DoT governance mechanism bound to fail

On July 4 this year, the Management Association of the Philippines (MAP) came out with its Statement of the Week titled “A Privately Run Tourism Promotion Board: An Idea whose Time Has Come.”

In this position paper, MAP noted that we are laggards in the region in tourist arrivals, despite the many things we have going for us in terms of tourist attractions compared with our next-door neighbors.

MAP strongly recommended collaboration between the Department of Tourism (DoT) and the tourism industry on the one hand, and all other private sector constituents that have a stake in this all-important sector of the economy, through some kind of a tourism promotion body (BusinessWorld, 4 July 2011).

On July 28, the DoT came out with its own take on the issue (Philippine Daily Inquirer, 28 July 2011). The DoT, through its spokesperson, bemoaned MAP’s position on the issue, arguing that the industry is best left to those who are identified with it, and blasting outsiders for “believing that they can do a better job than those that (sic) have been practitioners for decades.”

I fully concur with MAP’s stance on this issue. Tourism is a major component of our economic development programs and it affects many aspects of the country’s economic and social life, not to mention its ecology and its still pristine physical setting. It simply is too important an industry to be left alone to a single government agency and the industry players who have a direct financial interest in it. It calls to reason, therefore, that all segments of Philippine society—including, I might add, other government agencies and political subdivisions, church organizations, and NGOs—should play key roles in ensuring the success and sustainability of our tourism industry.

To say that these stakeholders “… are still unable to participate in international and domestic tourism promotions,” as this DoT functionary disdainfully and condescendingly declared, is senseless swagger. All of us have an important stake in the industry, and we all have something to contribute. There is therefore a need for a mechanism by which to bring together complementary resources and capabilities to capture value through synergies, resources and capabilities of which no single government agency or industry has a monopoly.

The DoT’s stand on the matter is both arrogant and asinine—arrogant in its assertion that only they know what’s good for the industry, and asinine in that it reflects an utter lack of understanding of the complex inter-connectivity among the different factors bearing on the industry and those who are dependent on, and who contribute to it.

From where I sit, there is no way that the industry’s interests, much less those of society itself, are best served by leaving its governance alone to the DoT and the various elements that comprise the industry. Contrary to the DoT’s assertion, the current set-up is NOT “the most (sic) ideal solution.” I have earlier noted that no single government agency or industry has a monopoly of the relevant expertise and resources that are essential to the industry’s continued growth. Add to this the fact that the industry has so many other stakeholders who deserve to be heard, and equity considerations dictate that they should be heard.

Having said all that, let me stress that my focal arguments against DoT’s counter-proposal to MAP’s idea of the Tourism Promotion Board actually center on two compelling reasons why I think that the governance mechanism favored by the DoT simply will not work.

One is the inherent flaw in the incentive system that underlies public-sector governance. As a rule, public servants are evaluated and compensated on the basis of performance measures that are specific to their assigned responsibilities. Thus, DoT officials and staff are “incentivized” to contribute only to the well-being of the industry under their care—to the complete disregard of spillover effects, both negative and positive, on the other segments of the economy and society. The interests of all the other stakeholders in the industry are completely ignored in the performance of their mandated tasks, resulting in a net loss of potential value elsewhere in the economy.

A second and more insidious reason is the natural tendency of regulators and the regulated to find common cause, a tendency to cozy up to each other in a live-and-let-live symbiotic relationship in which both have the incentives to lavish favors on each other. The most common cause of corruption in government is that both sides of this venality benefit from breaking the law. A one-on-one regulatory relationship as the one envisioned by DoT is bound to spawn such a situation.

The DoT proposal should be rejected outright for two reasons: It is inefficient in that it fails to maximize value for society; and it invariably leads to corruption.

(The article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines. The author is a knowledge management consultant. Feedback at [email protected]. For previous articles, visit <map.org.ph>).