CONSOLIDATED NEWS REPORTS

(Excerpts from News Reports)

Coverage: September 9, 2018 12:01AM to September 15, 2018 11:59pm
17 September 2018 8AM

NEWS HEADLINE POINTS NEWSPAPER/DATE/

WRITER/ LINK

Federalism linked to Federalism is a “strong predictor” of higher income inequality Businessworld online
greater inequality, UP in developing economies and higher poverty on average for
September 9, 2018
study finds all countries, a study by the University of the Philippines School
of Economics (UPSE) said. http://www.bworldonlin
e.com/federalism-
“The pro-federalism position claims that federalism will cause
linked-to-greater-
poverty to fall and the distribution of income to be more
inequality-up-study-
equal. Our regression results bear neither of these claims,”
finds/
wrote economists Raul V. Fabella and Sarah Lynne Daway-
Ducanes in a UPSE discussion paper, “Federalism and Others: Economic
Inclusion in Developing Economies.”

“On the contrary, federalism strongly predicts greater income

inequality in developing countries. Our results also show that
federalism strongly predicts higher poverty incidence and
severity on average: it does not reduce poverty incidence
and severity in developing economies,” the report added.

The study covers 105 economies during the 1987-2016 period,

and used the Gini coefficient as a measure of inequality
while the poverty gap ratio and poverty head count ratios
were used as measures of poverty.

The Gini coefficient looks at the distribution of a nation’s

income and is most widely used as measure of inequality. The
income distribution of a country is said to be more unequal
the higher its Gini coefficient.

The poverty gap ratio shows the average shortfall of the total
population from the poverty line (expressed as a percentage
of the poverty line) — reflecting both the severity and
incidence of poverty. The poverty head count ratio,
meanwhile, is the percentage of population that lives below
the poverty line.

For the poverty lines, the study used the World Bank’s
“extreme poverty line” of $1.90 per day and the $3.2 per day
standard for lower-middle-income countries.

Among the determinants used in the study were the real

gross domestic product (GDP) growth rate, “trade openness”
(expressed as a percentage of the sum of imports and
exports against GDP), the International Monetary Fund’s
financial institutional access index (expressed as bank
branches per 100,000 adults and automated teller machines
per 100,000 adults), and the inter-country risk guide (ICRG), a
measure of institutional quality.

While the paper showed that federalism “negatively

associates” with income inequality on average, it has an
 “inequality-increasing effect” in developing economies —
defined in the study as those having a real GNI (gross
national income) per capita of not more than $10,000 in
1992.

Meanwhile, it found that federalism “has either no effect or a

poverty-raising effect.”

“The federalism dummy [variable] in each case has an

unconditionally and strongly significant and positive
correlation with poverty incidence and poverty severity. In
the case of developing economies, it is shown that federalism
has no effect at all on poverty incidence or its severity,” said
Mr. Fabella and Ms. Daway-Ducanes in the report.

“Federalism thus appears to be on the wrong side of inclusion

— in terms of both poverty reduction and greater income
equality.”

The authors concluded: “On the debate whether we should

shift to federalism, if inclusion is the criterion, our research
results finds no support in favor of such despite the claims of
proponents. Indeed, the results show that poverty incidence
and income inequality could become worse. The
contemplated shift appears to be a jump from the frying pan
to the fire.”

The National Economic and Development Authority has

proposed a five-phase transition to a federal form of
government to avoid disrupting the economy’s growth
momentum. Economic managers earlier warned that the
proposed changes could cause the fiscal deficit to rise
beyond the 3% threshold against gross domestic product
ratio, the rule-of-thumb level for prudent borrowing.

Foreign investment Margarito B. Teves, who was finance secretary in the Arroyo Businessworld online
easing seen as administration, said the government needs to meet certain
September 11, 2018
achievable goal prerequisites before being deemed capable of running a
ahead of federalism federal state, and meeting these milestones could take a http://www.bworldonlin
shift long time. e.com/foreign-
investment-easing-seen-
He said for now, Congress should move to remove or at least
as-achievable-goal-
relax restrictions against foreign investment contained in the
ahead-of-federalism-
1987 constitution.
shift/
These conditions include expanding the capacity of local
government units (LGUs), and a strong and efficient
bureaucracy in both the federal government and the
federated regions.

“The removal of economic provisions can stand on its own

regardless of whatever form of government the Con-Ass
(Constitutional Assembly) will decide on, and later ratified by
the people. It sends a dramatic signal to foreign investors that
they are welcome to invest in the Philippines to create jobs
and level the playing field that will lead to more competition,
to the benefit of the Filipino consumers,” he said.
“If the target is to have something approved by May 2019, it
is easier if we just remove the restrictive economic provisions,
and then eventually… there’s no consensus later on whether
we should go federalism or continue with our present system
of government it does not matter. The economic provisions
can go with any form of government,” added Mr. Tevez.

The government is seeking to ease foreign ownership

restrictions, starting with those that can be done without
legislation, via its 11th Foreign Investment Negative List
currently with the Office of the President, and awaiting
President Rodrigo R. Duterte’s signature.

“If we go through amending the restrictive economic

provisions, we don’t have to go through this negative list
anymore. Some portions in the negative list have to hurdle
the issue of whether the constitution will allow us to accept
foreign investment. If the constitution should delete those
restrictions, then any areas now can be worked out by
foreign investors. That should not be very difficult,” said Mr.
Tevez.

Separately, a former member of the 1987 Constitutional

Commission said that it has not been established whether
federalism will lower poverty in regions.

“Federalism is a risky political experiment that is vulnerable to

unintended consequences. Federalism is not even
mentioned in the Philippine Development Plan 2017-2022 and
Ambisyon Natin 2040,” according to Christian S. Monsod.

“If the government’s road map works without federalization,

how much do we save?,” he added.

The National Economic and Development Authority

estimated that the shift in government structure would cost
P150-247 billion.

“We have largely failed in addressing mass poverty and gross

inequalities and the underdevelopment of outlying areas not
because of the Constitution. But because we have not fully
implemented it, especially its social justice provisions and its
mandate of local autonomy,” said Mr. Monsod.

“Devolution can be done with or without federalism. There’s

no consensus of the superiority of federal or unitary system, or
vice versa. So why shift?” he added.

He added that a prerequisite to an efficient federal form of

government is a functioning political party system. “We don’t
have that,” said Mr. Monsod.

“Federalism tends to serve the interest of, and thus further

entrenches, existing dominant groups in the region, in our
case political dynasties.”
Federalism won’t President Rodrigo R. Duterte on Tuesday admitted that he Philippine News Agency
ensure immediate could not convince everyone to support his push for
September 11, 2018
prosperity but federalism but noted that this new system of government will
beneficial to PH benefit the entire country through its wealth and power http://www.pna.gov.ph
sharing feature. /articles/1047678
Duterte said federalism might not assure improved economic Others: Economic
condition right away, but believes there is a chance it would
spread the country’s wealth and resources evenly among the Comments on the draft
regions. proposal

“It might help, it cannot guarantee

prosperity kaagad (immediately) but it might help distribute
the wealth of the nation among the local units,” he added.

He said federalism is “gaining ground” in the provinces

because they have always been lagging behind Metro
Manila and other urban areas in terms of development.

He, however, said he wanted political and economic power

distributed to empower local governments to help
themselves by implementing their own measures to alleviate
poverty.

Duterte said since he was elected as President, he might as

well exhaust all his powers to push for the amendment of the
1987 Constitution.

On July 9, Duterte received the proposed federal Charter

drafted by his 22-member Consultative Committee
(ConCom) to review the 1987 Constitution chaired by former
Supreme Court Chief Justice Reynato Puno.

Puno described the proposed Charter as one that

“establishes federated regions that are socially, economically
and politically viable and sustainable.”

Under the draft federal Constitution, there are 18 federated

regions composed of 16 symmetrical regions-- existing regions
plus Negrosanon Federated Region and two asymmetrical
regions – Bangsamoro and Cordillera.

Last month, Presidential Spokesperson Harry Roque said the

proposed Federal Charter is now open for comments from
the public.

Duterte will consider people’s comments before officially

transmitting the proposed federal Constitution to Congress,
Roque said.

Tête-à-tête was Chief Presidential Legal Counsel Salvador Panelo said Philippine News Agency
Duterte’s idea: Panelo Wednesday his tête-à-tête or one-on-one conversation with
September 12, 2018
President Rodrigo Duterte was the Chief Executive's idea.
http://www.pna.gov.ph
Panelo said the televised conversation was introduced to him
/articles/1047712
by Duterte during the President’s recent five-day official visit
to Israel. Others: Political
During their televised one-on-one conversation, Duterte had
 discussed pressing issues ranging from his relentless campaign
against illegal drugs and corruption to economy and politics.

On the proposed shift in the form of government from unitary

to federalism, Duterte said federalism “might help” but
cannot guarantee prosperity.

“But it might help distribute the wealth of the nation among

the local units,” he added.

He said federalism is “gaining ground” in the provinces

because these have always lagged behind Metro Manila
and other urban areas in terms of development.

17K councilors unite for On Sept. 10, city and municipal councilors from all over the Philippine News Agency
PRRD's federalism push Philippines pledged to help the information campaign of the
September 12, 2018
Department of the Interior and Local Government (DILG)
through the signing of a memorandum of understanding http://www.pna.gov.ph
between the DILG and the Philippine Councilors League /articles/1047721
(PCL).
Others: Political
The PCL, with a membership of 16,764 councilors nationwide,
has agreed to sponsor local laws and ordinances that would
promote federalism in communities.

The MOU signing was attended by PCL national chairman

Danny Dayanghirang, PCL national president Luis “Chavit”
Singson, and other PCL officers.

PCL will conduct information campaign activities to ensure

the success of the federalism advocacy.

The DILG, on the other hand, will capacitate and certify the
trained speakers of federalism-related activities of the
league.

“The PCL has been the first organization and league to be

coordinating with the DILG in our programs,” DILG Assistant
Secretary Jonathan Malaya said.

Next week, the DILG will be tapping the Union of Local

Authorities of the Philippines (ULAP) to help in the advocacy.

The DILG has been tasked by President Rodrigo Duterte to

spearhead the public awareness campaign for federalism
and has been visiting the regions to showcase the draft
federal Constitution crafted by the Consultative Committee.

Congress seen to There’s a slim chance the federal charter prepared by The Philippine Star
prioritize 2019 polls over President Duterte’s consultative committee would be able to
September 15, 2018
federal shift breeze through Congress in the next few months, as many
lawmakers are already busy for the midterm elections in May https://www.philstar.co
next year. m/headlines/2018/09/1
5/1851613/congress-
According to former Quezon congressman Erin Tañada,
seen-prioritize-2019-
politicians now seem lukewarm to tackling the draft federal
polls-over-federal-shift
charter the Concom submitted to President Duterte before
he delivered his third State of the Nation Address (SONA) last Others: Political
July.

He added even Speaker Gloria Macapagal-Arroyo was not

expecting the draft charter to get tackled during her term.

Duterte convened the Concom in February to review the

1987 Constitution in preparation for the drafting of a charter
for a federal form of government.

Professor Edmund Tayao, a member of the Concom, said he

is confident it would eventually be smooth sailing for
federalism despite initial delays.

He said that he has been hearing “so much support” from

local government officials and other stakeholders since their
recent regional presentations and consultations.

It’s now up to politicians, he said, to work on approving the

draft charter. “You are already looking at the midterm
elections. Lahat ‘yan busy na for their preparations,” Tayao
said.

Former senator and Concom member Aquilino Pimentel Jr.

echoed Tayao’s sentiment, saying he respects the decision of
Congress to hold off action on the draft charter.

Pimentel said Concom’s task is only to review and make

necessary amendments to the 1987 Constitution, and not to
pressure Congress into approving the draft federal charter.

But for former chief justice Reynato Puno, Concom presiding

officer, Congress should prioritize their proposed charter. “For
me, this should be given priority, because we can’t solve our
problems under a unitary form of government. The election is
only in their interest. The interest of the people should be
prioritized – a new constitution,” he said in Filipino.

Meanwhile, Tañada said it’s LP’s position that the

government should not rush federalism.

He said the LP wants to know how much the government

would have to spend to run a federal form of government.

He said they also want to know which problems could be

addressed without amending the Constitution.