Chains-for-Change PPP Pilot Project

1.0 Chains-for-Change: laboratory for social Public-Private Partnerships (PPP)

One of the two pillars of the EMIT Research Programme is the Chains-for-Change (C4C) pilot project, which aims to be a laboratory of concrete strategies and policies that could indicate potential routes to escape the MICT. It will employ the framework of Public-Private Partnerships (PPPs), which is not only used to implement big infrastructural projects as what is more commonly seen in the Philippines, but which is designed to address broader developmental and societal problems as well.

With respect to the C4C, the aim of EMIT research is to provide stakeholders with a common set of data and analysis in order to guide the choice of strategies and facilitate the building of consensus needed for collective action. The C4C on the other hand, not only will provide researchers with immediate inputs and feedback to help analyze the relevant issues, but will also be the natural vehicle to take-up the results and policy recommendations of the various research sub-projects. More importantly, it will be the laboratory where strategies will be formed and actually tested.

In November 2015, a final conference will be organized to present the overall results of the research projects and the lessons learned from the implementation of C4C. In this way, EMIT will not only be able to provide an in-depth analysis of the MICT, but also offer concrete strategies that can be replicated elsewhere in the country. Policy dialogues with stakeholders will precede the final conference in order to validate results and forge workable policy recommendations.

2.0 The Middle-Income Country Trap and C4C

Preliminary analysis of the MICT in the Philippines point to the role of exports diversification and upgrading, survival of local firms, and bridging credit gaps. Exports are highly concentrated on a few sectors (mostly in relatively low value-added segments), the absolute number of exported products are declining as well as the revealed comparative advantage of these exports. Almost 65% of Philippine exports in 2010 is accounted for by only nine sectors (HS 6-digit) in electronics. The Philippines also has the smallest product space as compared to its immediate East-Southeast Asian neighbors. The absolute number of exports (HS 6-digit) is barely more than half that of Thailand or Malaysia, for example. Moreover, the share of export product lines where the Philippines has a revealed comparative advantage has also been slightly falling, from 20% of total exports in 1996 to about 17% in 2010.

It is important for EMIT to fully understand the problem of upgrading and diversification in the Philippines top exports such as electronics. However, for C4C, it seemed appropriate to lay the stress on the broader manufacturing base of the country, which is driven by small and medium enterprises (SMEs). For the Calabarzon region, the agri-business sector has been identified as potential source of higher value-added production, hence understanding what hinders the survival, expansion and upgrading of SMEs in this sector is an essential step in escaping the MICT.

Anecdotal evidence reveal problems of credit, information on international standard requirements, organization of (micro) local supply chains, uneven facilitation of business permits across local government units, lack of basic skills in market studies, extreme risk-aversity (even among productive firms), and labour contract insecurities, among others. The strategies that will be formulated in the C4C will therefore be designed to address some of these key concerns.

3.0 C4C approach: Public-Private Partnerships

The term Chains-for-Change denotes the concepts of cooperation, partnership, and bridging distances, which when set into motion can be a powerful force for change. The idea of the project is to concretely harness the Filipino sense of ‘bayanihan’, which is a Tagalog term broadly encompassing the spirit of community solidarity. This positive meaning of ‘Chains’ also refer to the effort to bridge various manifestation of distance. This could be distance among producers within a sector, between workers and employers, local and foreign firms, or between profit and non-profit, public and non-public actors. ‘Chains-for-Change’ therefore fuses these twin ideas of partnership and distance-bridging, and point to them as drivers of change. This is also the broader essence of Public-Private Partnership, hence, the project aims to bring in the practical partnership tools and techniques and profit from the various lessons learned from PPPs worldwide. Towards this end, the Partnership Resource Center (PRC) of the Rotterdam School of Management will provide critical support to the C4C project through transfer of knowledge drawn from PPPs it has facilitated and documented worldwide.

The Philippines has had an ample experience with cross-sectoral partnerships, especially after the People Power revolution of 1986. Numerous institutions in different governance levels therefore exist, and these has produced extensive consensus in the form of development plans or agenda. One observation however, is that there seems to be considerable difficulties in transforming these plans into workable strategies. Hence, some of these plan-setting exercises have been used as occasions for sectoral/regional lobbying, while some have remained in such a high level of generality that attempts towards implementation have been especially problematic.

While the C4C project fully recognize that the basic ideas behind PPPs are not new for the Philippines, it sees an opportunity to address the problem of pragmatic implementation of an agenda for change. It is a pilot project with a focus on a particular region and sector, and within the sector, on few specific products in order to experiment and understand the conditions necessary to forge effective partnerships. The focus is therefore on the CALABARZON region and on the Agri-business sector, while the focus products will be identified further on.

C4C will employ a strategic approach based on exploiting existing opportunities, in-depth study of data for better diagnosis of problems, continuous monitoring, and the creation of societal cells. The concept of ‘cells’ is used because it connotes something that is dynamic, cohesive and has a huge potential for growth. Moreover, it allows for a better targeting of interventions. Specifically, there will be a selection of 3-5 product cells (composed of a minimum of 3 producers per cell), and 3 issue cells covering product-development (standards certification, market studies), productivity (labour issues, supply-chain) and credit (especially microfinance). The issues were identified during the initial meetings and through a study made by EMIT researchers of existing development plans.

Since the goal is to carry through a process that leads to concrete results, the C4C will be driven by the following guidelines:

a) Do not re-invent the wheel.

The Philippines has had decades-long experience with cross-sectoral partnerships in various levels, and numerous initiatives exist that the C4C can collaborate or build upon. For this reason, the initial effort of the organizers was focused on talking with as many stakeholder organizations as possible to make an inventory of similar on-going efforts related to the issue of competitiveness and inclusive growth.
The research team has also conducted a thorough inventory of regional development plans as well as sectoral road maps, especially in the Calabarzon area. The sector/product focus of C4C, for instance, will be based on the priority lists identified by the regional trade (DTI) and planning (NEDA) offices, and the priority sectors chosen by the Philippine Chamber of Commerce and Industry in the extensive consultations that they have undertaken in the past year.

b) Base decisions and actions on data/evidence and consultations.

The support of EMIT researchers will help ensure that popular understanding/perception of issues is consistent with evidence on the field and with scientifically validated principles (or theories). The C4C choice of strategies and actions will therefore be guided by research findings. However, since research takes time, some key decisions will have to be taken on the basis of broad consultations. In such cases, research would still be able to explain why interventions lead to either positive or negative results.

c) Grab opportunities when they arise. Be pragmatic. Perfection is the enemy of the good.

The EMIT project is complex and researchers operate across huge distances. The C4C project will also involve partners with multiple responsibilities and concerns. It is therefore important to seize the opportunities when they arise and this will sometimes require quick decision-making and fait-accompli type of consultation-information. The choice of key stakeholders, for instance, was based on the existing contacts of organizers, while a representative selection/consultation process would have been ideal. The choice of priority products/sectors will also be based on those previously identified by DTI/NEDA and PCCI, and in some cases, on the convenience of contacting and assembling existing network of actors.

d) Documentation and monitoring are essential.

The C4C secretariat is based in the NEDA Region IV office in Calamba, Laguna. It will ensure that the C4C process is documented, monitored and evaluated. One monitoring tool is the weekly 5-minute survey that will be emailed to stakeholders not only in order to flag problems, but also to quickly gather innovative ideas that arise in the process of implementation.

e) Maintain and nurture the ‘spark’ (or click, rapport, enthusiasm, whichever one calls it) among stakeholders.

Nurturing motivation and relationships are goals that are important but are often left implicit. Since the C4C is based on partnerships, it is worthwhile stressing the essential role of inter-personal relationships. If the C4C will succeed in providing useful insights on how sustainable and responsive institutions are developed, it will be because the project is able to harness the collective wisdom of a group of motivated and inspired stakeholders (Partnership Resource Center, 2012).

4.0 C4C Technical Team

The C4C Secretariat is based at the NEDA Region IV Office, with Donald Gauwe as point person. The technical team is further composed of Nicole Curato (EMIT-UP Liaison), Rosemarie San Pascual (EMIT-UP Administrative Officer), Annette Pelkmans (EMIT Project Coordinator), Rob van Tulder and Stella Pfister (Partnership Resource Center, Rotterdam).

The Core Stakeholders will be announced in January 2013.