One nation united: Is Duterte’s federalism PHL’s path to growth? Benjo Laygo / BusinessMirror

One nation united: Is Duterte’s federalism PHL’s path to growth?

BusinessMirror Reporters VG. Cabuag, David Cagahastian, Manuel T. Cayon, Jovee Marie N. Dela Cruz, Cai U. Ordinario, Mary Grace C. Padin, Catherine N. Pillas, Joel R. San Juan and Butch Fernandez

MANILA and DAVAO CITY–HE’S excited. For Manuel, a confidential National Bureau of Investigation (NBI) staff, the excitement comes from the possibility of being regarded as an FBI agent.

That is, if the plan of President-elect Rodrigo R. Duterte to adopt federalism as a form of government comes into fruition.

“That could happen [changing the NBI into the Federal Bureau of Investigation], couldn’t it?” Manuel said in an interview with the BusinessMirror.

Beyond the possible changes in labels of government agencies, Federalism has ramifications in a country that has grown used to considering its citizens in all the more than 7,100 islands follow a socio-political homogeneity.

There are, however, people like former Chief Justice Reynato S. Puno, who told BusinessMirror he has been calling for a shift from presidential-unitary form of government to a parliamentary-federal system. Puno attributed the problems plaguing the country, such as graft and corruption, poverty, insurgency, weak judiciary and others, to the present system of government.

There’s also Lito Monico Lorenzana, graduate of the Harvard University-Kennedy School of Government, who said he spent 40 years of his life advocating for federalism in the Philippines.

“Let me tell you the first anomaly: When the Americans that last controlled us gave us the presidential form of government, it was actually a form of government even alien to them,” Lorenzana told the BusinessMirror in Davao City, where Duterte reigned as elected mayor before being voted into president on May 9.

However, Puno and Lorenzana may have the gravitas as they advocate for Federalism, the push to unify the islands of the Pearl of the Orient is complicated.

Complicated vs tedious

UP College of Law Professor Edgardo Carlo Vistan noted, for one, that the current judicial system is incompatible with a federal system such that major changes would be necessary.

He explained to the Businessmirror that in a federal system, the judicial system will most likely be more complicated, but pursuing court cases may not necessarily be more tedious.

He said that most likely, a state or local courts will be created and administered by the various component states in accordance with their own laws.

“The independence that each component state will likely be granted in making laws effective within their jurisdiction will affect not only the variety of the judicial structures and systems across states,” he said. “But, more important the state laws that each Filipino will have to deal with in going from one state to another.”

He added that there will also be a federal system of laws and courts that would be distinct from those of the component states, adding another layer of complication.

“So, in many instances, one has to deal with both federal and state laws,” he pointed out.

But, he noted that not all court matters should be brought before both the state and federal courts.

“Most cases would usually end within the state judicial system and should not be allowed to cross over to the federal judicial system,” he explained.

Vistan said if the state judicial system is simple and not as multi-layered as what we have under the unitary-presidential form of government, then the disposition of cases may be hastened.

He said it would be ideal to three levels of courts at the most.

“Efficiency, however, would ultimately be affected by how the state courts are administered, the procedures they adopt in handling and deciding cases, and how these courts would actually handle cases brought before them,” he added.

Judicial strength

PUNO believes the country’s judicial health can withstand the changes that would come with federalism. Puno indicated that, under the federal form of government the Judiciary can fully exercise its independence under the federal form of government as compared to the present system.

The Supreme Court, he said, “is one of its kind in the world” for having a vast power to strike down any laws and policies promulgated in grave abuse of discretion.

But, Puno noted, despite having such powers, independence of the Judiciary is “insufficiently insulated in our Constitution” considering that appointments in the Judiciary is tainted with politics.

“Undeniably, the judiciary has never been given its financial independence by the political branches of the government. Lack of financial resources is one reason the Judiciary cannot liquidate its backlogs of undecided cases,” Puno said.

Former University of the East Law Dean and constitutionalist Amado Valdez said the judicial branch is expected to function more efficiently under a federal form of government.

While the country may maintain the present setup of the Judiciary, a State High Court may be created for the speedy disposition of court cases.

“A decision of the State High Court may be appealed to the Supreme Court as court of last resort,” Valdez said. A State High Court, he added, would result in the abolition of the Court of Appeals.

“A State High Court in every federal state will surely expedite disposition of cases,” he added.

Charter change

THE momentum in the federalism tack could be expected to come from the Lower House.

On Wednesday returning Davao del Norte Rep. Pantaleon Alvarez said his leadership will prioritize a measure changing the 1987 Constitution. Alvarez is being eyed as speaker of the House of Representatives in the Duterte administration.

He said Charter change (Cha-cha) and the revival of the death penalty will be prioritized in the 17th Congress.

“Revising the present Constitution [will be the first legislative item in the 17th Congress],” Alvarez said in a news conference. “Ang gusto ng ating bagong pangulo ay palitan ito into federal form [of government].”

He added they will undertake the changing of the Charter through a constitutional convention (Con-con).

Other lawmakers earlier told the BusinessMirror they are “still carefully studying” the proposal to change the country’s form of government from republican to federal.

Party-list Rep. Neri J. Colmenares of Bayan Muna and Marikina Rep. Romero S. Quimbo said the next administration should be specific on his federal form of government proposal.

“We want to hear more specific proposal[s] from him,” Colmenares said.

Quimbo, meanwhile, said he’s “not at all familiar with the concept, particularly, the form [the] incoming president has in mind.”

The so-called Visayan bloc, led by Negros Occidental Rep. Alfredo D. Benitez, tackled the proposal on Wednesday.

The 46-member Visayan bloc has expressed support for Duterte’s legislative priorities, particularly on peace and order, poverty reduction, public health and education.

Revisiting initiatives

FROM all indications, the process of getting to a federal form of government would be a circuitous route. This is why PDP Laban party president Sen. Aquilino Pimentel III has started revisiting previous legislative initiatives he led with LP Senator and fellow Mindanaoan Teofisto D. Guingona III, to start selling federalism to their Congress colleagues and the electorate.

Asked about the prospects of a bill on federalism in the current Congress, Pimentel said this would have already been included in the agenda of the proposed Con-con embodied in a resolution he and Guingona had earlier submitted for congressional approval.

“Filed na ang resolution on Con-con early this year pa,” Pimentel told the BusinessMirror, even as he clarified the envisioned agenda of the Con-con is “not necessarily” focused only on incoming President Duterte’s favored shift to federalism.

Saying the proposed change in the form of government will require revision of the Constitution, he confirmed their consensus is to let the Con-con tackle the matter.

“The preferred mode to amend the Charter is Con-con, not the current or future Congress (sitting as a constituent assembly),” Pimentel said. “Specific body ang Con-con to study Charter change.”

The senator added that once it is convened, “the entire Constitution is open to change.”

Asked if the current Congress can still pass the Con-con resolution so that the assembly can convene soon, he lamented that their proposal was virtually “ignored” by the Senate leadership and didn’t even reached plenary consideration.

“Hindi pinansin ’yun [Pimentel-Guingona] Resolution, hence, no more time this Congress. Sa next one na. I have to be realistic about it.”

But Pimentel voiced confidence that with Palace backing this time around, the refiled Con-con proposal will have a much better chance under a new leadership.

“Next Congress it be would impossible to ignore such a reso,” Pimentel said.

Congress is key

ACCORDING to Lorenzana, Congress is the key to the Federalism push. He said the three administrations that attempted to push for a federal form failed for various reasons, including the suspicion to preserve and extend their tenure in Malacañang.

But the common denominator of it all was Congress, which showed its natural dislike for federalism due to the common demand of people in the three separate national consultations that they wanted an end to political dynasties.

The two attempts during the term of former Presidents Fidel V. Ramos and Joseph E. Estrada were derailed over suspicion of term extension, while that of Gloria Macapagal-Arroyo reached Congress. Proponents, led by Lorenzana and former University of the Philippines (UP) President Jose V. Abueva, had to ask the Supreme Court to allow the federalism issue take its due course through the constitutionally guaranteed People’s Initiative.

The hope was booted out by one vote in the High Tribunal.

Lorenzana said federalism “is not just an overnight thing.”

“We cannot just legislate it tomorrow and then we have federalism,” he said. “It is a journey, and observes several principles, including subsidiarity, structural and institutional reforms and constitutional change.”

In a news conference on Monday, Duterte projected it would take two years to shepherd the process of getting people to approve federalism in a referendum, to be called after the enabling legislation is passed by Congress.

Political capital

IT is a common and logical view that any push for Cha-cha should start from the President and that its success depends on his political will and the trust that the people have in him.

Prospero de Vera, vice president for Public Affairs of the UP, said Duterte should do so while the iron is hot.

“It’s the correct move to push for federalism immediately at the start of his [Duterte’s] term because it is at a time when he has the biggest political capital,” de Vera said.

He pointed out that previous presidents had made the mistake of pushing for any kind of charter change later in their tenure, which resulted only in fear and agitation among the people as to the real intentions behind the moves for Cha-cha.

An example of this distrust is the failure of the administration of President Aquino to enact its charter change initiative. The outgoing administration confined itself only to the economic provisions of the Constitution to lift certain limits imposed on foreign ownership, ostensibly to minimize the peoples distrust for any moves to change the Constitution.

Mr. Aquino did not push for federalism, except for his support for the peace process with the Muslim secessionists in Mindanao, wherein his administration signed an agreement with the Moro Islamic Liberation Front to establish a new autonomous entity, named the Bangsamoro Autonomous Region. The law, which would have effected such agreement, however, did not pass Congress.

Isabela Rep. Rodolfo T. Albano III told the BusinessMirror the bill is a good template for federalism.

“We’ve been waiting for the proposal,” Albano said. “The best template is the BBL [Bangsamoro basic law] if it was passed,” he said.

He believes federalism will empower provinces through more authority and having their own funds.

Roxas solution

AQUINO’S anointed successor, Liberal Party standard-bearer Manuel A. Roxas II, echoed Mr. Aquino’s position against federalism. Roxas also countered that Duterte’s campaign for Federalism would not solve the problem of poverty in the countryside.

Roxas’s proposed solution is to pour more resources into the provinces to solve poverty and, consequently achieve peace and order.

Arroyo also had the same misgivings regarding federalism. She argued the economic zones are not developed enough for the resulting federal states to stand by themselves without subsidies from the national government.

Ramos also tried to change the Constitution toward the end of his term, which was met with strong opposition because of his outright pitch for the lifting of term limits of public officials.

De Vera said these concerns regarding the details on the proposed federal system of government could pose obstacles to the Cha-cha movement, and should be addressed through the careful crafting of the proposed constitutional amendments, while taking into consideration the pecularities of the Philippines and its people to come up with a federal system that will work, instead of merely copying the different federal systems of other countries.

Resolving conflict

THE underlying agendum to resolve the conflict in Mindanao via federalism is a logical one, as conflicts are among the reasons why economic growth and development have been slow in coming to the country’s largest island-group.

One is Mamasapano, the site of a massacre of 44 policemen. Located in Maguindanao province, it is among the poorest regions in the Philippines.

Poverty incidence in this municipality was pegged at 73.7 percent, according to the 2012 Small Area Estimates released by the Philippine Statistics Authority (PSA). Maguindanao province in part of the Autonomous Region of Muslim Mindanao (ARMM), where the poverty incidence rate averaged 48.7 percent in 2012, according to the PSA.

The poorest municipality nationwide, Bacolod-Kalawi in Lanao del Sur with a poverty incidence rate of 84.8 percent in 2012, is also found in the ARMM region.

The National Economic and Development Authority (Neda) said armed conflicts and security problems in the area, as well as natural hazards that affect the agriculture sector, where most of the poor depend on for their livelihood, are among the reasons many places in Mindanao are poor.

“It can also be partly explained by the high dependence on agriculture and the underperformance of the agriculture sector as a whole,” Neda Director General Emmanuel F. Esguerra earlier said. “We should note that more than 70 percent of all workers in the region are employed in agriculture sector.”

Benefits seen

MINDANAO’S land area covers six regions—the Zamboanga Peninsula, Northern Mindanao, Davao Region, Soccsksargen (South Cotabato, Cotabato, Sultan Kudarat, Sarangani and General Santos City), Caraga (Region XIII) and the ARMM.

But the six regions in Mindanao only contributed 14.439 percent to the country’s total GDP of P7.16 trillion in 2014, based on constant prices. According to a BusinessMirror computation based on PSA’s 2014 constant GDP data in the 2015 statistical yearbook, all 6 regions contributed some P1.034 trillion to GDP that year.

Based on the 2014 Gross Region Domestic Product (GRDP), only Davao Region posted a higher rate of economic performance at 9.4 percent from its GRDP of 4.1 percent in 2012.

This is the reason only Davao, the economic star among regions nationwide in 2014, was the only one that posted a poverty rate of 25 percent, better than the national average of 25.2 percent in the full year of 2012.

Economists believe federalism could be one of the most effective ways to spur growth and development in places like Mindanao.

University of Asia and the Pacific Vice Dean Cid Terosa said under a federalist form of government, small regions and municipalities will have a say in their development. Terosa said this will result in tailor-fit solutions that are designed to address area-specific economic and policy problems needed by the locale.

“The burden on the national government to alleviate poverty and unemployment will now be diffused to local regions or areas. The NCR won’t be the focus of programs and projects that promote or facilitate growth,” Terosa said.

“Federalism can, thus, reduce poverty and unemployment rates with an efficient, effective and enlightened federal government,” he added. “Initially, federalism will be administratively difficult to carry out since many regions or areas in the Philippines are prepared for it.”

Shrinking agencies

FOR pundit Bienvenido Oplas, Federalism would mean there would be shrinking of many national government agencies, including the Department of Agriculture (DA).

“If you have a strong and meaningful federalism, you have to shrink many national agencies, including the DA, in favor of the federal states or regions,” he said.

Meganomics Specialists International Inc. President Pablito M. Villegas explained this would mean the country will have a national agriculture agency, while each federal state or region would also have its own state-level or decentralized agency on agriculture.

Villegas said the national agriculture agency would focus more on policy making and strengthening of international trade.

He added the decentralized DA would focus on formulating strategic plans and programs in line with the national agricultural policy but will prioritize commodities and enterprises within the state. Doing so will give these federal agencies a comparative and competitive advantage based on the factory and resource endowments in the area and generate more employment for the population.

As the national and decentralized agencies would be able to focus on their respective functions, Villegas claimed federalism would be “advantageous” for the agriculture sector.

Ateneo Center for Economic Research and Development Director Leonardo A. Lanzona Jr., for his part, said this decentralization would also mean the agriculture structure would be more “responsive” to the needs of the farmers in their respective communities.

Oplas offered, as an example, the weather-based decision-making that farmers do in every region. He said, as rainfall patterns in various areas tend to be different even during same periods, the planning of crops to plant should be a responsibility given to the regions.

He added thatfederalism would also promote competition among the states or regions, as they would be given more leeway to decide on trade and fiscal policies.

“For example, if I am Masbate, I want to encourage agriculture processing here,” he said. “So I will offer them different types of fiscal or tax incentives and tell [these companies] come here instead of Negros or Cebu.”

“Or for example, if I am Manila, and I need produce like onion, garlic, etc., these islands would have to fight among themselves to get the market share in Manila,” Oplas added.

Infra possibilities

POLITICAL analyst Ramon C. Casiple said there are two ways by which the state can implement infrastructure development under a federal form of government.

“First is that a federal government has to get a local state to agree to a federal project,” said Casiple, who is also the executive director of the Philippine Institute for Political and Electoral Reforms.

Deals under the Public-Private Partnership (PPP) Program of the national government fall into this category. For example, the P19-billion Davao Sasa Wharf Modernization deal will have to be approved by the state of Southern Mindanao before being auctioned off.

This might prove to be quite problematic, especially since the local state will be given more power to implement infrastructure development deals on its own.

“The second one is that local states can undertake their own infrastructure-development projects and get outside financing on its own,” Casiple said.

Currently, local governments implement such projects also under the PPP scheme.

PPP Center Executive Director Andre C. Palacios noted, however, that infrastructure-development should not be stunted by any form of government.

“Infrastructure is urgently needed in the Philippines, whatever the form of government. If federal government means greater local autonomy and greater responsiveness to local needs, then we can expect more public spending for public infrastructure,” he said.

Trade and commerce

UNDER the federalist system in the United States, when it comes to the area of trade and commerce, the general guiding provision is found in its Constitution, the so-called Commerce Clause.

One interpretation of the said clause dictates that Congress has power to regulate interstate commerce, commerce with foreign nations and commerce with Indian tribes. However, the scope and jurisdiction of this power, and Congress’s sharing of authority with state legislature is still highly debated. State legislatures often contest that the clause impedes their power to rule on economic activities within their jurisdiction.

In the Philippine setup, however, the regulation of trade and commerce in a federal government would largely depend on a strong Executive arm, notes a trade and investment lawyer.

“Federalist states in the US started off with strong, individual states,” Kristine F. Alcantara, managing partner of trade and investment firm AAA Law, said. “In Canada there’s the same, equally efficient system. This can possibly work with the Philippines if you have functioning local government units [LGUs].”

While the question of division of power in regulating trade and commerce is difficult to answer, Alcantara remarked that a degree of autonomy, at least in determining the direction of a region’s economy, will be an advantage for self-determined growth.

“If federal states have more incentive to determine their own economy, to contract with private parties and incentive to grow on their own, they’ll have more incentive to grow,” Alcantara said.

Banking and Finance

FOR Bank of the Philippine Islands (BPI) economist Nicholas Antonio Mapa, proper backbone is still needed in the country before rushing to shift to a federal system of government, as it could post more harm than good.

“Federalism may offer some allure to the regions as it would seem to be a way to gain equity with long-standing imperial Manila,” Mapa said. “But changes to the economic landscape do not happen overnight, and in some cases, may not happen at all.”

The economist further elaborated that in federalism, states or regions that play host to more progressive cities or business districts have very different capabilities than the less-developed areas. As such, switching to federalism, with the current gap between urbanized and rural areas, may widen the divide between the two.

“National budgets have been devolved in theory through the LGU code and, perhaps, the reason behind the economic disparity is not as closely linked to our current form of government as most would think,” Mapa said. “My fear is that with the current disparity, more developed regions would be able to offer much better business perks and tax cuts that less-developed areas would be hard-pressed to match. This would simply perpetuate the situation.”

As such, Mapa said more projects still need to be carried out in lesser-developed regions in the country to level the playing field.

“Connectivity is key in all forms, through transport and communications. The current administration has supposedly gone on an infrastructure binge by building more roads than previous administrations combined,” he said. “From this we can see how far we need to go before we get our infrastructure up to speed with the region.”

Worries, concerns

THE push to a federal form of government has also prompted concerns from other sectors.

Lanzona expressed concern that the capacity and resources of local communities might not be enough to support agricultural production, so aid from the national government might still be needed.

For former PPP Center Executive Director Cosette V. Canilao, implementing infrastructure projects under a federal government would prove to be not so beneficial to provinces with low incomes.

“Among the local governments or provinces, there are only a few that can sustain infrastructure development under a federal system, like Manila, Cebu and Davao,” she said.

Canilao is worried on how low-income provinces can implement their own PPPs, since there are two ways by which private sector can be repaid under the scheme.

“How are they going to make their own, PPPs—especially social infrastructure? There are two means by which private sector can benefit from PPPs, first is through user charges and the other being availability payments,” she explained. Examples of user charges are tariffs—payments collected when a certain facility is used. Toll roads, railway systems and airports, for instance, are other examples. Availability payments are subsidies given to private-sector partners for projects that are less commercially viable.

“There’s a difference between financing the project, and the private proponent getting repaid on their investments,” Canilao said. “So, I think the provinces with high income are the only ones that can sustain infrastructure development under a federal system.”

Studious market

FOR CEOs like Januario Jesus Gregorio B. Atencio III and Andoni F. Aboitiz, the federalism tack should be carefully studied.

Atencio, 8990 Holdings Inc. president and CEO, said the federalism proposal should be carefully studied by the Executive and the Legislative branches with wide consultations as possible because of its implications to business and society.

“The Local Government Code had already devolved a lot significant functions to the LGU. I doubt if there’s anything more that federalism can devolve at this stage. Besides, we can always devolve more functions to LGUs, which I think is the safer route,” Atencio said.

“Federalism might create city-state fiefdom and encourage more dynasties,” he said.

For Aboitiz, president and CEO of Aboitiz Land Inc., a property developer mainly in Cebu, said he will have look first the federalism proposal of Duterte in order for him to decide if it is good or not.

“There are many types of federalism. Which one they will possibly adopt we still don’t know at this point. We have to look at it first to determine if it is good for us a company and for the Philippines,” Aboitiz said.

Echoes of colonialism

ACCORDING to Lorenzana, the country must grapple with several problems that are echoes of its subservience from American colonial rule.

One of the problems, he said, is the “subservience to the national government in all aspects.”

The next problem would be to have adaptable horizontal and vertical structures, where the national government devolves the functions to LGUs.

“[But] after several decades of political patronage, would Congress just give in their political influence to the locales who would be suspected also of building their own political influence?” he said.

He added that the structure of Congress, especially the Senate, is also an anomaly that federalism should be able to address.

“In the US’s presidential-federal form of government, when one elects the president, it carries with it the president’s running mate, unlike in the Philippines where each is voted separately, where we have the perennial bickering and separation with each administration,” he said.

And the senators are elected by each state, with each state sending two to the US Congress. “In the Philippines, the senators are elected universally, where eventually they think they are as powerful as the president,” Lorenzana said.

In 1935 the US colonizers formed only two political parties, the Liberal and Nacionalista, “which are basically the same faces of the same coin, and ruled by the same oligarchy.”

“The concept of governance here and the participation of the local governments failed because of the strong centralized power, that eventually give rise to political dynasties,” he said. “These are the anomalies of the Philippine type of democracy.”



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