Underpinning inclusive growth must be a bedrock of sound institutions that promote transparency, accountability, the rule of law, and effective and impartial performance of the regulatory function of government, as discussed in Chapter 7.
To move towards responsive governance, systems that promote objective decision-making, professionalism, transparency, and accountability, shall be instituted and mainstreamed. Thorough reforms in the budgeting process, in public procurement, and in the awarding of major contracts are needed to restore public confidence in government institutions and practices. In budget-planning, a key reform shall be the adoption of zero-based budgeting (ZBB), under which budgets of government departments and agencies are comprehensively scrutinized and justified in complete detail, from a zero base, not just incrementally. Budget releases will also henceforth be aligned with the number of active personnel and the actual progress of programs and projects to avoid such abuses as "conversion" and other kinds of fund diversion.
In public procurement, full use shall be made of electronic bidding and procurement to minimize discretion, achieve arm's-length transparency, and attain cost-efficiency. Terms of reference shall be based on comprehensive technical specifications prior to bidding and contracting to facilitate close comparability across alternatives and to prevent arbitrary ex-post "variation orders". Clear terms and transparent rules are vital to the success of big-ticket infrastructure projects such as the PPP. The publication and enforcement of blacklists of contractors and individuals suspected of rigging bids and showing substandard performance shall be undertaken to show the government's determination to clean up procurement and bidding.
The rationalization of government functions, pay, and personnel shall be continued and extended to cover not only the bureaucracy itself but also government-owned and -controlled corporations (GOCCs) and government financial institutions (GFIs).
The anticorruption drive shall also be strengthened with the passage of the Freedom of Information Act and the Whistleblowers' Act, as well as the revitalization of the Run-After-Tax-Evaders (RATE), Run-After-the-Smugglers (RATS), and Revenue Integrity Protection Service (RIPS) programs. Close collaboration, coordination, and information-exchange among various agencies shall form the basis for the build-up of cases against public officials and private persons involved in plunder, corruption, tax evasion, and other crimes involving the misappropriation of public resources. Strong cases, especially those involving well-known instances of plunder and grand corruption, shall be pursued uncompromisingly, showing neither fear nor favor and in line with "true and complete justice for all". As an indispensable first step, however, the personnel of agencies that directly involved in anticorruption efforts, especially the office of the Ombudsman, the Department of Justice (DOJ), and the revenue agencies, must be reinvigorated and rededicated.
A big part of the solution to the governance problem however lies outside government itself and involves the active participation of private business, civil society and the media in governance, monitoring, and feedback. This gives "voice" to people, enables civil society and the media to become partners of government, and makes the government more responsive to the needs of citizens. Among other steps shall be the adoption of client-satisfaction surveys at all levels of government. Monitoring and surveillance by the media, civil society, and an engaged citizenry shall underpin the campaign against corruption. This shall be facilitated by formal citizens' representation in budgeting and procurement processes, the disclosure of the allocation and expenditure of funds of various agencies, the involvement of civil society in the anticorruption effort, and the provision of channels for ordinary citizens to report directly and anonymously to competent authorities on anomalies in government functions and the state of public-service provision.
Ultimately, however, good governance must be founded on a cohesive society and people's trust in government. For this reason, government will endeavor to be transparent, communicate its intentions clearly, and seek consensus on social directions. The means of development communication and their convergence with traditional and new mass and social media shall be used for these higher purposes.
Improving governance and strengthening weak institutions in the country carry tremendous potential for bringing down the cost and risks of doing business. This is evident in public sector projects themselves. The PPP initiatives of government will not succeed unless private partners are assured of unbiased bid evaluations and award decisions based on competent authority. In the same manner, legitimate proponents of build-and-transfer schemes will be in short supply if their predecessors must face the ordeal of official harassment and regulatory risk. Strengthening governance, therefore, also implies addressing the weak rule of law, legal uncertainty, and high costs and delays of the legal system in the country, which have historically discouraged legitimate investments in the economy and instead fomented corruption. At the same time, there is a simple need to streamline and harmonize procedures within and across government offices.
A strong competition policy would promote a more open environment for investment, innovation, and appropriate pricing. This may be done by strengthening regulatory agencies and making them less susceptible to regulatory capture, lobbying, and rent-seeking. The linchpin of competition policy shall be an omnibus Competition and Anti-Trust Code that operationalizes constitutional provisions against monopolistic practices, as well as provides a transparent and predictable framework for standards and procedures for all regulatory authorities.