LOCALIZING REGIONALISM:

The Role of Philippine Local Governments in the

2015 ASEAN Economic Community

Introduction
With only several months to prepare, the ten member-states of the Association of Southeast Asian
Nations (ASEAN) are all busy carrying out programs, implementing policies and ensuring strategic
mechanisms are in place as soon as the ASEAN Economic Community commences in 2015. The ASEAN
Economic Community (AEC) is one of the three pillarsthe other two include the ASEAN Political
Security Community (APSC) and ASEAN Socio-Cultural Community (ASCC)that comprise the ASEAN
Community.

From its humble establishment in August 1967, ASEAN has come a long way by positioning itself as one
of the major stakeholders in regional and global community building. The Heads of States/Governments
first agreed upon the vision of creating a concert of Southeast Asian nations that is outward looking,
living in peace, stability and prosperity, bonded together in partnership in dynamic development and in a
community of caring societies. in 1997. This was the ASEAN Vision 2020, which subsequently breathed
life to the ASEAN Community.

In a noble attempt to ensure ASEAN centrality in the region and to enhance its prominence in global
affairs, ASEAN leaders in 2003 decided to accelerate and fast track regional integration from 2020 to
2015. Such bold albeit ambitious decision led scholars and pundits alike to question the level of
preparedness of its member-states for a closer and more intimate regional relationship, particularly on the
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anticipated economic integration .

It is worth noting that much of the skepticism for the creation of AEC is grounded on the glaring
developmental gaps among the ten member-states: Singapore with its impressive human development
index will more likely dominate the market and/or be a hotspot for migrating workers from its neighbors.
On the other hand, the fledgling economies of Laos, Cambodia and Myanmar will find it difficult to cope
with the increasing demands of integration. More likely, poverty and access to basic services will remain a
major issue in these areas.

1
John Goyer, Why the 2015 deadline for the ASEAN economic integration? Rappler, September 21, 2013, accessed:
http://www.rappler.com/world/regions/asia-pacific/39481-apb-survey-asean-economic-integration

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As one of the founding members of ASEAN and given its impressive economic track record for the past
four years, much is expected from the Philippines when economic integration commences. It is worth
noting that until recently, the Philippines took home significant upgrades from top credit rating agencies
2
such as Moodys and Standard and Poors . For many, this foresees a bright economic outlook and
provides a potentially firm foundation for economic integration.

At the surface, the Philippine government spearheaded by the Department of Foreign Affairs (DFA) has
been actively participating in various meetings and diplomatic missions as part of the preparations for the
regional economic integration. In terms of trade and investment, the Department of Trade and Industry
(DTI) are in the process of aligning their policies with ASEAN targets and indicators. The Department of
Tourism (DOT) and Department of Agriculture (DA), to name a few, are also doing the same on tourism
standards and agricultural policies implemented in the country.

However, positive economic prospects brought by investment upgrades do not guarantee a solid
preparation for regional integration. There is compelling reason to gear up and engage concerned
stakeholders in the integration process given the new terrain and its accompanying nuances as
evidenced by the key performance indicators and regional targets.

It is worth noting that AEC aims to attain the following characteristics: (a) a single market and production
base, (b) a highly competitive economic region, (c) a region of equitable economic development, and (d)
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a region fully integrated into the global economy . Of particular importance will be on enhancing the
countrys competitive edge and ensuring equal opportunities for economic development. In the 2010
Doing Business Index commissioned by the World Bank, the Philippines lags behind its Southeast Asian
th
counterparts: 144 out of the 183 economies surveyed. A good example will be on starting a business in
the country. At most, start-ups will have to undergo 15 steps before successfully issued a permitmore
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than half of the regional average of eight (8) steps .

Preparations and the subsequent sustainability of operations related to regional economic integration
then requires more than the current efforts of the national government. As frontline institutions at the local
level, it is firmly believed that local governments play an essential role in the integration process.
Specifically, national-local coordination on policies and programs related to ensuring competitiveness will
be the primary agenda. Further, cushions for micro, small and medium-sized enterprises (MSMEs)

2
Clarissa Batino and Cecilia Yap, Philippines Wins S&P Upgrade as Aquinos Changes Seen Enduring. Bloomberg, May 9 2014.
Accessed: http://www.bloomberg.com/news/2014-05-08/philippines-wins-s-p-upgrade-as-aquino-s-changes-seen-enduring.html
3
ASEAN Economic Community. ASEAN website, accessed: http://www.asean.org/communities/asean-economic-community
4
World Bank, Doing Business 2010: Reforming through Difficult Times (Washington D.C.: World Bank, IFC and Palgrave Macmillan,
2009) DOI: 10.1596/978-0-8213-7961-5 accessed:
http://www.doingbusiness.org/~/media/GIAWB/Doing%20Business/Documents/Annual-Reports/English/DB10-FullReport.pdf

2
thriving in the country should be in place. These cottage industries comprise almost 99.6% of the
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economya clear indication of its value in the national economy .

Following this line of thought, the paper intends to discuss and underscore the important role of local
governments in the integration process. The first section provides a brief background on AEC and the
regional economic integration process. Emphasis will be placed on the four pillars of the AEC, its requisite
targets and performance indicators and the actions necessary to attain these pillars. Having these in
mind, the succeeding section focuses on the potential role of local governments in realizing the
attainment of the AEC pillars. This will be discussed using the concept of multi-level governance, as first
utilized by the European Union (EU). Subsequently, the next section will feature a discussion on the
dynamics of national-local governance in the Philippine setting, with regard to regional economic
integration. Specifically, several frameworks for collaboration, i.e. sisterhood agreements between and
among towns and cities, sub-regional growth triangles, will be provided as examples of local government
immersion in regional endeavors. The paper concludes with prospects for a more collaborative and
inclusive AEC 2015 in the Philippines. Finally, the paper recommends that a separate sectoral body or
working group on local governance should be created under the AEC umbrella body as this will affirm the
important role of local governments in regionalism and enhanced community-building.

Gearing Up for ASEAN Economic Community

The agenda was clear when ASEAN leaders met in Cebu on 2003: place ASEAN at the center of regional
architecture by creating a regionally community integrated on the aspects of economy, politics and
security, and socio-cultural affairs. Aside from the three pillars of ASEAN Community, namely ASEAN
Economic Community (AEC), ASEAN Political-Security Community (APSC), and ASEAN Socio-Cultural
Community (ASCC), the leaders also agreed to accelerate the process of integration: from 2020 to 2015,
five years earlier than the initial target. As had often been the observation, the decision was noble albeit
ambitious for a relatively young organization comprised of small and medium-sized developing states
such as ASEAN. Nonetheless, the pursuit for greater regional cohesion continued and a year before the
target, much anticipation had been bottled up to determine whether ASEAN succeeds on its goal or not.

Sharper focus and attention is placed on realizing AEC: this is touted as the pillar that will more likely be
successful given the eagerness of the member-countries to gain greater access on regional economic
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chains and the global market as well . AEC is comprised of four sub-pillars, namely: single market and
production base, competitive economic region, equitable economic development, and integration into the
global economy. Each of these sub-pillars has specific targets to attain, as illustrated in Figure 1:

5
MSME Statistics. DTI website, accessed: http://www.dti.gov.ph/dti/index.php/msme/msme-statistics
6
Julio Amador III and Joycee A. Teodoro, A united region: The ASEAN Community 2015, Rappler, May 1 2014. Accessed:
http://www.rappler.com/world/specials/southeast-asia/asean-journey/47239-asean-community-2015-overview

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 SUB-PILLAR 1: SUB-PILLAR 3: SUB-PILLAR 4:
Single market SUB-PILLAR 2: Equitable Integration into
Competitive
and production economic the global
economic region
base development economy
Free flow of
goods, services, Foundation for
competition
capital,
policy, consumer SMEs
investment &
protection & IPR development
skilled labor

Development of
12 priority Infrastructure Entry into
integration development force of FTAs
sectors
Implementation of
Development of initiative for
Food security and energy and ASEAN
cooperation under integration
mineral
agri sector
cooperation

Figure 1. AEC Sub-Pillars and Targets. (Source: Toward an ASEAN Economic CommunityAnd Beyond, Asian
Development Bank, October 2013).

Based on the latest AEC Scorecards released by the ASEAN Secretariat for 2012, the organization
achieved 67.5% of the targets identified under the first and second phases of AEC implementation.
Among the four sub-pillars, AEC has better prospects in achieving the targets under Pillar 4 or Integration
into the Global Economy with 85.7% as of the same scoring year.Sub-pillar 1 attained the lowest score at
65.9%. However, the report was quick to point out that positive developments were still achieved even in
the low-scoring targets: ASEAN has made slow but steady progress in reaching AEC goals (2013:36).

Nonetheless, there is value in determining the challenges to realizing AEC by December 2015. On the
first level, the same report underscored the need for policy reforms related to liberalizing trade facilitation,
business sectors such as services and investment, as well as the importance of crafting policies on
competition and intellectual property rights. But the next level requires a more holistic approach: countries
need to work harder towards narrowing the development gap within the region. Of course, central
governments spearhead the development agenda for each member-country. But more importantly,
central governments cannot do this monumental task alone; other stakeholders are significant partners in
this process, especially now that the goal is regional in scope. It is believed that one of the instrumental
stakeholders in this endeavor is the local government unit (LGU). The succeeding sections expound on
this proposition.

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Localizing the ASEAN Economic Integration through a Multi-level Governance Approach
As December 2015 comes closer, ASEAN member-states are doubling efforts to meet or at the very least
get closer to achieving the targets set for AEC. In particular, central governments are working towards
standardizing domestic policies on trade and investment, as well as those related to skilled labor. For
sub-pillar 1, ASEAN reports that two significant agreementsASEAN Trade in Goods Agreement and
ASEAN Comprehensive Investment Agreementwere adopted early in 2013 to ensure the smoother
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facilitation of goods and investment among the member-countries . Much of the efforts now are on
maximizing the benefits of non-tariff lines: on average, 87.81% of tariff lines are at zero percent, with the
ASEAN-6 countries (i.e. Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore, Thailand) at
99.20%. The organization has to work on the 68.88% tariff lines for Cambodia, Lao PDR, Myanmar, and
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Vietnam (CLMV) .

But aside from regional efforts, individual member-countries should work on half of the AEC goals,
particularly on narrowing the significant development gap among the ten member-states. It is worth noting
that the goal of narrowing the development gap among the member-states, while attainable under all the
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sub-pillars, will be strategically achieved under sub-pillar 3 or equitable economic development . Under
this sub-pillar, two important components are identified: (1) development of small and medium-sized
enterprises, and (2) implementation of the Initiative for ASEAN Integration (IAI). As of current, the
organization has agreed on IAI wherein new approaches have been developed so that the benefits of the
AEC are more evenly shared between all ASEAN Member States (ASEAN, 2014:13).

Given the capacity and inherent power of central governments, there is no doubt that they can implement
policies and programs supportive of these components and overall goal. But given the constraints of time
and the nature of governance in Southeast Asian states, there is merit in utilizing other stakeholders as
partners in regional community building.

Noted European scholars Gary Marks and LiesbetHooghe (year) first introduced the concept multi-level
governance to illustrate the varied interacting authority structures in the global political economy.
Specifically, another scholar Philip Schmitter defines the concept of multi-level governance as such:

an arrangement for making binding decisions that engages a multiplicity of politically

independent but otherwise interdependent actors private and public at different levels of
territorial aggregation in more-or-less continuous negotiation/deliberation/implementation, and

7
Asian Development Bank, Toward an ASEAN Economic Communityand Beyond, in Asian Economic Integration Monitor,
October 2013
8
ibid
9
ibid

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 that does not assign exclusive policy competence or assert a stable hierarchy of political authority
to any of these levels (2004:49 as cited in Piattoni 2009: 2).

For Nugent (2003), the different levels of government, particularly according to the EU model, are
interconnected with political developments and this interconnectedness will likely to have a significant
impact on the advancement of the other levels (474). The proposition then is simple: dispersion of
governance across multiple jurisdictions is more efficient than concentration of governance in one
jurisdiction (Hooghe and Marks 2002:6).Multilevel governance (MLG) finds semblance in governance
mechanisms such as federalism and decentralization, as well as several tenets of neoclassical
economics, wherein the efficiency of monopolistic, territorially fixed, and nested governments are
challenged and in turn, diverse governments founded on voluntary coalitionsminimize rent-seeking and
optimize public good provision. This is consistent with an earlier claim by decentralization scholar
Charles Tiebout (1956) when he said that competition among local communities or jurisdictions means
efficient governance (as cited in Hooghe and Marks, 2002).

Currently, majority of ASEAN member-states have utilized a certain level of decentralization from the
central to local governments. Most of them have subdivided territorial jurisdictions into regions, provinces,
cities and/or municipalities, with varying degrees of autonomy, delegated functions, and fiscal capacity.
Scholars had provided mixed receptions on the efficacy of decentralization in ensuring the delivery of
basic services as well as reducing poverty and development gaps among its constituency; but in general,
there is a sense of optimism that decentralized governments will be able to achieve the target results
when given the right direction and motivation (Grindle 2007, Ichimura and Bahl 2009, Treisman 2007). On
most cases in Southeast Asia, local governments serve as the bridge to ensure that the benefits of a
growing economy will trickle down to constituents in local communities (Brillantes and Moscare 2002).

With solid foundation from the concept of MLG and given the existence of decentralized governments in
ASEAN member-states, there is compelling reason to identify local governments as key partners in
expanding and deepening regional economic integration. If only to emphasize, the development gaps
faced by majority of ASEAN member-countries are the same urbanization challenges that concern
Southeast Asian local governments today as they are simultaneously engines of economic growth, major
sources of pollution and centres of learning, creativity and innovation (Yap Kioe Sheng 2010).

The next section looks into the case of the Philippines and how local governments particularly cities
prepare for regional economic integration.

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Preparing Philippine Cities for AEC
In a recent forum jointly organized by the Local Government Academy and the various leagues of local
governments in the Philippines, there was a general perception of fear and lack of awareness among
local chief executives on the upcoming realization of AEC in December 2015. For most, the regional
economic integration means the onslaught of multinational companies and foreign workers, at least from
the ASEAN region, and will subsequently be to the disadvantage of smaller economic players, especially
those located in the Philippine countryside. The expression of fear and the general lack of awareness are
valid given the jargon that is ASEAN economic integrationfor the most part, the discourse had been
focused on academia, business circles and government offices. It was only recently that local
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communities and their chief executives were actively involved in the discussion .

In an immediate turn-around, the forum provided a platform for local officials to understand that AEC
means more complementation [and] less of competition (Habito 2014). Further, the role of LGUs in
ASEAN economic integration is to make the Philippines capable of keeping up with the ASEAN neighbor
countries by making reforms in the business environment, promoting local trade, generating employment
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and hastening the reforms in the economic sector (Roxas 2014) . Following this line of thought, the
succeeding discussions will underscore three key areas for local government support in achieving the
targets for AEC 2015, namely: (1) enhancing local business environment, (2) providing cushions
supportive of micro, small and medium enterprises (MSMEs), and (3) establishing meaningful
partnerships with fellow ASEAN local governments.

Enhancing Local Business Environment

Amid the slow economic recovery of major economies as a result of the 2008 Global Financial Crisis, the
country is considered to have the most favorable growth rate in Southeast Asia in the next five years
12
(OECD 2014) . This is consistent with the recorded positive economic growth in the past two years. The
start of 2014 showed a dip at 5.7% growth but prospects remain bright for the former Sick Man of Asia.
Reports show that the services sector continue to drive the economy at the supply side while private
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construction and infrastructure spending bolster the demand side .

Further, the World Bank-IFC Doing Business Index for 2015 released on October 2014 finds the
Philippines moving up 13 notches in global rankingsthe country is now at number 95 from 108 in 2014.
The index attempts to track and measure one of the most important features of an economythe ease
with which it is possible to do business, trade and exchange. At its core, the results of the report should

10
Local Government Academy. Conference Summary of the Forum on ASEAN Economic Integration: The Role of Local
Governments, 10-11 October 2014, Heritage Hotel, Pasay City
11
as cited in the LGA Conference Proceedings for Forum on ASEAN Economic Integration, 2014
12
http://www.competitive.org.ph/stories/1033
13
Philippines accelerating public investment to sustain growth that benefits the poor. World Bank, undated accessed:
http://www.worldbank.org/en/country/philippines/publication/philippines-accelerating-public-investment-to-sustain-growth-that-
benefits-the-poor

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guide governments, both central and domestic, to shape policies and regulatory frameworks conducive
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for inclusive development, job creation and sustainable growth . The Doing Business Index is subdivided
into ten areas for individual ranking: starting a business, dealing with construction permits, getting
electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across
borders, enforcing contracts, and resolving insolvency.

Based on the report, Singapore continues to be the highest ranked country with an 88.27 score. The
Philippines at rank 95 has a score of 62.08, 17 places below Vietnam at number 78 and six notches
higher than Brunei Darussalam at number 101. The country had seen consistent upgrades from the
Doing Business Index since it was started in 2001. Nonetheless, the Philippines has to improve its scores
before clinching a more competitive edge in the region. For instance, while the number of days to start a
business has reduced from 52 in 2010 to 34 in 2015, the number of steps taken remains to be
cumbersome at 16. The number of hours an individual spends to pay taxes had also not significantly
15
improved from 195 hours in 2010 to only 193 in 2015 .

Mindful of international standards on doing business, city governments had been particularly keen to
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improve their business climate to attract potential investors and locators in their locality . A study
conducted by the Department of Trade and Industry- Bureau of Small and Medium Enterprise
Development (DTI-BSMED 2006) identified the major problems that affect the business-friendliness and
competitiveness of LGUs, some of which include the large amount of time spent waiting to obtain
clearances from different LGU offices, lack of information or charter on the process flow and
requirements, and the lack of clear and standard requirements for the computation of fees.

As a response, one of the more significant steps undertaken by majority of cities is streamlining business
application and renewal. In February 2012, 412 LGUs have completed their re-engineering process for
electronic business permitting and licensing system (e-BPLS). By 2016, the Department of the Interior
and Local Government (DILG) in partnership with the Department of Trade and Industry (DTI) and other
development organizations all 1,634 cities and municipalities should be compliant with the BPLS
standards set by the national government.

A good example was done in Muntinlupa City: from the 14-step business permit renewal process, the city
decreased the steps to 12 and then to six steps in 2003. In order to decongest the process, they have
removed separate steps for obtaining clearances from their Health Office, Fire Department, and Zoning

14
KaushikBasu, Foreword: How to use Doing Business indicators and how not to, to Doing Business 2015: Going Beyond Efficiency,
(Washington D.C.: World Bank, 2014) DOI: 10.1596/978-1-4648-0351-2, accessed:
http://www.doingbusiness.org/~/media/GIAWB/Doing%20Business/Documents/Annual-Reports/English/DB15-Full-Report.pdf
15
World Bank, Doing Business 2015: Going Beyond Efficiency; World Bank, Doing Business 2010: Reforming through Difficult
Times
16
League of Cities of the Philippines.City LED: Local Economic Development for Cities, (Quezon City: League of Cities of the
Philippines, 2013).

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Office, and then lumped them into one step, along with the other offices requesting for clearance. After
streamlining, the city saw a steady increase in business permits and tax collection. The cities of Ormoc,
Zamboanga and Surigao have also made efforts to reduce the number of steps for business application
and renewal (BSMED 2006).

Other LGUs convened all offices involved in the BPL process in one area during application and renewal
period. Examples include Cabuyao, Bacolod, and General Santos City. There are also efforts at
computerizing BPLS process and also ensuring customer satisfaction at the end of the whole transaction.
Cities have also initiated Citizen Charters or information boards placed at conspicuous places in the city
hall complex. The charters include the number of hours to necessary to process a certain request or
application, the offices in-charge and the corresponding fees to be paid, should there be any (BSMED
2006).

Supporting MSMEs at the Local Level

Aside from removing bureaucratic red tape from the application and renewal of business registrations,
cities have also been providing incentives to micro, small and medium enterprises (MSMEs). It is worth
noting that out of 944,897 business enterprises operating in the country, 99.58% are MSMEs. Majority of
these MSMEs engage in wholesale and retail trade, motorcycle industries, information and
communication, accommodation and food services, recreation and administrative and support services, to
name a few. DTI statistics also indicate that MSMEs generated more than 4.9 million jobs in 2012more
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than half of the 2.6 million jobs coming from large enterprises .

With such significant impact on Philippine economy, particularly on local economic activity, the current
support provided by local governments had been increased to ensure their sustainability in the long run.
Most of the city governments established MSME offices to provide continuous capacity building trainings
and ensure that enough networks are given to potential enterprises. The SikapBuhay Entrepreneurship
and Cooperatives Office of Quezon City provides a good example. The office provides client and
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business development services for MSMEs specific for the type of livelihood .

The BangkoSentralngPilipinas (BSP/Central Bank of the Philippines) have also partnered with LGUs to
set up credit surety funds (CSFs) to help increase the credit worthiness of MSMEs that are experiencing
difficulty in obtaining loans from banks due to lack of acceptable collaterals, credit knowledge and credit
track records (2014). The project, which began in August 2008, had already established 29 CSF facilities
19
across the country at the end of 2013, with a total of P1.069 billion loans extended .

17
MSME Statistics, DTI website, accessed: http://www.dti.gov.ph/dti/index.php/msme/msme-statistics
18
SikapBuhay Office, Quezon City website, accessed:
http://www.quezoncity.gov.ph/index.php?option=com_content&view=article&id=245%3Asikapbuhay&catid=62&Itemid=28
19
Kathleen Martin. BSP to put up more Credit Surety Funds for MSMEs, Philippines Star, May 2, 2014 accessed:
http://www.philstar.com/business/2014/05/02/1318302/bsp-put-more-credit-surety-funds-msmes ;DaryllEdisonn D. Saclag, BSP

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Corollary to streamlining business processes and providing the necessary support to MSMEs, city
governments have also been keen to update current zoning laws, as these are primary information
requested by potential locators. In Quezon City, Mayor Herbert Bautista shared that they followed current
international standards on zoning which encourages the development of mixed-use communities and
highlights the competitive advantage of specific areas for future developments (2014).

Establishing Meaningful Partnerships with ASEAN Local Governments

Another dimension of strengthening competitiveness in the region and bolstering economic activity is the
creation of sub-regional cooperations and organizations. As of current, ASEAN saw the establishment of
the Greater Mekong Sub-Region (GMS), the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT), the
Singapore-Johor-Riau Growth Triangle (SIJORI), and the Brunei-Indonesia-Malaysia-Philippines East
ASEAN Growth Area (BIMP-EAGA). Based on the terms used, these sub-regional groups aim to induce
greater economic activity among adjacent territories and neighboring countries, along with building
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blocks of infrastructure and narrowing of the development gap among the members (Basu Das 2011) .

It should be noted that these sub-regional groups overlap in terms of membership and their initiatives are
often part of an ASEAN-wide program. While this is true, they still vary in structure and level of
membership. For instance, GMS was established by the Asian Development Bank (ADB) and is primarily
driven by private sector and development organizations investment. On the other hand, SIJORI, IMT-GT
and BIMP-EAGA are government initiatives with local governments as beneficiaries while an independent
21
government-attached body acts as secretariat and steering agency .

Because not all governments are keen to create different growth areas in various sections of their
geographic location and because of the existing constraints to establishing these growth areas (i.e.
structure, political will, financial support), there is value then in finding an alternative exchange system for
ASEAN local governments:

In ASEAN, local governments play an important role in fostering cooperation in the

regional integration process as well as in strengthening mechanisms for competition. Let us do it
among local governments in the Philippines with complementary strengths. For example, metro
cities can form coalitions with suburban municipalities. This will be more elaborate forms [sic] of
sisterhood components can be economic, cultural and educational. This cooperative

aims to open more credit surety funds, Business World, November 24, 2014 accessed:
http://www.bworldonline.com/content.php?section=Finance&title=bsp-aims-to-open-more-credit-surety-funds&id=98432
20
SanchitaBasu Das, Enhancing Regional and Sub-regional Co-operation and Connectivity in ASEAN. ISEAS Working Papers, 3,
(2013): page. Accessed: www.iseas.edu.sg.
21
David Carpenter, IzyaniZulkifli and Mark McGillivray, Narrowing the Development Gap in ASEAN: Context and Approach. in
Narrowing the Development Gap in ASEAN: Drivers and Policy Options, eds McGillivray and Carpenter, (New York: Routledge.
2013) 1-20.

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 arrangements [sic] will help us fill each others gaps, for better competitive advantage (Bautista
2014).

The mechanisms to organize sisterhood agreements between and among local governments inside the
Philippines and even across ASEAN region vary depending the type of partnership involved. But
compared to establishing sub-regional groups, this may prove to be relatively easier with memorandum of
understanding and cooperation or agreement may be forged to enforce the collaboration. There are no
official figures related to sisterhood agreements or twinning arrangements in the Philippines, especially on
the number of agreements enforced. Suffice to say that majority of the cities in the Philippines have
initiated a sisterhood agreement with a fellow Philippine city and had been reaping the benefits of
capacity building and training on various innovative governance practices.

If this is done regionally, the learning among local governments will multiply. As of current, the
Partnership for Democratic Local Governance in Southeast Asia (DELGOSEA) continuously facilitate
workshops and opportunities for study visits on innovative local governance practices among Southeast
Asian cities and municipalities. They have also been active in assisting local governments replicate their
chosen innovative practice (www.delgosea.eu).

Conclusion: Maximizing the Role of Local Governments in the Regional Economic Integration Process
The previous discussions extensively discussed the potential role of local governments in preparing for
AEC in 2015, particularly on narrowing the development gap and providing the necessary support for
local business and economic activity. At the heart of the discussions, the role of local governments are
collaborative and complementary with those done already at the national leveltheir primary duty is to
tailor-fit these general initiatives into something that will highlight their respective competitive advantages.

In particular, local governments have already made significant steps towards easing business activity by
streamlining business processes, providing necessary incentives for MSMEs, and updating zoning laws
to meet international standards. Further, specific support programs related to micro-financing and
ensuring access to credit are given to smaller economic players. In so doing, local governments do not
only diversify the market by opening its doors to infant industries with the potential to grow into productive
enterprises, they are also making the process inclusive. In a broader perspective, a growing and healthy
local MSME sector helps create a more equitable environment because now the members of the informal
economy are integrated and developed into potential members of the middle class. Finally, meaningful
partnerships and collaboration between and among Philippine local governments and also with other
ASEAN local governments should be forged. This is to ensure that necessary knowledge and innovative
practices are effectively shared, along with the benefits of economically linking local markets.

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Meanwhile, along with local government efforts to contribute positively in the regional economic
integration process, additional efforts at the national level should also be ensured:

the National Government must complement these with significant reforms as well,
including: (1) expansion of the Philippine Business Registry (PBR) to connect more local
governments, (2) connection of the Securities and Exchange Commission to the PBR, (3) Further
streamlining of Bureau of Internal Revenue requirements for starting a business, (4) streamlining
of requirements under the Fire Code of the Philippines, and (5) reforms in the area of barangay
permitting (Bautista 2014).

Such efforts are hinged on the fact that these need executive issuances and/or legislative measures to
ensure its application and implementation. More than anything, the national and the local governments
should work together towards attaining the targets for December 2015.

Still consistent with the concept of MLG, the paper concludes with a recommendation of creating a
working group or an ASEAN committee under AEC for the local government sector. This body will be
essential in ensuring that the necessary awareness for AEC reaches the grassroots and that the majority
Southeast Asians residing in cities understand it. Moreover, the group may work on programs and
initiatives specific for local governments, particularly on creating platforms for partnerships and
networking. The group may also provide policy recommendations particularly on engaging ASEAN local
governments in ASEAN endeavors to pursue and attain the targets for AEC 2015.

In the final analysis, the paper underscored the value of local governments in the regional economic
integration process. With local governments willing to strategically complement national government
efforts, there is brighter hope that the goals of AEC are at hand. The words of Dr. Habito ring true, full
participation in AEC 2015 pushes us to finally do the right things. n

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