Milking Them Dry

December 26, 2007

December 26, 2007


World Bank defers RP loan, probes graft”, headlines the Philippine Daily Inquirer issue dated November 20, 2007. “WB shelves $232-M loan to RP over corruption”, says the Philippine Star on the same day. Allegations of bid riggings and bids in excess of government estimates of road projects being undertaken by the DPWH apparently triggered the Bank’s action. If my memory serves me right, Vox Bikol, a little less than a decade ago and when Joe Obias was still editor of this Bicol weekly, the phrase “in every public works project is a crime” was bannered at the bottom of the front page of every issue. While I am not privy to the details as to why all of these came to be, l know that all of us have our own  inklings of what has been going on over the years. I was therefore surprised when the Presidential Anti-Graft Commission (PAGC) recently ranked DPWH as second best in fighting corruption among national government agencies. Maybe the “bosses” in DPWH Central Office in Manila have the best of intentions and are trying their best. But from the looks of it, I do not think much has changed in its field offices.

Let me just share my experience in the recent past. Last October 20, 2007, the Naga City Government Project Monitoring Committee (NCPMC) submitted its inspection and evaluation report on projects implemented by the DPWH  Engineering District 2 in the city. Spanning over six months, these projects were funded by regular allocations from DPWH and the pork barrel of Congressman Luis Villafuerte. Among the NCPMC’s findings were: 1) almost all of the projects were overpriced, ranging from 74% to 837%, when compared to similar projects implemented by the city government, 2) some of the projects reported to have been undertaken could not be located and 3) some projects were undertaken on privately owned properties. The average variance in unit cost for a comparable project undertaken by the city government was 261%. And worse, works on some of the projects were poorly done. While, historically, project costs of DPWH projects were higher than that of the city government of Naga, this time the differences in cost estimates were simply outrageous and scandalous. To think that some of these projects were implemented side by side or were contiguous with projects undertaken by the city almost during the same time period.

Off hand, the estimates were simply bloated. Despite several requests, the District Engineer refused to provide the NCPMC with a copy of the Programs of Work. Instead of taking to task the contractor who was billing the agency for a project that was completed a long time ago, it appeared that DPWH just allowed the contractor to do additional works to cover up the misdeed. No explanations were provided why the unit cost differences between work done by DPWH and the City Government of Naga were beyond the normal. Like the many other complaints on projects undertaken by DPWH, the Engineering District 2 simply stonewalled hoping that the complaints would just blow away — of course with a little help from the other entities involved in the inspection and audit of these projects. As of this writing, more than two months after the Regional Director of DPWH Region 5 has been notified, no action has been taken yet. Incidentally, the COA Regional Office and the NEDA RPMC were also notified.

It is no surprise then that old hands in the government construction business now say that the “Marcos years” were better. Then, the SOP (Standard Operating Procedure) was 10% — all in. They say that the standard now is at least a 30% SOP or more, depending on the kind of project being undertaken. (The SOP runs up to 50% for desilting and road regravelling projects. Some contractors alleged that around P1 Billion worth of desilting projects were undertaken in the Bicol Region prior to the May 2007 elections.) No wonder the estimates are bloated. No wonder it seems that no one sees nor hear any evil. It is now embedded in the system. “Everybody seems to be happy” except Juan de la Cruz.  Government infrastructure projects, in many instances, are being milked dry to the detriment of the public. No wonder why the pork barrel has always been controversial. 

There are quite a number of things that we can do. First, we can return to the old composition of the Bids & Awards Committee where an NGO representative seats as a regular member (and not as a mere observer under the current rules). Second, we can require that, instead of merely posting notices of bidding on the web, hard copies should also be posted in the church parish office and in other offices of institutions that are independent of government, where the project is to be implemented. Sanctions should be imposed on late postings and attempts to hide the notices from the public. Third, a range of unit costs should be prescribed by competent authorities working with the private sector for different types of projects taking into account the difficulty of implementing them. In addition, unit costs estimates of different government agencies should be regularly compared to encourage standardization. For instance, cost estimates of LGUs can be regularly compared to that of DPWH. (This can be readily done by the COA field offices in the different jurisdictions.) Collusion of bidders happen when there is a lot of excess fat on the cost estimate. Collusion of bidders will not be disadvantageous to the government if estimates only cover the real cost of the project and the profit that is due the contractor. Fourth, projects should be properly supervised by the concerned government agency to ensure that they are implemented according to the program of work. NGO and beneficiary/end-user monitoring should be encouraged. The experience in the province of Abra on project monitoring can serve as a good model. The third and fourth recommendations are most critical. An honest cost estimate coupled with proper prosecution will only allow the contractors to generate profits that rightfully are due them.  By and large, we have kept the cost down in Naga City because we have benchmarked cost estimates with that of the private sector. By and large, project prosecution conformed to the program of work because beneficiary/end-users are encouraged to monitor and are freely provided with all the information related to the project being undertaken. While deviances did occur on from time to time, they have always been kept in check because of a transparent system of managing project procurement and implementation.

Many contend that there is nothing much we can do. Over the years, it has grown to be systemic. Many attempts to clean it up have failed. There are essentially two ways of addressing the problem. First, which is almost next to impossible, is for the elected officials to keep their hands off public works projects. An unaccountable Congressman holds sway over projects within his jurisidiction. An elected local official similarly influences procurement in his turf. Public works has been a traditional source for election spending. Will they be willing to kill the goose that lays the golden egg? Second, is to make the procurement process truly transparent. At the moment, the Bids & Awards Committees and the others who have anything to do with project procurement and implementation, in many agencies and LGUs, have found a creative way of circumventing transparency rules. This is probably so because third party engagement is almost non-existent. The opportunity to reform public works procurement lies in getting more NGO/private sector/beneficiary participation. Procurement rules must therefore allow meaningful involvement of the non-government sector in the process of notification, pre-qualification, bidding and implementation. Reputable groups such as the local Chambers of Commerce and church based-organizations can be initially tapped to represent the private sector in the procurement process. Transparency rules are best implemented when groups with no personal interest in the proceedings are empowered to take part. By the way, the old procurement law allowed their participation. It can always be argued that the bidding processes now will be more contentious. It can be argued that, in time, these NGOs can be co-opted as well. But given the amount of public funds going down the drain, it might be worth the try. Any improvement in the public works procurement process is surely worth the trouble. In fact, we should be not only be concerned with the funds that are being wasted. The credibility of the government’s clean up effort begins here. By a single stroke, it will signal a change in all the 220 or so districts in the country.


The Chinese Among Us

December 13, 2007

Last December 1, 2007, I was invited by my cousins to deliver a message in a program that commemorates the 1st Death Anniversary of my uncle, Vicente Hao Chin, Sr. It was something I wanted to do. The Hao Chin’s have helped me to be where I am now, without asking or getting anything in return. But more importantly, my uncle was an “institution” in Naga City, in his own time. Unfortunately, Typhoon Mina was hovering over the Bicol Region. The flight to Manila was cancelled. I therefore had to request my sister, Penny, to read the message on my behalf. Penny told me later that the affair was well attended, with the Ambassador of China and prominent Filipino-Chinese personalities honoring the occasion. (She just could not understand them though. Except for my speech, all the messages were done in Mandarin.)

While my Uncle was a class by himself, his struggles and dreams were similar to many of those who have migrated from China to look for a better life in the Philippines. Many of them have made their own mark in their own localities, with a few of them gaining national prominence. Many of them have humble and difficult beginnings but have managed to improve their lot by working hard, working hard and working hard . . . Some of them were mistreated, discriminated upon and humiliated. But they had to hang on, for want of a choice and for the sake of their families. (I recall being heckled in several political fora because of my Chinese lineage. When we were younger, my father always reminded us to never let it pass. He said that while we are not special by any means, we are not inferior either.) Looking back, maybe they succeeded because they were working under adverse circumstances. They helped each other because they needed it to survive. Sometimes, the worse of times brings out the best in us..

Here was my tribute to my uncle . . .

Vicente Hao Chin, Sr., a Pragmatic Visionary

My uncle, Vicente Hao Chin Sr., who we fondly call Papa Chona, was a giant of a man. Though he had difficulty in communicating in the Filipino or English language, having had come fresh from mainland China, he surmounted all the odds to make the most out of himself for his family and for others. Like my father, whose sister, Tia Nit, is Papa Chona’s wife, he established himself through the dint of hard work and entrepreneurial skill.

While in Naga City, Papa Chona engaged in the hardware and lumber business. I saw him as a man with plenty of imagination, persistence, and nerve. Life was not easy for a Chinaman in the City. But he persevered. He plodded on. He succeeded. He later on became President of the Naga City Chapter of the Federation of Filipino-Chinese Chamber of Commerce and Industry. Papa Chona was one of the founders of the Chin Po Tong Volunteer Fire Brigade, an organization recognized as the pioneer of “Chinese volunteerism” in our locality. While in Naga City, he led the Chinese community in productively partnering with the city government and other local organizations to pursue various socio-economic and civic-oriented projects. One of which is the Naga City Civic Center, an important city landmark, which was established under the incumbency of then City Mayor Vicente P. Sibulo, his friend and namesake. Papa Chona was a pillar of the Naga City Chinese community. He was always there for them. I recall my Chinese friends recounting the many times his counsel was sought to resolve misunderstandings between members of the Chinese community. I guess Papa Chona was respected because he was a decent and fair person who wanted nothing for himself.

As his children were growing, Papa Chona went to Manila to venture into more ambitious business ventures, with the attendant risks, of course. I did not understand then why he would risk his successes in Naga City. Business in the city was expanding then. But Papa Chona was ahead of his time.

In 1971, he established the Philippine Belt Manufacturing Corporation (PhilBelt). Little did everyone know that it was to be the first industrial belting company in the Philippines. It is now considered as one of the largest producers of rubber belts in Southeast Asia. Whoever thought that one day a family corporation founded by Papa Chona would be in the big league forging a licensing agreement with Bando Chemical Industries, Ltd. of Japan, for the manufacture of v-belts and conveyor belts? From 1986 to the present, even after Papa Chona has passed away, PhilBelt has continued to establish itself in the export market. Through the years, Philbelt has maintained the quality and reliability of its products. Though I may sound like the spokesman of Philbelt, I would proudly say that Papa Chona’s unheard-of levels of ingenuity, courage and persistence made Philbelt a world-class automotive and industrial belting supplier in the Philippines and around the globe.

As a nephew wanting to succeed in the challenges that I chose to take, I look at Papa Chona as a towering figure who understood what he can do but did his best to outdo himself. Papa Chona has turned his ambitious ideas into a marvelous machine of prosperity, into an industry that brought in dollars to the country, generated jobs, and shared profits with the countless number of suppliers that sell Philbelt products throughout the country.

It has been said that some of the brightest names in government, economics, arts and literature, trade and commerce, are found to have come from the Bicol Region. Modesty aside, I would say that Papa Chona is one of them. (Papa Chona was honored by the Peoples Republic of China as one of the outstanding 1000 Chinese migrants worldwide sometime four years ago.) His impressive accomplishments as an entrepreneur, civic leader and philanthropist have been undoubtedly interwoven in the matrix of nation-building. The torch is now passed onto his children and the next generations to come. His legacy lives on because we are here whom he had honed to become what we are now.

Papa Chona’s death anniversary always brings me back to my collegiate years. As a young Engineering student at De La Salle University in Manila, I stayed in his house and probably learned more valuable things that I could not gain in the campus. In the house, I had the opportunity to interact with him at close range. I shared the room with my cousin Pabs who was a little older than me. Like his other brother and sisters, Pabs was a deep thinker. In that small corner, we found ourselves engaged in nightly discussions on everything from politics to management issues. From time to time, Pabs would share nuggets of wisdom from Papa Chona. I say his children, my cousins, mirror the kind of man their father was. We have been blessed to have been a part of him.

Thank you very much.