Monday, January 21, 2019

Pitching federalism

MULTINATIONAL companies in the Philippines may find it more advantageous to do business here should the country shift to a federal form of government in the next six years, said a university professor.

Speaking to a crowd of local and foreign investors during the Joint Foreign Chamber networking night last Friday in Cebu City, Elfren S. Cruz, an MBA professor at the De La Salle University, said he believes that federalism presents multinational companies with a more familiar business environment.

The top foreign investors in the country like the United States, Canada, and Australia, among others, have adopted a federal form of government in their countries.

“Multinational companies will have no problem because their countries are already federal. Maybe the Filipino businessmen will have to adjust,” Cruz said, emphasizing the further devolution of powers in a federal government, which would mean that business owners had better improve their regional networks.

He advised that companies not only concentrate on a national strategy but also prepare regional business plans. This may also require setting up regional subsidiaries, offices or networks.

“(With federalism,) for example, infrastructure in the region will have to be bid out and decided in the region, not anymore in Metro Manila… and businessmen will have to remember that kasi sanay na sila sa connection nila sa (they are used to dealing with their connections in) Manila,” he told reporters.

Among the major concerns of the business sector, the professor said, is the economic viability of some regions once federalism is realized. For every region, according to Cruz, there has to be one or two developed metropolitan centers that can be transformed into a commercial, transportation, and financial centers.


If there is one unsustainable cluster to be formed out of federalism, Cruz said it could be the Bangsamoro region and the rest should subsidize them, calling it “the “price of peace.”

“People keep saying that we are not ready. I believe we are ready. In many ways, we already think regional,” said Cruz, a long-time federalism advocate even before President Rodrigo Duterte, then Davao City mayor, campaigned for it.

However, the business community appeared divided on the issue.

European Chamber of Commerce of the Philippines (ECCP) vice president Henry Schumacher believes that strengthening the local government is what needs to be done instead of shifting to federalism.

“If the president wants decentralization, I think you can achieve that by making the Local Government Code more effective. I believe what the president wants to be achieved can be achieved without going through this enormous change,” Schumacher said.

For Cebu Business Club executive director and economics professor Fernando Fajardo, changing the system would not be an effective strategy for the new administration. Instead, he recommended an examination of the effectiveness of the Local Government Code and finding the necessary solutions to strengthen it.

“LGUs are given the power and money but they are not even evaluating how effective the LGU Code is,” he said.

In addition, Fajardo believes that if the administration is serious about sustaining regional development plans, it is also important to create a regional development authority.

“Originally, the Regional Development Councils (RDC) were supposed to be backed up by a regional development authority, which will implement the projects, but it did not materialize. We have the planning, but it is useless. RDC has no power to implement its own plan,” he said.

At the end of the day, Fajardo believes federalism will not spell change.

“I believe it’s more of the people. If we have a federal system, it’s the same politician that will run the show, the same families, the same names,” he concluded.
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