Business chambers caution on federalism

BUSINESS GROUPS in a joint statement on Sunday, Aug. 12, supported the call by economic managers of the Duterte administration to “weigh carefully” the costs and risks in the government’s planned shift to a federal system.

“We, the undersigned business organizations, appeal to our legislators to weigh carefully the costs, risks and uncertainty associated with the proposed monumental shift to a federal system of government,” said the joint statement by the Cebu Business Club, Employers Confederation of the Philippines, Financial Executives Institute of the Philippines, Makati Business Club, Management Association of the Philippines, Philippine Chamber of Commerce and Industry Inc., and Philippine Exporters Confederation Inc.

The statement also said, “Accordingly, we echo the concerns of fiscal and economic experts about the ambiguous provisions on the division of revenue and expenditure responsibilities between the proposed federal government and its federated regions.”

“Reports indicate an alarming cost to the would-be multi-level government under a federal system. Preliminary estimates range from P72 billion of the Philippine Institute for Development Studies (PIDS) to P130 billion of the National Economic Development Authority (NEDA). The fiscal deficit is estimated to reach 6.7% of the gross domestic product, which is way beyond the sustainable 3 percent target of our fiscal managers—a prudential limit also observed by the European Union for its member countries.”

“We worry about the dire consequences that such fiscal imbalance could have on the economy and the flagship Build, Build, Build program of the current administration.”

The statement also said, “We commend the economic managers in the Department of Finance, the Department of Budget and Management, National Economic and Development Authority, Bangko Sentral Ng Pilipinas, as well as the researchers in the Philippine Institute of Development Studies for their transparency in openly sharing their analysis and airing their concerns to the public. We support and join their call for a more detailed analysis of the fiscal impact of federalism to serve as basis for the deliberations in Congress.” — with a report by