Business World, 22 August 2011

Among the brickbats thrown in PNoy’s direction is “Doing nothing” or, as rabid Arroyo partisans prefer, “Nobody home.” There is also a sense even among allies of wasted opportunity due to lack of verb and bluster. While PNoy’s SONA II had imperfections other commentators had rightly pointed out, it also had   portentous substrates which many overlooked. When in last year’s SONA I, PNoy promised “No More Wangwang,” we doubted his resolve. We said it had been tried before with rhetoric always proving more enduring than the follow-through. PNoy, however, did not waver. Here is a humble shoot bearing the gene of a strapping Molave.  In SONA II he pledged to transport “No More Wangwang” from the streets to the corridors of power where malfeasance is grander. PNoy appears to finally have his finger on the lodestone for his presidency: the overhaul of governance. And I cannot agree more.

Disinterested observers have for so long fingered “weak governance” as the prime culprit behind the Philippine economic mediocrity. It has two dimensions: first, the quality of rules and mandates that guide the behavior of citizens, bureaucrats and firms; second, the quality of the enforcement of those rules and mandates. If either the rules are flawed or the enforcement weak and toothless, behavior will be errant and anti-social resulting in an economy foundering in the doldrums. These are like two blades of a scissors: dullness in one renders futile the other. If governance is to strengthen, the two blades must both be honed. How this is done in a weak state where gridlock rules and TROs cheap is the fundamental challenge of our time.

Reforming rules and procedures has an immediate drawback. Opponents fight tooth and nail to sabotage more stringent rules which threaten the enormous gravy of “business-as-usual.” Better and more transparent procedures will quicken things up once securely in place but in the mean time, things slow down to a canter. Detractors quickly drum-roll this as “doing nothing.” But procedural reform is an absolute necessity. Think of a ship fitted with a badly bent rudder. This is headed nowhere. To fix it, the ship has to slow down.  Economists call this the “J-curve”: things get worse before they become better. Reformers who do not manage the J-curve of reform quickly run into political quagmires.

The salient example here is Sec. Rogelio Singson of the DPWH. In his first year, the press highlighted the shortfall of infrastructure spending relative to budget. “Nothing is happening” was the repeated brickbat. What is overlooked is that Sec. Singson is deep into procedural reform. He installed more stringent cost review; he has stopped “chop-chopping” of large projects that facilitates venality. Every Juan and his brother know and lament this practice but it was only Sec. Singson who had the gumption to rule “No more chop-chopping.” The secretaries who came before were either scared to stop or rode it all the way to the bank. Think of it this way:  spending PhP 700-m of your PhP 1-b budget to get PhP 700-m worth of infrastructure  serves  public interest more than spending PhP 1-b of the budget to get PhP 500-m worth of infrastructure. The latter is “business as usual”. But you make a lot of enemies serving public interest in this country. Sec Singson is now at the crosshairs of powerful opponents who want to skewer him the way former BIR Commissioner Rene Bañez was skewered trying to reform the agency and ending up abandoned to the piranhas by Arroyo.

Good rules and procedures will, however, not serve without proper enforcement. This is the target of PNoy’s institutional innovation. Call it “halungkatan.” The age-old practice is “bulag-bulagan”: the entering president  turns a blind eye on shenanigans of the outgoing administration so as to be accorded  the same courtesy by the succeeding administration. “Bulag-bulagan” is the institution that perpetuates official banditry.  Arroyo’s grant of unconditional pardon to convicted felon Estrada was a cynical plea for “bulag-bulagan”. Scorning the practice, PNoy decided to turn the lights on the filth and plunder of the recent past. The exposés of plunder in NFA, PAGCOR, PCSO, SBMA, and PNP attest to this new tack.

This rejection of a settled, if cynical, political horse-trading guarantees a blowback.  PNoy knows that his own watch will now be subjected to the same treatment when it ends in 2016.  Economists call this “making a credible commitment” to behave properly.  Having plenty to hide, Arroyo paid the ultimate obeisance to “bulag-bulagan”: unconditional pardon of convicted felon Estrada.  And she would have gotten it too had Erap won the presidency and a priori had Mar Roxas not step aside in favor of PNoy. This sacrifice rendered the Bedol-Garci vote rigging syndicate irrelevant for the last presidential race.

“Halungkatan” is not a pathological obsession with the past. It is the only way to anchor a brighter future. We stand today a few major plunder convictions away from the dawn of renewed national self-respect and self-belief. Verily, we cannot sow the seeds of the future on the ground poisoned by un-exorcised plunder.