The Role of the State

and
The Modalities of
De-bureaucratization

Cynthia-Celeste D. Feliciano
Plan 210-A
AY 2015-2016

The Role of the State in Society

According to the 1987 Constitution of the Philippines, the prime duty of the
Government is to serve and protect the people. i This statement is further reinforced
in the general welfare clause of the Local Government Code, which enumerates in
detail the role of the State in securing law and order, safeguarding public interest and
ensuring the general welfare of its citizenry, the protection of human rights and the
promotion of social justice. These roles can further be synthesized into four basic
roles, namely:
1. The provider of public goods and services
In a free market economy such as ours, ideally, the State takes on the role of
an enabler. To a certain extent, the State will provide the necessary framework and
mechanism for the private sector to flourish. But, in cases where the private sector
is incapable or is reluctant to provide a particular good or service, the State assumes
the responsibility of providing the good or service, especially in the case of merit
goods.
Art II, Sec. 9 of the Constitution provides that, as a matter of policy, the State
shall promote a just and dynamic social order that will ensure the prosperity and
independence of the nation and free the people from poverty through policies that
provide adequate social services, promote full employment, a rising standard of
living, and an improved quality of life for all.ii
The rationale of putting the burden of providing social or public goods and
services on the State can be attributed to a number of factors.
a. The State has powers which cannot be delegated to the private sector. These
include, national defense, relations with foreign governments, taxation, police
power, eminent domain and the administration of justice.
b. There are goods and services which require large capital investments which
the private sector may be reluctant to provide. Examples of which are road
networks, infrastructure projects, airports, major electrification projects.
c. There are goods and services which the private sector may be unwilling to
provide, on the basis that capital expenditures outweigh the expected
revenues from the economic activity.
d. Public goods and services have characteristics which are distinctly meant for
collective consumption. These include the use of State facilities and parks,
street lights, protective services and welfare institutions for the marginalized. iii
2. The facilitator of the market
The State recognizes the indispensable role of the private sector,
encourages private enterprise, and provides incentives to needed investments.iv
The role of the State in the conduct of its economic affairs extends to
supporting the market by way of introducing capital or increased government
spending in support of either producers, consumers, or both. The pump-priming of
the production aspect of the economy can be in the form of major infrastructure
projects, provision of utilities that support production, access to loans, tax cuts,
labor policies, and production incentives such as lower interest rates. It rests on the
premise that, if producers are able to put affordable products in the market, people
will be enticed to buy.
On the other hand, supporting the consumer aspect of the economy usually
involves dole outs to encourage spending. This can be in the form of conditional

cash transfers (CCTs), basic commodity subsidies and price ceilings. The rationale
is that, spending oils the economy that is at a standstill. Such programs likewise
mitigate the further deterioration of the quality of life among those living below the
poverty threshold.
These concepts are better understood in a two-party political system, whereby
supporting the producers would be the Republican stance; while supporting the
consumers would be the Democrats stance.v
3. The arbiter between contending social groups and classes
Art II-Sec 5. The maintenance of peace and order, the protection of life, liberty, and
property, and the promotion of the general welfare are essential for the enjoyment by
all the people of the blessings of democracy Art. II-Sec 10. The State shall
promote social justice in all phases of national development.vi
The State is responsible for the creation and enactment of laws and
procedures for the proper dispensation of justice, from the barangay level all the way
to the Supreme Court. It takes into account the basic rights of its citizens, public
interests, as well as the protection of the marginalized sector, in the performance of
its duties to promote social justice. As the late President Ramon Magsaysay puts it,
Those who have less in life should have more in law.
4. The social engineer
The State carries with it the mandate to ensure social justice though the
abolition of mechanisms which perpetrate injustice. This is done through the
equitable distribution of wealth and power. vii This is the basis of the Comprehensive
Agrarian Reform Law, which is a form of State intervention to reform the society, by
granting land to the landless, as a means of livelihood.
Further, it gives the State the authority to determine the direction of
development through planning by defining the two mandated local plans of
government, namely the comprehensive land use plan (CLUP) and the
comprehensive multi-sectoral development plan (CDP) in the Local Government
Code.viii
II. The Advantages and Disadvantages of De-bureaucratization
As a premise, it is noteworthy to distinguish devolution from debureaucratization. Devolution is the transfer of powers and authorities to lower level
political government unit; while de-bureaucratization is the transfer of powers and
authorities to units not within the purview of government. As such, there is a major
shift which reassigns power and authority outside the government framework and
institutions.
These actors include the private sector, the non-governmental
organizations and peoples organizations, generally referred to as Civil Society. ix
The concept of de-bureaucratization primarily gained popularity among
governments because they saw the opportunity presented by the private sector in
financing government projects. This allowed the State to tap into the private sector
resources and develop their respective jurisdictions, which it would otherwise not
have been able to, due to lack of funding. Secondly, as in the case of the
Philippines, de-bureaucratization supported our policies on empowerment,
participatory governance and democratization. x
Experiences worldwide have sparked debates on the pros and cons of debureaucratization, as an alternative strategy of the State in the performance of its role

in society. The Philippines has its own success, as well as horror stories to tell in
relation to contracts that it has entered into, which support de-bureaucratization.
From the more basic power cooperatives, to the major infrastructure developments
such as the MRT, there have been lessons learned in the process.
Mass Transit System in the Metro
It cannot be denied that the LRT and MRT are catalysts of development in
Metro Manila. These BOT projects have inter-connected the cities in the metropolis;
ferry more than two million commuters on a daily basis; spurred infrastructure
development along its routes, not to mention, presented an alternative to the chaotic
traffic along EDSA, in the past.
The advantages mentioned are but a few of the good that came out of this
BOT deal which benefited the riding public. On the government side, advantages
include the overall economic boom and foreign investor confidence. Technological
transfer also allowed LRTA to take over operations of the LRT line in 2000 when it
refused to renew the contract with Metro, Inc.
It is said that de-bureaucratization through BOT results in first and foremost
efficiency, because it allows government to function with the efficiency of private
corporations. For some reason, it is not evident in the case of the MRT. The
subsequent changes in the maintenance service providers, not only led to the
deterioration of the physical assets, but also contributed to the inefficiency of the
service as a whole.
This brings us to one particular disadvantage of de-bureaucratization which is
the loss of government flexibility. Since BOTs and management contracts normally
have a lengthy term of service, the State cannot easily intervene when it needs to.
The thing is, the State is expected by its citizens to act on the matter, regardless of
what is stipulated in the management contract.xi
Moreover, an intervention can also create other problems which may not have
been anticipated by the parties in the original management contracts. The fare
reduction on the MRT to increase public access and ridership in early 2000,
resulted in losses for government due to fare subsidies. The burden of financing the
subsidy was then transferred to all taxpayers in the Philippines, regardless of
whether they take the MRT or not.
Other advantages of de-bureaucratization include timely delivery of projects
within budget, the use of taxes for other services, the development of local
capacities, risk transfer to private sector for potential losses due to faulty design and
construction, and unforeseen management costs.xii
Other disadvantages include, increased financing costs and added cost for
risks assumed by the private sector.
B. The Modalities of De-bureaucratization
There are various ways
bureacratization. These are:

by which the State can implement

de-

BOT is the acronym for build-operate-transfer . It was coined by Turkish

Prime Minister Urgat Ozal. xiii It is a financing scheme wherein the private sector

finances, builds, and operates the project for a prescribed number of years (20 years
or more), in order to recover investments, cover operation and management costs
and make a reasonable profit. Ownership and management of the project is then
transferred to the State after the concession period. Some of the variations include
the Build-Own-Operate-Transfer (BOOT), Build-Transfer and Operate (BTO) and the
Build-Own-Operate (BOO). It is commonly used for large-scale infrastructure
projects requiring substantial financing input such as the MRT/LRT.xiv
A concession is a grant of exclusive right to operate and manage. Under this
scheme, ownership of assets is retained by the Public Sector, while operations and
management are entrusted to the private sector. The concession area is usually
large in scope and grants last for a period of 25-30 years. This is primarily used for
the development of logging, mining, quarrying and other extractive activities.
Under RA 9520, a Cooperative is an autonomous and duly registered (with
the Cooperative Development Authority) association of persons, with a common bond
of interest, who have voluntarily joined together to achieve social, economic and
cultural needs and aspirations, by making equitable contributions to a capital
required, patronizing their products and services and accepting a fair share of the
risks and benefits of the undertaking in accordance with the universally accepted
cooperative principles.xv In the case of service cooperatives, they may provide any
type of service to members, including but not limited to transport, information and
communication, insurance, housing, electric, health services, education, banking and
savings and credit.xvi
Joint venture (JV), or more popularly known as Public-Private Partnership
(PPP) is a variation of the BOT permitted under RA 6957. It is an agreement
whereby, the contracting parties, usually from the public and private sector, contribute
equity, agree on a management structure and share in the revenues in accordance
with the stipulations in their contract. xvii Under this scheme, the State usually offers
equity contributions in the form of land assets. It can even bend backwards and offer
tax cuts or guaranteed revenues for a pre-determined period of time, in order to
entice private investors. The major draw of PPP from the State perspective is the
reduced risk which the private sector partner assumes. Of course, this would come at
a price and pose a potential risk to the State, as development, bidding and on-going
costs in PPP projects are likely greater than the traditional government procurement
process.xviii
Lease Contracts involve the private sector leasing a physical facility, usually
in Special Economic Zones, which are owned by the State. The State offers business
incentives, one-stop-shop facility, hassle-free transactions in a state of the art, world
class, environment-friendly, secure location. Facility management is assumed by
the lessor. The PEZA is a state agency tasked to promote investments, extend
assistance, register, grant incentives to and facilitate the business operations of
investors in export-oriented manufacturing and service facilities inside selected areas
throughout the country proclaimed by the President of the Philippines as PEZA
Special Economic Zones.xix One may ask, whats in it for the State? Such contracts
help the economy develop by primarily providing local employment and revenues
through income generation and increased local expenditures. The development of
special economic zones in a locality encourages not only investors within the facility,
but also the development of the periphery.
In service contracts, the public sector out-sources specific components
needed for the administration of its day-to-day business, but retains control of the
operations and maintenance of the system. This can be in the form of janitorial
services provided by private contractors in state institutions. The logic behind such
contracts is that it is more cost effective for the State to contract the service, as

oppose to employing people who must be afforded non wage benefits on top of their
salaries.
In management contract on the other hand, the State transfers responsibility
for the management and operations to the private sector. Remuneration is based on
indicators, and the public sector typically finances the capital and determine cost
recovery policies.xx
Privatization is the transfer of ownership, management and operations of a
public enterprise to the private sector. The primary objective is to reduce government
interference in the economy through competition.xxi In the Philippines, the public
sector nonetheless maintains its regulatory function. In the case of the privatization
of water distribution, Maynilad was awarded the exclusive grant to service the west
zone of Metro Manila in 1997. But due to Maynilads inability to meet its obligations,
MWSS, the State arm in water and sewerage services had to re-bid and re-privatize
Maynilad. The new owners, DMCI and Metro Pacific Investments Corporation took
over in 2007.
C. Should De-bureaucratization be encouraged? Why or why not?
On one end, we have a State that is crippled and unable to perform its
mandate due to the lack of financial resources. On the other, we have the private
sector which is willing to provide the financing and the service for a profit. The
bottom line is, we cannot have our cake and eat it too. All things considered, I am for
most forms of de-bureaucratization, save privatization.
Yes, de-bureaucratization should be encouraged, but in no means should the
shift be absolute. I am for the encouragement of de-bureaucratization due to the
following reasons:
1. It supports our policy on participatory governance. It provides an avenue for the
private sector to have direct participation in nation building. As such, there is
ownership that fosters nationhood.
2. It allows government to better manage its limited resources by tapping into the
resources of the private sector. It gives the State a freer hand by supporting
more projects without necessarily sacrificing one for the other.
3. Significant and well-studied investments on infrastructure translate to rapid
development. This will allow growth centers to flourish in 2nd even 3rd class
municipalities, through investments both foreign and local. Productivity is also
increased as employment becomes available in these areas.
4. Technological transfer would make the country more globally competitive.
My only reservation is on the absolute dependence of the State on the private
sector to run its affairs. I still believe that the State should be able to deal with
unforeseen exigencies which may arise should these private systems breakdown.
Though it can be argued that the state and the private sector can best
collaborate to fast track development and ultimately achieve general welfare, I
believe it is a utopian assumption to think that the private sector has the same drive
as government to achieve general welfare, or to promote social justice for that matter.
It is for this reason that I am against privatization. The State should hold on
to its assets; take advantage of the benefits of de-bureaucratization; then overhaul
and recreate the economy and the social service delivery process, based on private
sector models that work.
The role of the State goes beyond empowering the private sector. The State
should be able to function vis--vis the private sector in the attainment of progress.

Notes:

1987 Constitution of the Republic of the Philippines, http://www.gov.ph/constitutions/1987-constitution/, accessed 15

August 2015
RA 7160 Local Government Code, General Welfare Clause Sec 16:
Every local government unit shall exercise the powers expressly granted, those necessarily implied therefrom, as well
as powers necessary, appropriate, or incidental for its efficient and effective governance, and those which are essential
to the promotion of the general welfare. Within their respective territorial jurisdictions, local government units shall
ensure and support, among other things,1. the preservation and enrichment of culture, 2. promote health and
safety, 3. enhance the right of the people to a balanced ecology, 4. encourage and support the development of
appropriate and self-reliant scientific and technological capabilities, 5. improve public morals, 6. enhance
economic prosperity and social justice, 7. promote full employment among their residents, 8. maintain peace
and order, and 10. preserve the comfort and convenience of their inhabitants.

ii

1987 Constitution of the Republic of the Philippines, Art II-Sec9, http://www.gov.ph/constitutions/1987-constitution/,

accessed 15 August 2015
iii

Ernesto Serote, Power Point presentation on Public Sector-led Planning, 2015

1987 Constitution of the Republic of the Philippines, Art II- Sec 20 , http://www.gov.ph/constitutions/1987-constitution/,
accessed 15 August 2015
iv

Ernesto Serote, lecture on Public Sector-led Planning, 2015

1987 Constitution of the Republic of the Philippines, Art II-Sec.5&10 , http://www.gov.ph/constitutions/1987constitution/, accessed 15 August 2015
vi

vii

Art XIII-Sec 1. The Congress shall give highest priority to the enactment of measures that protect and enhance the
right of all the people to human dignity, reduce social, economic, and political inequalities, and remove cultural
inequities by equitably diffusing wealth and political power for the common good To this end, the State shall
regulate the acquisition, ownership, use, and disposition of property and its increments. ,
http://www.gov.ph/constitutions/1987-constitution/, accessed 15 August 2015
viii

RA7160 Local Government Code Sec 20c on the comprehensive land use plan and Sec 106 on the Comprehensive
multi-sectoral development plans
ix

Alex B. Brilliante, Decentralization, Devolution and Democratization: Old Concepts, Contemporary Applications,
Kasarinlan Vol 12, No 1 3rd Quarter 1996, pp.83-88
x
Alex B. Brilliante, Decentralization, Devolution and Democratization: Old Concepts, Contemporary Applications,
Kasarinlan Vol 12, No 1 3rd Quarter 1996, pp.83-88
xi
PPP in IRC Infrastructure Resource Center, http://ppp.worldbank.org/public-private-partnership/overview/pppobjectives
xii
xiii

Nigel Smith, Engineering Project Management ,(Oxford UK: Blackwell Service Co. 2002).
Benjamin Carino, Power Point presentation on De-bureaucratization and the Role of the State
xv
RA 9520, Philippine Cooperative Code of 2008
xvi
RQ9520, Philippine Cooperative Code of 2005, Art V-Sec 15
xvii
Benjamin Carino, Power Point presentation on De-bureaucratization and the Role of the State
xiv

xviii

PPP in IRC Infrastructure Resource Center, http://ppp.worldbank.org/public-private-partnership/overview/pppobjectives

xix
xx

xxi

PEZA website, http://www.peza.gov.ph/

Benjamin Carino, Power Point presentation on De-bureaucratization and the Role of the State
Gambhir Bhatta, International Dictionary of Public Management and Governance,(NY: Taylor and Francis, 2006).