Reducing the Price That Government Pays in Procurement. The Case of the Philippines

Roderica Taduran Stamer

Journal of Current Southeast Asian Affairs, 2007, vol. 26, issue 4, 6-31

Abstract: The Philippine government now pays less for the same goods it used to procure some years ago. In some cases, the reduction in price reaches as much as 50 percent. What dramatic change is responsible for this result? How did the change take place? Recent economic research has emphasized the importance of institutions in fostering economic development. Further, institutional changes occur whenever organizations deem it profitable. This framework shall be used in order to answer the questions above. Firstly, it will be argued that the savings that the government now enjoys are due to the successful implementation of reform measures in its procurement system. In particular, electronic procurement was established and in 2003 a new comprehensive law was passed. The paper will analyze some of the reforms’ features in clipping opportunities for corruption, removing barriers to entry, and lessening the likelihood of collusion. Secondly, the paper will argue that the public furor over corruption in government, which reached a climax during the impeachment of a previous president, provided the much-needed push for the reforms. The potential savings that the government was not able to realize in the old procurement system was the primary ‘selling point’ for the passage of the new law.

Date: 2007
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