Philippines - Land Administration and Management Project

Document of The World Bank Report No: 20755-PH PROJECT APPRAISAL DOCUMENT ON A PROPOSED LEARNING AND INNOVATION LOAN IN THE AMOUNT OF US$4.79 MILLION EQUIVALENT TO THE REPUBLIC OF THE PHILIPPINES FOR A LAND ADMINISTRATION AND MANAGEMENT PROJECT September 20, 2000 Public Disclosure Authorized Rural Development & Natural Resources Sector Unit East Asia and Pacific Region  CURRENCY EQUIVALENTS (Exchange Rate Effective as of July 26, 2000) Currency Unit = Peso (P) 1 pesos = US$0.0223 US$1.00 = 44.75 FISCAL YEAR Government: January 1 - December 31 ABBREVIATIONS AND ACRONYMS AusAID The Australian Agency for International Development BLGF Bureau of Local Government Finance CARP Comprehensive Agrarian Reform Program CAS Country Assistance Strategy DENR Department of Environment and Natural Resources DOJ Department of Justice ERR Economic Rate of Return GOP Government of the Philippines IACC The Inter-Agency Coordinating Committee ICC Investment Coordination Committee IPN Informal Policy Note LIL Learning and Innovation Loan LMB Land Management Bureau LRA Land Registration Authority MARO Municipal Agrarian Reforn Office NEDA National Economic and Development Authority NGO Non-Governmental Organization NPV Net Present Value PIO Prototype Implementation Office PMO Project Management Office ROD Registry of Deeds Vice President: Jemal-ud-din Kassum, EAPVP Country Manager/Director: Vinay K. Bhargava, EACPF Sector Manager/Director: Mark D. Wilson, Acting, EASRD Task Team Leader/Task Manager: Wael Zakout, EASRD  PHILIPPINES AND MANAGEMENT LAND ADMINISTRATION PROJECT CONTENTS A. Project Development Objective Page 1. Project development objective 2 2. Key performance indicators 2 B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 3 2. Main sector issues and Government strategy 3 3. Learning and development issues to be addressed by the project 5 4. Learning and innovation expectations 5 C. Project Description Summary 1. Project components 7 2. Institutional and implementation arrangements 8 3. Monitoring and evaluation arrangements 9 D. Project Rationale (This section is not to be completed in a LIL PAD) E. Summary Project Analysis 1. Economic 9 2. Financial 10 3. Technical 11 4. Institutional 11 5. Social 11 6. Environmental 12 7. Participatory Approach 12 F. Sustainability and Risks 1. Sustainability 13 2. Critical risks 13 3. Possible controversial aspects 14 G. Main Conditions 1. Effectiveness Condition 14 2. Other 15 H. Readiness for Implementation 16 I. Compliance with Bank Policies 16 Annexes Annex 1: Project Design Summary 17 Annex 2: Detailed Project Description 23 Annex 3: Estimated Project Costs 30 Annex 4: Cost Benefit Analysis Summary 31 Annex 5: Financial Summary 35 Annex 6: Procurement and Disbursement Arrangements 36 Annex 7: Project Processing Schedule 46 Annex 8: Documents in the Project File 47 Annex 9: Statement of Loans and Credits 48 Annex 10: Country at a Glance 50 MAP(S) IBRD 30861  PHILIPPINES Land Administration and Management Project Project Appraisal Document East Asia and Pacific Region EASRD Date: September 20, 2000 Team Leader: Wael Zakout CountryManager/Director: Vinay K. Bhargava Sector Manager/Director: Mark D. Wilson Project ID: P066069 Sector(s): VM - Natural Resources Management Lending Instrument: Learning and Innovation Loan (LIL) Theme(s): Poverty Targeted Intervention: N Project Financing Data 1 Loan K Credit [] Grant K Guarantee El Other (Specify) For LoanslCredits/Others: Amount (US$m): US$4.79 million Proposed Terms: Fixed-Spread Loan (FSL) Grace period (years): 8 Years to maturity:20 Commitment fee: 0.85% for the first Service charge: 0.00% four years; and 0.75% thereafter (if applicable) Frontend fee on Bankloan: 1.00% Financin Plan: suce lcaF i Total GOVERNMENT 1.36 0.00 1.36 IBRD 2.59 2.20 4.79 AUSTRALIAN AGENCY FOR INTERNATIONAL 1.00 3.20 4.20 DEVELOPMENT Total: 4.95 5.40 10.35 Borrower: GOVT. OF THE PHILIPPINES Responsible agency: DEPT. OF ENVIRONMENT AND NATURAL RESOURCES (DENR) Address: Visayas Ave, Dilliman, Quezon City, 1100,The Philippines Contact Person: Ms. Mylene Albano, Assistant Secretary for Local Governments and Executive Director of LAMP Tel: 63 2 925 2328 Fax: 63 2 925 2328 Email: lamp(denr.gov.ph f f_ Estimated disbursements ( Bank FYIUS$M): AY a 2001 200,I 2003 2004 Annual 0.5 1.5 2.0 0.8 Cumulative 0.5 2.0 4.0 4.8 Project implementation period: November 2000 - April 2003 Expected effectiveness date: 11/30/2000 Expected closing date: 09/30/2003 PADFa OCS Rft M-.h MM  Objective A. ProjectDevelopment 1. Project developmentobjective: (see Annex 1) The Land Administrationand ManagementProgram (LAM Program) The LAM Program is a long-term commitment (could be 15-20 year program) by the Government of the Philippines. The overall goal of the program is to alleviate poverty and enhance economic growth by improving the security of land tenure and fostering efficient land markets in rural and urban areas, through the development of an efficient system of land titling and administration, which is based on clear, transparent, coherent and consistent policies and laws, and is supported by an appropriate institutional structure. The long-term program would achieve: * A clear, transparent, coherent and consistent set of land administration policies and laws; * Accelerated programs that would formally recognize the rights of eligible land holders and facilitate the recording of these rights in a strengthened land administration system; * An efficient land administration system operating throughout the Philippines in accordance with government policy, and responsive to the needs of the people, supported by a sustainable financing mechanism; * An effective and transparent land valuation system, in line with internationally accepted standards, that serves the needs of all levels of government and the private sector; and i A well functioning land market operating in both urban and rural areas. The Land Administration and ManagementProject (LAM Project) The project would be a first step towards the implementation of a long-term land administration and management program. The development objectives of the project are to assess the viability of the Land Administration and Management Program and to formalize the institutional arrangements needed to support its development, by testing alternative approaches to accelerated programs designed to improve the protection of rights to land, eliminate fake titles, and introduce a framework for an equitable system of land valuation. This would be done through: (i) policy studies, analysis, and key decisions and actions of the Government of the Philippines (GOP); (ii) prototypes to test and implement interim institutional arrangements and adjusted processes of work flow to develop an efficient land titling and administration system in the prototype areas; (iii) evaluation of the prototypes; and (iv) drafting of legal instruments to formalize the institutional arrangements. 2. Key performance indicators: (see Annex 1) The impacts and outcomes of the project would be measured through a set of key indicators which include: (i) Government approves a time-bound action plan to set up the institutional arrangements necessary for an improved and effective system of land administration; (ii) The Inter-Agency Coordinating Committee (IACC) and key agencies approve recommendations for policy formulation in the areas of: (a) property valuation; (b) demarcation of forest boundaries; (c) land development process; (d) finance and fee structures for land registration; (e) fragmented laws and regulations; and (f) institutional structure for land administration; (iii) Procedures and guidelines for accelerating land titling programs tested, reviewed and endorsed by the implementing agencies and the IACC; (iv) Procedures and guidelines for land records reconstitution tested, reviewed and endorsed by the implementing agencies and the IACC; and (v) - 2- Government approves the direction of the long-term program and phase II of the LAM project, which includes a time frame of addressing institutional and policy reform areas recommended by the IACC and expanding the titling program and the record reconstitution program to the rest of the country. Detailed performance indicators are included in Annex I. Rationale for Using a LIL Experience in the sector shows that the issues of land management and administration are often complex, politically charged, requiring high and sustained commitment to address institutional and policy reform. In many countries, the process took a long time (Thailand, for example, took around 20 years and Indonesia is embarking on a 25 year program). Therefore, the use of the LIL will provide an opportunity to test approaches, achieve changes, and assure workable institutional arrangements prior to supporting the long-term program. While the Government at all levels recognizes the urgent need to improve the current land administration system, at present the institutional arrangements and policy reform needed to best achieve this objective are still unclear. A LIL would enable learning, communication, and building consensus among different stakeholders to propose changes in organizational culture as a prerequisite to subsequent commencement of the long-term program. It will also enable potential donors, including the Bank, to assess Government commitment for reform before supportingthe long-term program. B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1) Documentnumber: R99-55 Dateof latestCAS discussion:05/04/99 The proposed project is consistent with CAS objectives in two areas: (i) accelerating environmentally sustainable agricultural growth and alleviating poverty in rural areas; and (ii) promoting sustainable urban development and combating urban poverty. The proposed project would contribute to the first objective through provision of secure land titles to landholders in rural areas where poverty is more prevalent. The land titles could be used as collateral for credit needed to promote investment, productivity, and incomes. The project would contribute to the second objective by rationalizing land policies and institutional responsibilities for land administration. This would enable transparent and secure land transactions, facilitating investment, growth, and the building of more affordable housing in the urban areas. In addition, improving land administration functions would improve the effectiveness and efficiency of land registration offices, reduce corruption in land transactions, and eventuallyeliminate bad and fake titles. This outcome is also consistent with the CAS objective of improving govemance and transparency and combating corruption. 2. Main sector issues and Government strategy: An Informal Policy Note (IPN) on Land Management and Administration, prepared jointly by the Government and the Bank, highlightedthe following sector issues: Weak and Inefficient Land Administration System. There are a number of issues identified in the IPN which constrain the efficiency and effectiveness of the land administration system. First, there are multiple agencies involved in land administration,with no overall institutional mechanism for resolving outstanding issues. As a result, many issues remain unresolved for a long time. Second, the major land administration laws are outdated, and some do not comply with recent land use legislation. Third, not all privately claimed alienable and disposable (A&D) land is titled. Fourth, existing land record management systems are inefficient, and there are limited inventories of land records. Fifth, a large proportion of the records has been destroyed by war, theft, fire and water damage, or simply misplaced in the frequent transfer of -3- records. Many of the remaining records are in exceedingly fragile condition and some have been illegally altered. Sixth, there is no complete set of cadastral maps that show titled and untitled properties on A&D land, and information in the Registry of Deeds (RODs) cannot be searched by parcel or cadastral map number. Thus, the titling system does not support quality control; consequently,multiple titles, overlap and gap titles are not easily detected. Seventh, land registry is not easily accessible and high transaction costs, discourage both, registration and investrnent. Finally, all of these problems have eroded public confidence and trust in the titling and registration system as a whole. Under the current land administration system, it takes between six months to several years to obtain original titles and between several weeks to a few months to register subsequent land transactions. The percentage of untitled land is high (approximately 1/3 of parcels in rural areas). Land grabbing is widely practiced among those who can afford to pay the expenses for first time registration. These inefficiencies, combined with high land taxes, have produced informal land markets, particularly in poor communities, resulting in long-term tenure insecurity and decreased government revenues from land-related taxes. Rigid and Outdated Land Management and Administration Policies. Fragmented responsibilities for land management and administration among several government agencies without appropriate mechanisms for coordination have resulted in ineffective land management and administration. A key issue in land policy has been the land classification system, which is rigid and unresponsive to the evolving needs of agricultural and urban development; furthermore, it has not been effective in promoting sound management of natural resources. Several agrarian, urban, community development, and protected land programs have been imposed on this fairly static land classification system by different government agencies in recent years, leading to problems with overlapping mandates and multiple land management and administrative processes. This has added to the difficultyof changing the classification system, to respond to the emerging needs for economic growth and poverty reduction. Multiple and Inconsistent Land Valuation Systems Used in Various Government Agencies. In the different government agencies, several systems and methodologies for the valuation of real properties operate, and are utilized for different purposes, including real property taxation, and compensation for land, acquired for public investment and for valuation under the Comprehensive Agrarian Reform Program (CARP). The multiplicity of systems and methods has often produced doubtful valuations whose contestation in court has, at times, caused long delays in the implementation of government programs. Doubtful and contested land valuations have also had an adverse impact on the efficiency of land markets and land administration. Below market valuation of land prevents the efficient allocation of lands to their best use and leads to a relatively low tax burden which encourages land speculation and undermines the generation of significant revenues from land ownership. The absence of national standards and methods of valuation in accordance with international standards and practice provide a loophole to the overvaluation of real property and underestimation of a property-related lending risk. This undermines the integrity of financial transactions and the stability of the financial system. Inefficient Land Markets. An inefficient and ineffective land administration system combined with fragmentationof responsibilities of land management and administration and inconsistent and outdated land policies have resulted in inefficient land markets. In the urban land market, there is unmet demand for housing, commercial and industrial land because urban land supply is far short of demand. In addition, difficulties surrounding the conversion of agricultural lands to non-agricultural use, whether for housing, commercial or industrial purposes, have constricted the supply of urban land. This shortage of urban land has led to rising urban land prices that have made it unaffordable for the majority of the population. The high cost of urban land has driven many people to establish informal settlements on public and private lands. The CARP, which is achieving some success in promoting social equity through the transfer of lands -4- to landless farmers has, nonetheless, had an adverse effect on formal rural land markets. The CARP law has restrictions on the buying and selling of agricultural land under the program. In addition, many untitled privately claimed alienable and disposable (A&D) lands exist outside the formal rural land market. This phenomenon, and the CARP law restrictions, are the main causes of stagnation in the formal rural land market. Government Strategy. The Government Strategy on land administration and management, which was approvedby the NationalEconomicand Development Authority(NEDA)Board sets out the Government directionfor improvingthe security of land tenure, improvingservice delivery of land administration, eliminating fake and multiple titles, and promoting an efficient land market. The Strategy outlines the steps the Government plans to achievethe desiredobjectives.The Strategyrecognizesthe long-termnature of this programand highlightsa focussedapproachon the first step, undertaken in a 3-year project (this and technicalmethods project)to studyand test alternativetechniqueswith regardto policy, institutional and make recommendations to the Govemmentfor decisions and actions before the initiationof the long-termprogram. The commitment of the Governmentto implementthis Strategywas shown by the fast approvalby the InvestmentCoordinationCommittee(ICC) Board of the proposed project. Further, the Presidentof the Republic of the Philippinesestablishedthe Inter-agencyCoordinatingCommittee(IACC)by Executive OrderNo. 129to prepareand coordinatethe implementation and Management of the Land Administration Program. The IACC is chaired by the Departmentof Environmentand Natural Resources (DENR), co-chaired by the Departnent of Justice (DoJ) and includes the membershipof 13 departmentsand and management.The IACC reportsdirectlyto the agencies directlyinvolvedin the land administration Presidentof the Republicof the Philippines. issuesto be addressedby the project: 3. Learningand Development The proposed project will address the issues highlightedabove in land administration,policy and management, and in property valuation.For land administration, the project will test the existingorganizationalresponsibilities to adopt new approachestoward improvementsin deliverymechanismsof land administration. The project will address the property valuation issues by introducing a framework for real property valuation in line with international accepted standards and practices. The proposed project will also include several studies on key policies in land administration.The recommendations of the proposed studies on land administrationwill guide policy makersin makingwell informeddecisionson future laws and regulations. expectations: 4. Learningand innovation D Economic 1 Technical 12 Social 1 Participation 1 Financial 1 Institutional D Environmental El Other The projectwouldtest a schemefor the optimallevel of first time registration Financial: fees and fees on subsequent land transactions. The optimality of the level of these fees is an important factor for: (i) cost recovery;and (ii)participationof eligiblelandownersin the proposedprojectin termsof titlingtheir land and registering subsequentland transactions.While higher fees would enhance opportunitiesfor cost recovery and therefore, project sustainability, they would also represent a disincentive for eligible land owners to participatein the proposed project. To address this trade-off, the project would study the appropriatestructureand level of fees with a view to enhancing cost recovery while also providing adequateincentivesfor eligiblelandownersto participatein the program. Technical.The proposedprojectwould pilot severalconventional and new technologies, such as rectified - 5- aerial photography, total station and Global Positioning System (GPS) technologies to determine the most cost effective technology to be used for cadastral mapping and title production, given the accuracy requirements stated in the Philippines laws and regulations. The choice of the technology will have major implications on the cost of title production and, therefore, on the cost of the long-term program. Institutional. Tests to address institutional issues would be the most challenging part of the proposed project. Responsibilitiesof land administration are fragmented between the Department of Environment and Natural Resources (DENR) and the Land Registration Authority (LRA). The existing system has generated many problems and resulted in duplicate and fake titles, and opened the door to corruption. The project would support piloting a One-Stop-Shop (OSS) where all agencies involved in land administration have their offices under one roof in order to improve service delivery. The project would test the viability of the OSS in improvingservice delivery and building confidence and consensus among the different agencies in order to formalize these arrangements before the implementation of the long-term program. The project would also test public and private participation in the implementation of the project in the areas of cadastral mapping, map production and adjudication. The formalization of the institutional arrangements by the Govemment (either by law or by other administrative procedures) by the end of the LIL project would be a major factor in consideration of future support to the long-term program (beyond the LIL phase). Social. The project would test and identify measures to ensure that operational procedures and standards that will address social, cultural and gender considerations are in place during the adjudication process. The project would also test ways to manage expectations, maximize transparency and public confidence, provide safeguards to ensure full involvement of women and other marginalized or disadvantaged beneficiaries, and expand dispute resolution. The project would include the design and assessment of education, information and communication strategies, geared toward key stakeholders' participation, access and benefit from the project. Participation. The level of participation by eligible land owners is subject to, among other things: (i) transparency of the adjudication system; (ii) first time and subsequent registration fees as described above; (iii) intensity and depth of the Customers Relations Service (CRS); and (iv) overall confidence in the system. The project would test (ii) and (iii). Transparency and overall confidence in the system will be the core of the project design. The project would also seek active participation of non-governmental organizations (NGOs), peoples' organizations (POs), women's groups, real estate groups and other relevant associations during project implementation. Several mechanisms and strategies will be tested and/or validated towards ensuring informed and meaningful participation of Local Government Units (LGUs), NGOs and POs and other relevant government and private sectors in the implementation of Social Assessment, Customers Relations Services and Local Advisory Committee activities, among others. C. ProjectDescriptionSummary 1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown): 1. Land Policy Development (USS 0.50 million). The component would study and make recommendations on key policy areas of land administration, including: (i) land development process; (ii) land registration finance and fee structure; (iii) real property valuation framework; (iv) forest boundary demarcation and operational procedures policy study; (v) fragmented land laws and regulations framework; -6- and (vi) institutional arrangements for land administration. 2. Prototypes (US$ 4.5 million). The component would have two prototypes: Land Titling and Administration prototype and Record Management prototype. The Land Titling and Administration prototype (US$ 3.25 million) will be implemented in six municipalities in Leyte province and will focus on accelerating the issuance of land titles using the existing administrative and judicial proceedings,enhancing service delivery of land registration, and improving coordination between DENR and DAR in the implementation of CARP operations. The land record prototype (US$ 1.35 Million) will be implemented in Quezon City and will focus on record verification and reconstitution, creation of cadastral map base in the ROD, elimination of fake and duplicate titles (in the prototype area), and linkage to the LRA-sponsored computerization project, Build, Own and Operate (BOO) and other government land-related computerization initiatives. 3. Institutional Development (US$ 5.0 milion). The component would provide support to the Project Management Office and the two Project Implementation Offices of the two prototypes. This component will include: technical assistance (TA), training and overseas study tours, monitoring and evaluation includingtwo rounds of social assessment and one development impact study, and the purchase of furniture, office equipment, and vehicles. The Australian Agency for International Development (AusAID) would finance (subject to AusAIDs management approval) the TA, international training and overseas study tours. 4. Phase II preparation (US$ 0.3 million). The componentwould includethe design of the long-term program of the Land Administration and Management including one round of social assessment. 1. Land Policy Institutional 0.50 4.8 0.50 10.4 Development 2. Prototypes Other Public 4.50 43.5 3.49 72.9 Sector Management 3. Institutional Development to LAM Institutional 5.00 48.3 0.70 14.6 Management Office Development 4. Project Preparation for Subsequent 0.30 2.9 0.05 1.0 Phases Total Project Costs 10.30 99.5 4.74 99.0 Front-end fee 0.05 0.5 0.05 1.0 Total FinancingRequired 10.35 100.0 4.79 100.0 2. Institutionaland implementationarrangements: 2.1. Institutional The successful implementation of the Project would require the coordinated inputs from several key agencies particularly the Land Management Bureau (LMB) and the Land Management Service (LMS) in -7- DENR; the Land Registration Authority (LRA) and the Registries of Deeds (RODs) in DOJ; the Departrnent of Agrarian Reform (DAR) and their offices in the field; and the Bureau of Local Government Finance (BLGF) and the Bureau of Internal Revenue (BIR) of the Department of Finance (DOF). The framework to support this coordinated effort has already started, with the formation of an Inter-Agency Coordinating Committee (IACC) and a Technical Working Group (TWG). DENR has played a key role in promoting the Program, and therefore, would be the lead agency for the preparation and implementationof the project. DENR would collaborate closely with other key agencies like the LRA/DOJ, DAR, and BLGF/DOF during project implementation. Similarly,the role and active support of the courts would have to be elicited given their critical importance in the entire land administration process. For this project, DENR will take the lead in project implementation under the overall guidance of the IACC. The lead agency of the long-tern program will be determined during this project as part of the institutional arrangement study. The Project Management Office (PMO) would be headed by an Executive Director (who is already appointed) and two Deputy Directors, one from the Land Management Bureau (LMB) of DENR, the other from LRA. The PMO would be staffed by contracted and detailed qualified staff from the three main agencies, DENR, LRA, DAR. The PMO Executive Director will report to the Inter-Agency Coordination Committee (IACC) for policy and technical guidance and to DENR for administrative and financial matters. There will be two Prototype ImplementationOffices (PIOs) to be responsible for the actual implementation of the two prototypes. The PIO of the Land Titling and Administration Prototype (PIO 1) will be located in Palo Municipalityof Leyte province. The PIO1 would be headed by a senior DENR official and staffed by detailed and contracted qualified staff from ROD, LMS, and Municipal Agrarian Reform Offices (MARO). The PIO for the Land Records prototype (PI02) will be located in Quezon City Register of Deeds and be headed by a senior LRA official. P102 will be staffed by detailed and contracted qualified staff from DENR-NCR (National Capital Region), ROD, and the LGU. The two PIOs will report to the PMO for both technical and administrative matters. In addition, a local advisory committee will be established in the locality of the two prototype areas to monitor the implementation of the prototypes and provide advice to the PIOs. The local advisory committee will be headed by the chief executive of the local government in the prototype area and will include representatives from regional and local government agencies, NGOs and POs. While the PMO will coordinate the Policy Studies' component, the line agencies will be responsible for the substance of the studies, thus serving in a counterpart capacity. The counterpart for the Property Valuation Study and Finance and Fee Structure Study will be DOF (with active participation of BLGF/BIR); Land Development Process Study is National Economic and Development Authority; Institutional Structure for Land Administration will be the Department of Budget and Management (DBM), Fragmented Land Laws and Regulations Study will be DOJ; and Demarcation of Forest Boundaries Policy and Operational Procedures Study will be DENR . The lead agency will make available at least two senior staff to work with the study team during the entire study period. To clarify the roles and responsibilities of the IACC, PMO, PIOs and the Local Advisory Committee, the PMO will prepare Memoranda of Agreements (MOAs) at the central and local levels, to provide a framework for agreements among the different agencies. These will be prepared and signed prior to Bank approval. The detailed design of the two prototypes spells out the detailed implementationarrangements for the prototype activities. -8 - 3. Monitoringand evaluation arrangements: Monitoring and Evaluation will be an integral part of project implementation and will formn a good part of Component 3. A Monitoring and Evaluation Unit would be established in the PMO to monitor and evaluate policy study progress and recommendations, and the progress of the two prototypes. The two PIOs will also establish a Monitoring and Evaluation Unit to monitor the performance of the two prototypes. The evaluation of these two components will be an important input in the formalization of the institutional arrangements,the drafting of laws and administrativedecisions, and the overall design of the second phase of the project. In order to facilitate the Unit operations, a monitoring and evaluation system would be established during early stages of project implementationbased on the logframe of Annex 1. The technical assistance of the project will also include intemational and national advisors to assist the PMO in the monitoring and evaluation activities. The componentwould include two rounds of social assessment, one at the beginning of the project and one in the middle (a third round is designed at the end as an input to design of the long-term program). The TOR of this social assessment is included in the project file. Further, a development impact study will be conducted to monitor the socio-economic impact on project beneficiaries, with a base line study to be carried out at the beginning of the project, followed by a second round in the subsequest phase. D. ProjectRationale [This sectionis not to be completedin a LIL PAD. Rationaleshould be implicitin paragraphB: 3.] E. SummaryProjectAnalysis(Detailed assessments are in the project file, see Annex 8) 1. Economic (see Annex 4): [For LIL, to the extent applicable] e Cost benefit NPV=US$5.79 million; ERR = 24 % (see Annex 4) O Costeffectiveness O Other(specify) The primary benefits from the LAM project can be grouped under four categories. First, by testing and introducing new approaches to land titling and administration, the project would lay a strong foundation for a future LAM program which would increase efficiency in land titling and registration. Second, its prototypes would generate some incremental land titles and the benefits that derive from them. Third, the prototypes would also improve the quality of existing land records and efficiency in land administration both of which would increase confidence and efficiency in the land registration system. And finally, by improvingthe quality of land records, the project would increase the benefits accruing from the Build, Own and Operate (BOO) and other government land-related computerization initiatives, that is being funded separately. An economic analysis for such a land administration project would normally follow the conventional approach to economic evaluation of investments,which proceeds by estimating a future stream of costs and benefits and deriving net benefits to calculate an Economic Rate of Return (ERR) and a Net Present Value (NPV). We are unable to undertake precise estimation of ERR and NPV for the proposed project for two principal reasons. First, as this is a learning and innovation project with a focus on testing and learning, project resources, spent directly on the production of land titles are limited to about one-half of total project costs. Second, expected project benefits are difficult to estimate in the the Philippines as there are no data on which they can be based. Past experience cannot be a guide, as the land registration system has been dysfunctional. For these reasons, an ERR and NPV will thus not be computed for this project. -9- In response to the Government of the Philippines, we have carried out a hypothetical analysis of the economic worth of the project, based on land titling experiences and data from Thailand. The method and results of the hypothetical economic analysis are presented in Annex 4. 2. Financial(see Annex 4 and Annex 5): NPV=US$ million; FRR = % (see Annex 4) [For LIL, to the extent applicable] One objective of the financial analysis would be to assess whether the net financial benefits expected from the project are attractive enough for the targeted entities --- the landholders --- to participate in the project. In most countries, landholders usually want to obtain land titles in order to improve land ownership security and to use titles as collateral for institutional credit. Both, land ownership security and access to institutional credit would lead to increased investment, land productivity, and incomes. If landholders were to be charged the full cost of land titling, the decision by a landholder to participate in a land titling scheme would depend on whether the expected financial returns are higher than the payment for a land title. Under the normal situation where titles are issued upon request by landholders who are made to pay the full cost of the title, the landholders who request a titling service do so with the expectation that the financial return from acquiring the title would be higher than the cost of the title. Due to the effort to keep land titling costs low by undertaking land titling in large volumes village by village (the so-called systematic adjudication),the initial charge for a land title, under the proposed project, has to be kept low (lower than the cost of producing a title), to ensure high participation of landholders on a voluntary basis. It should be set at a level consistent with the affordability of the poorest landholders. For example, in Thailand where the land titling program has been successful, landholders are charged less than US$5/title compared to the average cost of US$36/title. The difference between US$36 and US$5 is the subsidy from the Government of Thailand. The Government recovers the subsidy by charging registration fees on subsequent land registrations. This arrangement has worked well in Thailand. It is expected that a similar arrangement would be introduced in the proposed project, although a careful study of the structure and levels of land-related taxes is planned to be undertaken with a view to striking the correct balance between the need to attract people to register land transactions on one hand, and the need for cost recovery and govermment revenue on the other. Fiscal Impact: It is expected that the proposed project would generate incremental revenue for the central and local governmentsfrom the following sources.Higher revenues would accrue from: (i) registration fees collected by the Register of Deeds (RODs); (ii) real property tax collected by Local Government Units (LGUs); and (iii) capital gains tax and stamp duty collected by the Bureau of Internal Revenue (BIR). The increased revenue would come as a result of a larger number of land transactions due to: (i) an increase in the proportion of land that is titled; (ii) improved efficiency in land administration that would make it easier and quicker for registration of land transactions; and (iii) a revival and invigoration of land markets in rural and urban areas. Higher revenues would also come as a result of higher land values due to: (i) rising land and property prices reflecting a higher future net income stream, created by land titling benefits; and (ii) more objective and improved methods of property valuation which the project would promote. Due to lack of data on changes in land transactions and expected tax elasticities, we are unable to estimate the incremental net revenue that would be generated by the project. To give an illustration of revenue flows from land titling, it may be useful to review the experience of another country which has been implementing land titling projects. In Thailand, annual revenues from land-related taxes (excluding property taxes) rose nearly 4 times within 10 years of land titling from less than US$300 million in 1984 to more than US$1 billion in 1994. These annual revenues are more than ten (10) times greater than the recurrent expenditures - 10 - of Thailand's Departmentof Lands, which amounted to US$87 million in 1997. 3. Technical: [For LIL, enter data if applicable or 'Not Applicable'] The proposed project would test various technologies for production of cadastral maps, including the surveying of boundaries and title development. The choice of these technologies would depend on the accuracy requirements of corner boundaries by the Philippines laws and considerations for cost-effectiveness.Experience in other countries shows that the introduction of rectified aerial photography, combined with other technologies such as a global positioning system (GPS) and total station, reduces substantially the costs of surveying and map production. Other new technologies such as high resolution satellite imagery would may be tested subject to coverage. Various technologies for land records management would also be assessed during the project. These could range from a complete manual system to semi-manualand computerizedland record management systems. 4. Institutional: a. Executing agencies: The Department of Environment and Natural Resources will take the lead in project implementation.Other agencies to implement the project are the Land Registration Authority of the Department of Justice and the Department of Agrarian Reform. DENR will take the lead in project implementation during the LIL period and the definition of the lead agency during the long term program will be done as part of the institutional arrangement study. Studies will be lead by the relevant agencies. b. Project management: DENR has implemented several World Bank and other donors financed projects. Therefore, they are familiar with the Bank processing procedures and procurement and financial management guidelines. The head of the Project Management Office (the Project Executive Director) is an Assistant Secretary in DENR. Because of the important role of the Land Registration Authority in implementing the project, a senior officer of the Land Registration Authority was appointed as Deputy Executive Director of the LAM Project. Further, Prototype II will be headed by an LRA official. International and local Technical Assistance would provide support to the PMO and the two PIOs in the technical, administrativeand management areas. The Technical Assistance will be mobilized at early stages of project implementation. 5. Social: Accelerating land titling and improving service delivery of land administration functions would result in a reduction of disputes over land rights. In the long term, this would have a positive social impact. The project does not intend to address the communal land tenure at this stage as the prototype sites would be limited to urban areas and the lowland rural areas. Social concerns and issues have all been considered in the design of the project. These will be further revalidated through the conduct of a social assessment giving special attention to the disadvantaged and marginalized groups, and to key stakeholders. The design of the social assessment has been prepared as part of the project preparation, and it will be conducted in three phases during various stages of project implementation. The first phase will be undertaken before the start of the project, the second phase just before the mid-term review and the third phase as part of the preparation for the long-term program. The objective of the first phase is to scan the social issues in the prototype area, the outcome of which would be used to improve and sharpen the design of the prototypes as well as the community awareness program. -11 - The aim is to ensure that low income and other marginal groups would have equal access to information, benefit from the project and have their rights protected. Results of this phase would also be used to establish an appropriate framework for stakeholders' participation and access to the project. The second phase would cover the same area as that of the first phase and would verify the level of stakeholders' participation, assess the project's initial social impact and determine the lessons for adjustment of the operations of the prototype. The third phase would cover a wider area, scope and stakeholders. It would also entail a more rigorous process than the first two phases. The government would use the output of the social assessmentsto develop and implement measures to minimize and mitigate any adverse social impact that may arise from systematic adjudiation and the issuance of land titles, especially on the poor and other marginal groups. The methodology for social assessments and consultations were designed under the guidance of an experienced social scientist from outside the operational Unit where the project is task-managed. 6. Environmentalassessment: Environment Category: B (Partial Assessment) The impact of the proposed project on the environment would be neutral in the short and medium term. Experience in the Bank-supported land administration projects in Thailand and the Brazilian North East Region Land Tenure Improvement Project indicates no significant impact on the environment. In the long term though, transparent and efficient land administration systems and coherent and transparent land management policies would have a positive impact on the environment in a number of aspects. Improved land security provides incentives to invest in improved long-term land use (e.g. soil conservation in rural areas, and investment in environmental infrastructure such as kitchen and bathrooms in urban areas). Project outputs including spatial data such as aerial photographs and cadastral maps would be useful inputs into environmental management. As this project is supported by a LIL and has a short-term duration of 3 years, no separate environmental assessment report has been prepared. All disclosure requirements have been met. The project would support a study to develop a national policy and operational procedures for demarcation of forest boundaries taking into account the legal rights of forest occupants, and the indigenous peoples and their access to forest resources are protected.Under this project, there are no indigenous peoples affected and therefore, OD 4.30 is not applied. The policy and operational procedures will be reviewed during the preparation of the follow-up project, and if found satisfactory to the Bank, the follow-up project could support the actual demarcation of forest boundaries. 7. ParticipatoryApproach (key stakeholders,how involved, and what they have influenced or may influence; if participatory approach not used, describe why not applicable): [For LIL, to the extent applicable] a. Primary beneficiaries and other affected groups: Systematic adjudication is highly participatory. The adjudication process would follow the practices in similar projects in Thailand, Laos and Indonesia, where the adjudication of land parcels is done in the presence of the claimer of the land, all the neighbors and the village head. The claimer and all the neighbors place boundary markers by themselves and the adjudication team records the measurement on the cadastral map and gets signatures from all parties. To ensure all parties are present during adjudication, extensive public informationand education campaign is done one month prior to adjudication start in the community. In the event that neighbors disagree on the boundaries, the case will be refered to the existing municipal court. In case the number of disputed cases is large, the project would develop and implement mediation and dispute resolution mechanisms based on the experience of similar projects. As regards social assessment, to ensure active and meaningful participation of stakeholders in its conduct, a core group will be formed with representation from the LGUs, NGOs/POs, academia and relevant private - 12 - and government agencies. The core group will be trained prior to the implementationof the first phase of social assessment for them to take the lead in its implementationin their respective communities. b. Other key stakeholders: Consultations with NGOs and POs have been undertaken from the start of project preparation activities through workshops and other informal meetings, feedback of which have been incorporated in the project design. These consultations would continue through the rest of project preparation and implementation stages. In addition, qualified NGOs and POs will also be engaged as service providers in the conduct of the social assessment. They will also be involved and/or consulted in the conduct of various policy studies and participate in the activities of the Local Advisory Committee. The Local Advisory Committee at the prototype level and the Inter-Agency Coordinating Committee (created by virtue of Executive Order No. 129 dated July 24, 1999) at the project level will take an active role in reviewing and providing guidance and policy directions to ensure that the project achieves its desired social developmentoutcomes. c. How will the project monitor performance in terms of social development outcomes? The second and third phase of the social assessment and the second phase of the development impact study will be the mechanismsto determine and measure the perfonnance of the project in terms of its achievement of the desired social development outcomes. These two studies, which complement one another, will be conducted separately and in a participatory manner. F. Sustainability and Risks 1. Sustainability: This section is not to be completed in LIL PAD. 2. Critical Risks (reflecting the failure of critical assumptions found in the fourth column of Annex 1): Risk RiskRating RiskMitigation Measure From Outputsto Objective Slowdownin the economy. M External to the Project IACC is not able to operate effectively S The IACC reports to the President of the and exert leadership. Republic of the Philippines.Memoranda of Agreements have been agreed amongthe main implementingagencies. Department and Agencies are not willing S The support of the long-term program will be to accept and implementthe agreed based on the actions taken by the govermment to recommendationsof the policy studies. act on the recommendationsof the policy studies, including the recommendationson the institutional arrangements for land administration. Further, the IACC is mandated by the E.O. 129 to report to the president on the limplementationof the program. - 13- No opposition from main stakeholders S The project will include a wide range of including NGOs and POs. activitieswhich involve the input and participation of the main stakeholdersincluding NGOs and POs. The Social Assessment will also evaluate the impact of the land titling on project benificiaries. The government will use the social assessment to develop and implement measures to minimize and mitigate any negative impact that may arise from the systematic adjudication and the issuance of titles especially on the poor and other marginal groups. From Components to Outputs GOP does not provide adequate budget M Counterpart funds is a issue in the Philippines. for the project. The World Bank management in the field is in continuous dialogue with the Government to ensure that adequate counterpart funds are provided to Bank-financedprojects. LGUs do not sufficiently address the issue M The selection criteria for the prototype sites of back taxes so as to encourage project includes the willingness of the local government beneficiaries to collect the land titles. to address the back taxes. The majority of land owners have legal M This will be investigated during the evidence of title in the prototype area. implementationof the prototypes. Overall RiskRating S Moderate to High/ This operationis rateda moderate to high risk. But, with this relatively high risk, the expected return will be equally as high. For this reason, the project is designed as a Learning and Innovation Loan to ensure that the risk is adequately assessed and addressed before embarking on supporcingthe long-term program. RiskRating - H (HighRisk),S (Substantial Risk), M (Modest Risk),N(Negligible or Low Risk) 3. Possible Controversial Aspects: None G. Main Loan Conditions 1. Effectiveness Condition * None - 14 - 2. Other [classify according to covenanttypes used in the Legal Agreements.] Other Conditions * Selected performance indicators, agreed with the Bank, will be used to monitor project performance, outcome and impact (monitoring and evaluation); * The PMO will maintain a computerized accounting system and hire qualified staff acceptable to the Bank to operate the system; * DENR will, by February 28 of each year, starting February 28, 2001, furnish to the Bank for its review and comments, an annual work plan and budget; and implement it, taking into considerationthe comments from the Bank (sectoralbudgetary); * Annual financial audits will be conducted by an independent auditor acceptable to the Bank and will follow the Terms of Reference (TORs) in accordance with the appropriate auditing principles, as approved by the Bank, and such audits will be submitted to the Bank within six months of the close of each fiscal year (accounts/audit); * The PMO will ensure that the following reports are submitted to the Bank: (i) semi-annual reports on July 31 and January 31 of each year, commencing on January 31, 2001; (ii) a report for the project's mid-term review by September 1, 2001; and (iii) within 6 months before project completion, the Government contribution to the Implementation Completion Report evaluatingthe project's performance (monitoring and reporting); = A mid-term review will be conducted no later than January 31, 2002 (monitoring and reporting); * The first round of the Social Assessment will be undertaken by December 31, 2000 and the second round by December 31, 2001 (Monitoring and Reporting); T Government would develop and implement measures to minimize and mitigate any The adverse social impacts that may arise from the systematic adjudication and issuance of land titles, especially on poor and vulnerable groups by February 28, 2002; = The Land Development Process Study, Property Valuation Study, the Finance and Fee Structure Study, the Fragmented Land Laws and Regulations Study, the Institutional Structure for Land Administration Study, and the Demarcation of Forest Boundaries Policy Study shall be completed by December 2002; and * The preparation of the long-term program will be initiated by September 30, 2002. - 15 - H. Readinessfor Implementation 1Z 1. a) Theengineering design documentsfor the firstyear's activitiesare completeand readyfor the start of projectimplementation. 1F1. b) Not applicable. 1 2. Theprocurement documentsfor the first six months'activitiesare completeand readyfor the startof projectimplementation; and a framework has beenestablishedfor agreementon standardbidding documents that willbe used for ongoingprocurement throughout the lifeof LIL 1 3. The LIL's Implementation Plan has beenappraisedand foundto be realisticand of satisfactory quality. OI4. The following itemsare lackingand are discussedunderloanconditions(SectionG): 1. Compliancewith Bank Policies Z 1. This projectcomplieswith all applicableBank policies. aI 2. Thefollowingexceptionsto Bankpoliciesare recommended for approval.The projectcomplieswith all otherapplicableBankpolicies. WaeltZakout hMark D. Wilson 4.. VinayK. Bhargava TeamLeader SectorManager/Director f CountryManager/Director - 16 -  Annex1: ProjectDesignSummary LandAdministration PHILIPPINES: Project and Management Hoaeyof Objectives In40" oIo~g&Evalaton Cioa Assmption CAS Goal: Sector-related SectorIndicators: Sectorlcountryreports: (from Goalto BankMission) Accelerateenvironmentally Sustainedincreasein statistics Government sustainableagricultural agriculturalgrowth growthand alleviatepoverty in rural areas urban Promotesustainable Increasein affordablehousing Governmentstatistics development Inprove governance, Transparencyinternational Internationalrating on transparencyand combat ratingson perceptionof corruption corruption corruptionshow improvement Follow-onDevelopment Objective: To alleviatepovertyand Increasedconfidence of the studies Socio-economic enhanceeconomicgrowthby securityof titlesby both improving the securityof land landholders and banks tenureand fosteringefficient land marketsin rural and Increasein numberof formal LRA records urbanareas, throughthe land transactions development of an efficient systemof land titlingand Increaseof loan fundingand studies Socio-economic administration, whichis based mortgagesto the property on clear, coherentand sector consistentpoliciesand laws, and is supportedby an Increasein numberof farmers study Socio-economic appropriateinstitutional who accessecredit structure. Increasein local government-related revenues budget Government from land-relatedtaxes and fees Increaseof loan fundingto the Socio-economicimpact propertysector Study - 17 -  'l~~~~~~~~w ProjectDevelopment OutcomeI Impact Projectreports: (from Objectiveto Goal) Objective: Indicators: To formulateand approve Government approvesa Government officialrecords policy and regulatorychanges, time-boundactionplan to set and to test alternate up the institutional approachesto accelerated arrangements necessaryfor programsdesignedto improve improvedand effectiveland the protectionof rightsto administration land,eliminatefake titles, introducean equitablesystem of landvaluationand formalizethe institutional arrangements,neededto supportimplementation of the long-termprogram. IACCand key agencies IACCofficialrecords approverecommendations for policy formulationin the areas of: (i) propertyvaluation;(ii) demarcationof forest boundaries;(iii) land development process;(iv) fnance and fee structuresfor land registration;(v) fragmentedland laws and regulations;and (vi) institutionalstructurefor land registration. Time-bound actionplan for implementation approved; Proceduresand guidelinesfor IACCofficialrecords acceleratingland titling programstested,reviewedand endorsedby the implementing agenciesandthe IACC Governmentapprovesthe IACC officialrecords directionof the long-term programand phase II of the LAM project,whichincludes a time frame for addressing institutionaland policy reform areas recommended by the IACC and expandingthe titlingprogram and the record reconstitutionprogramto the rest of the country - 18-  of 0-0"' M:" 40 WN I, :ft ,= B t -;-<~~~~~~~~ -Eyakafon - fLs Outputfromeach OutputIndicators: Projectreports: (from Outputsto Objective) Component: I. Improvedinstitutional 1.1Improvedcoordination 1.1Assessmentby key Continuedhigh political coordinationand mechanismamongthe stakeholders supportto the Program; arrangements in the issuance implementing agencies of patentsand the reconstitutionof titles. 1.2Recommendations (those 1.2Assessment by PMO; IACC is able to operate underthe authorityof the assessmentby supervision effectivelyand able to exert concernedagencies)of the missions leadership; policy study institutional accepted andimplemented 1.3 A time-boundactionplan 1.3 IACCrecords Departmentand agenciesare to implementthe rest of the willingto acceptand recommendations is endorsed implementthe agreed by IACC recommendations; 2. Priorityland policyissues 2.1 A draft actionplan 2.1 Assessmentby public, No oppositionfrom main studiedand time-bound endorsedby the IACCto leadersimplementers,and stakeholders,includingNGOs actionplan for improvethe processof land concerned professionals and peoples organizations; implementation developmentand planningfor agreed. the use of land in urban and rural areas. 2.2 IACCendorsesthe 2.2 IACC officialrecords recommendations of the finance and fee structure policy studyand time bound actionplan for implementation. 2.3 IACC endorsesa 2.3 IACC officialrecords frameworkforproperty valuationand a time-bound actionplan for implementation 2.4 IACCendorses 2.4. PMO records recommendations for changes in the legal frameworkfor land administrationand a time-boundplan for implementation 2.5 IACCendorsesa policy 2.5 IACC meetingminutes frameworkon forest boundariesdemarcation and legal rightsof forestoccupants - 19 - 3. Streamlinedand cost 3.1 Well-functioning land 3.1. Monitoringand effectiveprocedures are tested titling and administration evaluationsystem and put in place for an prototype,where 80%of accelerated programof parcels in the prototypearea issuanceof landtitles are titled with cost around US$60 per parceland 80% of titles are collectedand registeredby the beneficiaries 3.2 DENR,DAR and ROD 3.2 Monitoringand operatesa one-stop-shop, EvaluationSystem which cuts the time taken for issuanceof new titles by 50% at the end of the project 3.3 Proceduresand guidelines 3.3. Governmentrecords and for acceleratedland titling feedbackfrom users program, including streamlinedproceduresamong all the agencies,reviewedand endorsedby the IACCto be adoptedin the implementation of the long-termprogram. 3.4 An effectivecommunity 3.4 Socialassessment relationsand services program implemented includingbroad social awareness,impactmonitoring, and NGOs participation. 4. Streamlinedand cost 4.1 Improvedproceduresfor 4.1 M&Esystem effectiveprocedures to reconstitution of titles improvethe validityand developed, tested and completeness of landtitles in implemented. the registerof deedstested and put in place. 4.2 The reconstitution of 80% 4.2 M&Esystem; of all titles, including damaged,lost or incorrect records in the prototypearea. -20 -  4.3 Proceduresforthe 4.3 supervisionmissionand compilationand updatingof IACCrecord cadastralmaps, includingthe sharingof data amongthe differentdepartments/agencies have beentested, and implemented. 4.4 Proceduresfor interface with the BOO and other 4.4 LRA and IACCrecords. govermment land related computerization projects examined, reviewed,tested and implemented. 5. The directionof the 5.1 The NEDABoard 5.1 Governmentrecords long-termprogram and phase approvedthe directionof the II of the projectis approved. long-termprogramand ICC approvedphase II of the project. - 21 -  .1 a. X~~~~~~~~ Monri WM & Eva~i.tlon C-0COlMMu Project Components I Inputs:(budget for each reports: Project (fromComponents to Sub-components: component) Outputs) 1. Land Policy and Legal US$ 0.5 million 1. Land Development Process GOPprovidesadequatebudget Framework Report; forthe project; 2. Financeand Fee Structures on land transactionsReport; 3. Real PropertyValuation Report; 4. LegalFrameworkfor Land Administration Report; S. ForestBoundariesStudy Report; 2. PilotingLand Titlingand US$ 4.5 million 6. Final Reporton LGU sufficiently addressed AdministrationSystem PrototypeI; the issueof backtaxes,so as 7. Final Reporton Prototype to encourageproject 2.1 Land TitlingPilot II; beneficiariesto collectthe landtitles 2.2 Land RegistrationPilot The majorityof land owners have legal evidenceof title in the prototypearea; 3. InstitutionalDevelopment US$ 5.0 million 8. Monitoringand Evaluation Reports; 9. Six MonthlyProgress Reports; 10.Mid-termReviewReport; 11.Implementation CompletionReport; 4. ProjectPreparationfor US$ 0.3 million 12. ProjectPreparationReport Subsequentphases. of the long term program. - 22 -  Annex 2: Detailed Project Description PHILIPPINES: Land Administration and Management Project By Component: I - US$0.50million ProjectComponent LandPolicyStudies This component will include a minimum of six policy-oriented studies to address the key policy issues of land administration and management, building on past studies and information. The studies will involve extensive consultation with key stakeholders, in addition to analysis, and will be action-oriented. Detailed terms of reference will spell out a clear mechanism for conducting, reviewing and approving the recommendations arising from these studies. The studies would be expected to be carried out in stages including (see chart below): (i) assessing the current status; (ii) identifying the issues; (iii) identifying options and implications; (iv) consultating with key stakeholdersto obtain consensus; and (v) agreementon the course of actions by the IACC. The Bank will finance the Valuation, Finance and Fee Structure, Forest Boundaries Demarcation, and Land Development Studies, while AusAID will finance the Institutional Structure for Land Administration and Fragmented Land Laws and Regulations Studies. A. Property Valuation Study Objective. The study would aim to support the development of a national real property valuation framework, which is acceptable to all stakeholders and in line with international standards and practices. Description. Distorted land markets and difficulties in obtaining valid sales data have led to formula-driven cost-based valuation. In addition, there is no uniform valuation system or standards and under-valuation and inequitable valuation are rife, particularly in local government taxation of land and real estate. Valuation rules are prescriptive and rigid and high tax rates compound the problem. At the same time, Government revenues are low due to undervaluation. The weaknesses in valuation would be addressed by the proposed study which would: (i) study and examine current property valuation practice, identify strengths, weaknesses, levels of equitability, and cost of the existing system; (ii) develop options and determine the cost of establishing a framneworkfor a market-based property valuation system in accordance with internationally accepted standards; (iii) undertake discussions and workshops with key stakeholders in both government and private sectors, NGOs and POs to achieve consensus on a national valuation framework for taxation and compensation purposes; and (iv) identify an action plan to implement the framework. Deliverables. Five deliverables: (i) a short report with annexes on the current valuation practices; (ii) a discussion paper identifying options for the national framework of real property valuation; (iii) consultations on agreed-upon course of action; (iv) the drafting of any necessary acts or laws as agreed during the consultations; and (v) a recommended a time-bound action plan to implement the recommendations. B. Finance and Fee Structure Objectives. The study would recommend revisions in the structure and levels of taxes and charges in the titling and transfer of land to eliminate current disincentives for registration of land transactions. The - 23 - proposed review would take into account the central and local government revenues from property taxation, and the need to correct real property market distortions. Description. High fees and taxes for first time and subsequent registration together with back taxes have produced major disincentives for first time and subsequent land registration. Evidence indicates that less than 30% of the landholders in rural areas are able to meet the costs of having their land titled. The high costs of land titling and registration have been an important factor leading to a high incidence of informal transactions in land and becoming a contributing factor to loss of confidence in the titling system. The proposed study would be done in two phases. The first phase would be a quick review and recommended action to reduce land titling and transfer fees and taxes as well as related back taxes in order to stimulate landholders to title their properties in the prototypes. The second phase of the study would be undertaken during project implementation. It would review the current tax and fee structure and recommend changes taking into account new initiatives under the LAM project, namely: (i) introduction of market-based methods of valuation as a basis for tax and fee assessment; and (ii) an increased rate of registration of transactions together with higher turnover in land markets. The recommendations would aim at maximizing participation of landholders in land titling and registration, while also ensuring that cost recovery objectives of the Government are met. Using data generated from the prototypes, the study would estimate revenue-generatedusing the recommended tax and fee structure (together with improved methods of valuation and higher volume of registered transactions) and compare this with revenue-earned in the past under the scenario of a high fee and tax structure, together with poor valuation methods and lower volume of registered transactions. The recommended changes in taxes and fees would be implemented after the relevant authorities have considered the implications of the Government's fiscal policy. Deliverables. Five deliverables: (i) a short report identifying all taxes and fees currently applied to real property; (ii) a short discussion paper on the impact of these taxes and fees on initial patents, the registration of land transactions, land market, and revenues of central and local government; (iii) identifying options for restructuring the taxes and fees identifying the implications of each of these options on land registration and government revenues; (iv) undertake consultations and consensus building among all stakeholders to identify an agreed structure of land taxes and fees; and (v) a recommend a time-bound action plan to implement the recommendations. C. Land Development Process Study Objective. The study would recommend an action plan for harmonizing the implementation of interim guidelines for land allocation and would prepare implementation of the proposed National Land Use Act during the long-term LAM program. The overall goal of the study would be to improve equitability and efficiency in land-use so as to meet requirements for economic growth and housing, while also meeting the requirements for sustainable management of natural resources and food security. Description. Current processes of land allocation and development have: (i) failed to allocate land to its most productive uses; (ii) resulted in unplanned development of urban and settlement areas; and (iii) inadequate protection of natural resources, particularly forests. The study would review current interim guidelines for land use planning and development --- guidelines that have been developed as gap fill measures while awaiting enactment of the National Land Use Act (NLUA) --- with a view to harmonizing their implementation in terms of policy and institutional arrangements. The interim guidelines which lack consistency in design and implementation cover, among other things, land use classification, land conversion, land zoning, and land use planning. The harmonization of these guidelines would be expected to overcome current constraints to the allocation of land, to its most efficient use, orderly development of urban areas and settlements, food security and sustainable management of natural resources. In addition to -24 - studying the harnonization of interim guidelines for land allocation and use, the study would support the preparation of a program to implement,under the long-term LAM program, the draft NLUA once enacted. Deliverables. (i) prepare a flow chart showing processes, approvals and actions required for each of the reclassification of agriculturalto non-agricultural land, and sub-dividing of urban land; (ii) develop options for streamlined procedures for land re-classification; (iii) develop consensus among the stakeholders on changes to existing interim guidelines and institutional mechanisms for their implementation; and (iii) prepare a time-bound action plan to implement the recommendations. D. Demarcation of Forest BoundariesPolicy Study Forest Boundary Delineation Study Objectives. The study would develop a policy framework for forest boundaries demarcation,which ensures the legal rights of forest occupants and continued access to forest resources. Description. The proposed study would have three main components: (i) review the legal framework for the legal rights of forest occupants and their access to forest resources; (ii) practice and procedures to implement these legal regulations; and (iii) prepare a short policy framework for forest line demarcation which ensures that the demarcation of forest boundaries does not cause negative impact on those living inside the forests. Deliverables. A policy framework for forest boundaries demarcation (a few pages), which ensures the legal rights of forest occupants and continued access to forest resources. E. Fragmented Land Laws and Regulations Objectives. The study would aim to recommend changes in the existing land laws and regulations with a view to rationalize and consolidate them so as to avoid overlap and inconsistency in their effects and implementation. The overall objective is to lay the legal foundation in land policy, management, and administrationconsistent with the principles of good governance, efficiency and equity. Description. The study would support the review of existing land laws and regulations. Currently, there is an abundance of laws governing the administration of land in the Philippines, especially relating to A&D land. The laws are administered by different agencies. Many of these laws, introduced over a long period of time, are in conflict, due to subsequent amendments, with existing legislation. Operating an efficient and equitable land administration system under this framework has been difficult and has resulted in long delays in adjudication and registration of land rights, and in a considerable jurisdictional overlap and duplication of functions. There is also confusion in the mind of the community concerning agency jurisdiction and uncertainty as to which agency to consult when a particular action is required. The review of the existing land laws and regulation would be carried out in close collaboration with all agencies participating. Deliverables. Recommendations for review and possible consolidation of existing laws and regulations will be presented in a report. - 25 - F. InstitutionalStructure for Land AdministrationStudy Objectives. The study would select the findings and results of the project's testing and learning activities with a view to generating an institutional structure that would underpin the implementationof the long-term LAM program. Description. A major weakness in land administration and management has been the proliferation and fragmentation of organizations in the land sector whose operations have been inadequately coordinated. Under the proposed project, there would be a testing of organizational arrangements centered around the one-stop-shop concept in the administration of the two prototypes and in the review of the role of courts in the registration of land. Results from the tests would be evaluated and used as a basis by the Government to approve an organizational structure that would support the efficient implementationof the long-term LAM program. Deliverables. (i) documentation of the results of the testing and learning including evaluation of the results and recommendations for the new structure; (ii) consensus on a new organizational structure; and (iii) a time-bound action plan to implement the recommendations. Project 2 - US$4.50 Component million Prototypes The component would include two prototypes to test innovative new solutions to problems currently confronting the land administration and management system of the Philippines as identified in the various studies conducted on the land sector issues. The two prototypes are the core component of the Project. The outcomes of these two prototypes will provide invaluable information and allow the development of appropriate implementationstrategies for the subsequent phase of the Program. PROTOTYPE and TitlingPrototype-- Leyte) 1: (Land Administration The DENR, DAR and LRA are primarily involved in land titling and administration, each operating within its own policy and regulatory framework. Consequently,there is no mechanismto avoid outstanding issues and conflicts and all of these entities have the independent ability to award rights to land. Existing land record management systems are inefficient and incomplete with records destroyed through war, theft fire, flood or misplaced during relocation. There are no comprehensive record inventories.No agency has a complete updated set of cadastral maps, whereby the land tenure picture of the Philippines can be described. Each agency only maintains a portion of the overall comprehensive cadastral map. This has led to abuses in the producing of titles; a substantial part of them are forged and duplicated. Comprehensive mapping programs in DENR through cadastral surveys have been significantly reduced in recent years. Judicial titling through the courts has become slow and expensive and cadastral proceedings that were introduced for expediency and economy have failed to deliver the necessary improvements.Furthermore, there is evidence, confirmed in field units and in discussions with community and NGO groups, that the high initial registration cost for issuing titles is a major factor which keeps many poor families from acquiring titles for their land. - 26 - This prototype would focus on: (i) testing institutional collaboration in land administration in an improved service-orientedenvironment; (ii) streamlining procedures for issuing titles to privately-claimedA&D land; (iii) testing the existing legal framework and its suitability to undertake an accelerated program of land titling and administration; (iv) assessing the response from the stakeholders of accelerated programs of land adjudication; (v) evaluating the capability and capacity of the private sector on surveying and mapping; (vi) evaluating different technologies such as photomapping, high resolution satellite images, GPS in systematic adjudication process; (vii) introducing cadastral maps to RODs; and (ix) increasing community awareness of the benefits of land titles. The area selected for the prototype is in the province of Leyte. An area approximating 68,065 ha in extent, and covering 6 rural municipalities. It is estimated that total A&D lands are 57,190 ha, of which about 11,155 ha is already titled. The selected area includes about 10,344 ha of forest land and about 15,114 ha of lands, subject to the CARP program. Certificates of Land Ownership Award (CLOA) have been issued over 7,144 ha, with an estimate 6,108 ha remaining. The estimated population in the prototype area is 145,320 in about 36,911 households. A one-stop-shop (OSS) of land administration would be established by administrative arrangements (through a Memoranda of Agreements (MOA) at the local government level) in Palo City. The purpose of the MOAs would be to facilitate and expedite coordination among the different agencies responsible for land adjudication and issuance of titles (to be physically located in one building under the prototype) to all the eligible land owners in the prototype area (estimated around 30,000, mostly in rural areas), verify the accuracy of titles, already issued, and produce large scale cadastral maps showing all land parcels and parcel numbers to cover the entire prototype area. All of the above would be done within the one-stop-shop by the various responsible agencies physically located therein, and in accordance with the legal framework enforceable at the time adjudication and land titling is done. An overview of the land titling process is described in Annex 2.1. In the process, several technologies and approaches will be tested and evaluated. The project would finance the cost of building/renovatingof the one-stop-shop and the PIO, and the procurement of office equipment and fumiture. The project would also finance the development cost of title production, including aerial photography, surveying, cadastral mapping, the adjudication process (including allowances to government staff, salary, and allowances of contracted staff and other operational costs), and title production. PROTOTYPE 2: (Title Reconstruction and Record Management Prototype -- Quezon City) The prototype would support the improvement of land records management and the reconstruction of titles and cadastral survey maps. There are many agencies involved in the land administration and management system of the Philippines and each maintains a large set of records and maps to support its operations. The management of these records has been influenced by different factors over time, particularly the Spanish and American administrations, the Second World War and the decentralization of functions and records from head offices to regional operations. The majority of the land records held by the various land-related agencies in the Philippines is paper-based, comprising various of files, indexes, maps and plans. Due to budgetary constraints over the years and the generally low priority assigned to the management of the land records, most of the land records are stored in very poor physical conditions, thus at risk of environmental and vermin damage. The selected site for this prototype is 5 barangays in District 2 in Quezon City: Bangang, Silangan, Batasan Hills, Commonwealth,Holy Spirit and Patayas. The Quezon City Register of Deeds was destroyed -27 - by fire in 1988. Although there has been a mass re-constitution program since 1988, only about 121,400of the 300,000 previously registered titles have been reconstituted. The area also has a high incidence of fake or duplicate titles, an active land market (about 120 transactions per day), and a high incidence of litigation. Prototype 2 would conduct a comprehensive inventory of records and undertake a program of title validation and security in the prototype area with the objective to eliminate duplicate and fake titles. It would also validate and consolidate maps and plans and develop new processes for the reconstitution of lost/destroyed records and titles, and upgrade records management procedures and physical storage facilities. The prototype will also test the interface with existing Government land administration initiatives in other agencies (DENR, DAR-Swedesurvey, DOF-RPTA). Another outcome of the prototype would be the development and implementation of Land Information Management protocols and policies in relation to: (i) data storage and sharing; (ii) access to land-related data; (iii) security; and (iv) archiving of data. The component would finance the renovation of the one-stop-shop and the PIO (located next to Quezon City ROD located in the City Hall), procurement of equipment and fumiture, reconstitution of titles and cadastral and survey maps; the production of large scale, photo-backed cadastral maps showing all land parcels in the prototype area, together with parcel numbers; and the development of modem record management system. ProjectComponent 3 - US$5.00million Development Institutional This component will provide support to the LAM Project Management Office to manage and monitor the project. It would include three sub-components: (i) project management including technical assistance; (ii) education and training; and (iii) monitoring and evaluation. (i) Project Management. A Project Management Office (PMO) would be established to provide the management and control essential to ensuring the delivery of the outputs required from the two prototypes and activities from the policy studies. The project management office would be supported by international and local technical assistance oriented towards supporting the project director on: (i) project management and monitoring; (ii) technical aspects of project implementation; and (iii) the learning and innovation aspects of the Project. An outline of the TORs of the technical assistance is included in Annex 2B. (ii) Education and Training. The project would support domestic training in the areas of management, surveying and mapping land administration, and land information system. The project also would support focused study tours and overseas training opportunities, designed to enhance the understanding of the issues involved in modern land administration and management and to identify potential institutional arrangements for future implementation. (iii) Monitoring and Evaluation. This component would be designed to monitor development impact, testing and learning aspects of the project and implementation progress. A monitoring and evaluation system will be developed to measure the performance indicators shown in Annex I of this document, which are based on the testing assumptions in project design. Summary progress reports will be submitted to IACC, and a full progress report will be submitted to IACC, Bank and AusAID each quarter. This component will include a development impact study (socio-economic study) and two rounds of social -28 - assessmentin prototypeareas. The project would finance the incremental government costs, including contractual staff, consultantsand allowances,and other operationalcosts.The projectwould also financeinternationaland studytours. Theprojectwouldalso financethe studiesand the development local trainingand international of a computerizedmonitoringand evaluation system. Component Project million 4 - US$0.30 PhaseII Preparation This componentwould supportthe preparation of the long-termprogrambased on the outputand the experience of this project.This componentwill be initiatedby Month20 of projectimplementation. By then, experience from the on-going project will provide adequate knowledge of the Government's commitmentto policyand institutionalreform,test the institutionalanrangements for prototype 1 and 2, and test the differentalternativesand technicalapproaches. Initiatingproject preparationat this time will enable the Government to make a decision,on whetherto go forwardfor the long-termprogramand the donorsto supportthe program.It will also ensurethat there is no gap betweenthe end of this projectand the startof the long-term program. The project would finance the consultants'servicesto evaluatethe outcomeof this project and prepare phase II of the project. Furthermore,the project would finance the expenses of the social assessment,workshops and stakeholderconsultations. -29 -  Annex 3: Estimated Project Costs PHILIPPINES:Land Administration and Management Project PolicyStudies 0.10 0.38 0.48 Prototypes 3.81 0.30 4.11 Institutional Development 1.38 3.32 4.70 Preparationof the Long-TermProgram 0.09 0.19 0.28 Total Baseline Cost 5.38 4.19 9.57 Physical Contingencies 0.10 0.20 0.30 PriceContingencies 0.20 0.23 0.43 Total Project Costs 5.68 4.62 10.30 Front-endfee 0.05 0.05 Total Financing Required 5.68 4.67 10.35 Goods 0.63 0.06 0.69 Works 1.60 0.40 2.00 Services and Training 1.10 3.70 4.80 Titles Development 0.85 0.36 1.21 Incremental Operating Cost 1.50 0.10 1.60 Total Project Costs 5.68 4.62 10.30 Front-endfee 0.05 0.05 Total Financing Required 5.68 4.67 10.35 - 30 -  AnalysisSummary Annex4: Cost Benefit LandAdministration PHILIPPINES: and ManagementProject A. Descriptionof ExpectedBenefits 1. While the proposed project is a LIL that focuses on testing and learning, its prototypes would generate some outputs and related benefits in the prototype areas. The benefits would flow from the incrementalland titles that will be issued under the prototypes, and the improved confidence and efficiency in the land registration system (with a related reduction in transaction costs). 2. Confidence in the land registration system would arise from the prototypes which would: (i) test and introduce new approaches to improving efficiency in land administration,thereby laying the foundation for increased efficiency in land registration; and (ii) improve the management and quality of land records, thereby restoring confidence in the land registration system. Improvements in confidence and efficiency in the land registration system would positively affect about 50,000 existing land titles under the second pilot which focuses on improving the quality of land records. In addition, the first protoype would produce about 50,000 new land titles and improve efficiency in the administration of another 10,000 existing titles. A combination of improved confidence and efficiency together with the new land ditleswould provide to registered landholders investment incentives and access to cheaper and longer term institutional credit for investment. Consequently, the prototypes would generate benefits in the way of increased investment and land productivity associated with increased land tenure security and access to credit. This would lead to increased farm incomes (in rural areas) and rising land values in both rural and urban areas. 3. Other Benefits from the LIL. The LIL would provide additional benefits in the way of: (i) facilitating financial sector development through the recovery in confidence in the land registration system and in the use of land as collateral; (ii) coordinated institutional support for the comprehensive agrarian reform program (CARP), thereby speeding up the delivery of registered land titles to the beneficiaries of land reform; (iii) improvement in the management of natural resources through improvingthe technology of delineating and marking forestry boundaries; (iv) improvements in the valuation framework which would enhance fairness and equity in taxation and compensation systems for land, as well as enhancing risk analysis for collateral-based lending and land-related investment decisions in the private sector; and (v) improvingthe quality of land records which would increase the benefits accruing from the Build, Own and Operate (BOO) computerization initiative being funded separately. Summary of Benefits and Costs: 4. An attempt has been made to undertake a cost-benefit analysis for the project. Due to lack of land titling impact studies in the Philippines (except for an urban area impact study carried out for Davao city), we will use Thailand data on titling costs and impact to estimate the project's rates of return to investment in land administrationand titling. 5. For the rural sector, economic benefits from land titling are estimated from the titling impact on farmproductivity and incomes. For the urban areas, economic benefits from land titling are based on the impact of titling on land values (and annual rents), reflecting a future net income stream from land titling. For the Philippines, the impact of land titling in urban areas is based on estimates made by Emmanuel Jimenez (1982) for Davao City in his study entitled: "The value of squatter dwellings in developing countries, in Economic Development and Cultural Change, 30 (4): 739-52. He found that land titling increased unit housing prices by 58% (compared to untitled land) and housing rent by about 18%. - 31 - 6. Based on the above assumptions on benefits and costs, the project is estimated to generate net benefits with a net present value (NPV) of US$5.79 million and an economic rate of return (ERR) of 24% (Table 1). These results indicate that the project is economically profitable for the country to invest in. Moreover, the benefits from the project are underestimated in so far as we have excluded the expected benefits associated with the BOO, other unquantifiable benefits and the benefits, which accrue to more than one sector. Main Assumptions: 7. Key data and assumptionsderived from Thailand are, as follows: (a) land titling would increase agricultural crop yields by 6.6 percent (compared to untitled land), which would translate into an increase in net farm income of 10%; (b) average net farm income US$218 per hectare (ha), for a cropping pattern representing an average for Thailand; and (c) average cost per title would be US$36 (direct costs plus 50% of overhead costs) or US$39/ha . 8. Assumptions for the Philippines are, as follows: (a) under LAM project: (i) the prototype on titling would issue 50,000 new titles, in addition to 10,000 existing ones in a rural area (assumed to be 1 ha per parcel); and (ii) the prototype's support for improvement of the quality of land records and of the registration system would cover about 50,000 land titles in urban areas; (b) economic benefits would be realized gradually with benefits starting 1 year after issuing titles and full benefits being reached after 10 years of titling; (c) it is assumed that reconstruction of land records would produce a beneficial impact equivalent to 20 percent of the impact of land titling; and (d) land titling would increase urban housing rent by 18 percent, according to a study in Davao City by Jimenez (1982), and we assume an average rent of US$ 600 per year for all urban areas. 9. Other Assumptions: (a) improvements in land records and administration (reconstruction of titles) for the existing stock of titles would cost less than one- third of the cost of titling (US$10/title) and generate about 20% of the benefits that a new title would generate; and (b) titling impacts are based on a comparison of titled areas with similar but untitled areas. Sensitivity analysis / Switching values of critical items: 10. Sensitivity analysis has been carried out to determine the robustness of the estimates of economic benefits and returns given a number of assumptions. The sensitivity analyses and their results, are as follows: (a) A 50% decrease in the benefits of new land titles (due to less than expected impacts of the project on - 32 - access to credit and farm productivity) reduces the NPV to US$1.33 million and the ERR to 13%; (b) A 50% decrease in the benefits from reconstruction of existing land titles (due to less than expected improvement in the confidence in the land registration system) reduces NPV to US$ 2.2 million and ERR to 16%; and (c) A 50% increase in the investment costs (due to delays in project start-up and/or slow adoption of innovations in technology and adjudication)reduces NPV to US$4.68 million and ERR to 19%. 11. The results of sensitivity analysis indicate that the conclusions from the economic analysis are robust even when major changes in assumptionstake place. - 33 - 6. Based on the above assumptions on benefits and costs, the project is estimated to generate net benefits with a net present value (NPV) of US$5.79 million and an economic rate of return (ERR) of 24% (Table 1). These results indicate that the project is economically profitable for the country to invest in. Moreover, the benefits from the project are underestimated in so far as we have excluded the expected benefits associated with the BOO, other unquantifiable benefits and the benefits, which accrue to more than one sector. Main Assumptions: 7. Keydataand assumptions derivedfrom Thailand are, as follows: (a) land titling would increase agricultural crop yields by 6.6 percent (compared to untitled land), which would translate into an increase in net fann income of 10%; (b) average net farm income US$218 per hectare (ha), for a cropping pattern representing an average for Thailand; and (c) average cost per title would be US$36 (direct costs plus 50% of overhead costs) or US$39/ha. 8. Assumptions for the Philippines are, as follows: (a) under LAM project: (i) the prototype on titling would issue 50,000 new titles, in addition to 10,000 existing ones in a rural area (assumed to be I ha per parcel); and (ii) the prototype's support for improvement of the quality of land records and of the registration system would cover about 50,000 land titles in urban areas; (b) economic benefits would be realized gradually with benefits starting I year after issuing titles and full benefits being reached after 10 years of titling; (c) it is assumed that reconstruction of land records would produce a beneficial impact equivalent to 20 percent of the impact of land titling; and (d) land titling would increase urban housing rent by 18 percent, according to a study in Davao City by Jimenez (1982), and we assume an average rent of US$ 600 per year for all urban areas. 9. Other Assumptions: (a) improvements in land records and administration (reconstruction of titles) for the existing stock of titles would cost less than one- third of the cost of titling (US$10/title) and generate about 20% of the benefits that a new title would generate; and (b) titling impacts are based on a comparison of titled areas with similar but untitled areas. Sensitivity analysis / Switching values of critical items: 10. Sensitivity analysis has been carried out to determine the robustness of the estimates of economic benefits and returns given a number of assumptions. The sensitivity analyses and their results, are as follows: (a) A 50% decrease in the benefits of new land titles (due to less than expected impacts of the project on - 32 -  reducestheNPV to US$1.33millionand the ERR to 13%; accessto creditand farmproductivity) (b) A 50% decreasein the benefitsfrom reconstructionof existingland titles (due to less than expected improvement in the landregistration in the confidence system)reduces NPV to US$ 2.2 millionand ERRto 16%;and (c) A 50% increasein the investmentcosts (due to delays in project start-upand/or slow adoptionof in technology innovations reduces and adjudication) NPV to US$4.68millionandERR to 19%. 11. from the economicanalysisare The resultsof sensitivityanalysisindicatethat the conclusions robustevenwhenmajorchangesin assumptions take place. - 33-  Philippines: Land Administration and Management Project Table 1: Estimation of the ERR Unit = US Dollars No. Year Economic Benefits Economic Costs 11 Net Benefits Pilot I new Pilot 1 old Pilot 2 old Benefits from Benefits from Total Benefits 4 titles titles titles pilot 1/ Pilot 21 / Investment3/ Recurrent 2/ Total 1 2000 10,000 10,000 10,000 26,200 21,600 47,800 590000.0 216,000 725,400 (677,600) 2 2001 30,000 10,000 30,000 139,600 129,600 269,200 1080000.0 504,000 1,425,600 (1,156,400) 3 2002 50,000 10,000 50,000 340,200 324,000 664,200 1080000-0 792,000 1,684,800 (1,020,600) 4 2003 50,000 10,000 50,000 344,600 432,000 776,600 792,000 712,800 63,800 5 2004 50,000 10,000 50,000 567,000 540,000 1,107,000 792,000 712,800 394,200 6 2005 50,000 10,000 50,000 680,400 648,000 1,328,400 792,000 712,800 615,600 7 2006 50,000 10,000 50,000 793,800 756,000 1,549,800 792,000 712,800 837,000 8 2007 50,000 10,000 50,000 907,200 864,000 1,771,200 792,000 712,800 1,058,400 9 2008 50,000 10,000 50,000 1,020,600 972,000 1,992,600 792,000 712,800 1,279,800 10 2009 50,000 10,000 50,000 1,134,000 1,080,000 2,214,000 792,000 712,800 1,501,200 11 2010 50,000 10,000 50,000 1,134,000 1,080,000 2,214,000 792,000 712,800 1,501,200 12 2011 50,000 10,000 50,000 1,134,000 1,0B0,000 2,214,000 792,000 712,800 1,501,200 13 2012 50,000 10,000 50,000 1,134,000 1,080,000 2,214,000 792,000 712,800 1,501,200 14 2013 50,000 10,000 50,000 1,134,000 1,080,000 2,214,000 792,000 712,800 1,501,200 15 2014 50,000 10,000 50,000 1,134,000 1,080,000 2.214,000 792,000 712,800 1,501.200 16 2015 50,000 10,000 50,000 1,134,000 1,080,000 2,214,000 792,000 712,800 1,501,200 17 2016 50,000 10,000 50,000 1,134,000 1,080,000 2,214,000 792,000 712,800 1,501,200 18 2017 50,000 10,000 50,000 1,134,000 1,080,000 2,214,000 792,000 712,800 1,501,200 19 2018 50,000 10,000 50,000 1,134,000 1,080,000 2,214,000 792,000 712,800 1,501,200 20 2019 50,000 10,000 50,000 1,134.000 1,080,000 2,214,000 792,000 712,800 1,501,200 21 2020 50,000 10,000 50,000 1,134,000 1,080,000 2,214,000 792,000 712,800 1,501,200 22 2021 50,000 10,000 50,000 1,134.000 1.080,000 2,214,000 792,000 712,800 1.501,200 23 2022 50,000 10,000 50,000 1,134,000 1,080,000 2,214,000 792,000 712,800 1,501,200 24 2023 50,000 10,000 50,000 1,134,000 1,080,000 2,214,000 792,000 712,800 1,501,200 25 2024 50,000 10,000 50,000 1,134,000 1,080,000 2,214,000 792,000 712,800 1,501,200 26 2025 50,000 10,000 50,000 1,134,000 1,080,000 2,214,000 792,000 712,800 1,501,200 27 2026 50,000 10,000 50,000 1,134,000 1,080,000 2,214,000 792,000 712,800 1,501,200 28 2027 50,000 10,000 50,000 1,134,000 1,080,000 2,214,000 792,000 712,800 1,501,200 29 2028 50,000 10,000 50,000 1,134,000 1,080,000 2,214,000 792,000 712,800 1,501,200 30 2029 50,000 10,000 50,000 1,134,000 1,080,000 2,214,000 792,000 712,800 1,501,200 NPV = 5,796,562 ERR = 24% 1/ Standardconversionfactor of 0.9 applied to costs. 2/ Recurrent costs are taken as 20 percentof orginal investmentcosts 3/ Investmentcosts for new titles are based on an average cost of US$36per title, and US$10for reconstructingeach old title. 41 Benefits are based on 10% increase in net farm income (per ha) for rural parcels and 18% increase on rent (US$600/year) - 34 -  Annex5: FinancialSummary LandAdministration PHILIPPINES: Project and Management 1. The objectiveof the financialanalysiswouldbe to assesswhetherthe net financialbenefits expectedfrom the projectare attractiveenoughfor the targetedentitiesto participatein the project.In the proposedproject,key entitiesexpectedto participatein the project are the Government and the landholders. 2. Financial Benefits for and Participationby Landholders. In most countries, landholders usuallywant to obtain land titles in order to improveland ownershipsecurityand to use titles as collateralfor institutionalcredit. Both, land ownershipsecurityand accessto institutional credit would lead to increasedinvestment, land productivity and incomes. If landholders were to be chargedthe full cost of landtitling,the decisionby a landholder to participatein a landtitlingscheme would dependon whetherthe expectedfinancialreturns are higherthan the paymentfor a land title. Under the normalsituationwheretitles are issuedupon requestby landholders, who are madeto pay the fullcost of thetitle,the landholders whorequesta titlingservicedo so with the expectation that the financialreturnfrom acquiring the titlewouldbe higherthanthe costof the title. 3. Becauseof the desireto keep land titlingcosts low by undertakingland titling in large volumesvillageby village(the so-calledsystematic adjudication), the initialchargefor a land titlehas to be keptlow (lowerthan thecost of producinga title)to ensurehigh participation of landholders on a voluntarybasis. It shouldbe set at a level consistentwith the affordability of the poorest landholders. For example,in Thailand, wherethe landtitlingprogramhas been successful,landholders are charged less thanUS$5/title,compared to the averagecost of US$36/title.The difference betweenUS$36and US$5 is the subsidyfrom the Government. The Govermnent of Thailandrecoversthe subsidyby chargingRegistration fees on sub-sequentland registrations. This arrangementhas worked well in Thailand. It is expectedthat a similararrangement wouldbe introducedin the Philippines, althougha carefulstudyof the structureand levelsof land-related taxeswouldneedto be undertaken with a view to strikingthe correctbalancebetweenthe need to attractpeopleto registerland transactions on one hand and the needfor costrecoveryand government revenueon the other. 4. FinancialBenefitsfor and Participation by the Centraland Local Governments. It is expectedthat the project would generateincremental revenuefor the centraland local governments from the followingsources.Higherrevenueswouldaccruefrom: (i) registration fees collectedby the Registerof Deeds (RODs);(ii) real propertytax collectedby LGUs; and (iii) capital gains tax and stampduty collectedby the Bureauof InternalRevenue(BIR). The increasedrevenuewouldcomeas a resultof a largernumberof landtransactionsdue to: (i) an increasein the proportionof landthat is titled; (ii) improvedefficiencyin land administrationthat would make it easier and quicker for registration and (iii) a revivaland invigoration of landtransactions; of land marketsin ruraland urban areas. Higherrevenueswould also come as a result of higherland valuesdue to: (i) rising land and propertyprices reflectinga higherfuture net income streamcreatedby land titling benefits;and (ii) moreobjectiveand improved methodsof propertyvaluation, whichthe projectwouldpromote. Using Thailandto illustraterevenue flows, annual revenuesfrom land-relatedtaxes (excludingproperty taxes),there they rose nearly4 times within 10years of landtitlingfrom lessthan US$300millionin 1984to morethanUS$1billionin 1994. Theseannualrevenues were morethanten (10) timesgreater than the recurrentexpenditures of Thailand's Department of Lands,which stoodat US$87 millionin 1997. - 35 -  and Disbursement Annex6: Procurement Arrangements PHILIPPINES: and Management LandAdministration Project Procurement Procurement Methods (Table A): The Project Management Office (PMO) using the procurement facilities of the Department of Environment and Natural Resources (DENR) will carry out all procurement under the project Procurement of civil works and goods will be done using World Bank Guidelines:Procurement under IBRD Loans and IDA Credits, dated January 1995 and revised January and August 1996, and September 1997, and January 1999. Selectionof consultants will be done in accordance with the Guidelines: Selection and Employment of Consultants by World Bank Borrowers, dated January 1997 and revised September 1997,and January 1999. Some of the Philippines' NCB procedures, such as procedures of advertising, eligibility for participation of foreign contractors, bracketing, the practice of pre-qualification even for small contracts, and the use of bonds as bid and performance securities, are not acceptable to the Bank; these would be addressed through a side letter (Representations and Assurances on Procurement to the Loan Agreement) and the Operations Manual. Summary of the Assessment of the Agency Procurement Capacity. An assessment of the procurement capacity of the Department of Environment and Natural Resources was carried out in accordance with the Office Memorandum from the Manager of OCSPR, dated August 11, 1998. The assessment involved a review of the procurement policies and procedures adopted and implemented in the central office involving both foreign and locally-fundedprojects. The experience in the recently completed Bank-financed ENR-SECAL was also revisited. The assessment took largely into consideration the Bank's Country Procurement Assessment Report (CPAR) for the Philippines. The general findings of the DENR assessment conformed to those of CPAR. In general, the laws, rules and regulations relating to procurement being implemented by DENR adhere to principle of competition and are intended to promote fairness, economy, efficiency and transparency. However, there are certain rules and regulations, and procedures, which may not fully support fairness, economy, efficiency and transparency in procurement transactions. Bank-financed projects are not affected because of waivers in the Government laws, and rules and regulations, which also form part of the Loan Agreement. The capacity of DENR in relation to this project is average. The main risks concern the lack of formal, complete and efficient operating procedures, and the lack of qualified staff to cany out effectively the implementation of procurement for the project. To mitigate these risks, a series of actions will be undertaken under the project. Among others, an operating manual will be produced by negotiation to provide clear direction for streamlined bidding and contracting procedures, and provision of procurement function, including recruitment of Procurement Specialist, in the PMO to guide and manage the overall procurement process of the project. There is also a high percentage of contracts, which will be subject to prior review. Further strengthening of DENR's regular capability and capacity to execute procurement effectively will be pursued through the Bank's (World Bank Office Manila's) initiatives in providing regular training activities through the Asian Institute of Management (AIM). AIM will conduct a training needs assessment of a representative sample of implementing agencies (IAs), including DENR, so as to lay out a curricula, which will meet the various training needs. -36 -  a. Works. Worksunderthe project(US$2.04million)will includea new construction of the Office of Land Administrationin Leyte, renovation of Register of Deeds Office in Quezon City, aerial photography and orthomappingand cadastralsurveyingcontracts.The works contractsare expectedto be small (under US$300,000).Therefore,procurementof these works contractswill be done accordingto National CompetitiveBidding (NCB) proceduresacceptableto the Bank. A model bid documentsfor worksunderNCB procurement will be agreeduponwith the PMOfor use in the project. b. Goods. Goods and equipment (US$0.58 million) to be procured under the Institutional Development and PrototypeProjectscomponentsincludevehicles,computers,and otherofficeequipment, and furniture for the project managementoffice and the two prototype offices. There are no single contracts of goods expectedto be greater than US$200,000,therefore procurementunder ICB is not anticipated.Goods estimatedto be US$0.31millionwill be suitablypackagedinto lots and procuredusing NCB proceduresacceptableto the Bank. Contractsless than US$50,000equivalentand totalling about US$0.27millionconsistingof severalsmalland distinctof the shelf itemswould be procuredaccordingto national shoppingproceduresacceptable to the Bank. Shopping should be based on comparingprice quotations from at least three suppliers. Requests for quotationsshould indicate the descriptionand quantityof the goodsas well as the desireddeliverytime and place. c. ConsultantsServicesand Training.About US$4.80 million would be allottedto consultants servicesand training. The majorityof the contracts,estimatedat US$4.08 million, will be financedby AusAID, according to their own procurementguidelines.This would include provision of technical assistancein the two prototypesand preparationof subsequentphase, and training. Consultantservices, mostly policy studies, social assessment and individualconsultants,financed by the Bank, totalling US$0.72 million, shall be procured in accordance with the Bank's "Guidelines for Selection and Employment of Consultantsby WorldBank Borrowers" publishedin January 1997and revisedSeptember 1997,and January1999.Any contractaboveUS$200,000must be advertisedin the Development Business requestingan Expressionof Interestprior to developinga shortlist. Quality and Cost-BasedSelection(QCBS). The selectionof firms would be based on quality-and cost-basedselection(QCBS)proceduresusing the Bank's StandardRequestfor Proposal- Selectionof Consultantsdated July 1997,revisedApril 1998and July 1999.This would includevariouspolicystudies amountingto US$0.46million. Single Source Selection(SSS). Because of their involvementand knowledgeof local issues and communityneeds, and to promote participatoryapproach of the project, consultancyservicesless than $30,000 per contract (for a maximum ofUS$60,000for one NGO hired under this procedure)to be provided by accreditedNGOs, for very small assignmentsor assignmentsin remote areas, would be procured through single source selection. Contractingof NGOs to conduct social assessment, and community relationservices,throughsinglesourceselectionis estimatedto cost aboutUS$0.20million. IndividualConsultants.The PMOwouldneed consultants to performsome of the more complex,more specializedtasks of the project, such as studies on forest boundary demarcationand land tenure status, developmentof a monitoringand evaluationsystem, design and supervisionof 2 buildings,estimatedto cost US$0.06 million. These are individualconsultantswhose experience and qualificationsare the paramountrequirementsof the project. The selectionof individualconsultantswould be based on their forthe assignment qualifications (SectionV of the Guidelines). - 37 -  (d) Title Development Cost. About US$1.14 million would be allocated to cover the costs related to prototype activities in land titling, and land recording and information management. They would be procured according to normal commercial practice. (e) Incremental Operating Costs. About US$1.66 million would be allocated to cover the incremental operating costs related to managing the project. They would be procured according to normal commercial practice. Prior review thresholds (Table B): The World Bank will conduct prior review of procurement documents and actions in accordance with the procedures set forth in paragraph 2 of Appendix I to the Procurement Guidelines for: (i) the first works contract to be procured through NCB procedures, all works contracts financed by the Bank estimated to cost more than US$100,000 equivalent per contract; the first goods contract to be procured through NCB procedures, all goods contracts financed by the Bank estimated to cost more than US$100,000 equivalent per contract; (ii) all service contracts financed by the Bank that exceed US$100,000 per contract for firms, US$50,000 per contract for individuals, and contracts procured using single-source selection, and all terms of references (TORs) and cost estimates regardless of the value of the consultant's contract; and (iii) In addition, ex-post reviews in the ratio of one out of five contracts will be conducted regularly by the Bank's Office in Manila to identify and correct any irregularities. Financial Management Financial Management Assessment Summary In general, the financial management system of DENR is adequate to satisfy the minimum requirements of the Bank. There is adequate staffing as well as satisfactory competence of the staff. The internal control system is fairly adequate with documented policies and procedures. Budgets and disbursements are well controlled. The accounting system is on a manual basis but is fairly reliable and relatively timely except on its consolidation. The auditing is done by a constitutional body with acceptable auditing arrangements. The financial management system, however, has some weaknesses as follows: a) inadequate control over long outstanding cash advances/fund transfers; b) lack of periodic reconciliation of physical existence with recorded accountabilities on property and inventories; c) padded accounts payable; d) delayed reporting of consolidated accounts; and e) lack of report that link the financials with accomplishments. The system does not yet have the capacity to produce the Project Management Reports required by the Bank. To address these weaknesses, a strong PMO Financial Management Unit (PFMU) is to be organized to compliment the DENR financial management system in the implementation of the project. The PFMU shall be headed by a Financial Management Specialist. The PFMU shall be lodged with non-regulatory functions with good internal control. The PFMU shall be responsible for project cost accounting and for the preparation of project financial reports. A financial management manual, satisfactory to the Bank will be prepared to guide the financial operations of the project. A computerized financial management information system for the project shall be developed and installed at the PFMU. - 38 -  Action Plans 1. The Project's Financial Management Specialist, who shall head the PMO Financial Management Unit, shall be hired by loan negotiation. 2. The Financial Management Manual shall be prepared before the Project is presented for management approval. Financial Management and Disbursement Arrangements A. Disbursement Arrangements The proposed project will be disbursed over three years against eligible expenditure categories presented in Table C. Special Account - A Special Account (SA) in a commercial bank, acceptable to the Bank shall be opened and maintained in order to facilitate project disbursements. The SA, where the Bank's share of eligible expenditures under the project will be deposited, shall have the initial allocation of US$250,000 and a maximum amount of US$450,000. The initial allocations for the Special Account will be increased to the maximum amount, when the amount disbursed from the loan, totals US$2 million; this is subject to the Bank's prior approval. Applications to replenish the SA, supported by appropriate documentation, will be submitted monthly or when the amount withdrawn equals 20 percent of the initial deposit, whichever comes first. The Government of the Philippines (GOP) shall likewise open an account for its counterpart fund requirements in Pesos. Funds Flow - Funds from the Bank (loan proceeds) shall flow to the Special Account to be opened and maintained by the DENR Central Office for the PMO. GOP counterpart funds shall flow to a separate GOP bank account to be opened and maintained by the DENR Central Office for the PMO. The Bank's share on eligible expenditures shall either be paid or reimbursed from the Special Account. The GOP's share in the expenditures shall be paid from the GOP counterpart bank account. Expenditures, other than those to be paid in the Province of Leyte for Prototype 1, shall be paid by the PMO / DENR Central Office. Expenditures for Prototype 2 (Title Reconstruction and Records Management) shall be endorsed by the PIO to the PMO's PFMU for payment. The GOP shall front-load or release in advance to DENR Region VIII GOP funds to cover an estimated four-month expenditure requirement for implementing Project Prototype 1 (Land Titling and Administration) in the Province of Leyte. DENR Region VIII shall open and maintain a separate bank account where fund releases for Prototype 1 shall be deposited and disbursed. All expenditures for Prototype 1 shall be endorsed by the PIO to the Finance Division of DENR Region VIII for payment. The Finance Division of DENR Region VIII shall submit to the PMO, at least once a month, a request for reimbursements of the Bank's share in the eligible expenditures. The DENR Central Office/PMO shall reimburse DENR Region VIII for said expenditures for deposit to the DENR Region VIII's bank account for the project. Withdrawal of funds - For all contracts for civil works below US$300,000 equivalent, all contracts for goods below US$100,000 equivalent and all training and consultants' contracts below US$50,000 for individuals and US$100,000 equivalent for firms, withdrawal applications will be supported by Statement of Expenditures (SOE). All other withdrawals shall be through a Withdrawal Application (WA) supported by full documentation and signed contracts. - 39 -  Guide Document - The maintenance of SAs, preparation of SOEs and WAs and other disbursements matter shall be guided by the Bank's current Disbursement Handbook. B. Financial Management Arrangements Organization - The Finance and Management Service (FMS) of the DENR shall carry out the regular Government financial management functions in implementing the project at the DENR central level of fnancial operation. The FMS shall perform the functions of consolidation of the project's budget into DENR's budget, the cashiering and disbursing, accounting and financial reporting in accordance with the regular requirements of the Government. A Project Financial Management Unit (PFMU) shall be organized at the PMO to perform project financial planning, budgeting, financial analysis and monitoring, preparation of loan withdrawal applications and statement of expenditures (SOEs), and preparation of project financial management reports. The PFMU shall be headed by a Financial Management Specialist and staffed by a Financial Analyst and an Accountant. The PFMU shall report directly to the PMO Executive Director. The Finance Division (FD) of DENR Region VIII shall carry out the financial management functions in implementing the Prototype I sub-project in the Province of Leyte. The FD shall perform the functions of monitoring budget allotments and cash releases to the sub-project, cashiering and disbursing, accounting and financial reporting, including the preparation of Bank Reconciliation Statements and Statement of Expenditures (SOEs). A support staff for finance shall be provided to the PIO. The support staff shall prepare, process, and facilitate payment requests and shall assist the FD in preparing SOEs and requests for reimbursements. Internal Control - A Financial Management Manual containing the policies, guidelines, and procedures that are applicable in carrying out the financial management and operation of the project in the most effective and efficient manner shall be prepared. The Manual shall include policies, guidelines, and procedures to enhance internal control, particularly in the following areas: I. Cash advances, fund transfers and accounts payable - There shall be strict compliance to the requirements of the Commission on Audit (COA) requirements on cash advances, fund transfers, and accounts payable. These shall be monitored and controlled through the regular aging of cash advances, liquidations of fund transfers and accounts payable. Reports on the aging of cash advances, liquidations of funds transfers and, aging of accounts payable should be submitted to the Bank no later than two calendar weeks after each quarter. 2. Inventory and Fixed Assets - An annual physical count of inventories and assets under the project shall be required, together with a reconciliation of the records of the Accounting unit and the Property unit, both at the DENR Central Office/PMO and at the DENR Region VIII. Reports on the physical count and its reconciliation with the records of the Accounting and Property units should be submitted to the PMO no later than the end of the following quarter. Accounting and Reporting - Until the computerized database Financial Management Information System (FMIS) that is being developed for the DENR is completed and implemented, the manual accounting system, enhanced with the use of word processing and spreadsheet software, shall be used particularly to generate Project Management Reports (PMRs) and other financial management reports. - 40 -  after six monthsfrom effectiveness, The followingshall be the reportingarrangement: the Simplified ProjectManagement consideration Reports(SPMRs)shallbe prepared,and after one year of effectiveness, shall be made to shift to PMR-based on a quarterlybasis. The SPMRs shallconsist of the disbursements following: C. FinancialReports: of resourcesof the project. 1. BalanceSheet- A statement 2. Statementof Sources and Uses of Funds - A report on the receipt and uses of funds by project componentsand by activities. 3. Project Cash Forecast- A cash planningtool for withdrawalof funds as well as cash programming and scheduling. - An accountingof disbursements, 4. ProjectCash Withdrawals cash balancesand cash requirements. 5. SA Statement- A report on the SA balance, its movementand reconciliationwith Bank's and Borrower'srecords. D. ProgressReports: linkedto 1. Output MonitoringReport- A report by project activitieson the physical accomplishment financials. E. Procurement Reports Management 1. ProcurementProcessMonitoring Reports(Goods and Worksand Consultants'Services)- A reporton pipeline. the statusof the procurement 2. ProcurementContractExpendituresReport(Goods& Works,and Consultants'Services)- A reporton the statusof ongoingcontracts. Audit Arrangements - The balancesheet,sourcesand uses of funds,SA and SOE shallbe auditedby Auditorsacceptableto the Bank. The Auditor shall be requiredto issue an Audit Reportwith separate opinions on the reports audited. The Auditor shall also be requiredto submit a report on the project's financialmanagement systemwith recommendations for improvement. All of the foregoing reportsshallbe submittedon or before 6 monthsafter the end of the project's fiscalyear. The audit shallbe conductedin accordance with the Bank's AuditManual. -41 -  Procurement (Table methods A) TableA: ProjectCosts by Procurement Arrangements (US$ million equivalent) 1 1X~WRW NB N - '11 !F. Cost Total 1. Works 0.00 2.04 0.00 0.00 2.04 (0.00) (1.84) (0.00) (0.00) (1.84) 2. Goods 0.00 0.31 0.27 0.00 0.58 (0.00) (0.28) (0.24) (0.00) (0.52) 3. Services 0.00 0.00 0.72 4.08 4.80 (0.00) (0.00) (0.72) (0.00) (0.72) Cost 4. Titles Development 0.00 0.00 1.14 0.00 1.14 (0.00) (0.00) (0.68) (0.00) (0.68) 5. Front-endfee 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) 5. IncrementalOperating 0.00 0.00 1.66 0.00 1.66 Costs (0.00) (0.00) (1.00) (0.00) (1.00) Total 0.00 2.35 3.79 4.08 10.22 __________ _______________ (0.00) (2.12) (2.64) (0.00) (4.76) Figures in parenthesis are the amounts to be fmanced by the Bank Loan. All costs include contingencies 2' Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to managing the project. -42 -  Table Al: Consultant Selection Arrangements (optional) (US$ million equivalent) C*.suttsnt Method ~~~SleionmA ... ~~~~~~~~~~~~~~~~~~~~U ' .B. . - ..-. 04e_pndt QCBS QBS SFB LCS coQ Oter N.B.P. Totallost A. Firms 0.46 0.00 0.00 0.00 0.00 0.20 4.08 4.74 (0.46) (0.00) (0.00) (0.00) (0.00) (0.20) (0.00) (0.66) B. Individuals 0.00 0.00 0.00 0.00 0.00 0.06 0.00 0.06 (0.00) (0.00) (0.00) (0.00) (0.00) (0.06) (0o.0) (0.06) Total 0.46 0.00 0.00 0.00 0.00 0.26 4.08 4.80 (0.46) (0.00) (0.00) (0.00) (0.00) (0.26) (0.00) (0.72) 1\ Includingcontingencies Note: QCBS = Quality-and Cost-BasedSelection QBS = Quality-based Selection SFB = Selectionundera FixedBudget LCS = Least-CostSelection CQ = SelectionBasedon Consultants'Qualifications Other = Selectionof individualconsultants(per SectionV of ConsultantsGuidelines), CommercialPractices,etc. N.B.F.= Not Bank-financed are the amountsto be financedby the BankLoan. Figuresin parenthesis - 43 -  Prior reviewthresholds (TableB) Table B: Thresholdsfor Procurement Methodsand PriorReview 1. Works Less than $300,000 NCB All Contracts more than $100,000 (1.75) _____________________ _First NCB Contract (0.05) 2. Goods Less than $200,000 NCB All Contracts more than $100,000 (0.24) First NCB Contract (0.07) Less than $50,000 Shopping None 3. ServicesConsultants Servicesand Training Individual Less than $50,000 Qualifications Comparison None More than $50,000 Qualifications Comparison 0.05 Finns Less than $30,000 Single Source (NGOs) All (0.20) Less than $1 00,000 QCBS None More thianl $100,000 QCBS All (0.46) 4. Miscellaneous 5. Miscellaneous 6. Miscellaneous Total value of contracts subject to prior review: US$2.82 million OverallProcurementRiskAssessment Average Frequency of procurement supervision missions proposed: One every 6 months (includes special procurement supervision for post-review/audits) Thresholds generallydiffer by countryand project. ConsultOD 11.04"Reviewof Procurement Documentation" and contactthe RegionalProcurement Adviserfor guidance. - 44 - Disbursement C) (Table of loanproceeds Allocation Table C: Allocationof Loan Proceeds 1. Works 1.66 90 2. Goods 0.47 100%of foreignexpenditures, 100%of (ex-factorycosts)and local expenditures 90% of localexpendituresfor other items procured locally Servicesand Training 3. Consultants 0.65 100 4. IncrementalOperatingCost 0.90 65 5. TitlesDevelopmentCosts 0.61 65 Unallocated 0.45 Total ProjectCosts 4.74 Front-end fee 0.05 100 Total 4.79 Specialaccount: -45 -  Annex 7: ProjectProcessing Schedule PHILIPPINES: LandAdministrationand ManagementProject Poct$ct,edu0;fiSleSUAS\.f-Sat0 Planned f 00tX d?i ; fff SX070a**z000fai V0ISS000 ActualaV00fidiV0j)TUS Timetakento preparetheproject(months) FirstBankmission(identification) 05/12/99 08/13/99 Appraisal missiondeparture 02/13/2000 03/10/2000 Negotiations 04/15/2000 07/20/2000 PlannedDate of Effectiveness 11/30/2000 Preparedby: The goveniment of the Philippines under the leadership of the Interagency Coordinating Committee. Preparation assistance: Hatch (former BHP Engineering), fnanced by a consultant trust fund of US$195,000 from AusAID). Bankstaff who workedon the projectincluded: Name Speciality Wael Zakout Task Team Leader Frank Byamugisha Principal Operations Officer (Land Policy & Administration) Maria Theresa Quinones Participation Officer Mary Judd Anthropologist Ray Holmes Land Administration Specialist Richard Anson Rural Development Specialist Dominic Aumentado Procurement Officer Hung Kim Phung Financial Management/Disbursement Specialist Carlos Escudero Legal Counsel John Bruce Legal Counsel Ver Lara Financial Management Elisabeth Gelos Team Assistant Glenn Morgan Environmental Specialist Joseph Reyes Financial Management Specialist Brenda Phillips Program Assistant Patria Morente Team Assistant -46 -  Annex 8: Documents in the Project File* PHILIPPINES:Land Administration and ManagementProject A. Project Implementation Plan 1. PreparationReport 2. Governmentsubmissionto the ICC 3. SocialAssessmentTOR B. Bank Staff Assessments C. Other files electronic *Including -47 -  Annex 9: Statement of Loans and Credits PHILIPPINES:Land Administration and Management Project Difference between expected and actual Original Amount in USS Millions disbursements Project ID FY Borrower Purpose IBRD IDA Cancel. Undisb. Orig Frm Revd P037079 1997 Philippines AGRARIANREFORM COMM 50.00 0.00 0.00 28.86 4.76 0.00 P056524 1999 Philippines BANKIGSYSREF(FSAL 300.00 0.00 0.00 200.00 200.00 0.00 P004595 1998 Philippines COMMUNITY BASEDRESO 50.00 0.00 0.00 47.79 15.89 0.00 P039019 2000 Philippines FIRSTNATLROADS PROJECT IMPROV./MGNT. 150.00 0.00 0.00 148.50 2.17 0.00 P004589 1993 Philippines IRRIGOPERSUPP11 51.30 00. 0.00 7.69 7.69 2.48 P058842 2000 Philippines MINDANAO RURAL DEV 27.50 0.00 000 26.13 0.29 0.00 P004566 1998 Philippines PH-EARLYCHILDDEV. 19.00 000 0.00 17.22 5.89 0.00 P065113 2000 Philippines PH-SOCIALEXPENDITURE MANAGEMENT 100.00 0.00 0.00 83.02 13.98 0.00 P004602 1997 Philippines PROJECT 113.40 0.00 20.10 86.91 69.58 0.00 P004568 1993 Philippines PH-THIRDELEMENTARY EDUCATION 0.00 70.00 20.16 21.43 41.87 4.72 P004567 1995 Philippines PH-URBAN HEALTH & NUTRMON 18.00 0.00 4.30 6.44 7.14 0.00 P048588 1999 Philippines PH-WOMENS HEALTH & SAFEMOTHERHOOD 100.00 0.00 0.00 96.50 1.97 0.00 P039022 1999 Philippines PHIL-LGUFINANCE AND DEVELOPMENT PROJECT 23.30 0.00 0.00 20.83 3.93 0.00 P004611 1996 Philippines PHIL-LGUURBAN WATER& SANITATIONPROJ 57.00 0.00 9.00 46.61 52.27 7.55 P004592 1992 Philippines PHIL-MANILASEWERAGE PROJECT II 68.00 0.00 0.00 14.83 14.83 10.20 P004576 1998 Philippines PHIL-MUNICIPALDEVELOPMENT PROJECTIII 38.60 0.00 0.00 37.75 41.52 1.98 P004614 1996 Philippines PHIL-WATER DISTRICTS PROJECT DEVELOPMENT 150.00 0.00 0.00 15.22 -3.11 0.00 P057598 1999 Philippines RURAL FINANCE II 150.00 0.00 0.00 123.10 48.10 0.00 P040981 1997 Philippines RURAL FINANCE III 60.00 0.00 0.00 55.91 55.91 3.55 P051386 1998 Philippines SECOND SUBICBAY 10.00 0.00 0.00 2.49 1.16 0.00 P004571 1996 Philippines SZOPAD SOCIAL FUND 250.00 0.00 45.52 106.36 98.30 3.19 P004613 1997 Philippines TRANS GRID REINFORCE 58.00 000 7.27 38.36 3430 -1.68 WATERRESOURCES DEVE Total: 1844.10 70.00 106.35 1231.95 718.44 31.99 -48 -  PHILIPPINES STATEMENT OF IFC's Held and Disbursed Portfolio 3 1-Jul- 1999 In MillionsUS Dollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1980/82/89/90/94/95 AACT 0.00 1.70 0.00 0.00 0.00 1.70 0.00 0.00 1996 All Asia Growth 0.00 4.00 0.00 0.00 0.00 4.00 0.00 0.00 1996 All Asia Manager 0.00 0.04 0.00 0.00 0.00 0.04 0.00 0.00 1996 All Asia Venture 0.00 0.01 0.00 0.00 0.00 0.01 0.00 0.00 1990 Avantex Mill 5.44 0.00 0.00 0.00 5.44 0.00 0.00 0.00 BPI Philippines 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0/97/98 Bataan P/E 30.00 0.00 10.00 138.00 30.00 0.00 10.00 117.25 1997 Drysdale Food 15.00 0.00 0.00 10.00 9.60 0.00 0.00 6.40 1998 General Milling 0.00 0.65 0.00 0.00 0.00 0.65 0.00 0.00 1979/90 H&Q PV III 0.00 7.50 0.00 0.00 0.00 3.74 0.00 0.00 1998 H&QPV-I 0.00 0.61 0.00 0.00 0.00 0.61 0.00 0.00 1989 H&QPV-II 0.00 1.43 0.00 0.00 0.00 1.43 0.00 0.00 1993 MERALCO 3.79 0.00 0.00 0.00 3.79 0.00 0.00 0.00 1967/88 Mariwasa 11.92 0.00 3.00 0.00 11.92 0.00 3.00 0.00 1970/72/00 Mindanao Power 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1993/94 PLDT 1.79 0.00 0.00 2.39 1.79 0.00 0.00 2.39 1970/86/88/89 Pagbilao 42.00 10.00 0.00 6.20 42.00 10.00 0.00 6.20 1993 Pryce Gases 10.00 0.00 3.00 5.00 10.00 0.00 3.00 5.00 1998 Sual Power 30.00 17.50 0.00 196.00 30.00 17.50 0.00 196.00 1995 TRP 0.00 0.05 0.00 0.00 0.00 0.05 0.00 0.00 1999 UPPC 30.00 0.00 0.00 0.00 30.00 0.00 0.00 0.00 1999 Union Cement 2.10 5.63 0.00 1.50 2.10 5.63 0.00 1.50 1992 Walden Mgmt 0.00 0.05 0.00 0.00 0.00 0.05 0.00 0.00 1994 Walden Ventures 0.00 3.75 0.00 0.00 0.00 3.75 0.00 0.00 1994 Total Portfolio: 182.04 52.92 16.00 359.09 176.64 49.16 16.00 334.74 Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic 2000 Asian Hospital 14000.00 0.00 0.00 5000.00 1999 Cepalco 16000.00 6000.00 0.00 0.00 1998 Far East Bank 11 0.00 0.00 0.00 15000.00 2000 LTO Project 12000.00 8000.00 0.00 20000.00 1997 MAGSAYSAY LINES 8000.00 0.00 3000.00 26500.00 2000 MEP 0.00 0.00 0.00 0.00 1997 PT&T 30000.00 0.00 5000.00 30000.00 2000 PlantersBank 15000.00 9366.58 0.00 0.00 2000 ePlanters 0.00 0.00 250.00 0.00 Total Pending Commitment: 95000.00 23366.58 8250.00 96500.00 -49 -  Annex 10: Country at a Glance PHILIPPINES:Land Administration and Management Project East Lower. POVERTY and SOCIAL As5a& middl*. Philiaoineo Paciflc income Development diamond' 1999 Pooulation. mid-vear mimllions) 76.8 1.837 2.094 Life expectancy GNP oer caoits (Atlas method. US$) 1.020 1 000 1 200 GNP (Atlas method. USS b/i/ions) 78,0 1 833 2 513 Averave annual arowth. 1993-99 Ponulation f%) 2.2 1,2 1.1 I ahor forr(1 27 13 17 GNP Gross per primary Most recent estimate llatest vear available. 1993-99) capita PnrnllmAnt Pnvertv f( of oocultfont below nationat oovertvline) 37 Urban oooulation /% of total oooulatlon) 58 34 43 Life exoectancv at birth (vears) 69 69 69 Infant mortalitv (Dot 1.000 live birthrs) 32 35 33 Child malnutrition (% of chfldren under 5) 30 22 15 Access to safe water Access to imoroved water source (% of oooulation) 83 84 86 illiteracv (% of Dooulation aoe 15+) 5 15 16 G.rn,s nrimnqrv enrnllment f( of schooP-aoeoooub?aiont 117 119 114 Phiiippines Male 121 114 Lower-middle-income group Female . 121 116 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1979 1989 1998 1999 ___ Economic ratios' GOP (USS billions) 27.4 42.6 65 5 76.6 Gross domestic investment/GOP 33.2 21,8 20.2 18. Exoorts of ooods and services/GDP 21.6 28.5 51.9 51.2 Trade Gross domestic savinos/GDP 28.1 198 13.6 19.6 Gross national savirnos/GDP 29.7 21 1 16fi 25,11 Current account balance/GOP -5 5 -3.4 7.7 14.7 Domestic Interest oavments/GDP 18 3.9 3.0 2,5 Investment Total debt/GDP 48 4 67.2 73.0 68.2 Savings Tntxat debt sAryvicfi/xnnrts 24 ft 25 9 1a tt 13 Present value of debt/GDP -869.2 Present value of debt/exoorts 90.5 Indebtedness 1979-89 1989-99 1998 1999 1999-03 (averaoe annual orowthl - GDP 0.8 3,0 *0.8 3.2 43 PhHippines GNP oer caoita -2.0 1.3 .2.0 1.3 2.3 Lower-middie-income group Exoorts of ooods and services 4,1 7z8 -21.0 3.6 93 STRUCTURE of the ECONOMY 1979 1989 1998 1999 Growth of investment and GDP1%) (96 of GDP) Aoriculture 27.4 22.7 17.4 17.7 20 Industrv 37.0 34 9 31.3 30.3 ,_ Manufacturina 25.1 24.9 21.8 21.5 o Services 35.6 42 4 51 3 52.0 -10 94 a9s59 97 Private consumotion 62.5 70.6 73.1 67 4 -20 General aovernment consumDtion 9.4 9.5 13.2 12 9 -GD0 0 GDP Imoorts of ooods and services 26.6 30.3 58.5 50 2 (averaae annual crowthJ 1979-89 1989-99 1998 1999 Growth of exports and imports (%) Anricijlttire. n9 14 7 3 62 20 Industrv -1.2 3.0 -21 0-3 10 Manufacturina -0.3 27 -1.1 16 Services 2.6 3.8 3.5 41 o Private consumotion 1.9 3.9 6 9 0.4 -10 94 95 9 97 99 General oavernment consumDtion -0.2 3.5 -19 53 I Gross domestic investment -4.1 3.5 -16.3 -2 9 -20 Imoorts of noods and services 2.0 8 9 -14 7 -2 8 Exports -'e-Imports Gross national oroduct 0.6 3.7 0.2 3.5 Note: 1999 data are preliminary estimates. The diamonds show four kev indicators in the countrv tin bold) comoared with its income-orouo averaoe. If data are missino. the diamond will he inromnlete - 50-  Philippines PRICES and GOVERNMENT FINANCE Domestic prices 11979 1989 1998 1999 Inflation (%) (% change) 15 Consumer prices .. 12.2 9.8 6.686 Implicit GDP deflator 14.8 9.0 11.3 8.2 Government finance (% of GDP, includes current grants) o Current revenue .. 16.5 26.9 25.6 94 95 96 97 98 99 Current budget balance . 1.0 4.5 2.7 GDPdeflator CPI Overall surplus/deficit .. -2.1 -0.9 -2.7 TRADE (USS millions) 1979 1989 1998 1999 Export and import levels (USSmill.) Total exports (fob) .. 7,821 29,496 35,081 40,W0 Coconut oil 377 Sugar .. 89 .. .. 30,090 Manufactures .. 5,192 25,866 31,097 20.000 Total imports (cif) .. 10,419 31,848 36,276 Food .. 521 1,774 1.982 10,000 Fuel and energy .. 1,397 2,148 3,395 Capital goods .. 2,424 12,818 14,555 o 93 94 95 96 97 9 99 Exoort orice index (1995=f00) .. 88 Imnortonrir index (199g5100) 8R *Exports S imports Terms of trade (1995=100) .. 103 BALANCE of PAYMENTS fUSSmillions) 1979 1989 1998 1999 Current account balance to GDP(%) Exports of goods and services 5,678 10,674 43,413 47,886 15 Imports of goods and services 7,305 11.845 42,302 41,179 _ Resource balance .1,627 -1,171 1,111 6,707 Net income -223 -1,332 3.530 4,104 s Net current transfers 355 1,045 435 481 Current account balance -1,495 -1,458 5,076 11,292 I a a96 97 98 99 Financing items (net) 1,811 1,756 -3,717 -7,351 - Changes in net reserves -316 -300 -1,359 -3,941 1l Memo: Resprves incli,dinn nold tUSS millions) infiR4 14.9RR Conversion rate (DEC. localVUSSJ 7.4 21.7 40.9 39.1 EXTERNAL DEBT and RESOURCE FLOWS 1979 1989 1998 1999 fuss millions) Composition of 1998 debt (USS mill.) Total debt outstanding and disbursed 13,282 28,653 47,817 52,212 IBRD 731 3,492 4,311 4,040 A: 4,311 IDA 32 102 205 206 G: 7,185 : :205 Total debt service 1,584 3,244 5,166 6,026 c: 1,5f8 IBRO 86 536 654 642 D:3,456 IDA 0 2 4 4 Composition of net resource flows Official grants 58 380 184 Official creditors 427 874 -6 -38 12,237 Private creditors 703 -275 419 3,991 X _ E12 Foreign direct investment 7 563 1,713 F: 19,955 Portfolio equity 0 253 454 World Bank program Commitments 273 801 679 128 A - IBRD E - Bilateral Disbursements 213 465 301 163 B - IDA D - Othermultilateral F - Private Principal repayments 25 269 389 387 C - IMF G - Short-term Net flows 188 196 -88 -224 Interest payments 61 269 268 259 Net transfers 127 -73 -356 -483 Development Economics 95/0oo - 51 -  118 ° 120 ° 122 ° To Malolos Maril a 121 ° 30' Riv er 121 ° 10' no River o BULACAN PROVINCE r Batan ve Ri g u ray Pa Islands Ta UPPER P n-P Basco KALOOKAN PHILIPPINES Meycawayan hil CITY UPPER ipp QUEZON Wawa ine CITY Riv 11 LAND ADMINISTRATION AND er Montalban Nova Hw Noyaliches River Liches y. Reservoir Ma Obando 20 ° MANAGEMENT PROJECT 20 ° VALENZUELA no g Luz o n Strait Valenzuela Riv e r San Mateo RIZAL te o MALABON Ma PROVINCE 14 ° 40' NAVOTAS 14 ° 40' Malabon PROTOTYPE I - LEYTE PROVINCE LOWER Kalookan LOWER MARIKINA KALOOKAN Navotas QUEZON CITY Babuyan CITY Quezon CITY PROTOTYPE II - QUEZON CITY City Islands Marikina San Juan RIVERS MANILA del Monte SAN Babuyan Channel JUAN PROVINCE CAPITALS MANILA Antipolo S. Vicente Mandaluyong MANDA- PASIG REGION CAPITALS LUYONG CITY Cainta Aparri CITY Pasig Taytay PROVINCE BOUNDARIES Laoag City Dugo MAKATI Pasig R iv e 1 Pasay Makati CITY r REGION BOUNDARIES 6 Pateros 18 ° 12 18 ° Manila PATEROS Kabugao Piat Bay PASAY TAGUIG Taguig Angono CITY Bangued Tuguegarao Parañaque Vigan 5 CAR 14 ° 30' 14 ° 30' 9 Santiago Las Regions and Provinces Labuagan R. Tabuk Cavite City Piñas PARAÑAQUE 2 II Hwy. ico Laguna Ch Bontoc I Ilocandia I 10 Ilagan Bacoor Binangonan Pan-Philippine 1. Ilocos Norte 13 n R. 2. Ilocos Sur Lagawe Bay aya 3. La Union LAS Imus 4. Pangasinan 8 PIÑAS METROPOLITAN Cag San Fernando 3 7 CITY CAR Cordillera Administrative Region La Trinidad Cabarroguis 5. Abraa Bauang Bayombong MANILA 6. Apayao Baguio City 14 MUNICIPALITY L u z o n 15 7. Benguet General Trias Muntinglupa 8. Ifugao BOUNDARIES Dagupan Sta. Barbara 9. Kalinga MUNTINGLUPA PROVINCE BOUNDARIES 16 ° 10. Mountain Province Lingayen 22 16 ° San Pedro II Cagayan Valley C AV I T E PROVINCE San Jose Baler Biñan Ha 11. Batanes 4 LAGUNA lan San Antonio 12. Cagayan 18 er R iv gR Palayan City San Vicente 13. Isabela 20 R. Dasmarinas o . 14 ° 20' dr Aplaya 14 ° 20' 14. Nueva Vizcaya Tarlac Cabanatuan Pe 0 5 10 san 15. Quirino Carmona Santa Rosa III Sa n Iba Gapan PROV. Agu 21 KILOMETERS To San Pablo III Central Luzon Angeles 16. Bataan IX Western Mindanao 19 Polillo 55. Basilian San Fernando Islands 17. Bulacan 18. Nueva Ecija 56. Zamboanga del Norte 124 ° 126 ° 57. Zamboanga del Sur Olongapo Malolos 19. Pampanga 17 20. Tarlac 16 Balanga 21. Zambales X Northern Mindanao Moron Quezon City 58. Bukidnon MANILA Pasig NCR National Capital Region 59. Camiguin (See inset) 31 IV IV Southern Tagalog 60. 61. Misamis Occidental Misamis Oriental Trece Martires Los Banos Santa Cruz Jose Panganiban P h i l i p p i n e 22. Aurora 24 25 Daet 23. Batangas XI Southern Mindanao 34 24. Cavite 62. Davao del Norte Nasugbu 30 14 ° Lipa 14 ° 25. 26. Laguna Marinduque 63. 64. Davao del Sur Davao Oriental 23 Lucena City 35 Sabang S e a 27. Mindoro Occidental 65. Sarangani Batangas City Catanduanes 28. Mindoro Oriental 66. South Cotabato Lubang Naga 36 Catananuan 29. Palawan 67. Sultan Kudarat Islands Boac Pili Virac 30. Quezon Pasacao Tiwi 31. Rizal XII Central Mindanao Calapan 26 Tabaco 32. Romblon 68. Lanao del Norte Mamburao Marinduque 69. North Cotabato Ligao Legaspi City V Bicolandia IV Sibuy an 33 33. Albay XIII Caraga 28 Sorsogon 34. Camarines Norte 70. Agusan del Norte Mindoro Sea Burias 38 35. 36. Camarines Sur Catanduanes 71. Agusan del Sur 27 V 72. Surigao del Norte M Bongabon Bulen 37. Masbate 73. Surigao del Sur in Matnog 38. Sorsogon do Calintaan Romblon 52 Palapag ARMM Autonomous Region of Ticao ro Tablas Aroroy Muslim Mindanao Sibuyan Catarman VI Western Visayas St 32 Masbate 39. Aklan 74. Lanao del Sur Busuanga ra San 40. Antique 75. Maguindanao it Santa Teresa Milagros 37 Isidro 41. Capiz 76. Sulu Calbayog Oras 52. Guimaras 77. Tawi-Tawi Masbate 12 ° Samar 12 ° 43. Iloilo Semirara Taft 44. Negros Occidental Nabas 53 Islands Placer Culion Kalibo Visay an Catbalogan VIII VII Central Visayas Roxas City Sea Borongan 45. Bohol 41 Estancia Naval 49 50 46. Cebu Linapacah 39 Sigma Dao 47. Negros Oriental Carigara Dumalag 48. Siquijor Panay Villaba Tacloban City Cuyo Calinog Passi S. Remigio 51 VIII Eastern Visayas Barotac Palo Islands 40 Duenas Dingle Lawaan Ormoc Guiuan 49. Biliran Januay Cadiz Leyt e 50. Eastern Samar IV San Jose de Pototan 43 Barotac Nuevo Isabel Gu l f 51. Leyte Buenavista Jaro Zarraga Silay Abuyog 52. Northern Samar Jordan Bacolod City 53. Western Samar Iloilo City 42 Carmen Baybay San Cebu Silago 54. Southern Leyte Bago Sumag Carlos Lahug Danao La Carlota Canloan Leyte Dumaran V I Pontevedra Toledo Liloan V I I Mandaue 54 Lutopan Roxas Naga Cebu City Dinagat Maasin Liloan 44 Talisay Talibon n Kabaukalan San Buena- Ubay 10 ° 10 ° a Fernando 46 vista45 Siargao w Pintuyan Surigao la Negros Puerto Princesa City Tagbilaran City 72 a 29 Bais P Bohol Basay 47 Santander M i Sulu Sea Dumaguete ndanao Mambajao Siquijor City Siquijor 59 Aboaba Tandag 48 Camiguin 73 Sea Butuan XIII City 70 X Ag Brooks Point Dapitan usa Dipolog City Prosperidao n Oroquieta City 61 Agusan R. 71 60 Cagayan de Oro Hinatuan City Sindangan Bugsuk Liloy Iligan City Malaybalay IX Tangub 68 Marawi City 58 56 Valencia 8° 8° Pagadian 74 Maramag Balabac City XII Lumbatan Dangcagan 57 62 Malabang Kibawe Mindanao Tagum Cotabato City Kabacon Midsayap M A L AY S I A Cagayan Datu Piang X I I Davao City 64 Mati Sulu 69 Kidapawan Moro 75 Maganoy Isabella Zamboanga de Basilan Gulf Isulan Digos XI 100° 110° 120° N O R T H PA C I F I C 55 Koronodal Davao Basilan ARMM 67 OCEAN 63 Gulf 20° LAO 20° 66 P.D.R. South Alabel Sulu Gen. Santos China Philippine Jolo Sea 6° 65 6° THAILAND Manila Sea VIETNAM CAMBODIA PHILIPPINES 76 10° 10° Gulf of Thailand Area of Celebes Sea map Tawi-Tawi PALAU Sarangani BRUNEI 77 M A L AY S I A 0 100 200 300 KILOMETERS Bongao SINGAPORE 0° 0° This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown P.N.G. Java Sea on this map do not imply, on the part of The World Bank Group, any IBRD 30861 I N D O N E S I A INDIAN judgment on the legal status of any territory, or any endorsement or MAY 2000 Arafura Sea 10° E.TIMOR 10° acceptance of such boundaries. OCEAN Timor Sea 4 °120 ° 122 ° 126 ° 4° 100° 110° 120° 130° AUSTRALIA 140° 124 °