ASIAN CITIES IN THE 21 CENTURY - Asian … officials from 14 Asian cities participated. 10 ......

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ASIAN CITIESIN THE21ST CENTURYContemporaryApproaches toMunicipal Management

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Leadership and Change in City Management

© Asian Development Bank 1999

All rights reserved

First published April 1999

This publication was prepared by Asian Development Bankstaff. The findings, interpretations, and conclusions expressedin it do not necessarily represent the views of the Bank andthe ADB Institute or those of their member governments. TheAsian Development Bank and the ADB Institute do notguarantee the accuracy of the data included in this publicationand accept no responsibi l i ty whatsoever for anyconsequences of their use.

ISBN 971-561-210-5Publication Stock No. 010499 (Vol I)

Published by the Asian Development Bank and theAsian Development Bank InstituteP.O. Box 789, 0980 Manila, Philippinesemail: [email protected]: http://www.adb.org; http://www.adbi.org

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Volume I

Leadership and Change inCity Management

Proceedings of a Forumin Tokyo, Japan

16-20 February1998

Edited byNaved Hamid and John Martin

Published by theAsian Development Bank Institute

and theAsian Development Bank

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CONTENTS

PREFACE v

FOREWORD vii

I . INTRODUCTION 1

I I . THE CHALLENGES OF CHANGE IN MUNICIPALMANAGEMENT 7Keshav VarmaFormer Commissioner, Ahmedabad Municipal Corporation

I I I . ECONOMIC AND URBAN DEVELOPMENT 17Richard GordonChairman and Administrator, Subic Bay Metropolitan Authority

IV. MUNICIPAL LEADERSHIP AND CHANGE 29

A. THE NAGA CITY EXPERIENCE 30Jesse RobredoMayor, Naga City, Philippines

B. LEADERSHIP AND CHANGEIN THE CITY OF COLOMBO 42Omar KamilDeputy Mayor, Colombo, Sri Lanka

C. LEADERSHIP IN THE AGE OF GLOBALMANAGEMENT 45Glen S. FukushimaVice President, AT&T Japan Limited

D. LEADERSHIP AND CHANGE 48Asad Ali ShahManager; Water Supply, Urban Development and

Housing Division East

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V. CREATING DIRECTION: DEVELOPING VISION,MISSION, AND STRATEGIES 51

A. VISION AND MISSIONIN MUNICIPAL MANAGEMENT 52

B. ORGANIZATIONAL PLANNING 54

VI. CREATING A CUSTOMER FOCUS 69

A. CREATING AND SUSTAINING CUSTOMER FOCUS 69Rod OxleyChief Executive Officer, Wollongong City CouncilAustralia

B. CREATING A CUSTOMER FOCUS 74IN CITY GOVERNMENTJesse M. RobredoMayor, Naga City; President, League of Cities of the Philippines

VII. FINANCING URBAN DEVELOPMENT 91

A. EVOLVING ROLE OF LOCAL GOVERNMENTS 91Asad Ali ShahManager; Water Supply, Urban Development and

Housing Division East

B. FINANCING THROUGH PARTNERSHIPS 93Keshav VarmaFormer Commissioner, Ahmedabad Municipal Corporation

VIII. LOCAL GOVERNMENT INNOVATIONS IN JAPAN 103

A. LOCAL GOVERNMENT IN JAPAN 103Jiro KubotaSecretary General, Council of Local Authorities

for International Relations

B. INNOVATIONS IN MUNICIPAL MANAGEMENT 108

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IX. CONCLUDING REMARKS 117

A. ASIAN DEVELOPMENT BANK 117Preben Nielsen

B. AUSTRALIAN INSTITUTE OF MUNICIPALMANAGEMENT 119Barrie Beatti and John Martin

C. ASIAN DEVELOPMENT BANK INSTITUTE 121Jesus P. Estanislao

LIST OF PARTICIPANTS 123

ABBREVIATIONS 131

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Introduction

PREFACE

The Asian Development Bank Institute (ADBI)was established in December 1997 in Tokyo

through the joint efforts of the Government of Japanand the Bank. The Institute is primarily engaged inresearch on development issues, as well as capacitybuilding and training based on our own research.In the field of capacity building, we aim to help theBank�s developing member countries addressdeficiencies in institutional capacity throughtraining, exchange, and dissemination of effectivedevelopment strategies, paradigms, and bestpractices.

Until recently, local government has beenlargely overlooked in the developing membercountries. However, as central governments increasetheir focus on policy, and devolve responsibilitiesfor service delivery, the role of local governmentshas expanded proportionately. But localgovernments in general lack the trainedprofessionals they need to address the difficult issuesthey face. Local governments range in size fromsmall rural towns to megacities like Bangkok,Calcutta, Shanghai, and Dhaka. Yet all face similarproblems.

Because ADBI recognizes the extremeimportance of enhancing the capability of localgovernment to meet the new challenges, one of itsfirst activities was the Forum on MunicipalManagement held in Tokyo from 16 to 20 February1998. This volume summarizes the proceedings fromthat Forum.

The objective of the Forum was to providean opportunity for officials from cities in Asia toshare their experiences and learn about moreeffective ways of managing their city organizations.Thirty-one officials from 14 Asian cities participated

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in the Forum and discussed issues and techniquesrelating to leadership, corporate and business plans,human resource management, and customer focus.Many of them have been trying to put into practicewhat they learned in Tokyo, and several of citiesrepresented there now participate in the Bank�songoing project for Enhancing Municipal ServiceDelivery. Others have sent officials to ADBI-hostedforums for senior local government officials.

The second forum, held in Cebu City,Philippines, in December 1998, inaugurated theAsian Mayors� Network for fostering better relations,exchanging knowledge, and sharing experiences.The third forum will bring together mayors from atleast 20 Asian cities in Colombo, Sri Lanka, in mid-1999. The main objective is to improve theeffectiveness of local governments by exposing keydecisionmakers to new management techniques andsuccessful experiences of other cities.

The search for better models and methodscontinues among both practitioners and researchersof local government. It is critical that municipalleaders squarely face the challenges brought aboutby the information and communication revolution,global competitiveness, and rapid urbanization. Tothis end, ADBI is developing a comprehensive long-term research program on New Challenges for thePublic Sector with a special focus on physicalinfrastructure, information and urbanization. Thispresent volume represents an important componentof the Institute�s forthcoming research program.

Masaru YoshitomiDean, Asian Development Bank InstituteTokyo, Japan

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IntroductionForeword

M unicipal managers in Asian cities today arefaced with the formidable challenge of finding

effective and innovative ways of dealing with rapidurbanization, growing demand for improved publicservices, and declining financial support from centralgovernments. Moreover, in developing countries inAsia, the infrastructure requirements of the urbansector are so large that the multilateral developmentbanks and other donors can at best contribute onlya small fraction of the total. However, there is asolution to this apparent dilemma. Becauseeconomic activity and wealth in these countries willbe largely generated by the expanding cities, theresources needed for municipal infrastructuredevelopment will be available. Tapping theseresources, however, will require significantimprovement in the management of the cities.

Toward this end, and in recognition of theimportant roles that municipalities will play in theareas of economic growth, human development, andenvironmental management, the Asian DevelopmentBank (ADB) has identified improvement inmanagement and public service delivery at themunicipal level as a priority area in its governanceagenda.

In 1997 and 1998, ADB and the AsianDevelopment Bank Institute (ADBI) organized anumber of workshops aimed at creating awarenessof recent developments in public sector managementat the local government level. Participants sharedexperiences of successes in reforming municipalitiesand in motivating citizens and municipal managersto embrace change. Two of the workshops wereorganized under ADB�s regional technical assistanceon Governance and Development, which facilitatedcitizen initiatives to promote municipal government

The Bank hasidentifiedimprovement inmanagementand publicservice deliveryat the municipallevel as apriority area inits governanceagenda.

FOREWORD

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reforms in Lahore, Pakistan, and Dhaka, Bangladesh.The third was the ADBI-sponsored MunicipalManagement Forum in Tokyo, Japan, which wasattended by over 30 municipal managers from 10countries.

The three volumes on Asian Cities in the 21stCentury: Contemporary Approaches to MunicipalManagement are the outcomes of these initiatives.

� Volume I, Leadership and Change in CityManagement, discusses concepts such asleadership, vision, mission, planning, andcustomer focus to which participants of theTokyo forum were exposed. It also providesexamples of the application of these conceptsby municipalities in tackling their problems andimplementing change programs.

� Volume II, Municipal Management Issues inSouth Asia, discusses issues in selected SouthAsian cities, with a special emphasis onorganizational problems in Lahore. It alsoprovides a review of municipal reforms andurban governance issues in India and Sri Lanka.

� Volume III, Reforming Dhaka City Management,discusses the institutional issues, financialmanagement, and solid waste management ofone specific city � Dhaka � and providesrecommendations on organizational reforms todeal with these issues.

We are indebted to many individuals for thecompletion of these publications. We recognize thecontribution of the participants and speakers in theworkshops, who continue to do their best, every day,to make their communities livable through bettermunicipal services. Naved Hamid coordinated theworkshops and supervised the preparation of the

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reports. Rosario Belen and Merly Mallion assistedin organizing the workshops and preparing thematerials for publication. Eric McGaw providedediting services and Ramiro Cabrera did the coverdesign.

We trust that this set of publications will makea positive contribution to the literature on municipalmanagement. Further, we hope that it will prove auseful resource for city managers in their efforts toimprove the quality of life for their citizens, and thuspromote the development of responsive and effectivelocal government.

Yoshihiro IwasakiChief, Strategy and Policy OfficeAsian Development Bank

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Introduction

I. INTRODUCTION

Increasingly, cities are defining the way peoplelive in Asia. The management of cities and theirexpanding infrastructure is therefore of crucial

importance. The Municipal Management Forum,which was hosted by ADBI in Tokyo 16-20 February1998, provided an opportunity for officials fromvarious Asian cities to learn about more effectiveways of managing their city organizations.

The Forum was jointly developed by ADBI,the Bank, the project consultants, and professionaland academic staff from the Australian Institute ofMunicipal Management. During the month prior tothe Forum, the consultants traveled throughoutEast and South Asia to meet with participants andtheir colleagues to discuss management issues intheir cities.

This report is a summary of the Forum. Itattempts to capture the highlights for the busy citymanager while providing examples of innovation incity management in various parts of Asia.

Over the last two decades, publicadministration everywhere has gone throughdramatic changes in line with ever broader political,social, and economic reforms. Governments havetended to discard large bureaucratic structures infavor of greater emphasis on the process ofgovernance. They have looked to the market andother mechanisms to develop, regulate, and delivergoods and services to the community. To this endgovernment organizations have become smaller andmore focused on the long-term strategic issuesfacing their communities.

Recognizing this broader context of change,the Forum ensured that the subject was treatedas an important cornerstone of debate anddiscussion throughout the five days. While the rate

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of administrative reform is different for differentcities, the general consensus was that there is nogoing back to the large monolithic structures ofgovernment that existed in the past. What comesout of the discussion is the importance of a strongsense of community and the need for visionaryleadership in municipal management. Citymanagers are vested with the responsibility ofempowering communities to take ownership andcontrol of their situation and to become engagedin the decisionmaking that concerns their collectivefutures.

Contemporary approaches to effective cityor municipal management look to innovative andcreative ways of addressing the many issuesbefore us. The complexity of functions acrossAsian cities means that there are many ways ofmanaging cities to improve the delivery of worksand services. There are, of course, also generallyaccepted approaches to effective municipalmanagement. In this chapter, a brief overview isprovided of these approaches, followed by anoutline of the report.

Effective municipal management ischaracterized by:

� appropriate leadership and the managementof change,

� clear direction,� an appropriate organization culture,� a range of appropriate techniques for change,

and� a performance orientation for implementing

and managing change.

Effective leadership advocates a clear visionof what is possible. It is also one that recognizesand responds to the challenges of change. Effectiveleadership gives ownership to key stakeholders,vesting in them responsibility commensurate with

There is nogoing back to

the largemonolithic

structures ofgovernment

that existed inthe past.

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Introduction

the authority they seek. In turn, the stakeholders�vision provides clear direction for the organizationthrough strategic, corporate, and business plans.Underpinning leadership and direction is a concernfor organizational culture, the use of specifictechniques for change, and an effective

Figure 1: Contemporary Aspects of Best Practice MunicipalManagement

Leadershipand Change

Techniquesfor

Change

ManagingOrganization

Culture

Implementing andMonitoringChange

performance monitoring system. These conceptsare presented in Figure 1.

The structure of the rest of the report is asfollows.

Chapter II identifies the challenges of changeand discusses the need to alter our ways of thinkingif we are to effectively address the issues facingmunicipal management. Keshav Varma�spresentation on the challenges he faced asCommissioner for the city of Ahmedabad in Indiadescribes a vivid example of such a paradigmchange.

Chapter III highlights the challenges inherent

Directionand Strategies

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in creating economic development to sustain thecommunities within Asian cities and the need toenhance urban infrastructure so that its use isoptimized for the benefit of the whole community.Richard Gordon�s dynamic presentation on his roleas Chairman and Administrator of Subic BayMetropolitan Authority shows how one city reverseda perception of economic doom and gloom into oneof optimism and enthusiasm for the new Philippines.

Chapter IV focuses on the importance ofeffective leadership in municipal management. Acase study is presented by the mayor of Naga Cityin the Philippines, Jesse Robredo, an exemplaryleader who demonstrates through action andinvolvement with people at all levels of the municipalhierarchy that action and involvement are keyingredients in effective leadership. This chapteralso includes presentations by Omar Kamil, GlenFukushima, and Asad Ali Shah.

Chapter V summarizes the conceptualmaterial presented in the Forum. The chapterhighlights comments made by participants relatingto developing implementation strategies to achievea city�s vision, especially those relating toorganizational structure and human resourcemanagement.

Chapter VI discusses the idea thatmunicipalities provide services to customers �people who live and work in the city � not justthose who own land. Mr. Oxley�s and Mr. Robredo�stwo quite different approaches to creating acustomer focus are covered here.

Chapter VII opens with a comment oncontemporary approaches to financial managementbefore reviewing Mr. Varma�s presentation on howthe City of Ahmedabad developed the capacity toissue municipal bonds.

Chapter VIII highlights the system of localgovernment in Japan as presented by Jiro Kubotaand innovations in municipal management in Tokyo.

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Introduction

The participants had the opportunity to visit severalurban development innovations in Tokyo as guestsof the Tokyo Metropolitan Government and CityNet.These innovations included a land readjustmentproject, a new waterfront city, and a public-privatejoint venture urban development project inYokohama.

Chapter IX presents the closing remarks ofrepresentatives of ADB and the Australian Instituteof Municipal Management, as well as the Dean ofthe ADBI.

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Introduction

II. THE CHALLENGES OF

CHANGE IN

MUNICIPAL MANAGEMENT

If the predictions concerning the rate of urbangrowth in Asia are dramatic, so too is theamount of funding required for the additional

infrastructure needed to ensure the economic andsocial well being of the expanding urban population.The challenges of change in municipalmanagement are therefore enormous. The ADBvideo Cities under Siege identifies the challengesfacing municipal management. These includepopulation growth, economic sustainability, andinfrastructure issues involving clean water,transport, and environmental quality.

The challenges of change in municipalmanagement demand that mayors and citymanagers think in new and creative ways toaddress the new issues. They need to challengethe way in which we have traditionally managedour cities. This is nothing less than undertakingthe business of discovering the future.

Driven by the increasing challenges facingAsian cities, the scope of municipal managementis changing. The challenge for municipal managersis to identify the paradigms they currently use andask if these boundaries and behaviors areappropriate today, and will be in the future.

Keshav Varma�s presentation to the Forumis provided as an example of paradigmatic change.As Commissioner of the Ahmedabad MunicipalCorporation, he changed the community�sperception of the Corporation from that of a

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reactive and ineffective organization to onecharacterized as responsive and in which citizenswere willing to invest by buying municipal bonds.

Keshav VarmaFormer CommissionerAhmedabad Municipal Corporation

I have the privilege of presenting to you the casestudy of the city of Ahmedabad, the capital city ofthe state of Gujarat, in the western part of India.Ahmedabad has a population of about 3.6 millionpeople and has long been known as the �Manchesterof India.�

I am proud to have been the MunicipalCommissioner of this city for three years. What Iwill do today is relate to you an experience ofconvergence, an experience of pride, which Ibelieve is so important in managing cities. Citygovernance is not just the provision ofinfrastructure. City governance is much more thanmerely providing underground utilit ies. Citygovernance has to be built very differently.

My fear is that we are not keeping pace withwhat needs to be done. The current professionallevel of city management is a matter of seriousconcern. Cities are the engines of growth. But whatis fueling the engine? Is an old Indian locomotivedriver throwing coal into the furnace, or is it beingrun by professionals?

Engines of growth are often run by peoplewho do not appreciate the complexity of municipalmanagement. They do not appreciate the role ofthe economy of a city and the damage that a citycan cause to its neighbors. A badly governed citycan make rural, agricultural, educational, and familyhealth policies ineffective. For example, you can�thave family health if you don�t have basicinfrastructure, and you can�t have basic

Cities are theengines of

growth. But whatis fueling the

engine?

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Introduction

infrastructure if you don�t have the right citygovernance.

What I want to say here, very clearly, is thatthere is no scope for weak governance in citymanagement. The time for skepticism and tentativeapproaches is gone. We have almost lost the race.We have to be aggressive, strong, andprofessional in developing and governing cities.

In presenting the case of the city ofAhmedabad, let me give you a profile of theMunicipal Corporation. It is a large organization,encompassing all civic services and the provisionof related infrastructure. These include education,water supply, sewerage, street lighting, medicalservices, fire service, roads and public transport,parks, and dike maintenance.

The story starts in 1994 when the city washit by bubonic plague. This disease represents theultimate in the failure of city management. Whenplague broke out in the city, the people were soangry that it was impossible for the Chief Ministerto even enter the city without being threatened. Iwas assigned the daunting task of coordinatingefforts to control the outbreak. In 10 weeks, weremoved 65,000 tons of solid waste from the city.

Tensions ran high during this period. Once,while carrying out our work, we were nearly beatenup by members of the Jain community, who undernormal circumstances are the most peaceful of thecitizens of India. The reason for their animositywas the inaction of the Municipal Corporation andthe unresponsive attitude of its employees. Thespark that ignited this incident was the camera crewthat was following us to document our efforts toclean the city. The Jains got the impression thatwe were more interested in cheap publicity thansolving the problem. Fortunately, during thefollowing months our relationship with the citizenssteadily improved. In the end, their support for theMunicipal Corporation became the main reason for

When plaguebroke out in thecity, the peoplewere so angrythat it wasimpossible forthe ChiefMinister toeven enter thecity withoutbeingthreatened.

The Challenges of Change in Municipal Management

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our success.I was appointed Municipal Commissioner in

November 1994. The Corporation had beencoping with great difficulties over the previous 20years. The situation was so bad that publicservants were reluctant to serve in Ahmedabad.There was a general perception that the MunicipalCorporation smacked of corruption, and few peopleunderstood what was actually going on.Corporation staff members were reluctant toengage in a dialogue with the citizens about theirproblems. The Corporation was in such a defensiveposition that it ceased to be proactive.

Ninety percent of expenditure was going intosalaries while only 10 percent was spent on actualmaintenance and running the organization. On topof this, a very aggressive labor union exploitedthe situation. The institution thus representedvested interests with no concept of public service.

We received a contempt order from the HighCourt in which the Commissioner was asked to bepresent. The condition of roads was appalling.There were potholes two feet deep. Solid wastewas not taken out of the city.

Such was the situation when the newmanagement took over. Our challenge was how,in the face of all this adversity, to create credibility,hope, and confidence.

The first decision we took was thatAhmedabad would not turn to the state or centralgovernment for financial assistance. The city, wefelt, needed to develop the capacity to raise itsown revenue. This proposition was put to a townhall meeting of about 2,000 people. Many of thesepeople were incredulous about our intentions. Oneadministrator said, �You people are talking strangethings!� But we held firm that the city must beresponsible for itself. My personal belief is thatmoney is never the problem in city management.Using this concept as a guiding principle, we got

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Introduction

to work.We decided to begin with something with high

visibility, something that would make people standup and take notice � taxes. The recovery of duesat the time was only 8.2 percent. Property tax hadbeen taken over by the local mafia. Nobodybelieved in any kind of enforcement. When weannounced that everybody would have to paytaxes, nobody took us seriously. That was one ofthe biggest problems. We wanted to send amessage to the city that would make theseriousness of our intentions clear. Unless we weretaken seriously, we would not be in a position toserve the people.

At the time the worst delinquent was the stategovernment. After giving a single notice, we shutdown the water and drainage connections of allstate government offices and public sectorcorporations simultaneously. Despite the inevitablehue and cry that ensued, we held firm. The CityCorporation of Ahmedabad, we affirmed, could notrun an efficient operation by continuing to subsidizethe state. They had to pay.

A huge controversy ensued. That was fine.We wanted controversy. Why? Because previouslynobody took city government seriously. When thepress took up the issue, we stridently told themthat we were no longer in the business ofsubsidizing. A lot of feathers were ruffled, but asignal was given that nonpayment of taxes was nolonger acceptable. The result? Within 15 days thestate government paid its dues.

Another difficulty with which we had tocontend was the influence and power of the localmafia, which controlled transport completely andassigned motorcyclists to escort the trucksthrough the checkpoints to avoid payment of theoctroi (entry or exit taxes on goods). They hadguns. One day, after monitoring the streets on a24-hour basis, we caught a major underworld

The Challenges of Change in Municipal Management

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figure escorting six trucks. He was apprehended,brought into the center of the city, and given thethird degree in front of the public. More than 10,000people witnessed the operation.

The apprehension and castigation of this manwas important because we were trying to revive prideand confidence of people in the governance of theircity. Three days after this incident, our income wentup 25 percent. In five months the bank overdraftwas eliminated, and in 2.5 years our annual incomerose from $35 million to $65 million in spite of noincrease in tax rates and no new taxes. Income fromproperty tax went up from $16 million to more than$30 million per year during this period. The MunicipalCorporation suddenly started to show a surplus.

The High Court of Gujarat issued severalorders to stop the tough measures we were taking.However, while the Court was recessed for the wintervacation, we did a thorough cleanup job aroundthe area of the court building. When the High Courtopened, the Chief Justice was so surprised thathe called me to ask what had happened. �Thereseems to be a lot of good work taking place,� hesaid, adding that he would support the Corporationin all the tough measures it was taking.

Our next move was to start a cleanliness drivein public areas and night markets. We made theseareas completely litter free. We began repairingimportant roads, making sure that the work wasvisible to government officers and politicians. Weprovided better lighting, including sodium lightingon major roads. People started talking. Impressedby our earnestness and hard work, they began toparticipate. Realizing they were finally appreciated,Corporation staff members began feeling betterabout themselves. Although only the surface ofthe problem had actually been scratched, peoplestarted saying that things were changing. Theattitudinal difference was manifested in small butmeaningful ways. When our officers queued for

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Introduction

fuel at service stations, people would step asideand allow them to get through so they did not haveto wait.

Once our credibility had been established,partnerships with people began to emerge.Industrialists, professionals, nongovernmentorganizations (NGOs), children � we engagedthem all. Our message was very clear: you arespecial, this is a special city, you should be proudof it. One of our pride-engendering campaigns wasthat, unlike Mumbai, Calcutta, or Chennai,Ahmedabad was never governed by the British.We built on the role played by Gandhi, who camefrom Gujarat, in the freedom movement.

Partnerships started cropping upeverywhere. Both NGOs and the private sectorcame forward. Together they established the city�sfirst slum networking project, a $100 millionenterprise involving 1.2 million people. We werealso the first city to seek a credit rating. Previouslynobody was willing to provide a loan to us, but afterAhmedabad earned an A+ rating it was not difficultto raise capital.

We also started professionalizing the city�sworkforce of 48,000. Officers� qualifications werechanged from mere graduate degrees to MBAs.We employed qualified chartered accountants andenvironmental engineers. Employment with theMunicipal Corporation of Ahmedabad started tobecome a mark of distinction.

At all levels open and direct recruitmentaccounted for 30-40 percent of positions, asopposed to 100 percent by promotion earlier.Introducing the concept of direct recruitment ofprofessionals into the Corporation did much forits prestige. Officers now had to go through ouropen interview/selection process. Automaticupgrading to officer level no longer existed. In thefirst round of recruitment we acquired 40 MBAsand chartered accountants to assist with fiscal and

Once ourcredibility hadbeenestablished,partnershipsbegan toemerge.

Previouslynobody waswilling toprovide a loanto us, but afterAhmedabadearned an A+rating it was notdifficult to raisecapital.

The Challenges of Change in MunicipalManagement

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corporate planning. We started developing modernand sensible business processes like rolling plans.Things started happening in a very different way.

Industry started forging partnerships with thecity. We called in Mr. Allan Jacobs from Berkeley,who started the first road partnership. We createdthe first commercial street, subsequentlyrecognized by the Chairman of Marks and Spenceras the first classic business street in India. Theprivate sector, which developed the commercialstreet, was given advertising rights. We forged agreen partnership with NGOs and industry, and anurban forest sprang up. Some 31 parks andgardens were developed. When we handed overparts of the city to the private sector, a veryinteresting competition was engendered. At arecent international conference, Ahmedabadreceived a commendation from among 600 citiesfor its initiative in this area. Bangalore and Delhidid well, but Ahmedabad, never before known forits parks or gardens, was among the 23 cities toreceive a commendation.

We also developed partnerships withprofessionals by subcontracting work to theminstead of relying on Corporation engineers to doall the work. Public/private partnerships led to thecreation of the first development board.Undertakings like Ahmedabad�s first internationalfinance and trade center were handed over toprofessionals.

The Corporation completely changed itsstandards of quality control. Let me cite an example.Many Indian civil servants are accustomed todisregarding politicians in governance. In myexperience, once these people are accorded therespect that is their due, they will support you, thusbecoming part of the whole development process.A major political party was thus persuaded to agreeto the removal of 24 temples from the main streets.When we took some very serious action against

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Introduction

the unions, the politicians sided with us even thoughthe unions belonged to the same party as the unionmembership.

Ahmedabad is also known to be acommunity-sensitive city. How then could weremove the temples obstructing the street and traffic?Because of the emotional integration that the cityhad achieved, we were able to remove certaintemples and mosques, as well as a gurudwara �all of which were creating a problem for traffic flow.

One of the most important cultural changeswas to completely open the City Corporationinstead of allowing it to be a mystery. We drewaside the curtains so that everybody could seewhat was going on. People responded strongly.

The budget of Ahmedabad MunicipalCorporation rose from $115 million to $265 millionin two and a half years. I believe the budget hascrossed $280 million this year, which probablymakes it the second largest budget in India nextto Bombay. The Municipal Board gaveAhmedabad, which previously had a very dubiousfinancial record, an AA credit rating. When the saleof municipal bonds opened on 16 January 1998, itsoon closed due to oversubscription.

We have entered into a project programmingjoint venture. We also run future projects withMontgomery Watson for which we pay 2 percent.We have created two separate companies, onefor project programming and one for convertingsolid waste to biofertilizer.

The concept of better land use and urbanplanning will make a difference of over $60 millionto the income of the city. We have also includedan aspect of cultural heritage by encouraging thecity in its development control regulations to try toexpress itself in terms of its past. Ahmedabad wasknown for its modern facade and for the way itwas planned. We have now included cultural

The Challenges of Change in MunicipalManagement

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heritage as part of the planning process.I want to emphasize that throughout this

campaign about municipal governance we listenedto the people. Throughout all our campaigns, evenin the first polio campaign, we went directly to thechildren because the people of Ahmedabad had tobe a party to this entire change process. This isfundamental to city governance. If the people arenot with you, you cannot long remain in the driver�sseat.

During the past three to four years,Ahmedabad has had no communal disturbances.We took serious action in our first polio campaignand immunized minority children. Similar successeswere recorded in dealing with unions, providingclean water, and civil service reform. The mostdifficult accomplishment, the professionalization ofthe Municipal Corporation, will likely have thegreatest impact.

One of the biggest problems in South Asiais that civil servants in city postings have a highturnover rate. They rarely stay for more than sixto seven months. I therefore request ADB and theWorld Bank to help develop some kind of municipalmanagement service for both the IndianAdministrative Service and the Pakistan CivilService.

I have told you the story of a city undergoingdramatic change. Under the new Commissioner, Ibelieve the city is doing even better. An extremelydynamic person, he is leading in the right direction.Very soon Ahmedabad�s Municipal Corporation willhave a budget of over $300 million.

So this is the story of Ahmedabad. I am veryproud to have played a part in it.

If the peopleare not with

you, you cannotlong remain in

the driver�sseat.

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Introduction

Creating economic development within Asiancities is an important challenge for citymanagers if they are to lead their

communities into the next century. The Bank hasidentified the link between urbanization andeconomic development. Economic activity is theengine that both creates and sustains urbanization.Economic activity also provides the resources withwhich city managers provide the necessaryinfrastructure and services.

This chapter presents the dramatic story ofone city�s attempt to address a major change inits economic potential � the withdrawal of theUnited States Navy from its long-established basein Subic Bay, Philippines. The Mayor of the City ofOlongapo at the time, Mr. Richard Gordon,engaged his community in a campaign designedto maintain the base as a community asset anduse it to develop Olongapo into a major transporthub for the region. This is a story of courage andleadership, often in the face of personal threat,that saved a community from stagnation anddecline.

III. ECONOMIC AND

URBAN DEVELOPMENT

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Richard GordonChairman and Administrator, Subic BayMetropolitan AuthorityOlongapo City, Philippines

It is a great pleasure and honor to be here thisafternoon on behalf of my community to share withyou some of the experiences of Subic Bay. Whatwe have done in Subic can be represented in aphrase I suggested when I became Mayor ofOlongapo on 3 March 1980:

This country needs not just a change of men,but a change in men!

Attitude is very, very important. It takesleadership and people to form a partnership forchange.

I come from a community that was considereda �sin city� because it was totally dedicated toserving the US Navy, its shipyard facility, logisticswork, and so on. Outside the base, the city wasnothing but houses, bars, and nightclubs.

When I became the Mayor of Olongapo it wasa crime-ridden area. I was Mayor of a town that wastotally dependent on the US Navy. It had noagriculture, and all commerce and industry wasdedicated to the service of the US Navy. So whatdid we do? We sat down with the people and asked�What are Subic and Olongapo going to be like inthe year 2000?�

We held a conference and invitedeverybody: jeepney drivers, lawyers, doctors,even bar girls. It was a very big group. We saidwe can make this into a free port side-by-sidewith the US Navy, and we produced a master plan.We submitted it to the national government. Wedecided we would pursue a program to becomea model city. We concluded that crime could notbe eradicated because the national government

19

Introduction

controlled the police. However, if peace and orderwere not maintained we would not succeed inattracting investors to our community.

We created a system that gave responsibilityto the ordinary people of Olongapo by making eachof them a �miniature mayor.� I said you can becomeMayor of this part of the street. You have to keepit clean, you have to have a dustpan, you have tohave a broom, you have to have a uniform so thatpeople will recognize you, you have to have an IDcard, and you have to report crime. When you seecrime happening you must report it. If you don�treport it, you will be replaced by somebody moreresponsible. We told them that they could not bringtheir children onto the streets because we didn�twant them growing up as street children. We wantedthem to have an education. We accompanied thiswith slogans like Aim high, Olongapo! Let�s haveambition! Let�s have a free port! Let�s be thecleanest and most peaceful city in the Philippines!

We also used slogans like Bawal ang tamadsa Olongapo (Lazy bones are forbidden inOlongapo). We also encouraged education acrossthe community. When we started all theseprograms, walking the streets became safer. Theywere a lot cleaner. We then decided to work onthe public transportation system.

The central government taxed jeepneys andtricycles without consulting the local government.They said, you have to grin and bear it. Weimposed controls as they should have beenimposed. We told drivers that they had to painttheir jeepneys a particular color. There had beenno accountability whatsoever. We said we will colorcode them, put numbers on them, make the driverswear uniforms with their names on their back, andissue photo ID cards every year so we could havesome control. There had been lots of abuses inthe jeepneys and tricycles. People were robbed.In fact, the person who murdered my father

Economic and Urban Development

20


boarded one of these tricycles and it could not betraced. This is one personal reason why I believewe should have accountability in our publictransport system.

There was an outcry. Political will wasnecessary. We had meetings with all the jeepneyoperators and the tricycle drivers. We said we hadto do this because there must be publicaccountability. Operation of commercial publicvehicles, we said, is a privilege, and that if they didnot meet their responsibilities we would take theprivilege away. I said you have to wear uniformswith your name on your back because you areprofessionals. I am a lawyer and when I appear incourt I have to wear a suit. A doctor has to wear agown when he operates. I told them to wear auniform, have a body number and a color code,and have yourself photographed. To cut a long storyshort, traffic on the streets of Olongapo becameaccountable. Drivers could no longer abusepassengers, cut trips, or be involved in crime. Infact we became so successful that the Governmentof Sri Lanka sent a delegation to Subic in the late1980s to copy our system.

Then we proceeded to get people tovolunteer for services such as garbage collection.People were so used to having their garbagepicked up that many of them just threw it onto thestreets. We announced that we would collectgarbage twice a week, that garbage must be putin plastic bags, and that everybody would have topay garbage collection fees. In the Philippines alot of people are used to throwing their garbageon the street, but over time attitudes havechanged, at least in Olongapo.

The citizens asked where they could get theplastic bags. We said you are going to buy themfrom us at City Hall and we will use the money toprovide new trucks. Of course there was someresentment about all these new fees. But then

Operation ofcommercial

public vehicles,we said, is a

privilege, andthat if they didnot meet their

responsibilitieswe would take

the privilegeaway.

21

Introduction

people saw that the garbage trucks arrived on time.They noticed that the scrappy-looking garbagecollector had improved his image, no longersmoking while working or asking for gifts forChristmas. Now he was well paid and wore a uniformwith his name on the back along with the titleSanitary Technician. People were impressed. Soonwe had more volunteers lining up to help the city.

Let me tell you about our hospital situation.We received no funding from the nationalgovernment. Volunteers contributed equipment,beds, air conditioners, microscopes, and laboratoryequipment. Finally we had a better hospital. Weemployed young doctors and allowed them to treatthe wealthy for pay, provided they also providedfree medical services to people who could not affordthe treatment.

After that we got involved in relief work afternatural disasters in other communities. We helpedout in Baguio City after that city was hit by anearthquake. People saw that Olongapo wastypified by community participation. Even ourmarkets were cleaner than elsewhere. In short,we became a model city.

Then we got hit by Mount Pinatubo � theeruption of the century. Earthquakes every twominutes, a blizzard of ash accompanied by typhoon,five inches of ash, buildings collapsing. We had tobring down 9,000 aborigines from the mountain. Inthe middle of that evacuation, there was anothereruption and many more buildings collapsed. Wenever gave up. In the middle of saving people�s liveswe coined the saying Fight on Olongapo! The nextday we posted Fight on Olongapo! signseverywhere. We never gave people a chance topity themselves. We were always putting outmessages that encouraged people to think positivelyabout their circumstances.

After we got over Pinatubo and rebuilthomes, schools, and hospitals, we found out that


22


12 senators decided there would be no foreignmilitary bases in our country. Clark Air Field, theother large American base in nearby Angeles City,had been closed down during Pinatubo, and thensuddenly the US Navy decided to pull out of SubicBay. During the pullout there was a lot of lootingand pillaging. Lack of vision and leadershipshowed clearly. We said withdrawal of bases atthis time was inappropriate. Agriculture in centralLuzon was at a standstill, fields were covered withlava and volcanic ash. A coup d�etat attemptoccurred in Manila and power interruptions lasted16 hours a day. We said that it was simply thewrong time for the US Navy to withdraw.

The national government would not listen andtold us not to worry, that they were determined tokick the Americans out, and that support fromManila was forthcoming. Well, we did not listen tothese people. Although we lost the initial debate,we decided to take the fight to Congress. This wedid � literally. We loaded buses with people andheaded for Manila to lobby Congress. We said �Youbroke our rice bowls, but we want to replace themwith our own bowls, not with your promises. Andwe want a free port, and we want to have controlof it. We want the Mayor of Olongapo to be incharge of it. We want people from the localcommunity to be on the Board.�

They gave us $6 million. The base had beenrun for $178 million. Of course the Navy haddownscaled everything. They took away thetelephone system. They took away the power plant,leaving only 28 megawatts to go with the radarand the electronic equipment at the airport. Wetold people if you want economic revival in thiscommunity you have to be a part of the changeprocess. We asked the people to volunteer to guardthe facilities under a slogan called Protect andPreserve to Prosper. Protect the reputation of ourcountry, we urged, preserve its facilities, and we

More than8,000 peoplevolunteered.

They guardedhomes that did

not belong tothem. They cutthe grass. They

kept the baseintact.

23

Introduction

will prosper.More than 8,000 people volunteered. They

guarded homes that did not belong to them. Theycut the grass. They kept the base intact. They ranthe power plant without pay for four or five monthsuntil we started to get investors to come in on abuild-operate-transfer basis. We got a powercompany from Texas to set up a plant. Within ayear we had 118 megawatts of power. People whohad volunteered were getting jobs with better paythan during the time of the US Navy. The point wasmade that if you had volunteered to protect Subic,you were an original stakeholder. If you did notsteal and worked without pay and were reallyhardworking, business opportunities would becomeavailable to you.

It worked. Soon we had a total of 68 tanks ofpetroleum with 2.4 million barrels of oil. A newpipeline between Subic and Clark Field supplieda 14-day supply of oil to the country. Tankersbegan arriving at Subic Bay daily.

We also worked on infrastructure. We hadthree strategies. First, the moral infrastructure �the people. Honest, hardworking people,volunteering without pay. Second, the legalinfrastructure. We have the rule of law. We gotthe free ports established by Congress. And, withthe help of the World Bank, and later with ADB,we created rules and regulations that werepredictable, consistent, and enforceable. Finally,we concentrated on the physical infrastructure,the modernization of Subic Bay. We modernizedthe power plant, the petroleum tank farm, and thetelephone system. We did this in a joint venturewith the Philippine Long Distance TelephoneCompany. They had a monopoly at the time, butwe told them that they were not going to win unlessthey participated in a joint venture with themult inational corporation AT&T. Subic BayMetropolitan Authority would also have a share


24


in the operation. Eventually it became a 40/40/20 arrangement. We insisted that they put in amodern switch for telecommunications, which theydid, even if there was not a strong market at thetime. So communications were established.

Then we went on to the airport. The airporthad no radar, no electronics, nothing. We went afterDHL, the courier service, but they were not interested.We went to the United States to talk to FederalExpress and invited them over. Of course we usedour heads a little bit when we found out that theChairman of Federal Express was once a US Marinewho had visited Subic. And we managed to get himto visit the city. He saw the volunteers, saw thewonderful workforce, and was impressed. But hesaid:

I�m sorry Dick, but we�re going to go to Taipeibecause according to our analysis that is abetter location. They have an airport that canhandle 747s. Your airport is made for jet fightersand occasional landings of heavy aircraft. Butthat airport pavement is going to collapse unlessyou replace it with one foot of concrete. Besides,you don�t have a radar or an ILS, and you havetime constraints. We want to start our Asianhub this year.

At that time the World Bank was giving usmoney for infrastructure work and the airport waspart of this. We just said, �Well, we need toaccelerate!� And we did. In 29 weeks we had builtan airport. Working together on the runway fromend to end we cemented in one foot of concrete.In addition to that we were able to borrow moneyfrom local banks to get a state-of-the art radar.Then we tapped Mr. Smith on the back and toldhim that we were ready to rock and roll with FederalExpress.

FedEx came to Subic. Others followed. SubicBay has become a business hub for the Philippines

25

Introduction

and for Asia itself. Every day aircraft land in SubicBay from the US, Tokyo, Osaka, Shanghai, Taipei,Korea, and Kuala Lumpur, sometimes even fromAustralia. Speed is the name of the game. Goodsarrive every night for sorting and distributionthroughout Asia and the United States. Because ofour hard work in attracting Federal Express we nowhave over 300 companies in Subic Bay who haveinvested a total of $2.6 billion in four and a halfyears.

It is now only five years since the US Navypulled out. During that time we have created morethan 67,000 jobs in Subic and we make everythingfrom ships to telephones. We even have a SubicBay Industrial Park in partnership with Taipei,Chinaand a Japanese industrial park called SubicTechnopark. These are all joint ventures. Weprovide the land, we borrow money at concessionalrates, develop the land, and finally lease it at veryconcessional rates so as to attract business. Wegenerated $24 million from exports in 1994. In 1995the amount increased sevenfold to $174 million.In 1996 it doubled to $328 million, and last yearincreased to $530 million. That�s a billion US dollarsin exports in just four years of operation. And what�smore, we no longer receive any financialassistance from the national government. As oftwo years ago, we have been returning 2.5 billionpesos to the government in taxes and duties.

Subic has literally risen from the ashes ofMt. Pinatubo. We have six flights a day betweenSubic and Taipei,China, three flights a week toHong Kong, three flights a week to Kuala Lumpur,and three flights a week to Kuching. We have juststarted scheduled flights with Japan Air Systems.We expect to have more regular flights from Japansoon.

Subic is not just a transshipment facility. Ourdeepwater port, Subic Bay itself, is able to handlemany ships. The Philippines lies in a very strategic

In the five yearssince the USNavy pulledout, we havecreated 67,000jobs in Subicand we makeeverything fromships totelephones.


26


location of the world. The fact that 60 percent ofthe world population is only a few hours away isan important strategic advantage. This is why weare pursuing transportation by land, air, sea, andcommunications by satellite and cyberspace. Ourworkforce speaks English and has high levels ofskills. Filipinos themselves are a unique blend ofEast (we are ethnic Asians) and West (400 yearsof colonialism by Spain and America).

The most important aspect of all of thischange is the human resource aspect. Givingconfidence to individuals who were previouslydowntrodden is a most important outcome. Wehave discovered that by creating a partnershipbetween leaders and people and keeping a positiveattitude makes all the difference. Saying that wecan bear the burden if we bear it together, that wecan actually create business ourselves, is anotherimportant outcome.

Today the city of Olongapo is alive and well.We have new banks and new hotels and we areexpanding all the time. One unfortunate outcomeis that there is a culture of envy borne by politicalleaders elsewhere who are terrorized by the factthat they are being shown up by a neighboringprovince or town. This is something, I guess,endemic to developing areas where the culture ofenvy, the culture of fear, exists. This is whereleaders must try and convince their neighbors totry and realize that there is, in fact, a positiveoutcome for all. When you look at our objectiveover the next two years, to have both Subic andManila as viable seaports, our efforts will flow toother parts of the country. We envision three viableairports � Subic International Airport, AngelesInternational Airport (the former Clark Air Base),and the Ninoy Aquino International Airport � all ofinternational caliber. And all of these are within twohours by land from each other. Thus, developmentcan be pushed into the hinterland between these

Givingconfidence to

individuals whowere previouslydowntrodden is

a mostimportantoutcome.

27

Introduction

areas, decongesting the megacity of Manila anddispersing industries northward.

I have been preaching the gospel ofvolunteerism all over the Philippines, seeking avision, recreating the old values of the country, andholding up volunteers as stakeholders in a sharedvision. A national bureaucracy can at times be moreof an enemy than an ally, but it can be made an allyby making it believe that it was the originator of theidea.

The story of Subic, I�m sure, is not unique inthe Philippines. It�s happening elsewhere in thePhilippines. Cebu, for example, advertised itselfas an island in the Pacific � not just a part of thePhilippines. They were able to make do with whatthey had and prevent the national government fromgetting into their dreams and aspirations. Todayyou also have places like General Santos andZamboanga in Mindanao becoming free ports. Oneof my assistants that helped me run Subic is nowheading the Cagayan free port in the north, creatingnew development in that area.

And let me tell you one thing, faith in ourpeople, trust in each other, and teaching peopleto trust each other are very, very important. Ouryoung people, for example, worked with the formerbase workers to make Subic what it is today. Youngpeople from Harvard and Stanford Universities andfrom Wharton Business School in New York havereturned to work with us. We have many, manyyoung people who volunteer their time for Subic.Through this kind of action you can defeat apathyand indifference. You can get ahead. By developingnew ideas, by building faith in your people, and byenjoying the risk-taking, you can bring new life toyour country.

This is Subic Bay today and I am glad tohave had the opportunity to share our story withyou. I would like to thank ADB, our partner, aswell. We are not just thinking of Subic alone �

Faith in ourpeople, trust ineach other, andteachingpeople to trusteach other arevery, veryimportant.


28


we�re thinking of creating a ripple effect. The WorldBank has also come to Subic Bay. ADB has nowcreated a master plan for other areas and we haveinvited all the other towns around Subic Bay toparticipate in the ADB project because we knowthat development is soon going to flow from Subicinto these other communities.

Lastly, let me say that if you as a city managerwant to do something for your people, if your causeis true and if you are sincere in your efforts, yourgoal should not be to attain individual glory. Itshould be to uplift your people.

29

Introduction

The importance of leadership in municipalmanagement has become more evident inrecent years as officials tackle the many

issues facing Asian cities. However, we often findourselves grappling with the concept of leadershipin our efforts to determine the most appropriateway of addressing major issues.

It is clear from the many examples in this reportthat leadership is both a very personal and a verypublic phenomenon. Individuals have to act in waysthat are timely and relevant within the context oftheir city. Yet their actions also need to be verypublic for others to take direction andencouragement. It is this leadership through actionthat is seen in effective city managers. The firstpresentation by Mayor Jesse Robredo from NagaCity in the Philippines is an outstanding example.

This chapter presents several different andvaluable perspectives on leadership and change.The presenters besides Mayor Robredo, are Mr.Omar Kamil, Deputy Mayor, Colombo, Sri Lanka,and Mr. Glen S. Fukushima, Vice President, AT&TJapan Limited. Final comments are contributed byMr. Asad Ali Shah, Manager of ADB�s WaterSupply, Urban Development and Housing DivisionEast.

IV. MUNICIPAL

LEADERSHIP AND CHANGE

30


A. THE NAGA CITY EXPERIENCE

Jesse RobredoMayor, Naga City, Philippines

I am honored to be with you today in the inauguralMunicipal Management Forum of the AsianDevelopment Bank Institute. My presentation willfocus on how the change process we introducedcontributed to the attainment of our vision forNaga City.

1. Conceptual Framework

a. The Change Process

Conceptually, the change process moves from the�present state� toward the so-called �desired state.�Bridging these two endpoints is the transitionphase where the pain brought about by the processmust be managed effectively to ensure that thechange is sustainable.

Operationally, the process covers fourareas:

� sponsorship, where the need for change isarticulated;

� resistance, where objections to change aremanifested, mostly by beneficiaries of thestatus quo;

� transition, where the pain must be managedand given appropriate remedy; and

� culture fit, where the change finally becomesaccepted and sustainable.

b. Role of Leadership

Leadership plays a critical factor in successfully

31

Introduction

managing the process of change. An effectiveleader must exhibit both charismatic andinstrumental qualities to see the process through.The charismatic qualities inspire, allowing leadersto visualize and articulate their goals, energizegroups, and enable people to accept the neededchanges. On the other hand, the instrumentalqualities enable leaders to manage well, maximizingtheir authority to structure, control, and reward toovercome resistance. These qualities includepersonal mastery as well as skills in the followingareas.

� Communication: speaking, persuading, andlistening

� Hard work: energy, persistence, andorganization

� Analysis: diagnosis and problem solving� Networking: mobilizing support and nurturing

present and potential allies� Goal-process integration: pursuing a vision

with results-driven planning and process-drivenimplementation

� Capacity building: support and mentoring,confidence building, recognition, andaffirmation

2. Problem Setting

Let me set the stage by introducing you to whatmy city is not.

Naga is medium-sized, not big. Of the 68Philippine cities today, Naga is 44th in land areaand 38th in population. Our 77.5 square kilometers(km2) pales in comparison with the area coveredby Davao and Puerto Princesa, the country�slargest, whose metropolitan areas exceed 2,000km2. Our population of 130,000 is not even 10percent of the total population of Metro Manila.

Municipal Leadership and Change

32


Naga is landlocked. Because Naga is not aport, we do not have a shipping industry to speakof. All we have is the Naga River, which can onlyaccommodate small motorized boats. It might perhapsallow a small yacht, but there are none. Naga is notan enclave of the rich and the famous. Situated atthe heart of Bicol�s agricultural peninsula, ourlandlocked location places us at an obviousdisadvantage compared with port cities such asManila, Cebu, Davao, Puerto Princesa, Olongapo,or General Santos.

Naga is peripheral, not central. Our city is500 km from Manila. It is equally far from Cebu City,the Philippines� second largest urban center.Naga�s location and distance from these urbancenters is another disadvantage, especially incomparison with cash-rich metro cities such asMakati, Mandaluyong, Manila, Pasig, Quezon City,and Caloocan to the north, and Cebu and Mandaueto the south. From all indicators, therefore, Nagais a typical rural Philippine city, one of thosefaceless, ordinary urban centers dotting thecountryside.

3. Success Indicators

In spite of all these disadvantages, Naga is one ofthe Philippines� most livable cities. It is not as highlyurbanized as our bigger cities, but Nagueños donot have to suffer the traffic, congestion, urbandecay, and filth that characterize megacities. InNaga, the air is still clean and fresh, the waterabundant, and the land and river unspoiled by toxicwastes. Of course, we do contend with our ownunique problems such as squatting and the siltingof Naga River, but these are manageableproblems.

What makes life in Naga quite pleasant isthe presence of basic urban services andamenities. In fact, Naga is ahead of bigger

33

Introduction

Philippine cities in several categories. Considerthe following points.

a. Income

We raised the average monthly income ofNagueños by 62 percent from P3,532 in 1988 toP5,710 in 1991, based on a UN study on shelterstrategies. The same study placed Nagueños�average monthly income at least 34 percent higherthan other Bicolano urban dwellers with lowincomes, and 132 percent higher than those withhigh incomes.

b. Health and nutrition

In 1994, Naga emerged as one of the consistenttop performers among 62 Philippine cities inadvancing child welfare. This is based on aprogress report of UNICEF and the League of Citiesof the Philippines. In that report, Naga figuredprominently in the top ten in seven of eleven majorindicators for child survival, protection, anddevelopment.

For instance, we succeeded in reducing theincidence of first, second, and third degreemalnutrition among our children. The 3.5 percentincidence of third degree malnutrition in 1987 wasbrought down to only 0.1 percent last year,practically eradicating it as a health concern. Webrought down second degree malnutrition from 26.7percent in 1987 to only 6.9 percent, and first degreemalnutrition from 46.4 percent in 1987 to only 21.7percent in 1997. All told, 67.5 percent ofpreschoolers in Naga are of normal nutritionalstatus, a remarkable 48.5 percentage pointimprovement in just 10 years of sustained program


34


implementation.

c. Cable TV

As early as 1987, Nagueños were already enjoyingquality cable TV services in the comfort of theirhomes, much ahead of most other Philippine cities.This enabled us to become part of the emergingglobal village. Today, we have three local cableTV operators, each trying to outdo the others toprovide the best service to customers.

d. lnternet

In Naga, the Internet has become an importanttelecommunication medium, thanks to thepresence of three local Internet service providers.By midyear, the number will grow to four with theentry of a provider catering exclusively to localprivate schools. This guarantees easy access tothe Internet and the host of services it provides �e-mail, telnet, worldwide chat, remote data transfer,and access to the World Wide Web.

The city government already had an Internetpresence as early as March 1996 (our web site is<http://www.naga.gov.ph>). Today, all departmentsat City Hall enjoy Internet access through our localarea network. And in December 1996, the NagaCity Public Library became the first localgovernment-owned library in the Philippines toprovide Internet service to its clients.

e. Telecommunications

In 1995, when the telecommunication industry wasliberalized in the Philippines, the country wassubdivided into 10 service areas. Two of the newestand best performing telecom service providerscame to Naga, as did the two leading cellular phone

35

Introduction

service providers and the country�s leading pagingcompany. Naga now boasts of world-classtelecommunication facilities and a telephonedensity higher than the national average.

All these factors have contributed to the mostimportant legacy of my 10-year administration �the restoration of Naguenos� pride in themselvesand the city they love so well. Naga has become alivable, progressive, and people-friendly city, andis surely one of the Philippines� best-governed localgovernment units.

4. How did we do it?

What made this transformation possible? A reviewof what we did when my administration took overin 1988 will illustrate the keys to our success.

a. A city for the people.

When I ran for mayor in 1987, my campaign wasanchored by a vision to transform Naga into thecity its citizens deserved by attaining growth withequity. The emphasis on transformation wasimpelled by the results of a situational analysis mycore staff and I undertook before embarking onthe campaign.

b. Situational analysis.

Naga was certainly not in top shape in the post-Marcos era. It had to contend with the followingproblems.

� The tradition of old politics that disdainedchange and sought to maintain status quo.

� Naga�s distinction as Bicol�s premier city wasfast eroding. A former first-class city, Naga hadbeen reduced to third-class income status bythe Department of Finance. Its coffers were

The mostimportantlegacy of myadministrationis therestoration ofpeople�s pridein themselvesand in their city.


36


empty, strained by overspending that had lefta deficit of almost a P1 million.

� Its three-story public market � considered in1969 Southeast Asia�s biggest � was alreadyin shambles when it was ravaged by a fire thatate up a third of the available space.

� The central business district (CBD), its sizeunchanged for more than four decades, wasovercrowded, keeping potential investors away.Traffic volume, swollen by countless buses andjeepneys claiming terminal rights in the district,was unmanageable.

� The local economy was sluggish.� Employment was scarce.� Basic services, particularly for health and

education, had been deteriorating.� Smut films and lewd shows proliferated.� Illegal gambling was rampant, unchecked by the

police and military who feared to move againstpowerful syndicates.

� The number of homeless urban poor wasgradually growing.

Combined, these social, political, andeconomic problems led to the loss of faith andconfidence of people in their local government.

Moreover, I was a minority mayor, winningonly 24 percent of the vote and defeating myclosest opponent by a margin of less than 1,000votes. This added a sense of urgency to my task.Although I had the leadership mandate, it was notsolid. This impelled me to produce tangible resultsquickly to reinforce that mandate.

5. Elements of the Vision

In the visioning process, we identified three �do-ables� that would propel the city�s transformation.

� Inspiring governance. We aimed to restore the

37

Introduction

people�s faith in their government. Thesituation called not only for good governance,but for an inspiring one. Our message was notonly �Government works!� but �City Hall alwaysdoes things better!�

� Renewing community pride. We restoredNaga�s distinction as the Bicol region�s premiercity. The benchmark was its restoration to firstclass status by the Department of Finance.

� Recovering economic stability. We aimed to turnthe local economy around by creating neweconomic opportunities, encouraging freshinvestments, and expanding the businessdistrict.

In the elections, this vision was summed upsuccinctly by our battlecry: Kauswagan kan Nagakun bako ngonian, nuarin pa? This highly effectiveslogan has a clear, definitive Bicolano ring to itthat no translation could fully capture. Literally, itmeans �Naga�s progress � if not now, when?� Myvictory in that election over older, more seasonedopponents confirmed that the people of Naga �at least those who voted for me � shared myvision.

6. Implementing the Vision

It is very evident when we took over that for us toaccomplish our covenant with the electorate, thefirst step was to restore Nagueños� faith andconfidence in their local government. And becausecharity begins at home, we clearly should start withCity Hall.

a. Reforming City Hall

We launched a number of measures aimed atsending out the message that we meant business.Guided by the recognition that our workers at City


38


Hall were our most precious resource, we soughtto empower them by applying private managementsystems in a government setting.

Acting with dispatch, we immediatelyimplemented:

� a better compensation package for the rankand file,

� reorganization of the bureaucracy based onaptitude and competence,

� activation of a Merit and Promotions Board thateliminated patronage, and

� implementation of a reward-and-punishmentscheme.

In a matter of weeks, these efforts paid off,firmly securing rank-and-file support andcooperation for our programs and projects. NotedBalalong, a Naga-based weekly: �Mayor Robredohas done it. Barely two weeks in office, the youthfulmayor has shaken city hall�s tradition-bound andlethargic bureaucracy to the very roots of its being.�Commenting on the impressive change that webrought to City Hall, Vox Bikol wrote prophetically:�If Mayor Robredo holds on throughout his term,Naga will not see the summer solstice, but the sundancing in the sky.�

Building on these confidence-buildingmeasures, the city government conceptualized andbegan implementing its award-winning ProductivityImprovement Program (PIP). This program focusesboth on employee empowerment (people change)and improvements in systems and procedures(systems change) to improve the quality andquantity of frontline service delivery.

b. Anti-vice Drive

The remarkable improvements in City Halloperations, particularly in the delivery of its frontline

39

Introduction

services to customers, set the tone for anotherconfidence-building measure � the eradication ofillegal vices, especially smut films, lewd shows, andgambling (jueteng, an illegal numbers game, inparticular) in Naga City.

The crackdown on illegal gambling by our ownanti-vice squad was so thorough that in no timeNaga became a jueteng-free city. My arch critic inthe local media, who supported my opponent duringthe elections, was finally convinced of our sincerityand determination. In his column, he confirmed thatNaga, of the province�s two cities and 35 towns, isthe only place where jueteng does not existbecause it is not tolerated by local authorities. Andit is still jueteng-free today.

The supposedly untouchable smut films andlewd shows suffered the same fate, though it didnot take lightning raids to do the trick. My sternwarnings ignored, we merely waited for thebeginning of the new fiscal year (when all localbusiness establishments are required to register)to make our point. And the courts agreed with us inevery instance when the powerful nightclub operatorfiled a string of cases questioning that decision notto renew his business license. Today, Naga isperhaps the only Philippine city that does not havethese seedy nightspots.

c. Jumpstarting the Economy

At about the same time, we started tackling thechallenge of reviving Naga�s economy from stupor.Again, it entailed introducing concrete confidence-building measures directed at the business sector.This took the form of the Urban Transport andTraffic Management Program.

The program�s innovativeness stems fromthe fact that we used traffic management, as wellas the local government�s police and regulatorypowers, as tools for directing and controlling


40


urban growth.The program also sought to improve access

to the urban district, primarily through roaddevelopment and upgrading projects, and broughtabout the relocation of all bus and jeepneyterminals to the peripheries of the CBD.

By tremendously easing traffic flow within theCBD, the program restored life and vitality to thecity�s prime commercial hub. As a result, 21 banksopened new branches, several others renovatedtheir branches, and most of the 33 banks upgradedtheir service delivery to include ATM service in linewith Naga�s role as the regional financial center.

At the same time, the relocation of terminalsperked up economic activities outside the CBD,particularly in the formerly moribund diversion areawhere most of the bus operators chose to settle.In the urban district, three sleepy neighborhoodsin Tabuco, Blumentritt, and Barlin sprang back tolife after the jeepney terminals relocated there.

The above accomplishments may appeareasy, but in reality they were not. Again, as withour anti-vice drive, we had to hurdle a total of 30court cases filed by disgruntled terminal operatorsaffected by relocation. In the end, however, we wonthem all.

d. Forging Sustainable Partnerships

These confidence-building measures and displaysof political will made it possible to tap communityresources to implement economic projects thatwould benefit the city as a whole.

For instance, we were able to access theseresources to implement the Panganiban Upgradingand Beautification Project under a build-operate-lease scheme as early as 1989. This enabled thecity to develop a kilometer-long eyesore into abustling business corridor at practically no cost tothe city government, and the establishment of

Confidence-building

measures anddisplays of

political willmade it

possible to tapcommunity

resources thatbenefited the

city as a whole.

41

Introduction

privately owned satellite district markets througha build-operate-own arrangement under thePagtarabang sa Kauswagan (Partnership forProgress) Project. This later inspired the rise ofcommunity markets through joint ventures withbarangay (neighborhood) governments.

As a result, the local economy rebounded,and business flourished again. The citygovernment attained its goal of reclaiming Naga�sfirst class status from the Department of Financein 1991 after the first mandatory review conductedby the department during my incumbency.

The business sector�s cooperation wasimmensely helpful. In addition to an enhancedsystem for collecting revenues and no-nonsensecost-cutting measures institutionalized under PIP,and on the basis of renewed trust in citygovernment, we were able to convince thebusiness sector to declare more realistic sales.This translated into increased revenues for thecity. When the Department of Finance conductedits review, local revenues accounted for around75 percent of Naga�s total income, with nationalallotments accounting for the balance.

Having already won the hearts and minds ofmost Nagueños, we then proceeded, always inpartnership with NGOs, to implement otherinnovations that took longer to achieve.

7. The Keys to Success

Looking back, the following observations stand out.

Successful change leadership starts with a vision.When I ran for mayor in 1987, I knew clearly whatNaga was (problem definition), what I wanted it tobe (vision), and what had to be done to get us there(strategic management). An important corollary isthat a leader must be competent and adequatelyprepared for the demands of leadership, a capability


42


I developed during my previous stint in the privatesector.

This vision must be shared by the community. Myvictory in the election not only gave me the mandateto lead, it also affirmed that Nagueños shared myvision at the very outset. An important corollary thatmust be stressed is that a leader must successfullycommunicate his vision to his people. If a communityis to share one�s vision, they must first understandit, and then relate to it. In my case, the sloganKauswagan kan Naga kun bako ngonian, nuarinpa? (Progress � if not now, when?) did the trick.

Confidence building is critical. A leadershipmandate is time-bound. It must therefore bereinforced by concrete, decisive action, withoutwhich it will be eroded by inaction. Thus the vitalneed for confidence-building measures. Myleadership mandate was reinforced through CityHall reform, action against illegal gambling and lewdshows, and economic initiatives.

The change process must be impelled by a greatergood. When change is introduced, resistance fromcertain sectors and interest groups is inevitable,particularly from those who stand to benefit bymaintaining the status quo. But this can beovercome by support from those who are likely tobenefit from the change, i.e., the majority ofcitizens. The massive public approval for reformswe introduced at City Hall drowned resistance. Thisalso proved true in our effort to rid the city of illegalgambling and lewd shows, as well as the initiativeto relocate bus and jeepney terminals to theperiphery.

B. LEADERSHIP AND CHANGE IN THE

43

Introduction

CITY OF COLOMBO

Omar KamilDeputy Mayor, Colombo, Sri Lanka

Since the Municipal Council of Colombo wasinstituted over 130 years ago, it has faced manychallenges with varying degrees of success. Inrecent years, however, for a host of reasons, staffmorale and productivity had become very low. Asa result, when the new Mayor assumed office, hewas confronted with the necessity of bringing abouta complete transformation.

The Mayor had a vision � to make Colomboa modern, clean, friendly city. He firmly believed thatgovernment should be grounded in clear ethicalvalues, transparency, stability, and high quality.Therefore many new measures were introduced toreduce interparty conflict. To develop this vision,the Mayor constituted his �A-team,� a steeringcommittee that meets every Monday. It comprisesthe Mayor, the Deputy Mayor, the Chief OperatingOfficer, the Municipal Commissioner, the MunicipalEngineer, and the Municipal Treasurer. The Mayoralso has a top middle management comprised ofprofessionals for implementing the decisions of thesteering committee.

The Mayor and his team got straight to work.Highlights of the program and the achievementsof the last nine months are as follows.

1. Increased Standing Committees andParticipation of the Opposition

The Municipal Council comprises of 53 memberselected by the people. They are members of thegovernment as well as the opposition. In order tocreate a healthy climate among the opposition, theMayor decided to devolve power through the standingcommittees. We increased the number of standing

Governmentshould begrounded inclear ethicalvalues,transparency,stability, andhigh quality.


44


committees from the original 12 to 15, and oppositionCouncil members were offered chairmanship of fiveof them. This was the first time such an arrangementhad been made. The 15 chairmen of the standingcommittees are like an inner cabinet. They meetonce a month or whenever it is necessary. Thisstrategy was aimed at defusing inter party politics.Within a period of five to six months, conflict in thecouncil had reduced considerably.

2. Involvement of the Stakeholders

The Mayor also introduced a 100 Day Program.He invited the private sector, the corporate sector,the NGOs, and all other institutions to come andparticipate in providing services to the citizen, asthe city belonged not only to the Council but to everycitizen.

The Mayor invited the private sector and theNGOs to assist the Council by redeveloping the25 municipal dispensaries and to adopt them asone of their community development projects.

The corporate sector was then invited toassist in maintaining the city roads by providingfinancial or material assistance. The Mayoroffered each contributor a one-kilometer stretchof road to maintain, and in return let themadvertise their company logos and products onthat portion.

To help shape his vision of the city, the Mayorinvited local architects to participate in city building.The architects were requested to prepare a visionof the City of Colombo for 2005. Similarly, theInstitute of Engineers was invited to undertake astudy and prepare a report on the city�sinfrastructure requirements.

The Mayor then formed City Watch, a groupof leading businessmen, professionals, andacademics to provide him with constructivesuggestions and criticism. He set up voluntary

45

Introduction

advisory boards for each standing committee.Comprised of leaders in various fields � doctors,academics, businesspersons, and retired publicservants, these groups meet regularly to submitreports on suggested improvements to the Mayor.

The Municipal Council also holds regulardialogue with the Provincial Council and the CentralGovernment.

3. Achievements

So today � although our administration is onlynine months old � we are a committed team,determined to bring about change. We havedirection and a destination. We have found waysto involve all sections of the people. With regulardialogue, sincerity of purpose, and commitment tothe provision of services, the Mayor has been ableto win over the confidence of opposition parties,foreign governments, and the citizenry.

We have begun a privatization program.Although privatization is a term that evokessuspicion in our part of the country, we have beenable to allocate services previously undertaken bythe government to the private sector, and the resultshave been favorable.

This is a brief overview of what effectiveleadership and direction have done for the City ofColombo.

C. LEADERSHIP IN THE AGE OFGLOBAL MANAGEMENT

Glen S. FukushimaVice President, AT&T Japan Limited

Although I am not a specialist in municipalgovernment, I was invited to speak on the subjectof leadership in the age of global management. I


46


hope that you will find that my comments aboutthe issues confronting us as businesspeople havesome relevance to your work as municipalmanagers.

I have addressed various groups in theUnited States and Japan on the theme ofleadership in the age of global management sincebecoming Vice Chairman of the Japan-USFriendship Commission four years ago. My ideasare based on my experience in government forfive years and in the private sector for eight years.So it is from a perspective formed by considerationsof policy, business, and culture that I speak to youtoday.

In explaining the globalization ofmanagement, at least in the business sector, I thinkthere are at least six factors in the environmentthat have necessitated a globalization ofmanagement.

a. Politics

World politics have changed dramatically in therecent past, largely due to the end of the cold war.The other important factor affecting global politicsis the fading of boundaries in countries and regionspreviously characterized by barriers that inhibitedbusiness. Examples are the new and growingmarkets in China, Viet Nam, and Eastern Europe.

b. Economics

On the global level, the World Trade Organizationhas liberalized telecommunications services. Onthe regional level, the European Union and theNorth American Free Trade Agreement haveagreed on standards of facilitation and investment.On the national level, l iberalization andderegulation of trade have been adopted in manycountries, notably those that until recently were

47

Introduction

socialistic.

c. Globalization

Because more people are traveling around theworld, companies, in order to keep up with thecustomer demand, must offer seamless globalproducts and services. Increasingly, uniformity isseen across such industries as the airlines,shipping, and telecommunications.

d. Competition

More and more, companies are competing forglobal customers and clients. Recently, whenBritish Telecom tried to acquire MCI, an Americancompany, the regulatory authorities of neithercountry objected to the merger. However, othercompanies intervened and in the end the mergercould not be consummated. This is one exampleof how in the future we are going to see more casesof mergers and alliances to gain economies ofscale and to be more competitive internationally.Global management is in many ways seen as astrategic competitive weapon. Global companiesare willing to pay large fees to obtain capablepeople to run their local operations. Thesecompanies see these managers as competitiveweapons whose skills give their employers astrategic advantage.

e. Technological innovation

The continued pace of improved technology,whether in transportation, financial services,distribution, or telecommunications, requires theglobalization of management. The best exampleis the Internet.


48


f. Changing workforce

Because the global workforce is characterized bymobility and diversity, management must also beglobalized to maintain effectiveness in managingthe workplace.

Whether at the level of manager or factoryworker, there are five sets of basic values highlyimportant in the workforce. These are:

� respect for individuals,� dedication to helping customers,� high standards of integrity,� innovation, and� teamwork.

During my experience dealing with American,European, and Japanese corporations, I haveidentified qualities of particular importance for globalleaders in the business setting. Despite thethousands of books that have been written aboutleadership, very few deal with cross-culturalleadership. Attributes traditionally associated withgood leaders are intelligence, strategic vision, goodinterpersonal skills, and physical and psychologicalstamina. In addition to these classical leadershipattributes, however, I would add 10 others ofimportance for successful global leaders, at leastin a business setting. He/she should have:

� global, integrated, holistic vision;� flexibility, adaptability, and resilience;� openness to different ways of doing things;� ability to deal with uncertainty;� tolerance for ambiguity;� ability to listen and learn;� a long-term perspective;� patience and persistence;� consistency; and,� ability to lead the best workforce.

Attributestraditionally

associated withgood leaders

areintelligence,

strategic vision,good

interpersonalskills, and

physical andpsychological

stamina.

49

Introduction

When giving talks to Japanese managementgroups, I am often asked �What are the problemsor challenges faced by Japanese leaders?� Basedon personal observation and experience, I haveposed seven challenges.

� Rigid versus flexible leadership� Exclusivity versus openness� Particularistic versus universalistic rules and

principles� Nationalistic versus global� Implicit versus explicit articulation of

communication� Organizational versus individual initiative� Bureaucratic versus charismatic leadership

D. LEADERSHIP AND CHANGE

Asad Ali ShahManager; Water Supply, Urban Development andHousing Division EastAsian Development Bank

The question of vision that has been stressed atthis meeting is worth commenting about. In additionto the need to have a vision, a dream, of what youwant to achieve, there is also the need to have ashared dream that engages the whole community,the people. The challenge is to bring into alignmentthe entire resources of the society within whichyou live and work and to optimize the use of theseresources. In other words, the challenge is not onlyto have a vision, but to share it.

Articulating a vision can be difficult. It is noteasy to convince people to change whenestablished practices have been in use for a longperiod of time. A proactive approach is requiredto convey the message that change is essential.To do this successfully one must be a good


50


messenger, a communicator.Equal in importance to having the ability to

communicate with people is translating the visioninto a mission, and with that mission in focus, todevelop an action plan. What sets leaders apartfrom others is that they are not just theoreticians,they are also practitioners. They have the abilityto translate their vision into practice. There mustbe a linkage between the broad policy statementand the program�s implementation. The programhas to be translated into projects: there are dates,deadlines, and schedules to be met. In this hardwork, leaders need to be able to motivate peopleand to communicate to them the sense that byworking together, the whole community benefits.

The other message that came across quiteclearly during this Forum was that of self-reliance.In the past, cities relied heavily on the higher levelsof government to provide resources to addresslocal needs. But when government support isdiminished, local resources must be mobilized toensure the sustainabil ity process. Theseresources, be they financial, institutional, orhuman, must be mobilized at the community level.

One aspect that sets this Forum apart fromthe Bank�s earlier initiatives is that previously therewas high profi le participation from centralgovernment agencies. Now we are more focusedon the cities themselves. Support for the cities,formulated within a long-term perspective, cancreate partnerships that can be strengthened overthe next few years.

Finally, I think the Mayor of Naga City madea very good point when he emphasized thedevelopment of institutions. If we are reallyinterested in sustainability � making long-termimpact � it is the institutions, rather thanpersonalities, that matter. Personalities may beimportant in the short term, but institutions are what

What setsleaders apartfrom others is

that they arenot just

theoreticians,they are alsopractitioners.

They have theability to

translate theirvision into

practice.

51

Introduction

sustain long-term processes. We need leaders withlong-term vision in order to build institutions thatpromote change and maintain momentum.


52


53

Introduction

V. CREATING DIRECTION:DEVELOPING VISION,MISSION, AND STRATEGIES

Only after wehave a sense ofwhere we wantto go can weprepare amissionstatementdefining how wewill get there.

In this chapter we summarize the conceptualmaterial presented in the Forum and highlightthe comments made by participants relating to

developing vision, mission, and strategies toimplement plans to achieve the city�s vision.

It is clear from the proceedings that for awidely accepted sense of what is possible, a visionfor the whole urban community is essential ineffective city management. Forum participantshave discussed various ways to create such avision, one that includes all stakeholders and thatprovides direction for the provision of works andservices.

We have also identified the characteristicsof an organization�s mission. The missionstatement provides a sense of purpose. Who arewe as an organization and what is it we are tryingto do? Mission follows vision. Only after we have asense of where we want to go can we prepare amission statement defining how we will get there.

Finally, effective leadership must be backedup with valid and comprehensive corporate andbusiness plans. Without a long-term corporate planand individual business plans it is very difficult toknow what is required in the management of thecity, and whether we are meeting our goals. Theseplans also provide the best insight as to how tostructure the organization and to align humanresources to ensure we have the most appropriatepeople in the right jobs working together to achievethe city�s vision.

54


A. VISION AND MISSION IN MUNICIPALMANAGEMENT

Four discussion groups, whose conclusions aresummarized below, were asked to address thequestion:

In order to gain commitment to change, howdo you create a vision in which all stakeholdershave ownership?

Group A Comments

In order to create direction in municipalmanagement, the first step is to find out who thestakeholders are and what their stake is. For eachgroup of stakeholders, what are their concerns withthe organization?

Second, it is important to identify currentstrengths and weaknesses in the organization. Ifwe do not have a genuine sense of who or whatwe are as an organization, it is difficult to engagestakeholders in genuine discussion and to moveforward toward a vision.

Third, stakeholders must be assured that thevision is a �win-win� situation for everyone. We musttherefore identify any possible adverse effects onall stakeholders from the implementation of specificstrategies. It is a question of smoothing out theadverse short-term effects so that in the long runeveryone is benefited.

The final step is to involve people in theprocess of creating genuine stakeholder ownershipthrough the process and the outcomes of bettermunicipal management. To do this it is necessaryto get stakeholders to see the common ground.Then assign specific tasks to the stakeholders sothat after developing the vision, they continue toremain involved in fulfilling that vision. Mostimportantly, the process must be constantly

55

Introduction

reviewed so that all stakeholders can monitor thecollective vision and their particular roles in it.

Group B Comments

The first requisite in developing a vision andmission in municipal management is effectiveleadership. The leader initiates thinking about thevision and what needs to be done to achieve it.

The mission statement evolves out of theprocess of bringing the vision into focus by puttingtogether a detailed corporate plan. The corporateplan is directly l inked to the needs of allstakeholders � NGOs, interest groups, andindividuals. Out of this process more detailed tasksare identified for city management.

Developing a vision and articulating a missionis a process that works both top down and bottomup in organizations. Linkages with externalstakeholders are also very important.

It is a presumption to assume that arecognized leader already exists. Often leaders �or people exercising leadership � emerge fromthe group. A potential leader should appeal to theconstituency, to the people, and above all to thestakeholders. The stakeholders come first. Theleader derives from the stakeholders, the visionhe articulates.

Group C Comments

To have a vision, you must first understand thecurrent situation. You have to identify the prevailingconceptual framework. We have heard much inthis Forum about the importance of paradigmchange. We interpret paradigm change as firstunderstanding the influence of our currentconceptual framework and the way in which weapproach issues and problems in municipalmanagement, and then looking for fundamentally

Creating Direction: Developing Vision, Mission, and Strategies

56


new ways of tackling the problems.Through an understanding of our current

strengths and weaknesses, the way forward towardour common vision wil l ult imately emerge.Importantly, this must be done in an open,structured way involving key stakeholders

Group D Comments

We believe a vision needs to be evolved, notcreated. Evolving a vision demands a participatoryapproach with all stakeholders. In this processan important role for the municipal authoritiesshould be to create credibility in order to obtainparticipation from all stakeholders. It is insufficientto simply call people to meetings and expectcommitment on whatever is agreed to. Credibilitymust be developed and communications improvedbetween municipal authorities and the politicalelements of government.

Stakeholders should also be involved in agenuinely participatory approach. Visions willprobably vary between stakeholder groups. Theprocess of identifying aspects of a common visionis therefore very important in bringing differentgroups together. If all parties concerned can agreeon a common vision within which different groupsmay have their own particular strategies and goals,this is a good outcome.

B. ORGANIZATIONAL PLANNING

1. Planning Hierarchy

One of the benefits of traditional bureaucraticadministration is that it is directed at the regulation,coordination, and control of organizations �especially large ones. This coordination andcontrol is typically achieved through a hierarchy

57

Introduction

of plans.

a. Strategic Plan

A strategic plan is a concise statement of the futurecontext within which we expect to live and work inpursuit of our vision. A strategic plan indicates howwe will influence the future, and the broad goalsand strategies we will employ to achieve our vision.

b. Corporate Plan

A corporate plan is the engine room oforganizational planning. Out of this plan comesclarity about what is expected, who is responsiblefor implementation, and the resources needed toachieve the goals.

The corporate plan includes a restatementof the vision with greater clarity about where thecity expects to be in, say, five years. The time frameneeds to be far enough ahead to challenge thecreativity of staff, yet not so far as to be unrealistic.There also needs to be sufficient time for peopleto innovate and learn new ways of working. Thecorporate plan also states the organization�smission. While vision is an indistinct view of an idealfuture scenario, mission is what we as anorganization will look like as we attempt to createthe vision. Under each goal statement, acomprehensive corporate plan wil l identifyperformance indicators, measures, and targets.Without a system of assessment and evaluation,a corporate plan serves no real purpose inmunicipal management.

c. Business Plan

In effect, business plans are microcosms of thecity�s corporate plan. They provide the detailedplanning outcomes and assumptions for specific

A corporateplan is theengine room oforganizationalplanning. Itprovides clarityabout what isexpected, whois responsibleforimplementation,and theresourcesneeded.


58


areas or business units: water and sewage, roadsand drainage, community services, and so on.These plans also include more detailed accountinginformation relating to asset management. Thisidentifies capital and recurrent budgeting issuesas well as revenue matters relating to fees andborrowings.

It is important to distinguish between the plansand the planning process. A preoccupation withdocumenting strategic, corporate, and businessplans without appropriate consideration as to howthese plans are developed can mean that they lackthe organizational commitment to implement.Effective city managers are aware of the importanceof engaging stakeholders in the development ofplans to increase the certainty of successfulimplementation.

The final caveat that should be made aboutthis type of organizational planning is that, inevitably,plans change over time. This occurs for all sorts ofreasons, not the least being that as we solveproblems or implement the plans, we learn moreabout the service or function, and realize that ouroriginal assumptions were either naive, wrong, orinappropriate. Therefore the planning process weadopt is critical to ensure we are able to adapt theplan to the changing circumstances and our ownlearning.

2. Organizational Structures

It is axiomatic that structure follows strategy. Wedesign working arrangements to reflect what wewant to achieve. This idea is tempered by the culturaland social reality within which the organizationexists. It is also clear that as the number ofemployees in organizations increases, theorganization needs to seek economies of scale andto demonstrate synergy. Municipal authorities areno different in this regard from large private or

59

Introduction

state-owned business undertakings.Three discussion groups were asked to

address the question:

What objective should be kept in mind whendesigning organizations?

Group A Comments

When designing organizations we need to havea customer focus. We also need to recognize thatevery individual in the organization has potentialand to involve them in decisionmaking. Whilepeople will have divergent opinions, it is our taskto try to bring these together into the municipalstrategy.

We also need to look at the skills that existin the organization. What is the skill mix? What isthe need for training? Not everybody has similaror requisite skills. Having done that, it is importantto involve people to develop usable jobdescriptions that are useful in meeting thestrategies developed in a participatory manner.

The next step is monitoring and ensuring thequality of their involvement in matters affecting theirwork. One way of doing this is to improvecommunications between management andemployees. We have heard examples of regularmeetings, but sometimes meetings are insufficientbecause many people remain silent. One-on-onediscussion between manager and employee is onesure way to obtain feedback. In hierarchicalcultures, senior managers summon theiremployees to tell them what he/she wants them todo. Instead, why not just visit colleagues� officesand talk to them in their own places of work? Thishelps break down barriers and improvecommunications.

We also have some thoughts on thetraditional pyramid structure and how that might

We would liketo suggestturning thetraditionalpyramidstructureupside down,so that everyunit of theorganization isinvolved in thethinkingprocess.


60


be reversed. We do not really believe in the efficacyof the pyramid structure and would like to suggestturning it upside down, so that every unit of theorganization is involved in the thinking process. Ifthe main focus of activity is the customer, thecustomer is in a sense the city�s manager.

In recognizing that everyone in our workforcehas potential, several questions need to beanswered.� What is the skill mix in our organization?� Do we have a list of all the employees, their

qualifications, their competencies, the thingsthey can actually do? Who can drive a truck?Operate a computer? Design a bridge?Manage the accounts?

We need to know our staff�s capacity andskill mix. Typically, job descriptions flow on fromanswers to these questions and provide directionto managers, supervisors, and, most importantly,to the employee themselves.

Group B Comments

When we design an organization, we should do sofollowing a series of five steps.

� Identify the organization�s purpose.� Identify the service it is to provide.� Identify each employee�s competency,

capability, and potential. At this stage weshould start to think about reorganizing thegroup, differentiating the operations groupfrom the strategic group. We should also bearin mindthe size of the organization and the number ofemployees.

� Encourage interpersonal relationshipsbetween staff.

� Encourage the spirit of teamwork across the

61

Introduction

organization.

Group C Comments

We must start with the current strengths andweaknesses of the organization. The next step isto initiate a goal-setting program. There is needfor teamwork and participation, not only betweenmunicipalities and communities, but between privatesector organizations. Of course, the work has tobe supervised. The organization�s program hastargets that have to be achieved. People who areworking well must be rewarded. Those who arenot need to be disciplined. This is not happening inmany of the organizations represented here.

Comments by Facilitators

Mr. Oxley: An additional aspect to those raised herethis morning is that of creating an attitude.Professional managers in municipal managementmust adopt a positive attitude, one thatdemonstrates that we get the best possibleoutcome for our communities. Concepts identifiedas good theoretical models will only be translatedinto practical application by having the right attitudeto bring about change. This will lead to theoutcomes that our communities desire and deservefrom us as professional managers in localgovernment.

Mr. Payne: The role of the manager is changingdramatically. Competent technical people are putinto the role of managers by default. They areplanners and organizers, not controllers. An oldview of a supervisor�s job is that they are there tocatch people out on the job. This leads to gamesbetween supervisors and employees. What we aretrying to do is change the role of managers. I havementioned earlier that middle managers can�t

An old view of asupervisor�s jobis that they arethere to catchpeople out onthe job. Thisleads to gamesbetweensupervisorsandemployees.What we aretrying to do ischange the roleof managers.


62


always see that they have a role. What we havegot to do as senior managers is retrain them asplanners, coordinators, and project managers witha key role in the corporate and business planningprocess.

3. Human Resource Management

The key idea behind the concept of human resourcemanagement is that people are managed so as tomeet the goals of the organization. Qualitymanagement of people stems from and clearlyreflects what the organization wants to achieve, andhow it expects to do this. What follows are examplesfrom participants as to how they have addressedhuman resource management issues in their citymanagement.

Discussion

Mr. Zaidi: Personnel management and humanresource management are different. Personnelmanagement is about the performance of certainbasic functions such as selection, training, andcompensation. When the organization�s objectivescome before us then this is about human resourcemanagement.

The pooling of resources under certaincircumstances, especially emergency situations,is an example. In Karachi, when we were faced byan emergency situation to clear garbage from thecity, we pooled staff resources to assist in theremoval of garbage. This meant leaving a minimalnumber of staff to handle routine work whiledeploying extra staff with the health department.We achieved good results, and 95 percent of thegarbage was collected during this operation.Pooling resources is an important human resourcemanagement strategy in municipal management,especially when certain critical jobs need to be

63

Introduction

implemented quickly and efficiently.

Mr. Govindaraj: In our city we have experimentedwith two systems. In some areas, residents areactually taking responsibility for the door to doorcollection of their garbage. They pay the personwho does the collection. In other areas we collectthe garbage using our own employees. However,we find that the areas where the private peoplecollect the garbage are much cleaner. Theconclusion is that when people pay a privatecollector � even if it is a very small amount � theyfeel a kind of ownership. They feel they have tokeep their own area clean because they are payingfor it. They will not allow others to make it dirty.When the municipality does it, however, this attitudedoes not exist.

Mr. Martin: I have two observations. The first isthat service delivery is part of a bigger issue withinthe municipality. What you are suggesting here isa financial incentive system that encourages thelandholders, the people who live in a particulararea, to take responsibility for garbage collectionby paying a fee. The second observation is thatwe need to balance equity in service delivery withflexible fee structures.

Mr. Napitupulu: Surabaya is recognized as thecleanest city in Indonesia. The reward system inplace there is such that garbage collectors canactually earn more money than employees ofhigher rank.

Another thing is that people in Surabayaare conscientious about cleanliness. It is theirtradition that they should always be clean andtherefore the streets should be maintained. InJakarta, on the other hand, since people comefrom many provinces in Indonesia where they havevery different traditions, the attitude toward

When peoplepay a privatecollector �even if it is avery smallamount � theyfeel a kind ofownership.


64


cleanliness is different. It is harder to get peoplein Jakarta to collect their own garbage than it isin Surabaya. I think the important influence of theprovincial tradition must also be taken intoaccount.

Mr. Sultan: In Lahore, this exercise of poolingresources, mobilizing people from differentdepartments, and partly from the community, is alsoput into practice quite frequently. If we have tolaunch a campaign, for instance, such as thecampaign for removal of garbage, or for cattleeviction, then pooling of resources is done. Butthese are one-time exercises. Pooling is not asustainable way to run a city. It should be seen asa reflection of the institutional weakness of thedepartment concerned, something to which weshould pay more attention. If we strengthen therelevant departments, obviously there will be lessneed for pooling of other staff resources.

Mr. Martin: I concur. If we are constantly dealingwith crises, what does it say about our managementstrategy and the fundamental structure of ourorganization?

Ms. Yicui: Shanghai is facing the difficult task ofinfrastructure development. The majority of thelaborers working in the 10,000 construction sites inthe city are not local people. They come from ruralareas. One of the difficulties we face is how toimprove the quality of these workers and encouragetheir initiative.

In recent years, we have researched andintroduced new practices in human resourcemanagement. We help staff understand thepriorities by preparing an exhibition on urbanplanning, development achievements, and newlybuilt infrastructure. Often the mayor will go toconstruction sites for a face-to-face exchange of

If we areconstantly

dealing withcrises, what

does that sayabout our

managementstrategy?

65

Introduction

views with the staff to motivate them.First, the workers are briefed on the function

of these facil it ies. Second, we emphasizemanagement at the very basic level. There is adescription of each job and it is being reviewed andamended as circumstances change. On-the-jobtraining is provided on that basis. Participants inrelevant training are required to pass qualificationscovering basic knowledge and the skills. We alsohold competitions among employees. Third, rewardand recognition through competition occurs. Bothfinancial and non-financial rewards are formulated.Employees are encouraged to become modelworkers in regular or special competitions.Outstanding staff are financially rewarded withpromotions, bonuses, and housing provisions.Non-financial rewards include recognition as modelworkers. In addition, the mayor and other communityleaders express gratitude towards their families fortheir good work.

Mr. Martin: That is an outline of a comprehensivehuman resource management system, one thatextends into the community and provides recognitionof people involved in the construction industry.

Mr. Payne: I think the important feature of theShanghai human resource management exampleis in creating champions among staff, using themas role models. If we have the champions out theredoing good work, others will follow.

Mr. Hamid: I also found one very interesting point.You have to recognize the needs of your workersand to provide them with adequate facilities so theyare not preoccupied with personal matters. Thisis something that, in many countries, has brokendown.

There was an experiment in one locality inKarachi where law and order was a major issue. In


66


this particular locality the residents made monthlycontributions toward provision of better housing,education, and environment for the policeassigned to that locality. The result was that whilein the city of Karachi the law and order situationcontinued to be bad, this locality had hardly anycrime. So caring about your staff is a very importantfactor in motivating them. Taking care of thepersonal lives of employees and paying attentionto their families is very important in effectivelymanaging people.

Mr. Martin: Another way in which this is oftendescribed is career planning or careerdevelopment. Everybody likes to think they havea future. Because work is so central to our liveshaving a future at work and looking after people isimportant in maintaining their motivation over time.Mr. Shah: There are various types of professionalsemployed at the municipal level: engineering,planning, general management, finance, economics.One of the problems on the engineering side hasbeen that some of these people are so overqualifiedthat they try to use very high levels of engineeringsolutions on local problems. But not all cities aremegacities. One very interesting case occurred inBangladesh some 15 years ago, where the localgovernment engineering department was highlyregarded for its technical competence. The reasonwas that staff had worked with the municipalagencies and shown their flexibility and adaptabilityto local cost-effective techniques. As a result, theyhad become well accepted over a period of time.So one moral is, where you have a localgovernment service at the national level that cansupplement or support a program in a municipality,it should be encouraged to do so.

There is also a need for greaterprofessionalism. One of the items we havediscussed was whether there could be a career

67

Introduction

for urban managers, a career where individualscould use broad municipal and financialmanagement skil ls. There could be morespecialized training programs to supplement theirprofessional university education. I think acombination of various measures is needed.Mr. Stubbs from the ADB has developed apioneering $70 million capacity-building project inIndonesia for urban managers that includes careermapping. The ADB is very happy with the attitudeof the Government of Indonesia as they are readyto borrow money (not rely only on grants) forcapacity building, mainly targeted at localgovernment.

Mr. Stubbs: In preparing that project, theIndonesian Government looked at their urbansector, they looked at their policy, they looked attheir institutions, they looked at their funding andimplementation mechanisms, and they looked attheir human resources. Out of all of those areasthey identified human resources as the greatestconstraint and problem facing their localgovernment. So they put together a plan forimproving human resources at the local level.

The human resource gap at the local levelincludes the need for engineering and othertechnical skills, but the greatest problem is how tobring management skills into local government. Inthe Department of Public Works, particularly at thesenior level, the problems are managementproblems. Typically, they have engineers runningprograms who may have just post-high schooleducation. So they are undertrained, even in theirtechnical skills. Interestingly, there is no provisionfor a career path mechanism for a non-engineer inthe public works department. So if they happen tobe lucky enough to get a person with a degree inmanagement, that does not help them very muchin terms of career path development. In fact, it may

Of all theproblemsfacing localgovernment,that ofidentifyingappropriatehumanresources wasthe greatestconstraint.


68


be a hindrance.

Mr. Oxley: I work for an organization that underpinsits management philosophy through a qualitymanagement approach. We emphasize the peopleprocess, the human resource side. We havedeveloped a conceptual framework based arounddeployment, results, and improvement. These keyelements drive the way in which we manage ourpeople in the organization � how we manage theorganization through the deployment of people,through the creation of job descriptions, businessspecifications, company standards, and byundertaking training need analysis. We developcontracts that clearly outline the performancemeasures we want from our people.

When we focus on the results we want toachieve we use techniques such as �360-degreefeedback� reports where we have appraisals bothfrom senior levels and from peers andsubordinates. We undertake staff surveys, askingthem how they feel about certain aspects of theirroles within the organization. We have anemployment development and review program thatallows employees to continue their professionaldevelopment, skills development, or educationprogram to ensure that they have the skills thatmatch the requirements of a particular job.

We carry out a range of competenceassessments as well. We identify the competenciesrequired for individuals within particular workplacesand how these competencies can be uplifted. Togive an example, we have a reward scheme wherebyeither individual employees or groups of employeescan be nominated from throughout the organizationand judged as to whether or not they should beawarded recognition for the work they have doneover the year. Last year � it was pleasing to mepersonally � one of our work crews was able towin a team award. It was a great feeling for the whole

69

Introduction

organization.We emphasize training and development of

our employees. We undertake quarterly reviewsagainst set targets and measures, and there isalso an annual review of the whole organization toensure that the overall targets, our corporate goals,have been achieved.

We regard our people as the most valuableasset within our organization. We treat them withrespect. We have developed a set of values thatwe try to promote throughout the organization. Thiscomes about through strong leadership. Thismorning someone gave the example of a seniormanager going out on the garbage truck to get afeel for how the job is done. I think it is importantfor the chief executives and senior staff to be verymuch involved, so that their interest in the way theorganization works is clearly demonstrated. On aregular basis, one of our senior executives spendstime on an inquiry counter dealing directly withcustomers. When we as managers demonstratethroughout the organization that we are extremelyinterested in things the staff do, we win in two ways� staff morale improves and we learn to look atthe organization from their point of view.

Without people who are totally committed andhave a positive attitude about providing qualityservice, we would not be the organization that weare today. I can�t emphasize too strongly howimportant it is to develop good people processesthat are well understood and clearly articulatedthroughout the organization.

Ms. Prasad: In India we have a three-part systemof performance appraisal. It concerns the personalqualification of the officers, the targets we haveset for them, and what they have achieved. Weare also asked to make an appraisal of the type oftraining required. The only sad part is that follow-up is rarely undertaken.

When we asmanagersdemonstrateour interest inour staff, we winin two ways �staff moraleimproves andwe learn to lookat theorganizationfrom their pointof view.


70


When we talk about management andhuman resources we are dealing with two things.One is skill and the other is commitment. Skill canbe upgraded. Commitment on the part of theemployee has to be developed. In a market-oriented situation where there is a goal, theimmediate gain is clear, so you can motivateemployees to achieve more. At the municipal level,however, it is very difficult to measure performance,and even more diff icult to reward goodperformance.

Mr. Oxley: We measure satisfaction through anemployee survey annually. All employees areasked to complete the survey on a voluntary basis,anonymously. The survey covers a whole range ofissues concerning the organization. From thefeedback we obtain, we can see what we need tomodify in our management approach to the humanside of the organization. Getting feedback on aregular basis, adjusting our management practicesto ensure that our employees are motivated andsatisfied, that they are contributing significantly tothe overall good of the organization, is an importantaspect.

We need to create an environment withinthe organization where people want to come towork, where they want to contribute to the overallgood of the organization. Then we have a highlevel of employee satisfaction and certainly a highlevel of morale. It�s all about setting the direction.Over the last few days we have talked about avision for the organization, setting a goal and amission, and creating a set of values that rely ontrust, integrity, and respect. These are all elementsthat contribute to achieving the attitude we havebeen talking about. It is not easy. At the end of theday, all employees come to work because they wantto do a good job. I don�t know of any employee

71

Introduction

who says �I don�t want to do a good job today.�

Mr. Suwarnarat: I think in your position you haveto give awards to people who have done somethingvery well. How do you prevent that reward fromhaving a negative effect in that you intimidate therest of the people, or insult them for not being sogood? How do you prevent that?

Mr. Oxley: This is a very good question. It can beimagined that rewarding exceptional performersmight demotivate others who think they are alsogood performers. That�s a risk you need to take.Our experience has shown that throughout ourreward and recognition system, the overall attitudeis that it is a good means of recognizing that thereare people who are willing to make the extra effort.


72


73

Introduction

VI. CREATING A

CUSTOMER FOCUS

M unicipalities exist to provide services tocustomers, the people who live and workin the city and who use the city�s

infrastructure and services. Municipalities alsohave an obligation to the community to ensure thepublic good; the health and well being of thecitizens. The balance between community serviceobligations and customer needs varies from cultureto culture and from city to city.

The first presentation by Rod Oxleydiscusses the relationship between the WollongongCity Council staff and the community. The secondpresentation is by Jesse Robredo, Mayor of NagaCity in the Philippines.

A. CREATING AND SUSTAININGCUSTOMER FOCUS

Rod OxleyChief Executive OfficerWollongong City Council, Australia

Customer focus is but one element in the way wemanage our local government in Australia. In thecontext of the Wollongong City Council, customer focusfalls within the auspices of our quality managementsystem � what they want, what they need, and theirexpectations. It is linked to the vision, the mission, andthe corporate goals of the organization. Customerfocus has to be seen in the context of the totality ofthe management system. The emphasis onidentifying the customers and looking after their needsis part of our overall management concept.

74


There are three aspects to creating acustomer focus:

� knowledge of our customers� needs andexpectations,

� customer relationship management, and� customer satisfaction.

1. Knowledge of Customer Needs andExpectations

A commitment to a customer-focused approachmust be developed. It is paramount in myorganization that commitment is developed andexpressed from the Lord Mayor, through theCouncilors, and down through the managementstructure of the Council�s organization. There isalso a need to establish structures and processesto determine customer needs. Their needs andexpectations should be prioritized and deployedwithin the corporate plan.

It is pointless identifying what the customer�sneeds are, and assessing what customerexpectations might be, unless they are translatedinto the planning process and the corporate plan.From that level, the functional business plans needto encompass these needs. Customer servicestandards and service level agreements need tobe developed to meet expectations. These servicelevel agreements should be put in place so thatthe customers � be they internal or external �understand what the delivery standards are goingto be.

It is also important to conduct a customersurvey to determine expectations and to assessthem against the customer satisfaction levels. Asa consequence of that survey, a gap analysis canbe undertaken to ascertain the gap betweenexpectations and satisfaction. The size of the gapwill determine the level of focus that an

It is pointlessidentifying whatthe customer�sneeds are, andassessing what

customerexpectations

might be,unless they aretranslated into

the planningprocess and

the corporateplan.

75

Introduction

organization needs to put into a particular service.It is essential to have a well-developed informationdatabase that can be used as a means ofdetermining and assessing the direction in whichcustomer services should go. It is no longer goodenough to manage by gut feel or intuition. Modernmanagement practices dictate the way in which wemanage our organization and the way in which wesatisfy our customers� needs. They demand thatwe focus on the facts and analyze them in the bestpossible way.

We also need to ensure that our staff arefully conversant with the customers� needs. At theend of the day it is the staff, the people on thefront line of operations, who are called upon todeliver the range of services that we as municipalauthorities are expected to deliver.

2. Customer Relationship Management

It must be clear to every employee in theorganization that he/she serves the customer. It isnot only the person who deals directly with thecommunity who needs to understand theimportance of the customer, it is also the employeewho assists front line staff.

The concept of having an internal customerin the organization is not always clearly understood.The Wollongong City Council has developed a setof core values that are permeated and developedthroughout the organization. I am talking aboutvalues such as being open and honest, about beingfair and just, about ensuring that customers are animportant element of the way you operate yourorganization.

Another aspect of customer relationshipmanagement concerns empowering staff to dealwith customer problems or requests. Throughempowerment of staff, by delegating and devolvingresponsibility, staff at lower levels within the

It must be clearto everyemployee intheorganizationthat he/sheserves thecustomer.

Creating a Customer Focus

76


organization can deal effectively with customerinquiries. We need to promote a customer-friendlyworkplace.

In promoting our services, we have adopteda very simple slogan: Wollongong City Councilworking for you. In all of our publicity andpromotional material, we always finalize ourmarketing strategy, our marketing efforts, and ouradvertisements with the words working for you.Vehicles used in road construction have the sloganpainted on them. What does it do? It creates anatmosphere, it creates a culture of peoplecontinuously identified with the idea of commitmentto providing an ideal level of customer service.

It is also important that we create an openand responsive corporate environment. In creatinga customer-focused organization, you need tocreate an environment that makes people feelwelcome and where people are proud of what theydo in the organization.

3. Customer Satisfaction

It is useless creating a focus on your customersunless they are ultimately satisfied. Customersatisfaction is at the root of our vision, mission,values, and goals. Once again we need to be clearabout what is meant by the vision of an organization� what is its mission, what are its corporate goalsand objectives?

In the context of my own organization,customer satisfaction is one of our seven key resultareas. The corporate plan specifies that the firstkey result area relates to customer focus. That itis shown first is an indication of the importanceplaced on delivering quality service.

We have also developed a range ofmechanisms to compare customer satisfactionlevels within our own area to those of other areas.This process, called benchmarking, is a tool for

77

Introduction

assessing the performance of organizations.One component of our customer service

model is the reduction of the gap betweencustomer expectations and the service delivered.Gap analysis is a very powerful tool for assessingthe difference between what you say and what youdo. We measure customer satisfaction on aservice-by-service basis across all functions, aswell as by taking an overall view of the organizationfrom the customer�s point of view. This gives ourmanagement team the opportunity to modify theway in which services are delivered to ensure thatthose satisfaction levels are maintained.

Communicating the results of ourmeasurements of customer satisfaction to staff isvery important. Unless staff are made aware of theoutcomes of their work, they cannot respond. Wepublish a monthly staff newsletter providingupdates. Disseminating this informationthroughout the organization makes people feelthey are involved. This has an impact on morale,and when you have a situation where morale ishigh, you have people who are prepared to gothe extra mile to satisfy the customer.

A focus on customer satisfaction also leadsto working directly with customer groups to bringabout continuous improvement. We interact withpeople to ascertain whether or not they feelsatisfied, so as to find out if they are getting theright level of service from our organization. Forexample, in our planning or building approvals area,we often invite consultants, architects, and plannersto meet with us to ascertain whether or not theprocesses we have in place are meeting theirexpectations.

As cities grow into megacities, as we start tosee economies prosper, people want a greater sayin the way their municipalities are managed. Theyexpect and deserve better levels of service thanin the past. This is a challenge for all municipal

When morale ishigh, peopleare prepared togo the extramile to satisfythe customer.


78


authorities throughout the world. By developing agood customer service model, emphasizing thatcustomers are important, we will achieve much.

B. CREATING A CUSTOMER FOCUS INCITY GOVERNMENT

Jesse M. RobredoMayor, Naga CityPresident, League of Cities of the Philippines

1. Introduction

In my presentation today I will focus on our foursuccessful innovations in Naga City.

� Presenting and communicating a vision� Sharing the vision� Reinforcing the vision� Overcoming resistance

The situation in Naga was not ideal when Itook over as mayor in I988. To some extent, thesituation at that time represented the Philippinepolitical culture which is founded on certain orientalvalues. For a very long time, political power hadbeen concentrated in the hands of few families whomanaged to sustain it by dispensing favors undera system of patronage. The concept of utang naloob (debt of gratitude) is very pervasive, its effectsable to span generations. It is reinforced by othervalues, such as hiya (shame) and pakikisama(fellowship).

But there were some perceptible changesin this culture. The present Philippine Constitutionfrowns on political dynasties, which leveled theplaying field to some extent, encouraging andenabling newcomers to join politics and share powerwith the entrenched families. The preponderanceof competing candidates, including those from the

79

Introduction

political families in Naga, is the main reason that Iwas able to win the election as a minority mayor in1987.

2. The Productivity Improvement Program

a. Beginnings

Initiating municipal reform is difficult, especially fora new administration. But when we reassessed thewhole situation, we saw crisis-like circumstances thatactually offered an opportunity to introduce radicalchanges.

We initiated a series of confidence-buildingmeasures. The entire local bureaucracy wasreorganized, starting with a comprehensiveexamination that all employees underwent. Manythought it was just a joke. But to their consternation,and to the relief of demoralized but competentworkers, results of that examination served as thebasis for placement and ranking of employeesdepending on their skills and aptitude.

At the same time, we felt that our people �whose average take-home pay was the lowestamong the cities of the Bicol region � should bebetter compensated to boost their morale andefficiency. To address this, we provided thefollowing:

� a 10-percent across-the-board increase forrank-and-fi le employees, effectiveimmediately;

� a 10-percent increase in the salary rate ofdepartment heads, effective immediately;

� a 200-percent increase in the monthly cost ofliving allowance, effective immediately;

� P1,000 cash gift to all employees;� a I3th month�s pay to all employees at year�s

end;


80


� P758,000 to cover deficiencies in salaries forI988; and

� P249,000 to cover the terminal leaves of allofficials and employees.

These efforts might seem a pittance bycurrent standards. But money value was besidethe point. The point was to convey the messagethat the new leadership cared for the welfare of itsemployees. And it paid off handsomely, firmlysecuring rank-and-file support and cooperation forour programs and projects. Capitalizing on therestored morale of our people, we then proceededto implement measures aimed at professionalizingthe employees and upgrading their knowledge andcompetence.

� To ensure justness and fairness in the systemof promoting employees, we formed aPromotions Board where, aside from thetraditional members, the president of the NagaCity Government Employees Association wasgiven a seat for the first time.

� We devised schemes that gave duerecognition to outstanding achievers to inspirethem to go to the limits of their potential. Thisled to the institutionalization of an annualawards scheme for employees.

� We meted out punishment to erring employeesand officials, always guided by the precept that�public office is a public trust.�

All these served as critical foundations for theconceptualization, implementation, andinstitutionalization of our Productivity ImprovementProgram (PIP). PIP focuses both on employeeempowerment (people change) and improvementson systems and procedures (systems change) toimprove the quality and quantity of frontline servicedelivery.

81

Introduction

Primarily, it seeks to transform localgovernment employees into genuine publicservants driven, not by rules and regulations, butby vision and mission. To buttress and sustain thistransformation, the program focused on improvingsystems and procedures, fine-tuning them to theneeds, problems, and aspirations of the people.

Thus, against the backdrop of perceivedincompetence and inefficiency in government, wesought to demonstrate the opposite. By alwaysaiming to please, and putting our clients, theNagueños, first, we not only showed thatgovernment could work, but that we could do itbetter! Consistent with our vision to give Nagueñosthe city they deserved, we sought to establish CityHall as a center of excellence, and to sustain itover time by instilling a culture of excellence in thebureaucracy.

b. Objectives

Conceptually, PIP tackled the problem of how tobring about adequacy, efficiency, effectiveness,and equity in the delivery of public services amidstcompeting sectoral demands. Specifically, it soughtto attain the following goals:

� to set response time in the delivery of servicesto its barest minimum;

� to pursue specific projects and activities aimedat inducing and sustaining peak productivitylevels in all departments and offices;

� to encourage employees to come up withviable ideas and suggestions to furtherimprove productivity;

� to constantly upgrade the skil ls andcompetence of employees through the regularconduct of seminars, workshops, training, andsimilar activities;

� to institutionalize a cost reduction system; and


Against thebackdrop ofperceivedincompetenceand inefficiencyin government,we sought todemonstratethe opposite.

82


� to set up a feedback mechanism for the public.

c. Operational Activities

To operationalize the program, we implemented thefollowing projects and activities.

� Productivity seminars. Seminar and workshopson various productivity enhancing techniquesand methodologies were conducted for everydepartment and working unit. Among the topicstaken up were techniques of officemanagement, action planning, and timemanagement.

� Contract of deliverables. Each departmentand work unit were required to post in aconspicuous spot within their offices a list ofthe frontline services they performed, thepersonnel in charge of each service, and theminimum time needed by that personnel tocomplete each specific task.

� Very Innovative Person (VIP) Project. Togenerate suggestions on how to improvesystems and procedures, and to cut down onoperating costs and waste, the VIP project wasconducted annually. This contest among CityHall employees featured rewards for winningsuggestions. It is estimated that the citygovernment saves P1.5 million per year byimplementing suggestions that came out of theVIP project.

� Semestral surveys. To generate feedback fromemployees, a semestral survey amongemployees was also conducted using a simplequestionnaire randomly distributed by the PIPCommittee. The questionnaire asks what theythink of the PIP and how it affects their daily

The citygovernmentsaves about

P1.5 million peryear by

implementingsuggestions

made byemployees

through the VIPproject.

83

Introduction

working processes.

� Weekly Management Committee meetings. Aweekly meeting of the city�s ManagementCommittee was conducted every Monday,presided over by the Mayor. The ManagementCommittee consists of department heads,chiefs of offices, and responsible officers forindependent working units of the citygovernment. It enables the middle managersto report directly to the Mayor on a weeklybasis of progress in each department/office,determining, in the process, the inroads madeby the program in the day-to-day operationsof the local government unit.

� Institutional feedback mechanism. To enhancemonitoring and evaluation, the PIP Committee,in close coordination with the LingkodBarangay (one of the city governmentinstruments with direct links to the barangays,or neighborhoods), conducts mid-year andyear-end surveys to determine how peopleassess the quality of frontline servicesdelivery.

� Productivity Improvement Circles. At thedepartment and working unit levels, theestablishment of Productivity ImprovementCircles was encouraged and promoted amongpersonnel performing related functions. Itseeks the best way to evaluate current workingconditions by obtaining suggestions from eachdepartment of ways and means forimprovement. The best-performing Circles arerecognized at year�s end.

� Annual Search for Outstanding Employees.Every year, the Naga City governmentculminates with the search and recognition of


84


outstanding departments, officials, andemployees. Most often, it coincides with CityHall�s Christmas party, where winners of variousPIP contests are also announced.

� Employees Day. To strengthen teamwork andpromote camaraderie, the city government alsoholds an interdepartmental summer sports fest.It culminates with City Hall�s traditionalEmployees Day, which is dedicated to the rank-and-file every summer that features, amongother events, a beach outing.

d. Challenges and Obstacles

As expected, the program encountered obstacles,the most significant of which was the process ofaccepting change � where old attitudes and badwork ethics had to be discarded. Apathy, emotionalresistance, and insecurity were the usual reactions.

The employees themselves were thestrongest critics of the program because it upsetconvention � from mere fence-sitters, they werenow expected to share in many managementprerogatives like decisionmaking and goal-setting.Usually, criticism comes in the form of passiveresistance to innovative approaches, absurdtreatment of new ideas, or open support for thestatus quo.

At present, only a few critical voices stilllinger among City Hall employees. The criticismstems mostly from employees who fear that in theongoing process of change and transformation,they may literally or figuratively be swept away.But once they realize that their fears are baseless,the criticism will, sooner or later, fade away.

e. Success Indicators

How effective is the PIP in changing the way we do

85

Introduction

things in Naga City? I would say it is nothing shortof revolutionary. Consider the following indicators,both in terms of the quality of service as well asthe innovations spawned in the process of furtherimproving the quality of delivery.

In terms of service delivery, our peopleattained dramatic improvements in response time,service coverage, and cost efficiency. Here areeight examples.

i. Child welfare. With its City Health Office in theforefront, Naga emerged as the mostconsistent top performer among 62 Philippinecities in advancing children�s welfare.According to a 1994 progress report of UNICEFand the League of Cities of the Philippines, itfigured prominently in 7 of 11 major indicatorsfor child survival, protection, and development.

ii. SMART. The project included theintroduction of honors classes and computersubjects in the curriculum, the establishmentof four additional high schools, and otherquality-enhancing programs. Project SMARTenabled Naga to top the Bicol region inachievement among high school students forthe first time. In addition, the establishmentof one model city day care center and 24barangay centers since 1988 brought thetotal to 54 � all of them now using theMontessori approach to early child care anddevelopment.

iii. Urban poor program. Led by the lean but meanUrban Poor Affairs Office, Naga evolved thePhilippines� best urban poor program. Its NagaKaantabay sa Kauswagan was cited as one ofthe Top 40 Best Practices by the United Nationsduring the Istanbul City Summit in June 1996. Inaddition, it was featured twice in the Cities

In terms ofservicedelivery, ourpeople attaineddramaticimprovementsin responsetime, servicecoverage, andcost efficiency.

Naga�s urbanpoor programwas cited asone of the Top40 BestPractices bythe UN duringthe IstanbulCity Summit.


86


Sharing Workshops and an internationalgathering in Surabaya, Indonesia. Naga wasalso visited by Indian local government officials.

iv. Hospital care. With the Naga City Hospital atthe forefront, the city registered a 382-percentincrease in number of patients treated for atotal of 70,362 patients or 193 per day in I996(from only 10,800 total or 40 patients per daywhen it began operating in I99I).

v. Garbage collection. The General Services crewdramatically increased its garbage collectionefficiency from only 31 percent in 1990 to 85percent last year. The crew expanded itscoverage area from two to eight majorsubdivisions, and hiked its frequency of tripsfrom twice a week five years ago to dailycollection in the central business district.

vi. Cost Reduction. All these initiatives werecomplemented by cost reduction efforts underthe PIP. For instance, the VIP scheme contestamong city hall employees enabled thegovernment to save around P1.5 millionannually.

vii. Income generation. Led by its City Treasurer�sOffice and employing practically the same staffcomplement, Naga�s income last year hit aremarkable P163.4 million. Of that amount,P62.8 million was locally generated, a 376-percent improvement over the I988 level of onlyPI3.2 million.

viii. Government spending. Finally, citygovernment budgeting over the past threeyears proceeds from a given that maintenanceand other operating expenses of alldepartments will remain at their 1991 level,

87

Introduction

notwithstanding the city�s rapidly increasingannual budget. Thus, while City Hall�s percapita spending on social services zoomedfrom P65 in I99I to P323 in 1995, and oneconomic services from P225 to P8,411 duringthe same time span, its per capitaadministrative expenditures last year actuallydropped to P2I6 from P2I9 in 199I.

For its effectiveness and originality, PIP wasadjudged one of the country�s Ten OutstandingLocal Government Programs in I995. Naga alsoreceived the Galing Pook Award, which hasbecome the country�s most prestigious award forlocal government. PIP also gained internationalattention when it was featured during theInternational Conference on Governance held inManila in October 1996.

3. Replicable Innovations

Our effort to sustain and cultivate a culture ofexcellence at City Hall spawned a large number oflocal programs recognized nationally andinternationally for their innovativeness. Theseinclude the following.

i. Naga Kaantabay sa Kauswagan. This programis Naga�s unique and highly effective responseto squatting, a symptom of the urban poorphenomenon plaguing urban centersworldwide. The program was another GalingPook awardee and most recently adjudgedduring the Istanbul City Summit as one of theTop 40 Best Practices the world over. Itsstrength comes from the fact that given ourlimited resources, we decided on a strategyof focus (mass homelot acquisition over masshousing), developed creative approaches tofacilitate homelot ownership, and in the


88


process forged a tripartite approach thatworked wonders in settling tenurial issues.

ii. Metro Naga Development Program. In 1994,this program was recognized for its uniquenessand refreshing originality as a pioneeringexercise of the 1991 Local Government Codeprovision encouraging cooperativeundertakings among local government units.Reduced to the simplest terms, the Metro NagaDevelopment Program is a highly effectiveexercise in resource pooling. Guided by theprinciples of resource complementation androle definition, the program pools the effortsand resources of 13 local government units,the private sector, and national governmentagencies in Camarines Sur (Naga City�sprovince) and focuses them on projects andactivities that address the immediate needsof the Metro Naga constituency. In the process,it lays the groundwork for balanced, long-termgrowth of the area by operationalizing ascaled-down integrated area developmentframework, capitalizing on the strong urban-rural linkage between Naga and its neighboringtowns. The program also serves as amechanism for channeling resources fromvarious sources.

iii. Emergency Rescue Naga. The third of Naga�sthree Galing Pook winners (I994) is EmergencyRescue Naga, a program that addresses theurgent need for fast, reliable service in timesof emergency. Inspired by Rescue 911, itoptimized the in-house capabilities of the NagaCity Hospital, which serves as the program�sheadquarters and operations center. Like theMetro Naga Development Program,Emergency Rescue Naga features highlysuccessful community resource mobilization.

The programpools the efforts

and resourcesof local

governmentunits, the

private sector,and national

agencies andfocuses them

on projects thataddress theimmediate

needs of theresidents.

89

Introduction

By mobilizing the combined resources of thecity government, the police and firedepartments, the local association of barangaycouncils, government and private medical andeducational institutions, radio stations, localamateur radio groups, and private medicalvolunteers, Emergency Rescue Naga providesthe following services to Nagueños around theclock.

� Emergency rescue and transfer� First aid� Ambulance service� Quick police response� Traffic control� Firefighting� Promotions� Disaster preparedness and control

Emergency Rescue Naga effects coordinationamong participants primarily through the useof VHF radio and a telephone hotline, enablingthe program to attain a 3-5 minute averageresponse time within the city proper, and 30minutes for the farthest mountain barangayssome I7 km away.

iv. Naga SPEED. While the Metro NagaDevelopment Program focuses on economicobjectives, the Kaantabay sa Kauswagan andEmergency Rescue Naga on social concerns,the Naga Socialized Program for Empowermentand Economic Development (Naga SPEED)concentrates on political empowerment. NagaSPEED is a revolutionary mechanism formaximizing people participation in localgovernance.

Naga SPEED is unique for laying downmultiple channels through which specificsectors, groups, or the entire constituency can


90


participate in identifying developmental prioritiesand stamp their mandate or disapproval onmajor policy issues. As a result, it addressesthe need by a local government unit to have itsprograms supported by its people, and toimplement projects and activities. An innovativecomponent of Naga SPEED that sets it apartfrom other consultative mechanisms is itspioneering use of the referendum as a localtool for people empowerment. Indeed, Naga Citywas the first local government unit in thePhilippines to hold a referendum under the aegisof the I99I Local Government Code. Throughthis mechanism, the people adopted threecrucial policy measures that have far-reachingeffect on the future of the city.

In the process, it has mainstreamed theso-called silent majority � the unschooled, thepoor, and the powerless � within the priority-setting and decisionmaking process of theNaga City government. Through Naga SPEED,these people, whose previous importance togovernment officials rose and waned withelections and who had never before beenasked to express their views on governmentpolicies, were finally given a niche in localgovernance.

v. City Government Computerization Program. InI993, we began implementation of the Naga CityGovernment Computerization Program.Tapping the resources of a local university, thisin-house capacity-building program sought toharness the powers and potential of computersas a management and productivity tool in alocal government setting. This enabled the citygovernment to develop no less than 17computer applications in various areas of localgovernance.

Theunschooled, the

poor, and thepowerless, who

had neverbefore been

asked toexpress their

views, werefinally given aniche in localgovernance.

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Introduction

vi. Naga Early Education and Development(NEED) Program. The city governmentimplemented a comprehensive program thatsought to provide quality, equitable, andaccessible education at the preschool,elementary, secondary, and tertiary levels.This program is innovative because itredirected existing disparate educationprograms of the national government into onecohesive and comprehensive whole, therebyputting sense and logic into the local educationsystem.

At the preschool level, NEED effectivelyevolved an early education program for allpreschoolers in the city, including those withdisabilities. NEED worked out of the traditionalday care services of the Department of SocialWelfare and Development, combining the oldcustodial care with Montessori-type preschooleducation.

At the elementary and high school levels,the city government upgraded the quality ofinstruction to be at par with private schools byimplementing the SMART project. NEEDimproved the pupils� proficiency in science andmathematics, established honors classes,introduced computer l iteracy into thecurriculum, and established Naga City ScienceHigh School plus four other high schools.

At the tertiary level, the city governmentimplemented the pro-poor Iskolar kan Ciudadprogram that gave out scholarships todeserving but financially distressed collegestudents.

vii. Ecological Solid Waste Management Program.To better manage local waste, we launched thisprogram late in I995 to focus on zero-wastemanagement, the first of its kind in the entirecountry. The innovation here stems from


92


accessing existing waste managementtechnologies and applying them locally. Theproject was implemented to improve local solidwaste disposal, make the whole process moreearth-friendly, generate employment, andaddress the rapidly diminishing capacity of thecity dumpsite.

Presently, around 30 percent of solid wastegenerated daily in Naga City is being sortedand recycled. Compost fertilizers are alreadybeing produced at the dumpsite. And thetechnology, first piloted at the Naga City PublicMarket, is being replicated in surroundingbarangays. Impressed by this initiative, theDepartment of Environment and NaturalResources pledged support to the project.

viii. Government-NGO partnership. One secret ofNaga�s success, one that we take great pridein, is the presence of a strong local network ofpartners from both government andnongovernment organizations (GOs and NGOs)as well as people�s organizations (POs). Thispartnership draws its strength from progressiveelements in the political spectrum. Through theinstitutionalization of SPEED and the Naga CityPeople�s Council, an umbrella organization ofNGOs and POs in the city, we have drawn activemultisectoral participation and stakeholdershipin local governance from local communities inNaga.

4. Conclusion

The following six observations stand out concerningour involvement with PIP.

� Improving the quality of service delivery shouldbe a fundamental goal of any change processin the public sector. This stems from the

93

Introduction

general perception of the relativeincompetence and inefficiency that typifiespublic service. Disproving this is a big challengefor government leaders.

� Efforts to improve quality of service deliveryshould be consistent with the leadership�s visionand strategies for the change process. Thesuccess of improving the quality of servicedelivery is predicated on how the leadershipintroduces and manages change. Success inthis area is largely a result of how a leadercommunicates his vision, the extent to whichthe people share that vision, and how he/shereinforces the mandate with confidence-building initiatives.

� Improving productivity as well as the quality ofservice delivery should focus both on peopleand systems. One wiII not work without the other.

� Local governments can succeed in improvingthe quality of service delivery. Compared tonational government agencies and instruments,local government bureaucracies are small insize, work for a smaller clientele, and aretherefore more manageable. Further, they arenot resource-intensive since the focus is onmaximizing the potentials of people andimproving systems and procedures.

� Successful innovations are built onpartnerships, particularly with local NGOs andPOs. This is a common underlying theme toall our successful programs, from Naga SPEEDto the People�s Council. As with all othersuccessful innovations, it affirms the reality thatgovernment cannot do what it sets out to doon its own. Sharing skills, resources, andresponsibilities with partners is essential.

The success ofimproving thequality ofservice deliveryis predicatedon how theleadershipintroduces andmanageschange.


94


� Over time, government should move towardbeing development coordinators rather than�do-it-all� service providers. This is a corollaryto the above. We should recognize that in theemerging economic order of globalization, theonly way we can compete is to specialize.Certainly, government resources will not allowus to do everything. A proper response is tofocus on functions that government does best,leaving the rest to its partners. Whengovernment assumes the role of adevelopment coordinator it cannot abdicate itsgovernance function.

95

Introduction

VII. FINANCING

URBAN DEVELOPMENT

A. EVOLVING ROLE OF LOCALGOVERNMENTS

Asad Alih ShahManager; Water Supply, Urban Development andHousing Division EastAsian Development Bank

W e have been talking about how can wetranslate our visions and dreams intoreality. One of the very important

aspects in this process is resource management.Resources are of various kinds: institutional,human, and financial. Financial resources are veryimportant and, in my long experience, financialmanagement is one of the weakest areas inmunicipal management.

In the ADB we have recently introduced theproject performance management system, whichaims to link the long-range objectives with themedium- and short-term objectives, and to facilitatemonitoring the broad development impacts of theprojects. The monitoring system needs to bedeveloped in such a manner that it links the variousobjectives to key result areas. The managementinformation system needs to incorporate financialinformation appropriately. During our earlierdiscussions, we were also talking about the needto cut across the jurisdictions of individual workunits to create an integrated mission and visionacross the organization. As we discussed the otherday, it frequently happens that staff involved with

96


accounting and finance never go to the field. Theydon�t see the customers. A greater exposure ofthese staff to clients and customers would givethem a better understanding of the purpose of theirwork. They would be able to develop linkages withother units and generate a greater cross-fertilizationof ideas within the organization.

Some years ago I was involved with thedevelopment program in Dhaka. Both the WorldBank and ADB were trying to strengthen thefinancial reporting, accounting, and othermanagement systems within the Dhaka MunicipalCorporation. It was agreed that the position of theChief Accounts Officer should be upgraded, andthe number of staff dealing with accounting shouldbe increased. During project implementation Inoted that many of the senior staff in the accountssection were seconded from the Central Audit andAccounts Service. They never settled in this job,stayed in the position for only a few months, andtreated this only as a transition during which theirmain interest was to look for another job. With suchfrequent staff changes and a lack of commitment,financial management and accounting remaineda relatively weak area.

We have had considerable experience inIndonesia working with the local, provincial, andcentral government agencies on urban developmentprojects, including local institutional developmentaction plans and revenue enhancement plans.During the implementation process, the emphasisremained on physical targets and achievements,including contract awards and disbursements.Inadequate attention was given to the outcomes andimpacts, including progress on these action plans.Even the Bank�s review missions tended to neglectthis area in the earlier phases of the implementationof projects. Toward the latter part of the projectsmore emphasis was placed on the institutional andfinancial aspects, but the actual accomplishments

97

Introduction

remained lower than appraisal estimates. The Bank�sproject performance reports have consistentlyidentified the need for more emphasis on theinstitutional and financial aspects to ensuresustainability of benefits.

One other subject of relevance in this contextis that there is a lot of wealth generated in cities.The challenge for municipal managers andadministrators is to tap into this wealth and utilize itfor basic services and poverty alleviation programsin a cost-effective manner. Linkages of vision,mission priorit ization, and local resourcemobilization are important. In my view, one areathat has received inadequate resource mobilizationis land administration. We need to do a much betterjob of realizing greater resources for urbandevelopment from better land taxation.

A constant theme in many projects isdecentralization. However, while the centralgovernments have often surrendered many of theirfunctions to local authorities, this has not beenaccompanied by fiscal decentralization. The Bankis now working with governments to develop variousfunding mechanisms for regional and localdevelopment, including the municipal developmentfund in the Philippines and the regional developmentaccount in Indonesia. However, the basic messageis the importance of self-reliance at the local level.While the higher levels of government will be helpinglocal authorities, it is important that greater effortsbe focused on resource mobilization at the local level.

B. FINANCING THROUGHPARTNERSHIPS

Keshav VarmaFormer Commissioner, Ahmedabad MunicipalCorporationAhmedabad, Gujarat, India

Financing Urban Development

Whilegovernmentshave oftensurrenderedmany of theirfunctions tolocalauthorities, thishas not beenaccompaniedby fiscaldecentralization.

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I want to talk about partnerships. Whypartnerships? Why not exclusivity? Why dopartnerships happen? Why do partnerships nothappen? What do partnerships do?

In the South Asian context, partnerships arevery important for creating sustainability andrelieving corruption. Local self-governments haveto realize that they are confronted with a pattern ofextremely complex issues. When I was the MunicipalCommissioner in Ahmedabad, the urbandevelopment budget of the state government ofGujarat was exactly 0.8 percent of the total budget.If this is total funding available for urbandevelopment, we have a problem. The magnitudeof the problem has to be understood. Only thencan we find solutions.

The rate at which urbanization is taking place,and the disparity between the developed countriesand the developing countries is frightening. Why,for example, is child mortality high? Policy plannersin urban areas are so insensitive to the issues thatthey do not really care unless you dramatize thewhole problem. Look at the investment needs fordeveloping countries. The World Bank estimateof the required urban housing infrastructureinvestment over the next 30 years is

� Africa � $1 trillion,� Latin America � $500 billion, and� Asia � $2.3 trillion.

The gap between needs and availability is$100 billion to $200 billion. Current annual privatesector investment is $25 billion. Planned World Bankannual investment over the next five years is $3billion in East Asia alone. What are we talkingabout, 1 percent of investment? Therefore, thereis a need for convergence and there is a need forpartnerships.

When I started working with the Ahmedabad

99

Introduction

Municipal Corporation, it functioned in totalisolation. How the Corporation worked was amystery, and that was the biggest problem. In sucha situation people can indulge in wholesalecorruption. The land deals in which bureaucratsand politicians dealt separately with builders ledto corruption. Unless you create partnerships thatcontribute to transparency you will never be ableto deal with these problems. I believe thefundamental issue of city management ispartnership.

You cannot function effectively by excludingthe city because it is very close to you. The city isall around you. It is not like a member of parliamentor a senator whose constituency is far away. Hereyour constituency is right beside you. Theresponse of the city, the negative as well as thepositive, is a very immediate issue. I want todescribe one partnership relevant to all of us, onethat deals with the poor � the urban povertypartnership.

The population of the city of Ahmedabad is41 percent poor. These people are located in2,412 locations. Traditional poverty-orientedprograms aimed at alleviating poverty inAhmedabad were a mockery. Because budgetswere allocated at the state level, the MunicipalCorporation received insufficient finances to doanything substantial, and $1 million-$2 million wouldgo annually to slum areas and make no difference.In fact, the kind of investments that were beingmade created more problems than solutions.

Ahmedabad is the seventh largest city inIndia, and next to Bombay the second biggesttrade center in India. The population is 3.6 million.The number of households living in slums is225,000. Eighty-three percent of slums arelocated on private land, 10 percent are onmunicipal land, and 7 percent are on governmentland. Annual growth rate of the population is


Unlikemembers ofparliament orsenators whoseconstituenciesare far away,localgovernmentofficials cannotavoid workingin partnershipwith theirconstituents,who are rightbeside them allthe time.

100


higher in slums, double that of other areas. Thesecharacteristics typify urban slums across Asia.

The purpose of the partnership we formedwas to integrate the slum into the mainstream ofsociety by physically upgrading the slums in thecity within a finite time frame of seven years,improving the quality of life of urban poor in termsof health, education, and skill upgrading.

We decided to face the totality of theproblem all at once instead of going slowly overtime. Because we were going to work this problemout over the next seven years, it was going tocost $100 million. Money, in fact, was not theproblem. The problem was the mind set. We didn�twant to take on one or two slums and leave 2,408for the next year. If we kept on managing like thatwe would never address the problem. So we tookon the whole problem.

The municipal corporation did not have theprofessional competence to address the problem.We had to create partnerships of trust, we had tocreate a partnership with the beneficiariesthemselves. Therefore we came up with thepartnership concept where the beneficiary wouldpay for upgradation. It wasn�t to be a top-downconcept. The beneficiary would pay for 33 percent,the private sector would pay 33 percent, and theCorporation would pay the other 33 percent. Thewhole program would be taken to the slums not onthe shoulders of the municipal managers, butthrough NGOs and a separate institution.

The women in the slums played a very majorpart, and I think the help of the women completelychanged the level of confidence. In a society whereopen defecation occurs 70-80 percent of the timeand women cannot relieve themselves with dignitybetween sunrise and sunset, medical and healthproblems are inevitable. The public toilets in thecity were in such a mess that we created 50,000individual toilets in two years in the city. The pay-

We didn�t wantto take on one

or two slumsand leave

2,408 for thenext year, so we

took on thewhole problem.

101

Introduction

and-use concept was first started in Ahmedabadbased on this public toilet. This project wasenthusiastically supported by women�s groups, andthese groups were equal partners with us.

What it meant was the NGO was getting thecredit. The private sector also got credit for itscontribution. The community gets the benefit aswell as the credit, and although political loyaltieswere often divided, everyone embraced thispartnership. Why? The partnership is thecommunity, the slum dwellers, and the privatesector. We included the top NGOs in the world inour programs. The part played by NGOs wasabsolutely critical in bringing us a level of qualityand professionalism that had never before existed.

What we were trying to do in the slums wasto provide water, internal roads, pedestrian walks,stone water drains, streetlights, solid wastemanagement, and landscaping. All of this had tocome through professional planning, not throughcasual planning by municipal engineers. Weengaged professional planners. We handed overthe total work of planning, contour planning, theintegration of planning � what we call �slumnetworking,� to professional planners.

The infrastructure planning in the slumswould network with the infrastructure planning forthe city. Therefore the city infrastructure wasplanned in such a way that it encompassed theslum planning. This was the first time sluminfrastructure was being planned in a systematicway. Instead of somebody just providing a road ora streetlight, the whole area was being planned. Idescribed this approach as �landscaping.�

We have been working in the slums of Asiafor the last 40-50 years. They have not changed.The degrading conditions in which people live arethe same. We introduced the concept oflandscaping so that the slum would stop lookinglike a slum after we had gone through the process


102


of development, and this has made all thedifference.

Community development improved in theslums. It was all done by NGOs. Handing over theresponsibility, however, is not easy for municipalcommissioners to do. They do not like to relinquishtheir power. But one has to understand that byhanding over functions to professionals youimprove the functions. The role of the agencies isin the partnership, the community, formingneighborhood committees, and contributing toworkforce development.

What we did was simplify the whole conceptof tenure rights, the belief that you have to givetenure rights to people who live in slum areas. Wesaid that for 10 years the Municipal Corporationof Ahmedabad was not going to touch anybody,whether they be on private land, state governmentland, Government of India land, or Corporation land.I was strongly criticized by many for this position,but I asked for one example in which the poor hadbeen relocated in the city. There were noexamples. We talked about never allowing tenurerights versus the political will to move people out.There were lots of skeptics. Nobody believed thatthe Board would pay, that the AhmedabadMunicipal Corporation would hand over itsconstituencies to a private sector trust, that thistrust would be able to provide professionals to dothe job, and so on. What I�m going to show is how apilot project guided a total upgradation process.The project, which has been visited by staff fromboth ADB and the World Bank, is known asSHARDA � Strategic Help Alliance for Relief toDistraught Areas. It is also known as theAhmedabad Financial Support Project. The WorldBank worked with ADB over three years to co-finance development.

All of our municipal corporation engineerswere extremely reluctant to hand over the work to

103

Introduction

private sector and professional developmentcontractors because it meant that the monopolyof the contractor-driven system would be broken.The planning process was very professional withthe private sector looking at the whole thing. TheNGOs were there, the whole process of municipalmanagement was thrown open for all to see, andthat is one basic strategy of municipalmanagement. In the act of throwing open thecurtain, it makes a difference to corruption. Politicalrelationships become petty and insignificant. Youare in the spotlight and the public expectssomething different from you. The partnership isexpecting something different and this partnershipvery quickly gets cemented in the public gaze. Thisis very important if you want to create sustainabilityin the environment. And you have to create thestrategy of opening the gates and then leteverybody look, let the press in, let the critics in,let the international institutions in. Let the wholething become a partnership and let everybody seea different level of awareness. It will be very difficultfor the new management to bring it down.

Municipal bonds are also an important formof partnership. We had given 10 years tenurerights to Ahmedabad Municipal Corporation land.Our performance was credible. We had created asense of pride and commitment in what we do. Wehad created a sense of mutual respect.

My 24 years of experience in the civil servicehave taught me this: if the civil servant creates aprofessional relationship and raises the level ofmanagement, the politicians are also very happy.The civil service is on a different level. Partnershipsare based on respect, on professionalism, onaccepting that the other side also has a point ofview.

Our project has gone from what waspreviously known as a slum to what is now proudlycalled a township by the residents. They have


Our project hasgone from whatwas previouslyknown as aslum to what isnow proudlycalled atownship by theresidents.

104


invested money. In fact, the beneficiaries have paidin advance. You will be surprised to know that theMunicipal Corporation of Ahmedabad is finding itdifficult to keep up with the demand from the poorto professionally upgrade themselves. The tearsof joy that you see there are, I think, the best rewardthat any municipal manager can get.

The partnership opens your finances andyour performance to the public. You create differentpartnerships and these partnerships are the onlyway of creating sustainability in the environment.

Why the bond? Why the need to raise thismoney? The $35 million we raised could havebeen obtained through ADB, through USAID,through the World Bank. So why the bond?

When we were in the process of upgradingfinancial credibility, of creating professionalism, thequestion kept coming up. What happens if themanagement changes? Who is going to be incharge? Who is going to make sure that all wehave done continues? Where are the safeguards?

In municipal management, the biggestsafeguard is the people. Getting money fromvarious international institutions was creatingproblems. We invited the Credit Rating InformationService of India Limited (CRISIL), a joint venturewith Standard and Poors, to do a credit rating. Wedid not know what we were getting into. The stategovernment did not know either. Neither didCRISIL, who told us they had never rated amunicipal corporation. With the level of municipalrisks, the level of financial risks, the political andmanagement risks, nobody knew how to rate it.Some of their top financial experts came to theMunicipal Corporation for three and a half months.We helped them in their 15-year projections. Oursituation was that in the next 15 years, our incomewas supposed to rise at a level of 11 percent, andour expenditure to rise at a level of 12 percent.We had taken steps to completely change the

We hadchanged therecruitment

qualifications ofthe municipal

managers.Only MBAs,

charteredaccountants,

environmentalengineers, anddegree holderswould becomeofficers in theCorporation.

105

Introduction

recruitment qualif ications of the municipalmanagers to cope with this. Only MBAs, charteredaccountants, environmental engineers, and degreeholders would become officers in the Corporation.We had already placed 40 MBAs and charteredaccountants in the Corporation as part of themanagement executive training scheme that wasto revolve every year. This was admired by therating agency.

CRISIL looked at the environment, theylooked at everything. Then the problems startedcoming in, the political party started questioning,administration itself started questioning. Why werewe doing this? We were known to be financiallyunhealthy. We only owed money to the governmentand a few other institutions, and if a problem cameup we could go explain it to these creditors. Butwho would explain to the people? It was their moneywe were going to put into this. It was a stand-aloneconcept with no other safeguards. The state ofGujarat had been seeking a guaranteed bond since1978. But this was the first time that the credit ratingwas based on a non-guarantee of the state. It wasa stand-alone concept. The state government didnot come in. And when the credit rating came, itwas an A+.

This created a problem for us for one and ahalf years. Bureaucratic egos clashed, we playedour games, the state government played theirgames. Finally the politicians rescued the act bygiving in. We had a bureaucrat who became thePrincipal Secretary for Urban Development. Shesaid you will never be able to get clearance fromthe state finance department. We decided to gostraight to the Chief Minister. We took the directapproach for the municipal bond and informed thefinance department about it. The clearance camein. We then accrued income, met the repaymentschedule, and the credit rating was raised to AA.

Then I joined the World Bank. The new


106


Municipal Commissioner is a very dynamic personwho has continued with my programs.

The response from the cities was �Why areyou raising $35 million? Why not raise $100 million?We�ll come forward and give it to you because thismatters.� The response was �We are investing inour own infrastructure. We are creating our ownworld. We are not contributing to the centralgovernment where the funds go for agriculture orother things. We are contributing for ourselves.�

The reception to our public awarenessprogram was extremely enthusiastic. We spent $1million on an advertising campaign. The campaignhad a message � the people and the partnership.The whole campaign was based on the positionthat we are doing well because we listen to people,we listen to the city. Partnership with the citizens isthe essence of management. You have to gobeyond communities, you have to establish a senseof pride and emotional involvement. Passion andpride and emotions affect management in a muchbigger way than just rational thinking. You have toreach and create. You participate in festivalstogether, you participate in epidemics together. Youhave to be out there, with the people, on the street,because no file or paper work ever establishesrelationships. We represent you, we were saying,we are the essence of your aspirations, yourambitions.

If you want to reach out to the environmentand be competitive, change your paradigm. InBombay, the Gujaratis from Ahmedabad startedtalking about their new pride in their city.Ahmedabadians in Washington and New Yorkstarted coming back. At least 11 top-level heartspecialists came and joined the medical college.More money, more investments started coming in.What had we done? We created an emotionalpartnership with the people of the city. This hassustaining value.

Passion andpride and

emotions affectmanagement in

a much biggerway than just

rationalthinking.

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Introduction

The bond was oversubscribed, despite thefact that the interest rate was reduced by 2percent. At 14 percent, it is the first real municipalbond in which the pride, the emotions, the passions,and the vested interest of the people wasrespected. This is what partnerships are all about.

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109

Introduction

VIII. LOCAL GOVERNMENT

INNOVATIONS IN JAPAN

A. LOCAL GOVERNMENT IN JAPAN

Jiro KubotaSecretary General, Council of Local Authorities forInternational RelationsTokyo, Japan

I will speak about the features of the Japanesesystem of local government and its current issues.I will focus particularly on the recent central issuein Japanese local government called �localdecentralization promotion reform.�

Japanese local government has a longhistory, more than 100 years. Before the end ofthe Second World War, our local governmentsystem was similar to the local government systemsdeveloped by France and Germany. After the war,we introduced some elements of the Americanlocal government system. Our present system isa unique combination of European and American.

These features characterize the mixture andunique nature of local government in our country.

� First, Japanese local government has a two-tier system: one tier is concerned with theregional government, the other withmunicipalities. There are 47 regionalgovernments and more than 3,000 municipalitygovernments.

� Second, the Japanese local governments enjoyconstitutional recognition. The Japanese

110


Constitution guarantees local autonomy withelection of governors and mayors andassemblymen/women. It also provides otherprinciples of local government. This is veryimportant because before the war the Japaneseconstitution did not guarantee the status oflocal government. After the reform of theJapanese Constitution, the status of the localgovernment was guaranteed. This means thatthe National Parliament cannot abolish localgovernment without an amendment to theConstitution. The Constitution is very hard toamend. The Japanese Constitution has notbeen amended since it was declared.

� Third, in Japan, local governments have�general competence� powers. These generalcompetence powers are provided in theJapanese Local Government Act. This type ofact originally derived from the style ofcontinental European local governmentsystems. In local governments developed inthe British colonial countries, the powers andfunctions of governments were determined byspecific laws; for example, environment andurban development. However, in Japan,through the Local Government Act, localgovernment can do anything as long as itbenefits the local residents. In terms of thelegal system, Japanese local governmentsenjoy a wide range of capabilities. However,in reality they are also obliged to carry out awide range of functions delegated by thenational government. While Japanese localgovernment has a wide range of ability orpowers, in reality these powers are controlledby the National Government through other actsof parliament.

� Fourth, the governors and mayors of the local

Localgovernment inJapan cannotbe abolished

without anamendment to

theConstitution,

and theConstitution

has never beenamended.

111

Introduction

assembly are elected by residential votes. Thissystem is called a presidential system. In termsof the structure of local government, somecountries have more flexible arrangements. Forexample, in countries with the British system,the members of councils usually elect themayor from amongst themselves. In Japan, thedirect election of governors and municipalmayors is provided by the Constitution. Thereis no other way. This lack of flexibility is also afeature of our local government system. It isremarkable that this rigid system has continuedfor more than 50 years without anyparliamentary amendment.

� Fifth, most local government employees areon lifetime employment. That usually meansthe local government authority, the governorsor mayors, employ the local governmentemployees immediately after they graduatefrom university. Employees then have to workin the same organization until they reachretirement age. This system is called thecareer system and is very common in themilitary or diplomatic services of othercountries. Local government officials are in acareer system. They are provided with ampleopportunities for training and development.They change positions within the same localgovernment and are not assigned to anyspecial job description. The selection of local government employees is based on theresults of examinations. This is very differentfrom local government employment systemsbased on contracts. In Japan we do not havecontract employment. All Japanese localgovernment employees are appointed.

One of the features of the Japanese localgovernment system is the exchange ofpersonnel between the national and local

Local Government Innovations in Japan

112


governments. National government officialshave worked in local government, and localgovernment officials often have the chance towork in the national ministries and agencies,particularly when they are young. This isconsidered a part of professional careertraining.

� Sixth, local governments depend on thenational government for their fiscal resources.Typically, the proportion of resources raisedlocally is 30-40 percent. Local governmentexpenditure in Japan comprises 14 percent ofgross domestic product. This means localgovernment expenditure in Japan, thebusinesses and activities of local government,is very large. It is the very reason why localgovernments must finance works and servicesfrom their own fiscal resources. One of themain features of local government in Japan isits fiscal dependence on national government.This is partly due to the allocation of dutiesand functions to local government in ourcountry.

Local government in Japan has had severalmajor policy issues to address since the 1980s.The first one is to prepare for the elderly,particularly in the local and rural areas. Localgovernments have many programs for the aged.At the same time, local governments in Japan areresponsible for developing regional and localeconomy. This is comparable to the function ofAustralian local governments, which often attributetheir functions to the three Rs � �roads, rates, andrubbish.� Their functions are limited. Japanese localgovernment, on the other hand, provides a widerange of services. Residents expect localgovernment to promote big issues such asprotecting environment and promoting

113

Introduction

internationalization. However, the most importantpolicy issue is local decentralization reform.

Since 1995 Japan has been restructuringthe whole local government system. The key forceto local government reform is probably the fatigueor deterioration of the highly centralized localgovernment system in the postwar period. MostJapanese people now realize that decentralizationand structural reform of the national and localgovernments are two of the most important andurgent political issues to address if Japan is tosurvive in the next century. So in 1995, the NationalGovernment established the Local DecentralizationPromotion Committee as the single advisorycommission to the Prime Minister.

The objectives of this reform are to:

� demarcate the powers and responsibilities oflocal governments,

� promote the transfer of power andresponsibilities from National Government tolocal government,

� abolish agency-delegated functions andestablishing the new relationship betweennational and local government,

� strengthen and secure the fiscal resources oflocal governments,

� reform the structure of the local government,and

� improve the accountabil ity of publicparticipation.

It is very hard to realize all these objectivesbecause such reforms face very strong resistancefrom bureaucrats holding central power. Afternegotiations and concessions, the major points ofthese recommendations can be achieved ascompromises between ministries.

So far, the committee has submitted fourrecommendations to the Prime Minister.

Since 1995Japan hasbeenrestructuringthe whole localgovernmentsystem.


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Recommendations include the abolition of agency-delegated functions. Such functions will be redefinedin local autonomy functions for which localgovernment is fully responsible. The remainingtasks are functions that will be delegated by laws.After the reform, based on the recommendations,around 60 percent of agency-delegated functionsare expected to be redefined as local autonomyfunctions. The relationship between the twospheres of government should be based on law,reflecting equal partnership.

As for the financial system, specific subsidiesfrom the national government to the localgovernment will be reduced. At the same time, thegeneral subsidies, now called the local allocationtax grant, will also be abolished. In the future, localgovernment will no longer need to seek approvalfrom the national government to issue loans. Someflexibility in creating new local taxes will exist.Through these measures, it is expected that localgovernment will be strengthened in terms of fiscalresources.

B. INNOVATIONS IN MUNICIPALMANAGEMENT

The Tokyo-Yokohama area, with over 25 millionpeople, provides an excellent opportunity toinvestigate innovations in municipal management.With the support of CityNet, the Forum participantswere able to visit three innovative projects:

� the land readjustment for areas with denselyclustered wooden houses in Ikebukuro, Tokyo;

� the New Waterfront City, Rainbow Town, Tokyo;and

� the Minato-Mirai 21 Urban DevelopmentProject, Yokohama.

1. Land Readjustment, Ikebukuro, Tokyo

Localgovernment will

not need toseek approval

from thenational

government toissue loans.

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Introduction

(Group A)

Many land readjustment projects have beenimplemented in Tokyo to upgrade public facilitiessuch as roads and parks, to utilize lands efficiently,or to prevent disasters. The Ikebukuro-ldta areaused to be a fire hazard because it suffered from alack of parks, roads, greenery, and open publicspaces. Many old wooden houses, built during thepostwar period when the population grew rapidly,were densely packed together. Through this jointproject between citizens of Tokyo and the localgovernment, a step-by-step land readjustmentprocess was implemented. It has taken over 20years to develop. The tour looked at landadjustment mechanics utilized in implementing theproject such as replotting, land reduction, andsettlements. Visits to the area where readjustmenthas not yet been implemented were made forcomparison.

Discussion

Mr. Stubbs: It was clear from this tour that theprocess of urban redevelopment is a complex one,and difficult to follow over an extended period. Inworking in megacities around the region we at theADB find that one of the very significant challengesis how to improve and make more efficient and moreequitable land use in the center of the city. Howdo you provide housing, jobs, and services in thecentral areas of the city, which are growingspontaneously, and need to be improved? Whatis the mechanism for doing this? The IkebukuroLand Readjustment Project provides insight intoone approach.

Mr. von Einsiedel: I agree that it is a difficultprocess. However, what we saw at the Ikebukuroland readjustment project was amazing. If land can

The IkeburoLandReadjustmentProjectprovides oneanswer to thequestion of howyou providehousing, jobs,and services inthe centralareas of a city.


116


be exchanged for cash, and for relocation, it issomething that you dream of. But it is not, inprinciple, that much different from the guided landdevelopment of Indonesia, or the land-sharingprogram of Thailand, in the sense that you have anumber of landowners and you replot theboundaries and come up with the more efficientuse of the land. In cities where a lot of land isavailable that could be developed for urban uses,this is probably an expensive approach. However,when you consider the expense of extending yourutility lines to the suburban areas, extending yourtransport systems, water supply, and all the servicesthat the municipality provides, it may not be thatexpensive after all. I think this is an approach thatshould be considered in situations where landbecomes very expensive and suburban use of theland is no longer valid.

There are also social problems associatedwith any redevelopment work where people are tobe relocated and resettled. As land values go up,new development becomes more expensive for theoriginal residents. This, I think, is the most difficultpart of implementing that process.

One interesting factor is that this projectstarted in 1965, and it took 11 years just to arriveat an in-principle agreement. How many citygovernments can sustain that kind of projectmanagement? In many situations, for example, whena new mayor or a new governor comes into power,old plans are dissolved. What may have workedunder the previous administration is stopped andanother new project commences. So there areconstant changes. Here we find that after 30 years,and in spite of changes in political leaders andadministrators, the process is still in place. I thinkthat the lessons from the Ikebukuro landreadjustment project are how to sustain thecontinuity of the planning process over time.

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Introduction

Mr. Shah: I also think we have to consider landreadjustment and guided land development in thecontext of housing for low-income groups. One ofthe problems is the mismatch between supply anddemand. This is also related to the current crisisbeing faced, for example, in Indonesia, where theformal real estate sector takes over. Where thereis very large development, construction of high risebuildings, land prices become astronomically high.Unfortunately this guided land redevelopment hasnot taken hold in Indonesia. It is related to generalreform of land administration. It requires anattitudinal change toward the empowerment of thecommunity.

Land readjustment projects require abalance between individual and communityexpectations. It is a development process in whicheverybody gets something. Consensus building isnot easy. Under the old bureaucratic approach,administrators were not very interested in this kindof an approach. It is a staged process. Guidedland development takes up to 15 years before thefirst signs are evident. So I think we are talkingabout a type of community participation andattitude change which determines how far we wantto go in providing land to the urban poor, especiallyas the number is increasing. Under the presentcrisis situation, I think these choices become morerelevant.

2. New Waterfront City, Rainbow Town,Tokyo (Group B)

The New Waterfront City was originally establishedin I955 based on the Tokyo Bay land reclamationproject. The project�s present aim is to create anew �Silicon City� for the 21st century that strikes abalance between residential and businessfunctions. By 2020, Rainbow Town will be an idealnew city in a vibrant Tokyo, providing jobs for

Landreadjustmentprojects requirea balancebetweenindividual andcommunityexpectations.


118


70,000 and homes for 42,000. Three goals for thecreation of the rainbow town are:

� enhancing the quality of life in harmony withnature,

� fostering international exchange and a betterfuture, and

� contributing to the urban development of Tokyo.

The project is a partnership between thegovernment and the people. The Rainbow Townproposal was adopted to enlist the participation ofTokyo residents in shaping the community. Theproject demonstrated that the government andpeople can work together to create a comfortableand enjoyable place to live. It was also created tostrike a balance between commercial, business,residential, and recreation areas.

Discussion

Mr. Suwarnarat: Everything was very clean, quiet,and efficient. I didn�t see many people. I consideredmy own paradigm of the so-called ecosystem,which from my point of view is that there must bepeople, there must be animals, and there must begardens.

I understand that at the beginning of theproject, there was no stakeholder analysis, therewas little community involvement. They did not goand ask people what they expected in RainbowCity.

When we look at the population served bythe Rainbow City development, it was mentionedthat there would be 42,000 residents, and that theland investment was something like $45 billion. Sothe per capita investment is approximately $1 millionper person. Can the average Japanese citizenafford to live there? The answer is that the land

119

Introduction

and buildings would not be sold. They will only berented. So how could it be a home? If I am goingto invest in a home for my children, for my family,I�ve got to own it. I would not commit myself to acontract and leave my children in debt. How couldI know whether my children would be able to payor not?

We then went to the incinerator. Again, it wasa gigantic piece of construction. I could not smellanything. I could not hear any noise from theincinerator. And when I looked at the price to disposeof the garbage it was something like $50/ton. Soyou have to pay $0.05 to dispose of a kilogram ofgarbage. This is about 10 times as much as mycity could collect from my people. This kind ofgarbage disposal is not suitable for our situation.

I think this modern type of development, andthe type of living that goes with it, probably has tohappen. However, when we compare the lifestylethat goes with it, I think something is missing. Thereis a shortage of color, of complexity, of life.

Mr. Zaidi: With deference to our spokesperson,one may not entirely agree with his views. I thinkthat the quietness that he felt is one major pointthat should characterize modern city planning. Thisquietness is a reflection of modern technology. Itis one of the subcenters of one of the minicitiesthat the Tokyo Metropolitan Authority hasdeveloped in collaboration with the private sector.At the heart of this planning lies the extreme scarcityof land that has necessitated this type ofdevelopment. I was quite impressed by thetechnology used at the incinerator, especially theutility ducts. Most prominent was the technologybeing used to dispose of garbage. Instead ofcollection by trucks, they have outlets installed atthe residences and garbage is sucked throughvacuum pipes and goes straight to the incinerator.I think it was quite an impressive facility.

Instead ofcollection bytrucks, outletsinstalled in theresidencessuck thegarbagethroughvacuum pipesstraight into theincinerator.


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3. Minato-Mirai 21 Urban DevelopmentProject, Yokohama (Group C)

The Minato Mirai 2I (MM2I) Project (1983-2000),with total budget of two trillion yen, is one of Japan�sleading urban development projects based onpublic-private partnership. A joint venture company,the MM2I Corporation coordinates and promotescommunity development. A basic agreement ontown development under MM21 was reached withall the landowners in the jurisdiction that definedthe role of such fundamental elements as urbancommunity development. It also establishedstandards for the scale of construction, land usage,building heights, the layout of pedestrian networks,and so on. The project has three primaryobjectives.

� Promote Yokohama�s autonomy. MM2Iconsolidated and integrated the two areas intowhich Yokohama�s city center has long beendivided. The concentration here of businessaccommodation, shopping centers, and culturalfacilities will create jobs and bustling recreationareas for citizens, stimulate the local economy,and consolidate the city�s economicfoundations.

� Improve port functions and amenities forcitizens with parks and greenery in the heartof the city.

� Decentralize the metropolis. MM2I aims tofacilitate decentralization of the official,commercial, and international conferencefunctions formally concentrated in Tokyo andto promote more balanced metropolitandevelopment.

MM21 was conceived as far back as 1963.

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Introduction

The city will be completed in 2000. It is built on186 hectares, part of which is reclaimed from thesea and part on a reclaimed shipyard. When it iscompleted it will cater to 10,000 residents and190,000 people working in the area.

Discussion

Mr. Khuntia: What is striking about MM21 is that itis being planned as a modern city through jointventure. The Minato-Mirai Corporation isspearheading the development. A basic agreementon urban community development as to how thecity will be developed was reached and the landuse planning has been very carefully organized.

The city has a lot of greenery. It is also aninternational and cultural city. It wil l beenvironmentally friendly. There is a hugeconvention house that can hold up to 5,000 people,modern shopping centers, exhibition halls, hotels,and the like. Then there are underground tunnelsthat carry the water pipes, the heating and coolingsystem, telephone cables, and sewage ducts sothat the roads will not have to be dug up for repairs.Solid waste from the various buildings is fed into avacuum duct. The total length of such ducts is over13 km. The city is being developed so that it willjoin two parts of old Yokohama City. It will be arecreational center with all kinds of amenities. Thecity will decentralize Tokyo, which is quite near, andas many as 130 international companies have theirheadquarters in Yokohama.

About 50 percent of the work has beencompleted. We asked whether they have been ableto get adequate returns from their investment inthe development. It appears that right now thereis a slump in the real estate market and there arestill some areas to be sold.

One important lesson from the developmentof MM21 is that for a city in a developing country

Undergroundtunnels carrywater pipes, theheating andcooling system,telephonecables, andsewage ductsso that theroads will nothave to be dugup for repairs.


122


there is a need for such development. However, ithas to be done in phases and the risk has to bedistributed with joint venture partners. It would notbe possible for a city corporation to invest so muchmoney, because the returns are not very certainand may take too long to materialize.

Secondly, it is not just the Minato-MiraiCorporation doing all the work. The Corporationis in charge of the basic urban planning throughthe agreement on urban planning development.There are about 15 different companies in theprivate sector engaged in particular activities. Forexample, one company looks after the conventioncenter, another looks after a hotel or a hospital.Risk is thus distributed among various companiesand stakeholders.

Another interesting feature of thisdevelopment is that the Japanese Government hasbeen very supportive throughout. TheGovernment�s financial and moral support this hasmade this project possible. While it cannot bedirectly replicated in developing countries thereare certain lessons to learn from MM21.

Mr. Khan: I think that what we should be emphasizingis to learn from the positive lessons we have seenwith the development of this area. So in continuationof my friend�s comments, I would like to say thatconventional approaches to resolve problems ofurbanization is usually at the level of government.The lessons that we have learned are that thepeople of Yokohama City were migrating to Tokyo.What we have to do in our cities is to controlurbanization through land development andagriculture reforms, job opportunities, and housingavailability.

A salient lesson is that by controllingurbanization in the place where the people intendto migrate one helps resolve problems at the point

By controllingurbanization in

the place wherethe people

intend tomigrate one

helps resolveproblems at the

point of origin.

123

Introduction

of origin, in this case Tokyo. And another very briefpoint is that in the developing world, we have touse cost-effective and appropriate technologiesto resolve problems with respect to economy andcost.


124


125

Introduction

IX. CONCLUDING REMARKS

You need fullparticipationfrom thecitizens insharing the costburden.

A. ASIAN DEVELOPMENT BANK

Preben Nielsen

I would like to present my perception of the definitionof governance. This has been the theme duringthe past five days. At the local government level, Iwould define governance as effectively andefficiently delivering new services in the context ofthe following four parameters:

� accountability,� participation,� transparency, and� predictability.

Unless you have willingness to pay for theservices within affordable means, you have no usefor governance. In other words, you need fullparticipation from the citizens in sharing the costburden. This translates into awareness. Campaignsthrough print and electronic media are needed toenlighten the potential beneficiaries. This iscertainly not contrary to NGO interests.Government and NGOs can work together in aconstructive manner.

The first parameter, accountability, apart fromfinancial balancing, also relates to investmentplanning in accordance with economic,environmental, and social planning criteria, as wellas subsequent ranking of projects in terms ofeconomic and financial internal rates of return. Wecannot spend money in abundance. We have

126


limitations, we must prioritize, we must see wherethe greatest needs are. Examples of this includeour experience in Bangalore, India, where we arerunning an urban project in satellite towns. Wehave started the Bangladesh Secondary TownsProject; and in the Lao People�s DemocraticRepublic we have the Secondary Towns Project.They all involve participation and transparency indecisionmaking. This means involvement of thebeneficiaries in the planning, design, andimplementation process. For community and NGOmeetings, a full disclosure of relevant information,including resettlement aspects, is provided. In allof these dealings we are trying to keep a level offull disclosure, in accordance with ADB policy.

Predictability implies that you don�t spring anysurprises on the beneficiaries. When you gothrough the consultative process, you must informthe participants about what you are going to do.You should not go back to city hall and changethe plans without informing the participants in theprocess. This is the worst thing you can do becausethey will lose confidence in you.

Turning to alternative methods of serviceprovision, we have private sector participation. Welike to use this term because it encompassesvarious combinations of private sector participationwith government partnership. The most commonlyused system is the private sector managementcontract. This is a contract where you engage, forexample, a professional water utility firm toundertake the services. The reason you go for thisparticular type of contract is that you are trying toaccess technical skills, you�re avoiding publicemployment rules, and you want efficiencyimprovements. This of course goes hand in handwith the highest service standard.

Another option is leasing. You enter into amanagement contract relating both to the revenueand operation side, including a profit for the service.

In theconsultative

process, neverchange the

plans withoutinforming theparticipants.

This is the worstthing you can

do becausethey will lose

confidence inyou.

127

Introduction

This profit is agreed upon and should go back tothe government, or should be reinvested.

You also have a lower level of private sectorparticipation; namely the service contract forindependent advice. This is basically to accesstechnical skills. One example of this is in Sri Lanka,where we are assisting in privatizing the water supplyin Colombo with the World Bank. We have thesupport of National Water Supply and DrainageBoard, which is responsible for all water supplies inSri Lanka, including Colombo. This water utility ishandling a budget of about $100 million a yearand four accountants are unable to keep order inthe accounts. So a solution would be to go for aservice contract. The utility is now looking into themodalities of engaging consultants from the privatesector.

Franchising is the case where you have fullresponsibility as the manager for investment andfull cost recovery. Then you have variouscombinations of build-operate-transfer. Thesefunction as management contracts with access toprivate sector capital and maintain control untilhandover time. In these cases, transparency isextremely important because you are dealing withworld market bankers. The last option is fullprivatization, which means outright sale from thestate to private companies.

Last but not least, we have beneficiarycontribution. This is usually related to a publicsector project involving financing by internal andexternal financing agencies. The important pointhere, as also raised in the case of Ahmedabad, isthat we want to involve the beneficiaries, thestakeholders in the financing process so theybecome owners.

Concluding Remarks

128


B. AUSTRALIAN INSTITUTE OFMUNICIPAL MANAGEMENT

Barrie Beattie

The Institute of Municipal Management hasdeveloped, as part of its corporate plan, theprocess of internationalization. We go out and talkto people around the world and discussmanagement processes that will improve localgovernment in Australia. I am encouraging you todo the same and go back and put into operationsome of the things you have learned from eachother here this week. Try to put in place some ofthe initiatives, some of the processes you havelearned over the last five days.

I would also add that I am absolutely delightedthat ADBI has set up a chat group. This is amarvelous opportunity because of the networks wewill be able to build and maintain. Networks areimportant. You could be communicating withsomeone next door or someone from in a farawaycountry. They might be doing things that we canassist each other with, and vice versa. It is importantthat we build these networks and learn from eachother.

John Martin

I have had a tremendous learning experience thisweek. The most important thing that I take awayfrom the Forum is a feeling for the power ofpartnerships. We have learned about theimportance of community partnerships in initiativesfor change, for example, when raising financesthrough municipal bonds. As a managementeducator, I have been involved in the developmentand implementation of many innovative techniqueswithin local government organizations. What I haveseen and heard this week is that, in the face of

129

Introduction

incredible pressure for change in large cities,working with the community in partnership is whatmatters. In the past we may have been overlyfocused on the internal operations of organizations.The importance of partnerships with our communityis essential. That is the message I will take back toAustralia.

C. ASIAN DEVELOPMENT BANKINSTITUTE

Jesus P. Estanislao

I am very glad that we have had the cooperation ofsuch outstanding participants, especially those fromthe Institute of Municipal Management in Australia,the ADB, and the World Bank. We also have DickGordon with us, who shared some of his experienceswith you. And you had a visit to some of the localgovernments here in our own Tokyo, and Iunderstand that you had listened to Mr. GlenFukushima, who is one of the leading businessexecutives here in Tokyo.

My concern as the Dean of the ADBI is notonly with the program, but what happens after it. Iknow you have attended many differentworkshops, seminars, and forums in your lives, butthe question is � what happened afterward? Ihope you will all nurture the relationships formedhere, and that your efforts to work toward solutionsto the problems of Asian cities will be reinforcedthrough your experience here.

I am sure that you are aware not only of theproblems you face in your respective cities, but ofthe common problems of other city administrators.And perhaps because you are faced with commonproblems, you can cooperate with one another infacing them. I certainly hope that we can continueto cooperate with one another in this area. And

Concluding Remarks

130


where we can be of some help in building bridgesbetween you and others equally concerned withthe problems you are confronted with, we will beonly too happy to serve as facilitators to build thatbridge.

I would like to know how we can improve on aforum such as this one, and in what ways we canbetter serve you in the future. We are open to anyideas or suggestions that you have. I cannotpromise that we will do everything, but we certainlywill listen with a great deal of interest. And wherewe can make a difference, we will certainly try.

Here at the ADBI we believe in networks. Thefirst network that we will establish is within Japanitself. I think there are plenty of very good experiences here and we would like to be able todraw from these successes. This country iswonderful about getting involved in detail. TheJapanese are very structured, and many of theirsuccesses in city administration could beassembled and shared among the countries ofAsia. This is a challenge ADBI will take seriously,especially those in the Programs Department. Weintend to put together a meaningful follow-upprogram that is truly substantive and thataddresses many of your needs. Remember thatwe are here to support you.

It is absolutely necessary that we beginthinking across our different sectors. This is a forumon municipal management, and most of you aredirectly involved in managing cities. Very critical toyour success is nurturing the cooperation of thecentral government, the private sector, the NGOs,and the other players in your cit ies andcommunities.

I noticed that one of your sessions wasfocused on customer orientation. Because you mustprovide public services to the differentconstituencies served by your cities, listening to

If there isanything that

we havelearned from

business, it isthe principle oflistening to thecustomers we

serve.

131

Introduction

the needs and demands of these constituenciesis essential for success. Often citizens haveimportant ideas and perspectives preciselybecause they are directly affected by yourmanagement. If there is anything that we havelearned from business, it is the principle of listeningto the customers we serve.

Concluding Remarks

132


133

Introduction

LIST OF PARTICIPANTS

DELEGATES:

Dhaka, Bangladesh

Mr. Shahidullah MiahSecretaryDhaka City Corporation

Mr. Abdus Sattar MianDeputy SecretaryLocal Government DivisionMinistry of Local Government

Dr. Saleemul HuqExecutive DirectorBangladesh Centre for Advanced Studies

Phnom Phen, Cambodia

Mr. Chea SopharaFirst Vice Governor of the Municipality ofPhnom Penh

Mr. Benson SamayLegal Adviser

Mr. Teruo JinnaiFinancial Advisor

134


Fuzhou, Peoples� Republic of China

Mr. Weng FulinMayorFuzhou Municipal People�s Government

Mr. Wang QingDeputy DirectorThe Planning Commission of Fuzhou

Mr. Li HongDeputy DirectorForeign Affairs OfficeFuzhou Municipal Government

Shanghai, Peoples� Republic of China

Ms. Yin YicuiDeputy Secretary GeneralShanghai Municipal Government

Mr. Zhang PeishengChief of Investment DivisionThe Planning Commission of Shanghai

Ms. Zhou YingDeputy Section ChiefForeign Affairs OfficeShanghai Municipal Government

Bangalore, India

Mr. V. GovindarajPrincipal Secretary to GovernmentUrban Development Department

Mr. Subhashchandra KhuntiaAdditional CommissionerBangalore Mahanagara Palike

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Introduction

Mysore, India

Ms. Amita PrasadCommissionerMysore City Corporation

Banderlampung, Indonesia

Mr. Ir. Eddy HeryantoChief of City Planning

Mr. A.J.P. GustimigoHead of Local Development and Planning BoardCity Planning Agency

Jakarta, Indonesia

Mr. Maurits NapitupuluHead of Central Jakarta Development PlanningBoard (BAPPEKO Jakarta Pusat) for Central Jakarta

Mr. Anshary LubisHead of Subagency of Jakarta CityPlanning Agency

Vientiane, Lao People�s Democratic Republic

Mr. Thongvanh Phan-RajsavongPresidentVientiane Urban Development and ManagementCommittee

Mr. Oudone VathanaxayDirector of Urban Services DepartmentVientiane Urban Development and ManagementCommittee

List of Participants

136


Mr. Phaiboon ChanthamalyEngineerUrban Administration OfficeVientiane Urban Development & ManagementCommittee

Karachi, Pakistan

Mr. Anzar H. ZaidiAdministratorKarachi Municipal Corporation

Mr. Tasneem Ahmad SiddiquiSecretaryLocal GovernmentGovernment of Sindh

Lahore, Pakistan

Mr. Khalid SultanAdministratorMetropolitan Corporation Lahore

Peshawar, Pakistan

Mr. Jamshedul HasanDirector GeneralProject Management UnitSecond Urban Development Pacific

Colombo, Sri Lanka

Mr. Omar Z. KamilDeputy MayorColombo Municipal Council

Mr. M.A.V. PereraMunicipal CommissionerColombo Municipal Council

137

Introduction

Mr. W.A. KarunaratneAdditional General Manager (Operations)National Water and Drainage Board

Mr. K.W.K. PremadasaTreasurerColombo Municipal Council

Bangkok, Thailand

Mr. Ksemsan SuwarnaratAssistant Permanent SecretaryThe Bangkok Metropolitan Administration

RESOURCE PERSONS:

Mr. Nathaniel von EinsiedelRegional CoordinatorUNDP / UNCHS (Habitat)Urban Management Programme for Asiaand PacificBangkok, Thailand

Mr. Glen S. FukushimaVice PresidentAT&T Japan Limited

Mr. Richard GordonChairman, Subic Bay Metropolitan AuthorityOlongapo City, Philippines

Mr. Jiro KubotaSecretary GeneralCouncil of Local Authorities for InternationalRelations, Japan

Mr. Rod OxleyGeneral ManagerWollongong City Council, Australia


138


Mr. Jesse RobredoMayor of Naga City andPresident, League of Cities of the Philippines

Mr. Keshav VarmaManagerUrban Development Sector UnitEast Asia and Pacific RegionThe World Bank

ADB STAFF:

Mr. Munawar Alam,Project Implementation OfficerIndia Resident Mission

Mr. Graham JacksonProject EngineerWater Supply, Urban Development and HousingDivision West

Mr. Shakeel KhanSr. Project Implementation/Programs Officer,Pakistan Resident Mission

Mr. Preben NielsenManagerWater Supply, Urban Development and HousingDivision West

Mr. Asad Ali ShahManagerWater Supply Urban Development and HousingDivision East

Mr. H. S. SoewartonoProject OfficerIndonesia Resident Mission

139

Introduction

Mr. Jeffry StubbsSenior Urban Development SpecialistUrban Development and Housing Division East

FACILITATORS:

Mr. Barrie BeattieExecutive DirectorInstitute of Municipal Management, Australia

Mr. John MartinSenior LecturerHuman Resource ManagementQueensland University of Technology

Mr. Bryan PayneExecutive DirectorInstitute of Municipal Management, Australia

COORDINATOR:

Naved HamidSenior Strategy and Policy OfficerStrategy and Policy Office


140


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Introduction

ABBREVIATIONS

ADB Asian Development BankADBI Asian Development Bank InstituteCBD central business districtCRISIL Credit Rating Information Service of India LimitedGO government organizationMM21 Minato-Mirai 21 Urban Development ProjectNEED Naga Early Education and Development ProgramNGO nongovernment organizationPIP Productivity Improvement ProgramPO people�s organizationSPEED Socialized Program for Empowerment and Economic

DevelopmentVIP Very Innovative Person project

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