FCM International

CASE STUDYMunicipal Partners for EconomicDevelopment Program

www.fcm.ca

FOSTERING LOCAL ECONOMICTRANSFORMATION THROUGHCOMMUNITY ENGAGEMENT

Naga City’s Collaboration with its Civil Society and Businesses

The Federation of Canadian Municipalities (FCM) Municipal Partners forEconomic Development (MPED) is a five-year program (2010–15) to supportsustainable and equitable economic development in seven developing countriesin Asia, Africa and the Americas. The program partners and direct beneficiariesare local governments and local government associations (LGAs) from thesecountries. MPED is undertaken with the financial support of the Governmentof Canada provided through the Canadian International Development Agency(CIDA). In Asia, the program is active in Vietnam and Cambodia. MPED alsosupports the engagement of program partners in regional (Asia) knowledgesharing, global policy development, and program coordination, with an emphasison economic development, environmental sustainability and gender equality.

By strategically concentrating resources on local-level “demonstration projects”,MPED allows partners to develop new evidence-based models and practices foreffective municipal management and economic development. The resultingknowledge and data can allow partners, and LGAs in particular, to influencenational policy development and replicate local successes.

This case study from the Philippines was identified and documented with theintention of offering ideas for Cambodian and Vietnamese municipalities, aswell as other stakeholders in the decentralization and local development effort,to consider new avenues and innovations as part of their role in supporting LED.Its focus is to propose ideas that work and to question the practices underlyingthese models, with the view of triggering the discussions required to adapt andtransfer these experiences to other contexts.

Table of Contents

The Case of Naga City . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Partnering with Civil Society to Address Economic Growth . . . . . . . . . . . . . . . . . . . . . . . . 1

Mechanisms to Involve the Community in the City’s Economic Development Efforts . . 2

Naga’s Economic Development Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Naga City LED — Success Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Financial support for this publication is provided by the Government of Canada through the

Canadian International Development Agency (CIDA).

CREDITS

Case Study Management: Carmen Bohn and Pascal LavoieResearch and Writing: Basile GilbertEditing: Dal BrodheadDesign: Phredd GrafixDate: October 3, 2011

FCM would like to thank the following persons fortheir assistance in the preparation of the case study:Mayor John C. Bongat and Mr. Willy Prilles,City Planning and Development Officer.

Naga City is about 450 kilometres south ofManila in southern Luzon. It is about 100 kilo -metres north of Legaspi City, the government

centre of Bicol Region, one of the country’s 16 admin -istrative regions. It is home to two of the country’soldest colleges, founded in 1793 and 1868 and isconsidered “the heart of Bicol”. It has establisheditself as the historical, religious, educational andbusiness centre of Bicol Region. Naga has a popu -lation of approximately 175,000 people which swellsto an estimated day time population of 300,000 to400,000. It has a total land area of 85 square kilo -metres. The city is landlocked. It doesn’t have directaccess to the sea and is not particularly well-endowedin terms of location and natural resources. It is there -fore somewhat disadvantaged compared to othercities, especially port cities, from an economicdevelopment perspective.

Twenty years ago, the potential for the growth ofthe City’s commercial and trade sectors had sig nifi -cant limitations. The local economy was weak andemployment was scarce. Business sector confidencewas low and there was widespread indifferencetowards development and little cooperation amongthe various sectors of society. The city’s main publicmarket — considered in 1969 as Southeast Asia’sbiggest — had significantly “degraded” and waslater hit by a fire which took away 1/3 of its availablespace. The Central Business District (CBD), typicalof similar business centres in other cities in thePhilippines, was overcrowded and had major trafficvolume aggravated by the presence of numerous“jeepneys”1, buses and motorised tricycles whosemain terminals were located within the business

district itself. These factors were scaring investorsaway and thus the business tax base of the citygovernment was weak. Furthermore, the City hadto contend with the usual social problems affectingurban centres such as growing urbanization andhomelessness, a crime rate on the rise, limited basicservices for the citizens and rampant illegal gambling.

� Partnering with Civil Society toAddress Economic Growth

Mayor Jessy Robredo first ran for Mayor in 1987.Under his leadership, the City of Naga has madeitself a name for competitiveness enhancement andgood local governance largely based on the localgovernment’s strategy of embracing civil societyinvolvement and encouraging cooperation with theNGO and business sectors. Based upon his progres -sive practices and credibility, he has been re-electedfor 5 terms, a total of 15 years between 1987 and2010. The Mayor had a clear vision of the gover -nance model he wanted to offer to the citizens ofNaga to address the city’s problems and transformit into an economically vibrant urban centre.

The partnership element of the governance modelhe developed with his team is now a foundationalaspect of Naga City’s approach. The current Mayor,Atty. John Bongat, continues to innovate, expandthe city’s development, and consolidate systemsbased on the principle of constructive engagementand synergy with civil society partners. Its funda -mental concept is based upon the “principle ofstakeholdership”. Since 2010, that principle and theexperience of Naga City are now reflected at thenational level in the programs and policies of theDepartment of the Interior where the former Mayornow acts as its Secretary.

Governance ModelNaga City adopted the principle of stakeholdershipas its guiding framework for city governance andits development strategies. The chart noted belowsummarizes the framework’s key elements.

The model is anchored on the ideal of building stronginstitutions and there are three key elements whichform its foundation:

1. Progressive DevelopmentThe progressive perspective is a philosophy thatanchors all development efforts and seeks toengage all sectors of society in realizing their rolein local development. It is spearheaded by thelocal government as part of its leadership and

The Practice of Community Engagement in Naga City, Phillipines  � 1

1Jeepneys are the most popular means of public transportationin the Philippines. They were originally made from US militaryjeeps left over from World War II and are known for theirflamboyant decoration and crowded seating. They havebecome a symbol of Philippine culture.

THE CASEOF NAGACITY

THE NAGA GOVERNANCE MODELA local guiding framework

Progressive development perspective. Seeksprosperity-building tempered by an enlightenedperception of the poor

Functional partnerships. Vehicles that enable the cityto tap community resources for priority undertakings

Participation. Mechanisms that ensure long-termsustainability of local undertakings

mobilization role. Behind this perspective is thenotion of “growth with equity” which seeks topromote economic development (growth) andsustain the implementation of pro-poor (equity)projects to build prosperity for the community atlarge. The philosophy stipulates that growth andequity building can feed on each other. Economicgrowth provides the resources and sustains theimplementation of social development programs.Equity projects lead to better quality of life, abetter city that ultimately, fuels further growth.

2. Functional PartnershipsOn-going engagement in partnerships is the vehiclethat enables the City to tap community resourcesfor priority undertakings. Government resourcesare never enough to address all the concerns ofthe constituency. Non-governmental groups alsohave the capability to address specific problemswhich the government bureaucracy cannot. Part -nerships are sought to multiply the local gov -ernment’s capacity and enable it to overcomeresource constraints.

3. People ParticipationPeople participation mechanisms ensure the inclu -sion of individuals and the community in govern -ment decision-making. They promote long-termsustainability by generating broad based stake -holdership and community ownership over local

undertakings. While partnerships, for operationaland practical reasons, often occur between insti -tutions and orga nized groups, par ticipatorymech anisms give all sectors of the com munity —including the marginalized — a voice in gov ern -ment. It mainstreams them and engages themin governance. The response of various constitu -en cies — a business person, the market stallholder,the squatter, the farmer or the householder —depends on how receptive an administration is totheir participation in the decision making process.The City’s leader ship encourages and formalizesmechanisms to enhance constituency participation.

The Naga City lead ership developed a visioning pro -cess which evolved incre mentally. Taking ad vantageof one of the city’s strengths — the presence of anactive civil society sector composed of business,civic and people’s organizations — Naga City insti -tutionalized various mechanisms of participation andconsultation. The Naga partnerships and par tici pa -tory mechanisms go beyond mere consultation.They can be classified as follows:

• Project-based Partnerships: these are specificprojects where private sector expertise andresources are tapped to complement governmentcapability. Projects may be related to generatingeconomic growth (growth strategy) or support-ing the poor into society (social development orequity-building);

• Participatory Institutional Partnerships: theserefer to mechanisms that involve the community,usually through organizations, in government-initiated bodies so that they can participate in thedecision-making process and the implementationof development programs.

Ultimately, Naga City considers its governance modelas a public reflection process which captures theaspirations of the people while the process itselfserves to build “stakeholdership” across society.

� Mechanisms to Involve the Communityin the City’s Economic DevelopmentEfforts

Institutional Partnerships — Local Special BodiesNaga has pro-actively supported the establishmentof several “Local Special Bodies” facilitated by theprovisions of the Philippines Local Government Code(1991). The City also issued a “People EmpowermentOrdinance” which expanded the people’s role ingovernance by establishing a functional framework

2 � The Practice of Community Engagement in Naga City, Phillipines

PARTNERSHIPS PARTICIPATION

PROGRESSIVEPERSPECTIVE

GOOD URBANGOVERNANCE

BUREAUCRACY

STRONG INSTITUTIONS

CITIZENRY

CIVIL SOCIETY

for partnership and participation with involvementof close to one hundred NGOs and People’s Orga -nizations through the “Naga City People’s Council”(NCPC). This strategy created and secured theavenue for on-going participation of organizedgroups in governing the City, not only through con -sultation, but also through policy-making, projectimplementation, monitoring and evaluation. Forexample, various civil society organizations arerepresented in the Development Council, the Bids andAwards Committee, the Peace and Order Council andother bodies and business community repre sen ta -tives have become members of policy-making bodiessuch as the Environmental Management Board, theIntegrated Livelihood Management Council, as well asthe Transport and Traffic Management Task Force.

Partnership Transparency — i-Governance

The i-Governance Program is amongst the effectivetransparency and account ability mechanisms devel -oped by the City to strengthen its rapport with thecitizenry. This key program is an initia tive to make“information and communications technology work”for the improvement of governance and to enhanceeffectiveness of City develop ment strategies. Initi -ated 10 years ago (2001), its components are nowinstitu tionalized features of daily two-way com mu -nication between the government and its citizens.For ex ample, the Naga Citizens Charter, distributedto all households and businesses, describes approx -imately 130 key services of the city government. Itexplains the step-by-step procedure for accessingthese services, as well as the response time fordelivery, and the city hall officers and staff respon -sible for the service. This information is comple -mented by a list of require ments a customer mustcomply with to facilitate service delivery, as wellas the relevant fees. The Citizens Charter is viewedas a contract between the city government andits citizens.

Partnership Accountability

Another key tool is the City’s website (www.naga.gov.ph) which provides details of practically allaspects of city operations on the internet which isa relatively rare practice in the Philippines. It alsopresents a means of understanding and monitoringthe activities. It contains a virtual Citizens Charter(called Netserve) and also posts:

1. The city’s annual budget, along with the allocationsfor specific departments and offices

2. The status of city finances, updated on a quarterlybasis

3. Notices of bids, public offerings and otherprocurement activities, as well as their outcomes

4. City ordinances and Executive Orders.

In addition, the website features the TXTNaga (laterNaga “TxtServe”) program which takes advantage ofthe widespread use of mobile phones and their SMSor “texting” capabilities. This feature allows citizens,merchants and corporations to send complaints,queries and feedback to the city government ata very low cost (as low as 1 peso = US $ .02 permessage sent). These messages are sent to the City

The Practice of Community Engagement in Naga City, Phillipines  � 3

Page from the website

government’s mail server and follow-up actions aredirected to the relevant city department. Replies arereturned the same way.

The i-Governance Program is comprehensive andmany of its details are not elaborated here. Thepoint is that the program illustrates how Naga Citypartners with, and leverages contributions from thecommunity and private sector. Partnerships enableresource pooling, building synergy and allow the Citygovernment to tap community resources. Examplesof such partnerships include the following:

Project-based Partnerships The stagnation of the local economy and congestionin the former city center in the early 90s, two of manyproblems, became the drivers of long-term, project-based economic interventions and the transformationof Naga. Here the private sector has been success -fully involved in growth-enhancing programs andin equity-building efforts. These government-ledinitiatives have enticed the private sector to take theinitiative. Striking examples of growth enhancementwere the strategies adopted by the city to reducecongestion in the city-center and to open up newbusiness areas. A few of them are described below.

The “Urban Transport and Traffic Management Plan”:The UTTMP demonstrated how the City could use itsregulatory and policy enforcement powers in sup portof business expansion by relocating all the bus andjeepney terminals to outside of the old Central Busi -ness District (CBD). In the early 90s, these trans portterminals were located in the “Centro” (or CBD) andpeople came to the CBD in Naga from all parts ofthe Bicol region by bus and jeepney to trade. Theresult was gridlock. As traffic management is oneof the responsibilities of the city government, theadministration undertook lengthy deliberations withthe private sector to determine how to best re-organize circulation and relocate the terminals whileminimizing the negative short-term impact on somestakeholders. The relocation of the terminals outsideof the “centro” increased pedestrian circulation andperked up economic activity on the periphery of the

4 � The Practice of Community Engagement in Naga City, Phillipines

PARTNER AREA OF COOPERATION

1. Naga City People’s Council • Impetus for development.• Development and

maintenance of naga.gov(city website).

2. Naga City Investment Board/ • Impetus for development.Metro Naga Chamber of • Development andCommerce and Industry maintenance of 2

components of naga.gov,namely the InvestmentGuide and theNetserve/Services page.

3. Naga City Tourism Council • Impetus for development.• Development and

maintenance of theTourism and Travel Guidepages of naga.gov.

4. University of Nueva Caceres • Technical support from the IT college.

5. Department of Education • Internet access and (national) training for all public

elementary and highschools (cyber school —support infrastructure).

6. Ayala Foundation • Internet access for allpublic high schools(provision of equipment).

7. Digitel (telephone company • Internet access for all and Internet Service public schools (internet Provider) connection).

8. Association of Barangay • Operation of cybercafés Councils at the village level.

9. Smart Telecommunications • Support to the TxtNaga (a major national mobile component.service provider)

Part of the Central Business District (CBD). More popularlycalled by locals as “centro”, CBD-I is the traditional commercialhub. The Naga River, Hernandez Avenue and Arana Street boundthis 30-hectare area. Being the location of most businessesengaged in services and wholesale and retail trade, CBD-Iteems with people — which swells to as much as 250,000during the daytime — from the city and its neighboringmunici palities. The Naga City Supermarket, the biggest inSoutheast Asia when it was built in 1969, is found at thecore of this district.

Naga ‘TxtServe’ program.

CBD. The total commercial area effectively expandedby a third and the strategy significantly eased trafficflow within the CBD, restoring order, life and vitalityin the area.

Satellite District Markets: In the Philippines, publicmarkets are usually operated by local governmentand such was the case with the 1,500-stall NagaPublic Market which is at the heart of the CBD. Underthe Naga Local Initiatives for Economic Activities andPartnerships (LEAPS) program, the City encouragedthe private sector to construct and operate satellitemarkets in pre-determined, strategic areas on theperiphery of the CBD. The only limi ta tion imposedby the City was that these initiatives should follow aset of government requirements regarding the areaand facilities development. This approach generatedseveral proposals from the private sector, and thereare now five privately owned district marketsattracting commercial development.

Panganiban Beautification and Upgrading Project:Also part of the LEAPS program, the PBUP was aninitiative to create a new business corridor out of akilometer-long swampy area on the periphery of theold CBD. The property was owned by the PhilippinesNational Railways (PNR) and was located along therail tracks and Panganiban Drive, which serves asone of the main thoroughfares leading to the CBD.The city government leased an abandoned portionof the PNR property. It then approached a nationalorganization with a local chapter in Naga, the UnitedArchitects of the Philippines (UAP), to conceive acohesive design for duplex-type commercial build -ings in the area. Regulatory policies (Naga CityOrdinance No. 92-027) were established to guidethe use and maintenance of the properties. Inter -ested private developers were then invited to sub-lease the PNR property and build the approvedduplex-type commercial buildings. A Build-Operate-Transfer (BOT) arrangement was developed with thenational government and the business communityas partners. The result was a new commercial andbeautification project begun and a new businessarea created which generated new commercialactivity and employment.

The Central Business District-II: CBD-II is a 250-hec -tare area whose core is a 27-hectare development isbeing undertaken by a private sector partner, RubyShelter Builders and Development Corporation.Compared to the UTTMP and the PanganibanUpgrad ing Project which moved growth to otherareas at the periphery of the old business district,CBD-II is an effort to create another distinct com -

mercial area. Based upon the UTTMP expe rience,the local government was approached to providethe growth stimulus. Using its power to regulatetransport terminals, the city established an inte -grated bus terminal on a lot donated by the privatecompany, Ruby Shelter. The area was also designedas the location of two privately-owned integratedjeepney terminals to service two-thirds of all inter-city/municipality public utility vehicles. These terminalsbecame the anchors of the CBD-II development.In fact, CBD-II has been dubbed Naga’s transportexchange. City hall has since then constructed asports complex on another donated lot in the areaand the private sector has established a satellitemarket within the area. Establishments supportingand catering to the market created by these facili -ties have sprouted within the area and Ruby Shelter’s27-hectare core development alone has resulted in a100% expansion of the commercial district. In addi -tion, it played a role in stabilizing an exorbitant pricerise for commercial space in Naga.

� Naga’s Economic DevelopmentProgram

The current administration continues to follow thesame governance model, now named “HELP yourCity”. It calls for strong participation in governanceand development in virtually all of the sectoral pro -grams2 which directly or indirectly affect local

The Practice of Community Engagement in Naga City, Phillipines  � 5

CBD-II, inaugurated in 1996, is designed for medium-endcommercial development. It is dubbed as Naga’s TransportExchange.

2Health and Nutrition; Housing and Urban Poor; Education,Arts, Culture and Sports Development; Livelihood, Employ -ment and Human Development; Public Safety, Peace & Order;Cleanliness and Environmental Protection; Transparency,Accountability, Good Governance.

• The revitalization of the Naga River, a major water -way that bisects the urban district, in order tomax imize the river’s potential to beautify the city8

and generate new commercial activities on itsperiphery. It will be managed with civil societypartners such as the Ateneo Institute for Envi ron -mental Conservation and Research (INECAR) andthe Geodic Engineers of the Philippines.

� Naga City LED — Success FactorsThere are a number of key factors which havecontributed to make Naga successful in its LEDpolicies and programs.

Shared Ownership and BenefitsOne of the key factors is the shared ownership ofvarious initiatives by the local government, the localconstituents and organized groups who collaborateto conceptualise and implement them. Through itsopenness to meaningful collaboration, the local gov -ernment ensures that its projects and initiativesrespond to local needs and benefit local people. Thisapproach creates a foundation of trust and goodwillamongst local citizens who become more inclined tosupport their local government and its initiatives.

Multi-Sector CollaborationThe City government pro-actively builds synergythrough its collaboration with business and civilsociety groups. Several of its initiatives to expandcommercial areas demonstrate how this poolingof resources can generate commercial activity andeconomic development in the city.

Effective StewardshipThe prevalent philosophy in city hall is to do more withless and it has been able to pool resources (financialas well as knowledge/capabilities/skills) and do morewith less reliance on its own financial resources.

Human Capital DevelopmentThe Naga City government estimates that between40 and 50% of its success can be directly attributedto its human capital development focus.9 It has beenbased upon its team of professionals working hardwithin the local public service, as well as with itsactive and engaged NGO and private sectors. Inaddition, its management team has a progressiveattitude and is vision-driven, results-oriented andtakes pride in its success.

6 � The Practice of Community Engagement in Naga City, Phillipines

economic development3. Consistent with the City’sgovernance model, the operationalization of thisvision calls for the economic empowerment ofthe citizens.

There are a number of initiatives currently underwayas part of this program and they include the following:

• Re-activation of the Naga City Investment Board

• Continuing improvement of the public transportterminals and support for the development ofadditional business centers4;

• Infrastructure improvements to the CBDs;

• The re-organization of the Market Enterprise andPromotions Office (MEPO);

• The development and expansion of marketfacilities though a Build-Operate-Transfer (BOT)scheme, etc.

• Several small enterprise development initiativessupporting agricultural development5

• Infrastructure development and facilitiesassistance for agricultural stakeholders6

• Tourism development initiatives7 to promotetourism in Naga

3An example would be the Livelihood, Employment and HumanDevelopment component which emphasizes the establishmentof an investment and business friendly climate, the creationof employment and economic opportunities, sustainedagricultural development, comprehensive tourism promotionand strong support for needy sectors.

4Including the rationalization of sidewalk vending and parkingarrangements in some areas.

5Such as soya milk and soya based food production, Pili nutpro cessing, and handicraft production and soft broomproduction.

6Including the rehabilitation of irrigation systems, concretingof farm to market roads, the acquisition of a recirculatingdryer for the City’s tree and plant nursery, etc.

7Including the establishment of the Arts, Culture and TourismOffice, a promotion campaign known as SMILES Naga (forSee, Meet, Invest, Live, Experience, and Study in Naga), andvarious linkages with the academe, travel agencies, etc.

8Transforming the riverbank areas into one of the majorrecreational and tourism attractions in the city by developingwalkways, bridges, promenades and mini-parks.

9The Naga City Hall’s mission statement comprises the notionsof honesty, dedication and collaboration. It reads as follows:“Through a well-defined development plan and a corps ofhonest and dedicated public servants working hand in handwith the people, we shall pursue growth with equity”.

CONCLUSIONS

Naga City officials have demonstrated that goodlocal governance matters because it can bring acommunity together to mobilize its resources topromote economic growth and equitable socialdevelopment that directly benefits its people. TheCity is now one of the fastest-growing economies inthe country. Since 1999, Naga City’s economy hasbeen growing at a rate of 5 to 7 % higher than thenational average. It is considered a liveable city, withimproved basic services, a significantly higheremployment rate and a dramatically decreasedpoverty incidence. Citizens enjoy a much higherquality of life than then they did 20 years ago.

The city is recognized as a centre of local innovation.It has built a reputation for being a model local gov -ernment and has developed its own City Gover nanceInstitute to share its experience with other cities andmunicipalities from the Philippines and around theworld. However, though much has been done overthe years, Naga City authorities remain aware of theneed to continue working hard to sustain the gainsachieved. The management team works relentlesslyto meet challenges. It needs to ensure that a streamof competent leaders will be there to continue thework, as well as to continue the corporate strength -ening process and community organizing and em -power ment which has been at the heart of its strategy.Naga City is gradually on its way to achieve its visionof local economic empowerment and ensur ing thatdevelopment is “inclusive” and benefits everyone.

The Practice of Community Engagement in Naga City, Phillipines  � 7

Leadership ContinuityThe City has also benefited from many years of pro -fessional and political continuity and stability. TheMayor who initiated the strategy was in place foralmost two decades. The same City managementteam has been in place for 18 years of uninterruptedservice. This situation has allowed that team to build aconstructive rapport with the community and pursueand sustain clearly defined short and long-termobjectives.

A Conducive EnvironmentThe Naga City management team had the willing nessand readiness to make the most of the local autonomyprovisions of the 1991 Philippines Local GovernmentCode. It contained a number of new and innovativedecentralization features and provided additionalpowers to local authorities which included new localrevenue generation powers, as well as mechanismsfor local participation. Naga maximized the use ofthese provisions with the formation of “Local SpecialBodies” which included sectoral representation fromcivil society.