The Philippines - Economic Growth - usaid

SOUTHEAST ASIA COMMERCIAL LAW & INSTITUTIONAL REFORM AND TRADE DIAGNOSTICS JULY 2007
THE PHILIPPINES
Impressive arrays of donor resources have been deployed over a decade to analyze the need for reform in
corporate governance, lay the black letter groundwork, and detail next steps for implementation. There is
no reason to attempt to improve upon that extensive and exhaustive work here, but is should be noted that
efforts will need continued support to achieve lasting success.
There is a gap, however, that should be filled. While existing studies may provide an adequate plan for
reform, the case for reform appears to be made from an outsider’s standpoint rather than from a Filipino
standpoint. In fact, the international call for reform arrived in large part as a reaction to the Asian
currency crisis. Many Filipinos may see reform, in part, as a condition of international assistance in the
wake of that crisis—a condition that need not be taken too seriously now that the crisis seems to have
passed. Filipinos, other than those in donor-sponsored NGOs, do not speak of good corporate governance
in terms of value for Filipinos.
This report makes the following recommendations:
• Greater efforts should be made to train businesspersons on the efficacies of corporate governance,
particularly that greater corporate governance can increase wealth for all and need not be, as
appears more commonly perceived, a threat to established wealth.
• A Philippine case for good corporate governance should be made. To accomplish this, the
Philippine case for reform should not refer heavily to the good governance checklists of the
OECD, the New York Stock Exchange, the European Bank for Reconstruction and Development,
or other outside indicators, instead focusing on issues from the Philippine perspective. The
Philippine case for reform would:
° Establish the Philippine nexus between good corporate governance and prosperity
° Calculate the gains to be expected from true institutional reform
° Calculate the loss and opportunity cost suffered from lack of institutional reform.
Effective institutional reform will require support from those who hold economic and political power.
That audience may respond to an indigenous economic call to action more aggressively than it appears
prepared to respond to an external prescription.
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