July 18 - July 31, 2005

Ike Señeres

Corporatization of governance

Computerization is never an end in itself, because it is only a means to an end. Despite the high technology that comes with the world of computers, these machines big and small are merely just tools that are meant to produce an intended output or result. These are the ends that we should look at and evaluate, and not the tools that were used to produce these.

Looking closer at our central government agencies (CGAs) and our local government units (LGUs), we note that some of them were already able to computerize, while the others have not. In evaluating the success or failure of their computerization programs, what must we do? Are we just going to count the number of machines? Or count the number of users? Since computers are really just means to an end, we should really look at the “ends”, to find out whether these were achieved or not. Based on my own experience, it is very difficult to determine success or failure at the project level, because of the lack of reliable performance measures.

After studying the phenomenon of government computerization for many years, I have arrived at the conclusion that the only way really to measure success or failure among the CGAs and LGUs is to convert them to corporations, so that their viability and profitability could be measured. This idea is really nothing new, because hundreds of government owned and controlled corporations (GOCCs) now exist, and the local government code (LGC) now allows LGUs to function like a real corporation. In theory, all of the existing departments could be “corporatized”, leaving only their policy functions as “non-profit” activities.

Having worked in both the corporate and the bureaucratic worlds, I could say as a first hand witness that the latter suffers from an inability to measure productivity by way of “value added” outputs. For this reason, it is very difficult to measure the “return on investments” (ROI), as far as public expenditures are concerned. While this may not be an issue as far as the old school of governance is concerned, this is being challenged by the new thinking that public funds are not only accountable funds; these are also “invest-able” funds that should also be income generating. By way of simple inference, it is implied that additional revenues earned from investments could potentially reduce the tax burden. Even with this hard line and purist thinking, it is still generally recognized that there are many public services that could not be “corporatized”, such as national defense for instance.

For whatever it may be worth, I would like to share with you two economic “realities” that I have recently “discovered”, and I would leave it up to you how you would react. The first reality could explain why FedEx decided to transfer their regional hub to China from the Philippines, even if they say that they would still continue to maintain their operations here. Ten years ago, Subic was the best airline hub location in Asia, and at that time, Guangzhou in China did not even have a decent airport. In all those years however, the Chinese government through a State owned company (a GOCC in other words) had built a modern and world-class airline hub in that sleepy province, while the Philippine government did nothing to improve Subic, even allowing it to deteriorate somehow. Looking back now, it would appear that even if we were successful in preserving Subic as it was, we would still lose to China, because they have already jumped ahead of us.

The second reality is could explain why India is already beating us in the software development and the computer services businesses, even as we are trying to catch up with them as much as we could. Consider this: while we are trying to beat India by positioning ourselves as an outsourcing destination for North American companies, India has jumped the gun on us by fielding a number of Indian companies that are now outsourcing their requirements to Barbados. From that vantage point, they are now closer to the North American market than we are. Right now, I am unable to ascertain whether these Indian companies are State owned or not, but that does not really matter, because what matters is they have jumped ahead of us.

From the viewpoint of global competition, I think that it should not really matter whether it would be our GOCCs or our private companies that would succeed abroad, because what should only matter is that they should be Philippine companies, period. For the record, I am openly advocating that the government should increase the capital of the Philippine International Trading Corporation (PITC) so that could operate abroad and be more competitive than they are now. In addition, I am also advocating that the government should either invest in or lend to the Philippine companies that are already operating abroad, such as San Miguel Corporation or Jolibee Foods for instance. Back here in the homeland, we should also increase the capital of all GOCCs that are involved in infrastructure development, especially those that are tasked to make our facilities more globally competitive in terms of attracting new business locators. We must do this, or else we will lose out in this global game.


Tune in to “IRADYO NATIN” on DZEC AM radio 1062 KHZ Mondays to Fridays from 1 to 2:30 PM. Text 0919-646-6323 email iseneres@yahoo.com

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