OpinYon Back-Page Stories: Federalism is Not What the Doctor Ordered

Proposed federal regions of the Philippines. Graphic courtesy of Rappler.com

By James Veloso

FEDERALISM might not be what the doctor has ordered for the country.

While many prominent business leaders are amenable to the proposed charter change that would pave the way for the shift of our form of government from unitary presidential to federalism, still some of them are unsure if the shift is indeed necessary.

In a recent interview Philippine Chamber of Commerce and Industry (PCCI) honorary chairman Sergio Ortiz-Luis Jr. said that while federalism is a novel concept that maybe worth exploring, it would be better if the Duterte administration should instead revisit the Local Government Code of 1991 and make necessary amendment on its provisions (without necessary changing the form of government).

“Many in the business community would like to see the powers devolved to the local government units [LGUs] to be defined clearly and streamlined, as businesses are also taxed by local governments,” Ortiz-Luis was quoted as saying.

“Rather than graduating from local government devolution to federalism, let’s first revisit the devolution of powers to local governments and fix it,” he added.

Aside from Ortiz-Luis many other political analysts and observers have warned that federalism might not solve, but only worsen, the already-entrenched problem of political dynasties in the Philippines.

The other problem those opposing federalism see is the huge possibility of the overlap of functions and powers between national and local governments.


Former Senator Miriam Defensor Santiago was among the first to express reservations on federalism noting that it might actually reinforce and perpetuate political dynasties.

She noted that the Philippines is the “world’s political dynasty capital,” with 178 active political families as of 2013.

She claims that these political dynasties have managed to infiltrate all sectors of national and local government, from the executive and legislative branch down to the barangay levels even if a provision against the same is already embedded in the 1987 Constitution.

Aside from Santiago, former Comelec Chairman Christian Monsod who is one of the framers of the 1987 Constitution is also questioning the wisdom of shifting to federalism.

Monsod instead favors amending the Local Government Code as a means to the regional development promised by federalism explaining that the Constitution allows provinces to convene voluntarily and autonomously poll their resources and push for change in the Local Government Code on the equitable division of the internal revenue allotment (IRA).


He added, the local government code also allows the provinces to borrow funds from the national government, much like the promise of federal states being able to raise their own funds.

The Bangsamoro Basic Law, he cited, would allow the state to keep 70% of its resources, and Monsod said the Constitution allows for the provinces to petition to the Congress to create a law that would afford them the same autonomy.

"I think we can change the IRA very quickly by just changing the Local Government Code and you don’t have to wait two years and to put a federal system in place that will have a long transition period anyway," he said.

"The heart of 1987 Constitution is social justice and human development. So if you're talking about a revolution, and I think that is what people wanted in voting for President Duterte, the revolution the poor want is social justice not federalism," he said.


While on the campaign trail, Duterte said "nothing will appease the Muslims, the Moro people if we do not give them the BBL (Bangsamoro Basic Law)."

But recently, House Speaker Pantaleon Alvarez has said they are putting the passage of BBL at the back burner and will prioritize the shift to federalism instead.

However, critics have charged that the decision by House leadership to amend the charter through the much ballyhooed Constitutional Assembly (Con-Ass) instead of the more popular and acceptable Constitutional Convention (Con-Con) would surely result to a flawed and defective federal government.

Observers pointed out that Con–Ass would require a vote from members of Congress and since 70 percent of the members of the House come from dynastic political clans, certainly they wouldn’t enact a law that would run against their own interests.


Then there’s the tricky problem of how the powers will be shared between the national and local governments.

Since in federalism, the national government has no say on how each federal state develops it will do so in an uncoordinated fashion and at varying paces. The result: an uneven distribution of wealth among federal states.

That, in return, could strengthen the powers that political clans hold over their constituencies, analysts have noted.

Empirical studies conducted by the Asian Institute of Management’s Policy Center in 2012 and 2013 showed a strong correlation between high poverty incidence and the proliferation of political dynasties in those areas.

Studies have also shown that only Central Luzon, Southern Luzon and NCR have gross regional products (GRP) large enough to be self-sufficient.

In short, eight out of the eleven regions that will be created under the federal system might spiral deeper into poverty due to their inability to survive without subsidies from Manila.

“That’s exactly what happened in Latin American countries which attempted federalism, Ortiz-Luis added.

“Latin American (sic) experimented with federalism and countries there had a runaway inflation, because there is no central authority, no military authority, they had various monetary policies and economic strategies”, he continued.


No better example could be given than in Mexico, which currently operates under a federal system of government.

For years now, Mexico has been suffering under a sluggish economy, a weak political system dominated by the ruling elite, and the escalating problem of illegal drugs that had sparked a bloody “war on drugs”, starting in 2006.

The reason being the Mexican federal government lacks the tools to hold state governments accountable.

One such example is in the issue of the federal transfers of funds, where federal funds are dispersed to the 31 states and Mexico City in proportion to their population, local revenue and poverty rate.

However, the state governments – not the federal government – supervise the federal funds (reminiscent of the “pork barrel” system in the Philippines where the congressmen, not the state, has control of the funds). The result: widespread corruption in the state and municipal levels.


That might not be impossible to happen in the Philippines, as legislators under House Speaker Pantaleon Alvarez had effectively formed a “supermajority” under Duterte’s PDP-Laban Party.

One way to avoid this, Ortiz-Luis pointed out is to strengthen the local governments and amending the Local Government Code of 1991.

Not only will such reforms clearly define the powers of local and federal governments, it would also streamline business transactions and eliminate the problems of double taxation and redundancies in securing permits – a perennial problem even in the current centralist government.

“As it is, there is disparity in the implementation of the Local Government Code. If we shift to a federal form of government, laws must be clear. It will be difficult to grow businesses if we do not clearly delineate the powers of the local and central governments,” Ortiz-Luis argued.


He instead recommended reforming the LGU law describing it as pivotal in bridging the disparity in economic development in the regions – one vital factor in the proliferation of political dynasties and the rise of ethnocentric sentiments which might lead to secessionist tendencies.

As in most cases, the inefficiency of our government is a product of corruption. The system is not the problem – it’s the corrupt people in the system that is the problem.

So don’t change the system. Eliminate corrupt people in the government and let’s see how things will get better.


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Wednesday, 21 February 2018
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