(Note: There were some factual errors contained in my last Friday column. The projected palay harvest decline estimate by the Philippine Statistics Authority (PSA) should read 3.19 million metric tons (MMT) instead of 3.9 MMT. It is the ‘lowest’ output in seven years for the July-September, period, according to PSA.)
STATE governance in one-party market economies often functions less like traditional bureaucracy and more like a high-stake corporate enterprise. In China and Vietnam, for instance, commune (local)-level officials are assigned strict performance targets to meet annually and over multiyear periods. Every local development plan must align seamlessly with overarching goals established in the national five-year plan.
At the helm of each local government unit (LGU) is a party-appointed leader who functions as the chief executive, paired with a technocratic vice-chair who acts like the chief operating officer. Together, these senior officials are primarily held accountable for achieving development targets. Failure means replacement by a more capable team or administrative demotion through reassignment to remote areas.
This governance arrangement is practically the mode adopted in the corporate world. In the private sector, branch managers — whether in banking, manufacturing or agribusiness — are assigned targets to ensure maximum returns from the investments. This is the way corporate governance works, wherein an agreed plan is made with targets set and necessary resources provided to ensure accomplishment of the tasks.
The corporate governance model in running local governments in China and Vietnam has proven to be very effective, particularly in their agricultural sectors, as shown by the incredible transformation of their rural areas into modern agricultural-producing communities.
I am not saying that corruption never happens in the implementation of agricultural development projects in these countries. But despite corruption, the unequivocal march forward of their countryside is undeniable because the targets set, once attained, have dramatically improved the situation in their local communities.
In the Philippines, since no development targets are set for LGU officials to attain, resources are mostly squandered. LGU officials who are nonperforming are supposed to be made accountable via an electoral process, but as majority of the voters in the country are poor and functionally illiterate, candidates with the money and resources to bribe them or provide “ayudas” are the ones voted into office.
The American-style liberal democracy we adopted hook, line and sinker functions best in a society anchored by a strong middle class. The Philippines, however, does not have a robust middle class as the majority of the Filipinos are poverty-stricken and poorly educated. The result is an electoral process wherein the candidates with the most gold, goons and guns get elected, entrenching themselves and perpetuating political dynasties, especially at the local level.
The Local Government Code (LGC) of 1991 assigned the mandate of delivering basic services such as health, education, social welfare, agriculture, etc. to the LGUs. The framers of the LGC were under the illusion that since LGUs were closer to the ground and knew the needs of their constituents, they would be more responsive to their development requirements.
The reality is actually the opposite because the main priorities of most LGU officials are twofold: recover their campaign costs during the last election and generate more revenues in preparation for the next election. Whatever good things they may do during between elections are incidental.
In the proposed 2027 budget, the Marcos administration is proposing to raise the Local Government Support Fund (LGSF) to P58.53 billion from P57.87 billion in 2026. It was only P23 billion in 2025. Note also that the share of the LGUs through the National Tax Allocation is around P1.19 trillion in 2026.
This is an enormous amount that can pump-prime development activities in local communities. However, we have not seen much of that in 2026 (or in the previous years) and critics are saying that increasing the LGSF for 2027 is not meant to address urgent development needs our local communities. Rather, it is intended for political purposes in preparation for the national elections in 2028.
A review and revision of the LGC is long overdue but no politicians, whether national or local, will initiate such for fear that they may incur the ire of LGU officials who will feel threatened by any attempt to make them more accountable.
As such, the better tack is to entirely change the constitutional provision on local governments by adopting a corporate governance system for LGUs. Under this charter change, LGU officials should no longer be elected but appointed by national officials after undergoing a strict vetting process by a committee made up of highly reputable professionals. More importantly, development targets should be set and agreed to by the appointed officials, to be attained within clear timelines.
The main task of LGU officials is to implement development projects and provide better basic services. It is managerial in essence. Thus, good managers are needed to properly discharge the functions assigned to our LGU officials.
Adopting a corporate governance system will naturally raise the barrier to entry, weeding out unqualified leaders. Celebrities, religious figures, educationally incompetent candidates and self-serving business owners will be discouraged from aspiring for local office as holding power requires hitting concrete, verifiable performance targets.
Elective positions should be confined to officials who formulate national policies that bolster our economic development prospect. This policy framework conducive to further growth can then cascade and inform local development plans. LGU officials who are technically competent managers will have a better chance of successfully implementing these plans.
Let me emphasize, though, that adopting successful corporate governance at the local level will necessitate a national leadership truly committed to the task of implementing real reforms. We have seen such kind of leadership in China, Vietnam and Singapore.
We have yet to see one emerge in the country after 40 years of Western-type democratic governance in the wake of the dismantling of the martial law regime in 1986.
fdadriano88@gmail.com
