Promoting e-Government in the context of New Public Management: The Case of the Cebu City Government in the Philippines Mary Grace P. Mirandilla CPR south 3, BUPT, Beijing, China December 5-7, 2008

New Public Management Public sector reform approach introduce or simulate performance incentives and disciplines found in market environment Main drivers : autonomy and accountability of public managers decentralized control; variety of alternative service delivery mechanisms competition; incentives increased efficiency; client- and results-driven

Public sector reform approach

introduce or simulate performance incentives and disciplines found in market environment

Main drivers :

autonomy and accountability of public managers

decentralized control; variety of alternative service delivery mechanisms

competition; incentives

increased efficiency; client- and results-driven

Local Gov’t & Real Property Real Property Taxation (RPT) Revenue-raising power of LGUs administration, appraisal, assessment, levy and collection of real property taxes major source of revenue but declining in trend (%) Many commercial transactions premised on titled property, BUT land administration inefficient and problematic Year All LGUs Provinces Cities 1989-1991 58.2 54.4 63.1 1992-2000 55.4 49.0 59.7

Real Property Taxation (RPT)

Revenue-raising power of LGUs

administration, appraisal, assessment, levy and collection of real property taxes

major source of revenue but declining in trend (%)

Many commercial transactions premised on titled property, BUT land administration inefficient and problematic

Uncertain Property Rights Only 20% of privately owned land “registered,” some rely on deeds; most rely on informal systems 10 million registered titles, but… about 6% remains unclassified duplicate and overlapping titles Reliable or not, LAND used as collateral for bank loans and investment! Private sector engineered “work-arounds” but… Poor system encourages tax delinquencies and non-compliance, erodes credibility, and increases cost!

Only 20% of privately owned land “registered,” some rely on deeds; most rely on informal systems

10 million registered titles, but…

about 6% remains unclassified

duplicate and overlapping titles

Reliable or not, LAND used as collateral for bank loans and investment!

Private sector engineered “work-arounds” but…

Poor system encourages tax delinquencies and non-compliance, erodes credibility, and increases cost!

“ What are we trying to solve?” Getting bank loan with land as collateral involves… Verification of Land Title Tax Declaration Tax Clearance … several not-so-easy steps: Verification of Land Title – 6 steps Tax Declaration – 4 steps Tax Clearance – 7 steps

Getting bank loan with land as collateral involves…

Verification of Land Title

Tax Declaration

Tax Clearance

… several not-so-easy steps:

Verification of Land Title – 6 steps

Tax Declaration – 4 steps

Tax Clearance – 7 steps

Verification – Cebu City RoD Get an application form from a Register of Deeds clerk Proceed to the vault keeper – Vault keeper, together with two assistants/ helpers, looks for the title. Once found, title is photocopied. Recording - Transaction is recorded by the records officer Certification of title – Certified copy is duly signed and certified by the Register of Deeds records officer Pay cashier – Photocopying and Certification fees Release of Certification from RoD

Get an application form from a Register of Deeds clerk

Proceed to the vault keeper – Vault keeper, together with two assistants/ helpers, looks for the title. Once found, title is photocopied.

Recording - Transaction is recorded by the records officer

Certification of title – Certified copy is duly signed and certified by the Register of Deeds records officer

Pay cashier – Photocopying and

Certification fees

Release of Certification from RoD

Verification - Cost Costs Photocopying = $ 4 cents/page (titles usually have 4 pages) Verification fee = $ 0.27 Certification fee = $ 0.80 TOTAL = $1.24 Personnel 1 Clerk (receives applications) 1 Vault keeper 2 Helpers 1 Records Officer (concurrently admin officer) 1 cashier (same for all transactions) TOTAL = 6 personnel (total City RoD personnel: 22) Average number of verifications 40-50/day Average Length of Time per transaction If all in order : 20 minutes If not all in order: 3 days to 1 week

Tax Declaration – Cebu City Hall Get an application form from the counter (tax assessor on 2 nd level of city hall) Pay cashier (ground level of city hall) Get signatures of the following: Administrative Officer Chief of the Building and Machinery Division of the specific district the building is located (if living in a building); Chief of the Land Division of the specific district the property where is located (Cebu City has 80 barangay or villages separated into districts) City Assessor Get Documentary Stamp

Get an application form from the counter (tax assessor on 2 nd level of city hall)

Pay cashier (ground level of city hall)

Get signatures of the following:

Administrative Officer

Chief of the Building and Machinery Division of the specific district the building is located (if living in a building); Chief of the Land Division of the specific district the property where is located (Cebu City has 80 barangay or villages separated into districts)

City Assessor

Get Documentary Stamp

Tax Declaration - Cost Costs Documentary Stamp = $ 0.44 Tax Declaration fee = $ 0.67 Total = $1.10 Personnel 1 Clerk (receives applications) 1 Cashier 3 Signatories Average number of verifications 40/day , sometimes 70/day if tax declarations involve subdivisions Average Length of Time per transaction For single property (certified true copy): 30 minutes For all properties in a subdivision : 3 days max. For an owner with many properties: 3 days max.

Tax Clearance – Cebu City Hall Bring tax declaration/ tax receipt of property Verification of the tax declaration at the verification section (1st Floor City Hall) – print-out to be generated Computation of Taxes to be paid (if not yet fully paid) If there are: No payables – proceed to step # 5 With payables – payment to be made at the cashier first, then proceed to step # 5 Proceed to Miscellaneous Window for Tax Clearance payment Proceed to Tax Clearance Section for issuance Get Documentary Stamp

Bring tax declaration/ tax receipt of property

Verification of the tax declaration at the verification section (1st Floor City Hall) – print-out to be generated

Computation of Taxes to be paid (if not yet fully paid)

If there are:

No payables – proceed to step # 5

With payables – payment to be made at the cashier first, then proceed to step # 5

Proceed to Miscellaneous Window for Tax Clearance payment

Proceed to Tax Clearance Section for issuance

Get Documentary Stamp

Tax Clearance - Cost Costs Documentary Stamp = $ 0.44 Tax Clearance fee = $ 0.67 Total = $1.10 Personnel 1 Clerk (receives applications) 1 Cashier Average number of verifications 100/day Average Length of Time per transaction If taxes are already fully paid : 30 minutes If taxes are not yet fully paid : 1 hour

Problems and Issues Manual system prone to human error and corruption Handling of records and titles have resulted to loss A vault keeper earns US$189 per month, including allowances Tampering of entries in a certificate of title very likely Worn out titles due to poor storage facilities and exposure to humidity Index card filing system inefficient, prone to wear and tear Workflow process moves from one step to the next on a “ per-transaction” basis

Manual system prone to human error and corruption

Handling of records and titles have resulted to loss

A vault keeper earns US$189 per month, including allowances

Tampering of entries in a certificate of title very likely

Worn out titles due to poor storage facilities and exposure to humidity

Index card filing system inefficient,

prone to wear and tear

Workflow process moves from

one step to the next on a

“ per-transaction” basis

Electronic Land Market Project Proponents USAID (funding source) TAF (management) ADMU (research and coordination) DBP-DCI (technical) Demonstrate that… proper market incentives can increase efficiency and improve business confidence in land titling process solution has long-term viability proposed solution better than alternatives or status quo Land is national issue but locally driven. Thus, start reform at local level, Cebu City selected as pilot.

Proponents

USAID (funding source)

TAF (management)

ADMU (research and coordination)

DBP-DCI (technical)

Demonstrate that…

proper market incentives can increase efficiency and improve business confidence in land titling process

solution has long-term viability

proposed solution better than alternatives or status quo

Land is national issue but locally driven. Thus, start reform at local level, Cebu City selected as pilot.

“ What’s in it for me?” City Government Cebu is place to invest; secure property rights Cebu doing things differently from the rest City Planner Expand business; compete with other destinations City Tax Assessor More revenues and new sources of revenue City Register of Deeds (RoD) Checks and balance Lighter workload for staff Bureau of Internal Revenue (BIR) More sources of revenue Taxpayers Credible system encourages compliance Tax payment for secure property rights worth it! Banks More credible collateral for loans Investors Knowledge of good area for investment

Cebu is place to invest; secure property rights

Cebu doing things differently from the rest

Expand business; compete with other destinations

More revenues and new sources of revenue

Checks and balance

Lighter workload for staff

More sources of revenue

Credible system encourages compliance

Tax payment for secure property rights worth it!

More credible collateral for loans

Knowledge of good area for investment

“ Why start with Cebu City?” Basic system and correct mindset in place Early adopter of ICT for public admin. reform Simple computerized database in early-1990s Real Property Tax Information System (RPTIS) GIS maps for land use and tax mapping SPRING ( S ystems & P rocedures R ationalization IN G overnment) systematic, step-by-step, results-driven approach to program management Willing and able local stakeholders in place

Basic system and correct mindset in place

Early adopter of ICT for public admin. reform

Simple computerized database in early-1990s

Real Property Tax Information System (RPTIS)

GIS maps for land use and tax mapping

SPRING ( S ystems & P rocedures R ationalization IN G overnment)

systematic, step-by-step, results-driven approach to program management

Willing and able local stakeholders in place

Electronic Land Market (ELM) Three-phased Approach Phase 1 : Feasibility of interagency cooperation at LGU level (City Assessor and City RoD) Phase 2 : Develop sustainable business model(s) Phase 3: Develop a national roll-out strategy

Three-phased Approach

Phase 1 : Feasibility of interagency cooperation at LGU level (City Assessor and City RoD)

Phase 2 : Develop sustainable business model(s)

Phase 3: Develop a national roll-out strategy

Phase 1: Inter-agency Cooperation Probably first time that two government offices shared and integrated their respective databases! CEBU CITY ASSESSOR Tax Declaration ELECTRONIC DATABASE GIS map Land Title Tax Declaration CEBU CITY RoD Digital Land Titles

Probably first time that two government offices shared and integrated their respective databases!

Digitizing a Document Any Internet-based Application Identification Authentication Digital Document Origination Document Delivery Document Storage Document Amendments & Cancellation Digital document is identified, authenticated, safely stored, and easily retrievable

Phase 1: Scanning of Titles DBP DCI scanned, inspected, encoded, and recorded 180,000 land titles Done inside RoD vault for 3 months Unit Cost: P1.39 ($ 3 cents) per image Subtotal for image scanning: P250,200 ($ 5,560) Total Cost for managing activities in Phase 1: P1 M ($22,000)

DBP DCI scanned, inspected, encoded, and recorded 180,000 land titles

Done inside RoD vault for 3 months

Unit Cost: P1.39 ($ 3 cents) per image

Subtotal for image scanning: P250,200 ($ 5,560)

Total Cost for managing

activities in Phase 1:

P1 M ($22,000)

Spatial Information Reduces Risks Tax assessment layer Tax declaration GIS Map Orthogonal rubber sheet map

Tax assessment layer

Scanning of a Picture Possible that not all local government officials, as commonly perceived, are corrupt. RoD opened his vault for scrutiny of outsiders! Possible to link two government agencies together Local government wants to initiate reform by creating a good verification environment With integration of land titles and tax declarations, things are definitely better off today than yesterday

Possible that not all local government officials, as commonly perceived, are corrupt. RoD opened his vault for scrutiny of outsiders!

Possible to link two government agencies together

Local government wants to initiate reform by creating a good verification environment

With integration of land titles and tax declarations, things are definitely better off today than yesterday

Policy Implications Insurance Commission policy that declares areas with digital land titling system as having reduced risks Central Bank policy supporting and promoting the use of the Cebu City platform for digital land titles as a standard for evaluating loan collaterals Local Governments policy promoting digital land titling as part of, and a priority in, their development program Policy to uphold the integrity of the system as binding and can stand in the court of law!

Insurance Commission

policy that declares areas with digital land titling system as having reduced risks

Central Bank

policy supporting and promoting the use of the Cebu City platform for digital land titles as a standard for evaluating loan collaterals

Local Governments

policy promoting digital land titling as part of, and a priority in, their development program

Policy to uphold the integrity of the system as binding and can stand in the court of law!

Next Steps? In Phase 2, s how proof of concept (or working system) Presentation to Insurance Commission in Aug 2008 successful, but … USAID-funded project closed, grant to ADMU ended in Sept 2008 Implications on momentum of reform activities and support of champions. “ Who will continue the work?” Complete electronic land market system for Cebu pilot estimated at $89,000. “Who will foot the bill?” Government to finance succeeding phases? “ Will other donor agencies help?” Opportunity for private sector to invest in system?

In Phase 2, s how proof of concept (or working system)

Presentation to Insurance Commission in Aug 2008 successful, but …

USAID-funded project closed, grant to ADMU ended in Sept 2008

Implications on momentum of reform activities and support of champions. “ Who will continue the work?”

Complete electronic land market system for Cebu pilot estimated at $89,000. “Who will foot the bill?”

Government to finance succeeding phases?

“ Will other donor agencies help?”

Opportunity for private sector to invest in system?

Conclusion e-Gov guided by NPM principles can thrive in the Philippine context decentralized and market-driven approach an understanding of incentive structure of stakeholders strategy with potential for national leveraging ICT-led reforms can exist in harmony with bureaucratic institutions of developing countries ICT can make processes more efficient without threatening the tenure of bureaucracy Ultimately, innovative approach of pilots require time and sustained budget support

e-Gov guided by NPM principles can thrive in the Philippine context

decentralized and market-driven approach

an understanding of incentive structure of stakeholders

strategy with potential for national leveraging

ICT-led reforms can exist in harmony with bureaucratic institutions of developing countries

ICT can make processes more efficient without threatening the tenure of bureaucracy

Ultimately, innovative approach of pilots require time and sustained budget support

Thank you. [email_address] [email_address]

Thank you.

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