Manila International Conference
From Decentralization to Federalism: The Next Step in Philippine Democracy
22-23 September 2016, Makati City, Philippines
Speech of
Sen. Aquilino “Koko” Pimentel III
Senate President

Senator Mian Raza Rabbani, Chairman of the Senate of the Islamic Republic of Pakistan; Mr. Rupak Chattopadhyay, President and CEO of the Forum of Federations, Ottawa, Canada; Mr. Georg Milbradt, Chairman of the Board of the Forum of Federations; Ambassador John Holmes, former Canadian Ambassador to the Association of South East Asian Nations; Mr. Roger Bruce Wilkins, President of the Financial Action Task Force of Australia; Mr. Bill Gardner, Chief of Party, Philippines Facilitating Public Investment of the USAID-DAI; Mr. Bruce Hutchins, Deputy Chief of Party at Development Alternatives Incorporated (DAI); Mr. Benedikt Seeman, Country Representative of the Konrad Adenauer Stiftung Philippine Office; Dr. Paul Hutchcroft, Local Governance Specialist, Australian Embassy; Dean Julio Teehankee, De La Salle University; Prof. Edmund Tayao, Executive Director of the Local Government Development Foundation (LOGODEF); my esteemed party mates from the Partido Demokratiko Pilipino Lakas ng Bayan (PDP LABAN), our fellow advocates of Federalism and Constitutional Reform, fellow workers in government, ladies and gentlemen, good morning to all of you.

May I first greet our esteemed guests from overseas: Mabuhay and welcome to Exciting Philippines! This is the first time that this potential marketing slogan “Exciting Philippines” has been used. So, why do I say that it is exciting to be in the Philippines nowadays? Because Change has come, with many more coming. And Change is Exciting!

We in PDP Laban are honored to be a co-organizer of this event through our Federalism Institute. For the past several months, we have been working closely with LOGODEF, the Forum of Federations, PREP and the Konrad Adenauer Stiftung. And what has been the purpose of that collaboration? To bring further change to the country by putting up the Federal Republic of the Philippines.

My political party, the PDP Laban, has been pushing for federalism for the past 34 years! There have been many attempts in the past to amend our Constitution but these all came to naught.

With the election of the first president from PDP Laban, Rodrigo Duterte, we now have a true federalist at the helm. As a long-time mayor of the City of Davao, in the southern part of the Philippines known as Mindanao, he knows from personal experience the flaws inherent in a system of government that is Unitary. The farther[1] you are from the one and only center of power of this single unit, the more difficulties you encounter, the more disadvantages you have.

To our foreign guests, you have arrived at a critical juncture in our country’s history. We are in the best position now to adopt a Federal System of Government under the leadership of President Duterte and his political party, the PDP LABAN. At no other time in our history has our dream of a Federal Republic been closer to reality.

Those of you who know something about our history may notice that this debate on the appropriate system or form of government is nothing new. In fact, it has been fought since the beginning of our Republic. As early as the 1890s, our national hero himself Dr. Jose P. Rizal advocated for a federal system of government for our country. Rizal wrote that the country would probably adopt the “freest government” and he predicted that “the islands will probably declare themselves a federal republic.”

Thus, we are glad and honored that our fellow federalists from abroad are in our shores to help us shape the type of Federalism appropriate for our peculiar conditions, history, and culture. As an emerging federation, we are eager to learn from the experiences of more established federations who have had decades if not centuries of federal practice.

In the design of our federal constitution or federal structure, we are eager to deliberately avoid the mistakes and pitfalls in older federations. And in borrowing concepts and ideas from federal countries, we would like to understand the guiding principles so that we can properly adopt them and even adapt them to local conditions to meet our specific needs.

On our part, we have extensive experience in decentralization. Since the enactment of the Local Government Code under the tutelage of my father Senator Nene Pimentel, we have been undergoing devolution and decentralization for the past 25 years. Thus, we also have much to share to our foreign guests as they to us. Perhaps, this conference may then be an opportunity to “learn from each other” to further enrich our collective experience.

Given the “federalism fever” gripping the country today, there will always be critics of federalism. As in every proposed change, there will be people who will resist it and argue for the status quo. That is to be expected. The Philippines is, after all, a vibrant democracy, probably the most vibrant in this part of the world. Thus, I expect no less than a vigorous debate on this issue in the halls of Congress as well as in every street corner where politics is a national past-time.

So, allow me to address some of the arguments being raised against Federalism:

First, I’ve been told, “if it ain’t broke, why fix it?” If we limit ourselves to this expansive modern place called Metro Manila, then maybe we can say that there is nothing significantly broken about the Philippine system of government. But the Philippines is more than Metro Manila. If we take a look at a map showing the poorest, least developed provinces in the Philippines, then we will realize that all these places are far from the center of political power in the country which is Metro Manila. If we reverse the criterion and look at the most progressive areas in the Philippines, then we would see that the most progressive are Metro Manila, the center of political power, and the areas surrounding it and closest to it.

When rebels in Muslim Mindanao proposed a law called the Bangsamoro Basic Law as part of a comprehensive peace settlement, the said proposed law was challenged as unconstitutional, in spite of the fact that the 1987 Philippine Constitution recognizes and authorizes the creation of autonomous regions in the country especially in Muslim Mindanao.

There is therefore something broken which needs fixing.

Second, there is this contention that we do not need to change the system and form of government in order to reap the benefits of federalism; that there is no need to amend the Constitution to empower the regions and the local governments. They argue that a mere revision of the Local Government Code will allow the devolution of powers and resources that federalism hopes to achieve.

While it is true that power may be decentralized or devolved under our current set up, this can only be done through legislation and to a certain extent executive action. Therefore, whatever powers were devolved can easily be taken back or withdrawn by the national government unilaterally. Under this scenario it is entirely possible that after the term of President Rodrigo Duterte the next president may recentralize again and there is nothing we can do because laws may be amended anytime.

Let me quote from the book FEDERALISM: AN INTRODUCTION by George Anderson of the Forum of Federations – If there is an essence of Federalism, it is that there are two constitutionally established orders of government with some genuine autonomy from each other, and the governments at each level are primarily accountable to their respective electorates. [Emphasis supplied.] The benefits of federalism should not only be enjoyed by this generation of Filipinos but also by all generations to come.

Third, the critics claim that under federalism, the IRA (or Internal Revenue Allotments) which local government units currently enjoy or any form of subsidy or assistance, will disappear. They ask, who will now subsidize the poor regions like ARMM and CARAGA, which are both in Mindanao, when 65% of the country’s Gross Domestic Product (GDP) comes from the National Capital Region (otherwise known as Metro Manila), Calabarzon (Region 4) and Central Luzon (Region 3)?

This argument comes from a false understanding of Federalism. It assumes that in federal countries the rich regions get to keep all their income and revenue while the poor regions are left to their own devices. They are grossly misinformed.

Federalism, in fact, requires the continuation of the IRA or what is termed as “fiscal transfers” from the Federal Government to poor regions. In most federations, the Federal Government raises more revenues through taxes, fees, and loans than it needs for its own operation; thus, Federal Governments make regular fiscal transfers to the regions to enable them to better meet their responsibilities.

Just like our country, all federal countries have regional differences in wealth. Even in the US, Canada, and Germany some states or regions are rich and developed while other parts are relatively underdeveloped and have limited revenue. Most federations deal with this problem using the principle of equalization or revenue sharing that provide for fiscal transfers from the Federal Government to the regions.

Most of these revenue-sharing arrangements are unconditional transfers which the receiving regional governments can use for whatever purpose.

But we will also introduce a new system called “conditional transfers” wherein the Federal Government attaches conditions on the use and purpose of the funds by the regional and local governments. These transfers are program specific and cannot be used for other purposes. And we will use these conditional transfers to promote national purposes and set standards in various devolved fields like health care or education.

Therefore, the argument that poor regions in the country will lose their assistance or subsidy from the Federal Government is without basis.

Fourth, I have heard criticism of the 20-80 revenue sharing scheme[2], in favor of Regional Governments, which our Party has proposed. This proposal is not cast in stone; it is simply for discussion. Thus, criticisms against the revenue sharing formula is premature, to say the least.

The guiding principle which will determine the taxing powers and revenue share of each level of government is that the allocated resources must be commensurate to the powers and responsibilities assigned to them. How this is determined is crucial to the capacity of each level to perform their respective mandates.

Since we seek to empower our local governments, we need to provide them the needed resources to be able to fulfill their mandate. This is consistent with our belief that local governments deserve a bigger share of government resources since they are in a better position to address the needs of their constituents.

We will first determine what exclusive powers we give to each level of government and what concurrent powers are shared between them; only then can we come up with a final formula on revenue sharing for them to use to fulfill their respective functions and mandates.

Others argue that we must take “baby steps” in moving towards Federalism. I say to them, we have already taken the necessary steps towards Federalism in case they have not noticed. We have had the Local Government Code for 25 years. The concept of autonomous regions has been incorporated in our 1987 Constitution.

We are ready for Federalism, which is the logical destination of the journey that we started with decentralization and devolution. If we truly want to empower the regions, we must federalize! If we want to speed up progress and economic development across the country and lay the basis for a just and lasting peace in Mindanao, we must go federal!

The conditions are ripe we must act quickly! There is no time to lose.

Right now, Congress is finalizing President Duterte’s first budget. But by early next year, Congress will be ready to tackle the matter of changing the Constitution in order to adopt the Federal System of Government for the Republic of the Philippines.

I can assure all that the debates and discussions on this and many other related topics will be open, transparent, consultative, and participatory. Since we are amending the Constitution, the people will ultimately decide the future structure of our government. Thus, we will be doing extensive consultations across the country.

Once approved, we recognize that the transition to Federalism will be complex and difficult.[3] We will be needing the help and the cooperation of everyone.

What is important is for the Filipino People to know that all these changes going on in the country today are being done for their benefit. President Duterte and his allies are fixing the country so that the present generation as well as future generations of Filipinos will have a better country to live in.

Federalism is one such fix.

At the end of the journey, all we want to see is a Philippine society which is JUST and FAIR, which SAVES and SHARES, which is SCIENTIFIC and OBJECTIVE, which is PEACEFUL and DEMOCRATIC, which is EDUCATED and HEALTHY, and which is, most of all, HAPPY and FREE, with overflowing LOVE OF GOD AND COUNTRY.

That is the ending we want, and I hope all of you will be with us in this journey.

Thank you for being here in order to help us achieve our dreams. I wish you a successful conference. Magandang umaga po sa inyong lahat!

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[1] “Farther” can be used in two concepts: geographically and politically.

[2] Under this proposal, 20% of local revenue will be given to the National Government while 80% of local revenue will be retained by the regions.

[3] We might even need a Transition Period.