David Cagahastian

August 23, 2016

The emerging regions in the proposed federal system of government would have to
be subsidized at the beginning to bring economic development in the countryside
en route to truly autonomous regions in the Philippines, experts said yesterday.
At the forum on federalism organized by the BusinessMirror, speakers and partici
pants pointed out the growing inequalities in the economic development and incom
es of the various regions in the country due to the long-time preoccupation of t
he government in developing Metro Manila.
The lagging behind of the countryside in economic development has provided as a
disincentive for foreign direct investments (FDI), which the move towards federa
lism seeks to remedy.

Federalism to attract FDIs

During the discussions regarding the proposed shift to a federal system of gover
nment, former Finance Secretary Margarito Teves pointed out that there might be
a need to provide subsidies for the poorer regions either from the national gove
rnment or from the richer regions at the start of the shift to a federal form of
government.
He said these subsidies are needed to jumpstart the development in the previousl
y neglected regions of the Philippines.
"We might need to give more revenues to the poorer regions, because otherwise, w
e would have the same situation wherein the poor regions will remain poor," Teve
s told BusinessMirror at the sidelines of the forum.
"But it will result eventually in more investments because if I'm a businessman,
I don't have to be confined to the richer regions to make investments because I
might as well try to see if I can make more money in the other regions than I e
ver thought before," he said.

Equalization payments
One of the speakers for the forum, former Senate President Aquilino Pimentel Jr.
who is considered as the father of the Local Government Code, proposed that of
a "equalization payments" made to the poorer regions to allow these regions to c
atch up in infrastructure spending.
"There should be an equalization fund, raised from the mandated contributions fr
om the federal states. The equalization fund would be the share of the funding w
hich may be needed by some federal states who might be lagging behind in develop
ment," Pimentel said in his presentation.
Pimentel is proposing the creating of 11 federal states in the Philippines, with
Metro Manila becoming only a federal administrative region.
Pimentel, who has been advocating the shift to federalism since the 1980s, said
the amendments to the Constitution should be enacted to truly stimulate developm
ent in the countryside as the Local Government Code only devolved powers from th
e Department of Agriculture, the Department of Health and the Department of Soci
al Welfare and Development. He said that although these functions have already b
een devolved, there are still many instances wherein the national government ass
erts jurisdiction over these functions, especially during times of natural calam
ities.
"There is talk to merely amend the Local Government Code--to expand the powers t
o the other departments not covered by the original scope. But in that case, the
central government can still do the same and arrogate the powers which have alr
eady been devolved. We have to move forward in addressing this by changing the f
undamental law," Pimentel told the forum.

French model
The various speakers at the forum included representatives of foreign chambers a
nd of foreign governments. For the French model of government, French embassy ch
arge d'affaires Laurent Le Godec gave an overview of the French model of governm
ent which President Duterte had earlier referred to as the model which the Phili
ppines should follow.
Le Godec clarified that the French government is not a federal form of governmen
t, but is a unitary form of parliament which has a president and which form feat
ures some of the advantages of a federal form of government.
"We're honored to be referred to by your president as the model which should be
emulated. But we would like to clarify that we are not a federal country at all,
and we made the choice in the French Revolution that we will be a unitary count
ry to unify the nation and destroy the old feudal powers," Le Godec said.
But he suggested that the French system of government in allowing the local gove
rnments to flourish and develop could be a good example for the Philippines to f
ollow since France at one point in time also had to contend with the inequality
in the economic development of Paris and the countryside.
He said there are many measures which France adopted to boost local economic dev
elopment and strengthen the powers of the local governments, such as creating ad
ministrative units which advice and control the way the local governments work,
and the establishment of regional courts of audit which audit how the local gove
rnments spend their budget.
"The main objective is to boost local economic development and strengthen the po
wers of the local government. But we did not feel the need to shift to federalis
m," he said. (David Cagahastian)