

understanding how this culture that defines a country, having yet to attain
and sustain national unity with an ideological base (because of the great
cultural divide separating the elites from the Bayan), impinges on the
workings of the bureaucracy. 20 But more importantly, it has not through
any basic research in culture sought to understand how this bureaucracy
may be made more relevant through indigenization (Alfiler, 1979;
Bautista, 1979; Briones, 1979; Carifio, 1979; Carifio & De Guzman, 1979;
De Guzman, Vifieza, & Leon, 1979; Carifio & Alfiler, 1986; Varela, 1995;
Theobald, 1999; De Guzman, 2003). An inquiry into actual attempts at
indigenizing the Philippine national bureaucracy or its counterpart among
local government units reveals that until now no concrete efforts have
been made along this area. The very little research done on the
importance of knowledge built with indigenization informing local
governance is in Social Work (Veneracion, 2003).21 This is not surprising.
For governance to be successful, there should be harmony between
individual aspirations and freedoms, social/community values and
institutions, and political institutions, values and goals (Caoili, 1989). In
this sense, social work is the profession most likely to grasp the
importance of indigenized local governance. The fact that the office of the
social worker in any local government unit is an extension of the local
mayor's office gives them a particularly important role in effective local
governance. They are indeed at the forefront of service delivery. Being
"street-level" bureaucrats mediating between the clientele-public and the
office which is subject both to the vicissitudes of politics and
administration, they are able to exercise great discretion and therefore
define policy content and direction as these take shape in actual
implementation. More than social workers, they are public administrators
too but with the advantage of being informed by sociological lens.
This fundamental harmony in culture and governance cannot be

attained by merely reinforcing a western imposition. No matter how
rigorous and systemic these reinforcements are via the retraining and
education of its human resource, as has been the trend in the development
of Philippine Public Administration, the same problems will persist.
Following this latter "tradition," there is sure to be very little prospect for
any effective long-term public administrative reform. But the fact also that
Philippine Public Administration, rapidly changing and growing as it is and
July-December
continually being confronted with calls for relevance in its fields, both
existing and emerging, the challenge of developing and designing local or
indigenous governance is indeed one that could probably finally resolve
22
the question: for whom is Philippine Public Administration?
Endnotes
According to Weber (1968), modern forms of organizations are characterized by
rationality-i.e., social and industrial organizations run by rational procedures and
modes of thought. Weber contrasts the unpredictability and inconsistency prevalent
among patrimonial states as against the "continuity, trustworthiness and objectivity of
the legal order... [seen/shown in] the rational predictable functioning of the legal and
administrative agencies in modern industrial capitalist... [states]" (p. 1095). According to
Weber, where there is a weak separation between the "private" and the "official" spheres
strong patrimonial features exist.
2 Central to the mainstream idea of modernization is the bureaucratic ethos

(defined primarily by its content values of efficiency, efficacy, expertise, loyalty and
accountability) long attached to the development of modern public administration and
championed by the works of Weber (1946), Wilson (1887), Taylor (1967), Goodnow (1903)
and Willoughby (1937). See Pugh (1991).
3 Robin Theobald (1999, p. 492) found that despite the implicit recognition among
scholars of the past 30 years that the West's historical experience is different from that
of developing nations, the neo-patrimonial state and modern state dichotomy continues
to permeate the body of literature on corruption. From this viewpoint, the West provides
"the model of the modern state to which premodern or less developed forms must aspire"
to if they are to progress. This, for Theobald is not only "merely descriptive" but also
"analytically unproductive" and may in fact lead to both misplaced and inappropriate
policy implications.
I Although the "public interest-centered" definition of graft and corruption is said

to be more dominant in developing countries such as the Philippines, official tendencies
remain inclined to the "public office" (De Guzman, 2003).
For a comprehensive list of all Philippine laws on graft and corruption, see Office
of the Ombudsman (2004). For a list of all anti-graft bodies, see Sto. Tomas and
Mangahas (2007), and Holmes (2007).
6 This is to ensure that elected officials, popular mechanisms, and the judiciary
could keep pace with the development of the civil service and keep the latter under
checks and balance (Carifio, 1988, p. 7). For a more comprehensive discussion of the
topic, see Carifio (1992).
7 Although a Public Administrative system that is truly empowering is an

aspiration (Alfiler, 2008), it is far from a reality.
' Initially exclusive to the Americans, the colonial bureaucracy was gradually
transferred to the Filipinos because of the Wilsonian Doctrine that outlined the basis for
American international policy that sought to prevent World War II; and the fact that it
was cheaper for the United States to maintain a bureaucracy of Filipinos rather than
Americans. This signaled what officially was referred to as "Filipinization" of the
bureaucracy. Despite this however, the "Filipino" bureaucracy was under the close
supervision of the Colonial Desk in the U.S., with the treasury and foreign affairs
2014
remaining in American hands up to 1945. According to Cruz (1974), the Colonial Desk or
Bureau of Insular Affairs was organized by the Americans as a colonial instrumentality.
On paper, it played with the American rhetoric of colonialism-i.e., "colonialism as a
humanitarian mission"-but in actual practice, it ensured the full attainment of
America's imperialist goals.
It is actually in the context of American military objectives that both public

education and the civil service were introduced. In fact, these two complemented each
other. For Filipinos, entry into the bureaucracy required passing through the
educational system set up by the Americans, declaring an oath of allegiance to the
United States, and passing merit examinations that were not only in English but were
also subtle indoctrination to American imperial rule. The examinations in fact, in
keeping with American imperial goals, had nominal competitive features and therefore
could not have furnished adequate tests of fitness to given positions. What was sure
though was that any Filipino who aspired to be part of the colonial bureaucracy, would
have to speak, think and behave like an American; and follow the same belief and value
systems as the Americans (Veneracion, 1988). From acculturation to Spanish culture,
the Filipino elites would now internalize the Anglo-American language and way of life in
less than one generation reinforcing their power in Philippine society through a system
of patronage politics that plays to the interest of Americans.
9 For a broad discussion on the indigenization movements in the Philippines, see

Mendoza (2002), also: Salazar (1991), Torres-Yu (1996), Navarro and Lagbao-Bolante
(2007), Enriquez (1994), Bautista (2001), and Carifio (2001).
10 According to Caridad Alfonso (1972), "... not content with the degree of
interdisciplinariness of the courses offered by it, the College has continually advised its
students to take electives in related disciplines such as political science, sociology,
psychology, anthropology, planning, economics, business administration, demography,
mass communications, etc." (p. 286). The late professor and former NCPAG dean Ma.
Concepcion Alfiler will always be warmly remembered by the researcher for her
inspiring enthusiasm in encouraging doctoral students in her PA 399 classes to pursue
theory development through grounded research.
" According to Danilo Reyes (1995a), Public Administration has grown to be "an
eclectic field, so vast and interdisciplinary" that it has drawn knowledge, methodologies
and techniques from various disciplines, a development that only aggravated the
"intellectual crisis" of Public Administration. But clearly and unlike its American
counterpart, the study of Public Administration in the Philippines is one, owing to its
being a colonial implant, more in search of its past, its roots, its tradition and
consequently, its direction (Reyes, 1995). This preoccupation may be responsible for the
continuing question of relevance and the impetus for indigenization aimed at building
public administration theories based on empirical data. In the manner of a "self-
consciousness about research methodology which seems to be growing not only in terms
of data collection strategy but also in conceptual and analytical design," there is in the
meantime, according to Ocampo (1982), "a strong indication for corrective action" within
the discipline itself.
2 De Guzman or RPG as he is fondly called in the College served the University in

various capacities as director of the Local Government Center (1965-1973) later renamed
Center for Local and Regional Governance (CLRG), dean of the then College of Public
Administration (1973-1982) now NCPAG, UP vice president for planning and finance
(1982-1985), and chancellor of UP Los Bafios (1985-1991). De Guzman also served as
secretary general of Eastern Regional Organizarion for Public Administration or EROPA
(1981-1995). According to Tapales (2002), RPG's "years at CPA can be said to be years of
active networking with the academe in the University and abroad, as well as with public
July-December
administrators" expanding Public Administration in the areas of research, academic,

outreach, extension and consultancy. Under his leadership, the CPA survived the early
years of martial law through what would be known as "critical collaboration" with the
Marcos administration. With his assertion of management excellence in CPA and the
institutionalization of external linkages, the College would remain at the forefront of
public management education in the country amidst the growing competition from new
public management institutions for leadership in the area. Recollections on the deanship
of RPG point to the warmth of a family-style runned college and community. In a
tribute to RPG, Reyes (2011) writes "To Dr. Raul P. de Guzman (1930-2010). Professor,
educator, scholar, administrator, mentor, adviser, colleague and friend; 'Those of us in
our generation, who study, teach or even practice public administration today must
somehow owe this man something."'
13 Carlos P. Ramos' administrative stint from 1956 as director of the then Institute
of Public Administration (IPA) up to 1973 when RPG took over the helm of dean of the
then already College of Public Administration, was described by Tapales (2002) as the
years of "expansion and institution building." Under his institutional vision and
administrative guidance, the IPA would be transformed into the Graduate School of
Public Administration (GSPA) in 1963. In 1966 it would become the School of Public
Administration (SPA) and within the same year, the College of Public Administration
transitioning from an institution that merely provided academic instruction to one that
engages in training and consultancy for national and local government capability
development.
14 Finding meaning and relevance to the field is a challenge posited early on by pillars
of Public Administration in the Philippines (De Guzman, 2003). Meanwhile, according to
Onofre D. Corpuz (2003), education, civil politics and government, three major Philippine
institutions that are so pervasive in our society because they reflect people's basic values do
not have a continuity with the past. Corpuz criticizes the fact that "[t]he government had
been run independently for just the last four decades, managing most of public affairs in a
language that is not native to the citizens" (pp. 12-19).
This "relatively new movement" for indigenization in the mid-90s which Carifio
(2003) talks about in her article "Contributions of the Perspective of Public
Administration" was actively engaged in by then dean Proserpina D. Tapales, Ma.
Concepcion P. Alfiler, Luzviminda G. Tancangco and the late Victoria A. Bautista. These
challenges were clearly articulated by Tapales (1988) in her article "New Challenges to
Teaching and Research in Public Administration." Carifio herself had published some
articles on graft and corruption in Filipino (For a discussion on the use of the national
language in the teaching of Public Administration in the country, see Tapales &
Tancangco [1991]). Similar calls can be seen in Romeo B. Ocampo's (1982) "Toward a
Review of Research and Knowledge in Philippine Public Administration." Danilo R.
Reyes (1995b) takes stock of these efforts in his dissertation, A Search for Heritage: An
Analysis of Trends and Contents of Public Administration Literature at the U.P. College
of Public Administration, 1952-1992. Although Reyes argues that there is already a
Philippine Public Administration, Pefialosa (2002), in a review of the dissertation,
contends that while indeed there is a Public Administration in the Philippines there is
still no Philippine Public Administration in sight-i.e., one that is solidly grounded in the
historio-cultural context of the country; and because truly Filipino in language-and-
culture is owned by Filipinos, and finding relevance to sociocultural realities in the
country, is able to contribute to its development as a nation.
Responding to the same question, Alex B. Brillantes, Jr. and Maricel T. Fernandez
(2008), writes "There is a Philippine Public Administration as far as there is an
American, French and Thai public administration. There is a Philippine public
administration as far as there are institutions of public administration addressing specific
2014
sectoral concerns. There is a Philippine public administration as a field of study. There is

a Philippine public administration considering the massive role of the bureaucracy in
Philippine public administration. There is a Philippine public administration as regards
major institutions in education, politics and government. Yes there are basic public
administration structures and processes.... Within this context, we can arguably affirm
that indeed, there is a Philippine public administration characterized by the presence of
administrative structures and processes operating within a unique Philippine context"
(pp. 246-247). But Brillantes and Fernandez without posing an answer extends the
inquiry further by asking "If there is a Philippine Public Administration, then for whom
does Philippine Public Administration exist?" This latter question is inevitably tied to
the problem of relevance which indigenization attempts have tended to address.
Unfortunately, early efforts at Filipinization or indigenization of Public Administration
discussed earlier have failed to take off and take root. Despite this, calls for
indigenization using the Sikolohiyang Pilipino as model continued from professors of
NCPAG, Tapales, Alfiler and Bautista who were themselves, at some time, members of
the Pambansang Samahan sa Sikolohiyang Pilipino (PSSP) and who stood out for their
continuing resolve in incorporating Sikolohiyang Pilipino in their teaching curricula,
both in administrative theory and research methods and in a number of their research
and publications on public service value (Tapales & Alfiler, 1991; Tapales & Enriquez,
1995b). See also Alfiler (2008).
15 For a detailed explanation of these themes of indigenization, see Mendoza (2006).
16 This is an entire field of study itself-i.e., the appropriation or indigenization of

European Public Administration in America-from the translation of German literature to
the scrutiny and critique of European theories from the American perspective. An example
is the translation into English in 1946 of the works of Max Weber (Martin, 1989).
17 According to Lee (1986), this incongruence does not necessarily lead to graft and
corruption. Only under certain conditions does this incongruence make people behave
according to folk norms, and therefore by definition commit graft and corrupt practices.
According to Lee these conditions are "(1) the socioeconomic status of the bureaucrats,
especially low salaries, perceived relative poverty, and the inconsistency of wealth with
power and prestige; (2) structures and functioning of the bureaucracy (e.g, the elitism of the
bureaucrats, the idealism of the legal framework, and the imbalance between supply and
demand of government resources) and the lack of institutional control on the performance
of the bureaucrats (e.g., the great discretion power of the bureaucrats, the inadequacy of
the internal checking mechanisms, and the lack of extra-bureaucratic control); and (3) the
social reactions to the bureaucracy, particularly the situations where (a) the government is
regarded politically illegitimate, (b) the leadership is considered immoral, (c) the society is
relatively unstable, (d) people are ignorant of the laws, or (e) the government is applying
discriminative policies towards ethnic groups" (Lee, 1986, p. 106).
Meanwhile, Varela (1995) suggests a rethinking of the Filipino administrative

culture. In one article, she elaborates on what she believes are its different faces
allowing for a sharper analysis of the bureaucracy and what are often simply dismissed
as cultures of patronage, bureaucratic mediocrity and ambiguity, dualism, and graft and
corruption. For Varela, efforts should be directed at eventually devising a "Filipino model
of an indigenized bureaucracy" which will, by incorporating our cultural values and
norms, remove the existing incongruence. In her words, "such Filipino-designed
bureaucracy may yet provide the 'close fit' between two sets of contradictory cultural
value systems" and therefore result in a bureaucracy that is "truly expressive of and
responsive to the Filipino national aspiration and development" (pp. 161-177).
On a similar note but without delving into these critical clashes, one study
suggests the need for Public Administration as a discipline, unavoidably influenced by
July-December
the larger social environment to which it belongs, to "not lose its leadership role in
providing directions and values for society." For Gavino (1986), social norms, values and
ethics are public standards that should be upheld by PA, for in their appreciation arises
social responsibilities.
18 An important motivation in the pursuit of this research problem is the discussion

in doctoral classes in NCPAG, particularly PA 208 (DPA-NCPAG, 11t semester, 2001-
2002) of Alfiler and PA301 (DPA-NCPAG, 1st semester, 2001-2002) of Ocampo. According
to Ocampo, the reason why until now no Filipino contribution to administrative theories
in Public Administration can be made is because there is really no attempt at Filipino
theorizing on the matter. This according to him may be brought about by several factors:
(1) it is difficult to construct, even attempt to begin engaging in, an academic discourse
in the Filipino language; and (2) the NCPAG faculty are more inclined towards pursuing
projects that are of immediate concern to funding institutions, endeavors which implicitly or
logically require the use of English in its researches and reporting of findings. In other
words, there is not much remuneration in theorizing. To his students then in Public
Administrative Theories, Ocampo acknowledges these shortcomings and posits the
challenge to engage in more basic research. In the same manner, Alfiler calls on her
students for more primary data gathering following the model of Sikolohiyang Pilipino and
using mixed methods approaches to research.
19 Contrary to findings of the Bulatao-Lynch school of pakikisama or SIR (smooth

interpersonal relations), studies in Sikolohiyang Pilipino since the 1970s have already
proven the complexity of Filipino behavior. In fact, while one can easily identify a host of
negative Filipino attitudes, studies in Sikolohiyang Pilipino have also found equally
valued positive Filipino traits and values to, all of which revolve around the central
Filipino concepts of loob and kapwa. The simplistic enumeration of values in the manner
of Jocano (1981) disregards other traits for which the Filipino is known, such as
pagkamakabayan, kalinisan ng loob, pagkamatulungin, pakikiramay, kasipagan and
katapatan. The latter are traits commonly held dear and appreciated among Filipinos of
Bayan, the millenarist groups and sects. As a matter of fact, they hold together bigger
organizations like the Philippine Independence Church established by Aglipay, the
Iglesia ni Cristo and El Shaddai, as well as lesser ones like the Dating Daan and probably
also some Catholic "revivalist" groups. Furthermore, overseas Filipino contract workers,
skilled and professional, have remained the world's most sought after labor power
precisely because of their positive work ethics.
Many of the studies enumerating supposed inherent negative Filipino traits (e.g.,
Lynch & de Guzman II [1973], Jocano [1981], Andres [1994], and others such as that of
C.R. Kaut [1961]) in being so simplistic are blatantly erroneous. For example, Filipino
bahala na is not equivalent to American fatalism but to determination and risk taking.
Filipino hiya rather than being associated with shame is more similar to propriety/
dignity. In the same manner, Filipino utang na loob is not merely debt of gratitude but
gratitude/solidarity itself and pakikisama is not so much an exercise of smooth
interpersonal relations but a manner of relating to one kapwa on the basis of
companionship to esteem. Contrary to these simplistic listing of Filipino values, Enriquez
sows that there are different levels and structures to Filipino personhood emanating
from one's loob to labas-i.e., from kapwa (core-value), pakikiramdam (pivotal
interpersonal value), kagandahang-loob (linking socio-personal value), bahala na and
pakikibaka (confrontative surface values), to hiya, utang na loob and pakikisama
(colonial/accommodative surface values). In truth, all these values may be connected to
important Filipino social values like karangalan, katarungan, at kalayaan (Pe-Pua &
Protacio-Marcelino, 2000).
20 An important call towards this direction is a study by Tapales & Alfiler (1991).
2014
21 See also Veneracion (1996). More relevant to this study is a research done by
Veneracion (2000) entitled "Praktika ng Pagtulong sa Pamahalaang Lokal: Kasong Pag-
aaral sa Bulacan." Veneracion gathered relevant data also through the use of
triangulation of field research techniques including the focus group discussions in her
attempt to "reconceptualize social work practice in local governance as a collective effort
among social workers themselves" (p. 45).
22 See Brillantes and Fernandez (2008). Interestingly, Sukarno D. Tanggol (2008)

goes ahead to try and answer this question, but in terms of Philippine Public
Administration's relevance to its Muslim minority. To his disappointment, Tanggol found
that Philippine Pubic Administration up to present has yet to achieve relevance among
Filipino Muslims.
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2014
Author-Title Index
Volume LVIII, Nos. 1 & 2
Antonio, Michael G. Reconfiguring processes in public administration: A

review and description of innovative approaches in microfinance,
92-112.
Baylon, Minerva S. Lessons on policy transfer: The Philippine experience,

113-138.
Enhancing performance in Philippine public enterprises: A revisit of

recent reforms and transformations, by Marie Fe Villamejor
Mendoza, 139-157.
Fifteen years since oil deregulation: Assessment of the Department of

Energy's role in the implementation of Republic Act 8479, by Emir-
Deogene Mendoza, Ron Ponce Dangcalan, Ron Ponce Dangcalan,
and Albertine June Din, 57-91.
Globalization, supranational institutions and the disarticulated state:

Emerging issues and challenges for public administration, by
Danilo de la Rosa Reyes, 1-25.
Lessons on policy transfer: The Philippine experience, by Minerva S.

Baylon, 113-138.
Mendoza, Emir-Deogene, Ron Ponce Dangcalan, and Albertine June Din.

Fifteen years since oil deregulation: Assessment of the Department
of Energy's role in the implementation of Republic Act 8479, 57-91.
Mendoza, Marie Fe Villamejor. Enhancing performance in Philippine

public enterprises: A revisit of recent reforms and transformations,
139-157.
Pefialosa, Ma. Carmen V. The Philippine bureaucracy: Prospects for

administrative reform and indigenization, 195-221.
Pham Tien Nam and Oscar Ferrer. Social enterprises and development
management: A socialist partnership between state and non-state
duty bearers and social service providers in Vietnam, 158-194.
The Philippine bureaucracy: Prospects for administrative reform and

indigenization, by Ma. Carmen V. Pefialosa, 195-221.
222
author-title index.pmd 03-Jun-16, 5:27 PM

AUTHOR-TITLE INDEX
Reconfiguring processes in public administration: A review and

description of innovative approaches in microfinance, by Michael G.
Antonio, 92-112.
Reyes, Danilo de la Rosa. Globalization, supranational institutions and the

disarticulated state: Emerging issues and challenges for public
administration, 1-25.
Social enterprises and development management: A socialist partnership

between state and non-state duty bearers and social service
providers in Vietnam, by Pham Tien Nam and Oscar Ferrer, 158-
194.
Ugaddan, Reginald G. and Sung Min Park. Unravel the effects of

leadership and motivation factors on employee engagement:
Evidence from the U.S. Federal Agencies, 26-56.
Unravel the effects of leadership and motivation factors on employee

engagement: Evidence from the U.S. Federal Agencies, by
Reginald G. Ugaddan and Sung Min Park, 26-56.
2012
author-title index.pmd 03-Jun-16, 5:27 PM

2014
Subject Index
Volume LVIII, Nos. 1 & 2
ADMINISTRATIVE REFORM
Pefialosa, Ma. Carmen V. The Philippine bureaucracy: Prospects

for administrative reform and indigenization, 195-221.
BUREAUCRACY

CIVIL SERVICE POSITIONS-UNITED STATES

CORPORATE GOVERNANCE
Mendoza, Marie Fe Villamejor. Enhancing performance in

Philippine public enterprises: A revisit of recent reforms and
transformations, 139-157.
DEPARTMENT OF ENERGY
Mendoza, Emir-Deogene, Ron Ponce Dangcalan, and Albertine June

Din. Fifteen years since oil deregulation: Assessment of the
Department of Energy's role in the implementation of Republic Act
8479, 57-91.
DEREGULATION
Baylon, Minerva S. Lessons on policy transfer: The Philippine

experience, 113-138.
ECONOMIC ASSISTANCE, DOMESTIC - DEVELOPING COUNTRIES
Antonio, Michael G. Reconfiguring processes in public

administration: A review and description of innovative approaches
in microfinance, 92-112.
224
subject index.pmd 03-Jun-16, 5:31 PM

SUBJECT INDEX
ELECTRIC POWER INDUSTRY REFORM ACT (EPIRA)

ELECTRIC UTILITIES - DEREGULATION

EMPLOYEE MOTIVATION

ENERGY INDUSTRIES - LAW AND LEGISLATION

GOVERNMENT BUSINESS ENTERPRISES - EVALUATION

GOVERNMENT CORPORATIONS - MANAGEMENT

GOVERNMENT EXECUTIVES - RATING OF - UNITED STATES

MICROFINANCE

2012

PETROLEUM INDUSTRY AND TRADE - DEREGULATION

8479, 57-91.
PETROLEUM LAW AND LEGISLATION

8479, 57-91.
POOR - SERVICES FOR - DEVELOPING COUNTRIES

PUBLIC ADMINISTRATION


Reyes, Danilo de la Rosa. Globalization, supranational institutions

and the disarticulated state: Emerging issues and challenges for
public administration, 1-25.
REPUBLIC ACT NO. 8479

8479, 57-91.
SOCIAL ENTERPRISES - VIETNAM - CASE STUDIES
Pham Tien Nam and Oscar Ferrer. Social enterprises and

development management: A socialist partnership between state
and non-state duty bearers and social service providers in Vietnam,
158-194.
July-December

SUBJECT INDEX
SOCIAL ENTREPRENEURSHIP - VIETNAM

158-194.
SOCIAL RESPONSIBILITY OF BUSINESS - VIETNAM

158-194.
2012

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PHILIPPINE JOURNAL OF PUBLIC ADMINISTRATION

Volume LVIII July-December 2014 Number 2

Lessons on Policy Transfer:

Enhancing Performance in Philippine

Social Enterprises and Development Management:

The Philippine Bureaucracy:

However, scholars in Public Administration know too well how

The work of Minerva S. Baylon presents a policy analysis focusing on

Likewise, the paper on "Enhancing Performance in Philippine Public

A more cardinal challenge highlighting the need for a deeper

All in all, the continuing discourse on the meaning of context serving

Lessons on Policy Transfer:

The article looks into how globalization has taken on forms

Keywords: policy transfer,deregulation,policy formulation, EPIRA

Globalization has taken on various meanings and forms. One such

*Associate Professor, National College of Public Administration and Governance,

Globalization, or the integration of the world economy, has put

It can be said that policy transfer is not a new phenomenon. A liberal

However, in the context of globalization, policy transfer has

Deregulation and liberalization are examples of policy transfer. In

Objectives of the Study

This study aims to document and illustrate the experience of a

A case study of the formulation of the Electric Power Industry

The Experience of the Philippines

The Philippines is one of the countries that has introduced

To make the country globally competitive and sustain economic

The assessment of the results of these liberalization and deregulation

Other studies on the privatization program of the government,

The negative impact of privatization on employment has also been

There is a growing realization that the interest of the powerful few

How Policy Transfer Challenges Effective Internal Governance

To what extent have these conditionalities affected the internal

the national government would assume private loans of Marcos cronies to

The passage of the Oil Deregulation Law during the Ramos

The challenge to the integrity of the legislative and executive

[t]he timing of full deregulation also became a contentious issue

The Case of the EPIRA Formulation1

The formulation of the Electric Power Industry Reform Act or EPIRA

Background on the EPIRA

The EPIRA is one of the controversial economic and regulatory

Enacted in 2001 as RA 9136, EPIRA was intended to address the

industry. It provides for a "framework for the restructuring of the electric

Dynamics of EPIRA Formulation

An examination of the dynamics of the formulation of the EPIRA

The interests of the industry players, meaning electricity power

According to the Freedom from Debt Coalition or the FDC (interview

overtaking ODA as the primary source of development financing. To

The dictates of the industry players, IFIs and bilateral organizations,

The extent of the participation of independent power producers or

The same unpatronizing attitude towards the consumers seemed to

The capture of the formulation process by the industry players was

the proposed restructuring of the industry made the legislators rely

The presence and influence of consultants, who were mostly foreign,

Another consulting firm, Navigant Consulting, after insistent request

As a result of the high confidence placed on the consultants,

diminished. It would not be an overstatement to say that the consultants

On the part of the legislators, they were given briefings and

Transparency and accountability suffered when closed door meetings