MANILA- The National Economic and Development Authority (NEDA) suggested the crafting of a roadmap, aligned with the Philippine Development Plan (PDP) 2017–2022, for the Philippines’ possible transition to a federal type of government.
Speaking at the Third Annual Public Policy Conference of state think tank Philippine Institute for Development Studies (PIDS) on Tuesday, NEDA Undersecretary Rosemarie Edillon highlighted some of the challenges that may arise should the Philippines pursue federalism.
“That is what I hope we would have – a roadmap to prepare us for this change, to ensure that we get the most benefits, to minimize the cost of transition. And always, not losing sight of what we want to achieve – a matatag, maginhawa at panatag na buhay para sa lahat,” she said.
She noted the PDP, the Philippines’ blueprint for development, creates the foundation for inclusive growth, a high-trust and resilient society and a globally competitive knowledge economy.
Federalism, on the other hand, is a proposed type of government characterized by “semi-autonomous states with a central government” and comprises “multiple interacting governing units, each with its own preferences and decisions to make.”
Edillon said that the roadmap should prepare the country for a number of challenges once federalism is in place, starting with challenges “at the roots.”
“Is it really possible to make it work given our peace and security problems? Our vulnerability to disasters? For the former, we would need a strong and nimble military able to move swiftly from one state to another,” she said.
She added the Philippines must be able to pool resources to help a state or sub-state in case of an emergency situation.
On revenue collection, Edillon said a bigger concern is the transfer pricing or the setting of a price for goods and services sold between and among entities under an enterprise.
“Will federalism also result in a ‘race to the bottom’ where states, wanting to attract the most investments, will offer the sweetest package of incentives? Or, the opposite: will states, in a bid to quickly beef up their fiscal resources, impose more regulations, thus increasing the cost of doing business?” she said.
Another concern would be human capital at the highly technical level of governance for deployment to different states, she said.
But despite the challenges, Edillon said federalism is a “long-term endeavor requiring a sustained commitment.”
She compared these questions on federalism with the Philippines’ initial skepticism toward the Association of Southeast Asian Nations Free Trade Area (AFTA), the trade bloc agreement among members of the Asean of which the Philippines is a founding member.
“But just like the ASEAN macro-model study that showed that the benefits of the Philippines from the AFTA was close to nil, we proceeded because we knew, deep down, that openness to trade will eventually turn for the good for us,” Edillon said.