CHAPTER II

Review of Related Literature

Nowadays, it is practically impossible to separate business and politics. The two

areas of society are strongly interlinked in order to build communities and people’s lives.

“In fact,” writes Asis and Alfaro, “for good governance to be sustainable, it requires

partnerships between government and civil society.” Gomez (2007) recalls President

Gloria Arroyo saying, “it would take the private sector working together with government

to create the jobs needed to build a strong middle class and a modern, first world nation.”

Although it is well-known that business and politics are involved together in

creating our current environment, the extent and specific effects of the relationship has

never been delved into. In fact, this would be the first time the relationship of business

and politics will be studied by a group of University of St. La Salle researchers. Things

that have not been determined before are the specific numbers of taxation income that

businessmen provide to the government, the usability of that income, and whether that

sum of money is being wholly contributed to the public good. Employment is another

factor that no research has fully made comprehensible, such as how many people,

especially of the lower class, do businesses employ and thus help in the reduction of

poverty.
 A study done by Asis and Alfaro (www.worldbank.org/governance) determined

that “governance includes the State, but also transcends it--by including civil society. The

State, in order to create an encouraging political and legal environment, needs the support

of civil society to facilitate political and social interactions, such as mobilizing groups to

participate in economic, social and political activities. Article 10 Section 20 of the 1987

constitution states that ”The State recognizes the indispensable role of the private sector,

encourages private enterprise, and provides incentives to needed investments.” (de leon,

1987 Philippine Constitution) The State also needs the private sector to activate the

market and generate jobs and income. In order to understand the relationship between

civic participation and local governance, the reader may already have grasped that it is

through good governance that local governments and societies can foster development.

Good governance, of which the main elements are participation, transparency and

accountability, can provide more productive investment, spur faster economic growth,

and alleviate poverty…It is a two-way communication process between the government

and citizens, with the overall goal of better decisions that are supported by the public, the

increased the [sic] well-being of the population, and the reduction of poverty.”

(www.worldbank.org/governance) Extractive industry benefits from having reliable

local counterparts, with which companies can negotiate, communicate, strategize, and

resolve conflicts. Local government and traditional authorities can benefit from the jobs,

infrastructure, and information that large companies bring to remote areas. Unfortunately,

often the potential for mutually beneficial relationships is not met. There are other cases

where national governments send significant portions of extractive revenues back to the

localities from which the resources were drawn, but the local government does not have
the capacity to turn those funds into investments that improve local welfare in the long

run. Increasingly, companies, government, civil society and donors, are piloting ways to

further community development without circumventing local government and traditional

leaders. This involves capacity building for local government in areas such as: revenue

management, participatory planning and monitoring, transparency and communications.

It is clear that community development activities at the operational level are most

effective when they are aligned with existing local or regional development plans and are

linked to long-term strategic objectives. Policies, resources and support from the national

level government are a necessary foundation for community development investments to

be sustainable beyond the life of a specific mine or local leader.

(http://www.commdev.org/section/topics/local_govt_devpt). Bacolod City bested among

the 130 other cities when the Philippine Chamber of Commerce and Industry declared it

the "Most Business-Friendly Local Government Unit in the Philippines" on Friday. (Filed

Under: Economy, Business & Finance,Government)

Bacolod City did not top the list of the next-wave cities of the Department of

Trade and Industry, Commission on Information Technology and the Business Process

Association of the Philippines. But it surpassed all other business process outsourcing

(BPO) locations in one category—business environment. In the 2008 scorecard for next-

wave cities, Bacolod City landed on the 5th spot—behind the clusters of local

government units of Laguna and Cavite, and the cities of Iloilo and Davao. Bacolod City,

however, got the highest score of 96% in the business environment category of the study.

(http://www.sunstar.com.ph/static/bac/2004/02/04/news/city.to.strengthen.e.gover

nance.project.html)
The business environment category, which accounts for 15 percent of the final score,

takes into account the incentives given by local government units to BPO firms: peace

and order situation, crime rate, travel advisories and vulnerability to natural disasters.

Other criteria used in the survey are availability of talent (50%), infrastructure (30%) and

cost (5%).

Bacolod City is one of the growing BPO locations outside Metro Manila. The city hosts

three big BPO firms—Teletech, Teleperformance and Convergys—and a number of

smaller companies. Around 5,000 employees are working in the BPO industry. “Because

of the growing number of BPO companies, they have to look for locations other than

Metro Manila,” and Bacolod took advantage of that external factor. This is an example of

how the business sector plays an important role in the local governance and creates a

good impact in the city development. (www.abs-cbsnews.com). But on the dark side of

business and politics often the potential for mutually beneficial relationships is not met.

In the worst cases, the relationship between companies and local government is a covert

one, where resource transactions and agreements are made under the table without public

scrutiny, input or benefit. In other contexts, the local government may be weak or lacking

sufficient resources to provide services that the community needs.

(http://www.commdev.org/section/topics/local_govt_devpt) The Philippines, called the

“Pearl of the Orient Seas” by Dr. Jose Rizal, “Oro, Plata, Mata” by cultural icon Peque

Gallaga, and “Asia’s golden haven” by Steven Spielberg, has practically lost its glitter

and now stands among the cellar dwellers in Asia.

Ironically the only Christian-dominated country in Asia, the Philippines ranks among the

most corrupt countries, not only in Asia but worldwide. A recent survey reports the
Philippines as being more corrupt this year compared to last year. The World Bank

estimates that about 40 percent of government resources are lost to corruption yearly.

This unfortunate and deplorable phenomenon of corruption and bad governance is just as

pervasive in our city of Bacolod as it is at the national level.

Bad governance and corruption are the primary reasons for the persistence of poverty

and underdevelopment in many parts of the country, including Bacolod City. Among the

products of corruption and bad governance are massive poverty, increasing rate of under-

employment and unemployment, brain drain, inadequate and/or inappropriate production

support systems, defective social and physical infrastructure, persistent malnutrition,

surging criminality, and social unrest, to name just a few.

These problems emanate from absence of a comprehensive people-centered sustainable

development agenda, lack of political will and sense of nationalism among public

officials, predominance of vested interests and elitist policies, inefficient bureaucracy,

and perverted value system.

Corruption and bad governance in public service have their roots in the semi-colonial and

semi-feudal character of the economic and political structures of Philippine society,

where the “bureaucracy is nothing but an instrument for facilitating the exploitation of

the people by foreign and feudal interests.” (Bulatlat.com) Many national-level initiatives

to promote good governance require long-term strategies-- even those initiatives with the

support of the civil society. Efforts to realize good governance at the local level, however,

are achieving results in the short term. When local governments lack sufficient capacities,

the participation of local civil society can promote good local governance. In fact, for
good governance to be sustainable, it requires partnerships between government and civil

society. Civic participation in local governance differs from previous more limited efforts

on community participation by connecting citizens to local governments through

institutional linkages.

(http://www.worldbank.org/wbi/governance/pdf/fy02brief/civic_local_annex.pdf)