Federalism good for business – Lopez
Trade and Industry Secretary Ramon M. Lopez yesterday said that federalism is good in the devolution and operation of the trade and industry functions, promotes ease of doing business, and competitiveness among local governments in attracting investors, but he also agreed with the other macro-economic managers of the government of the need to establish first the financial feasibility – costs and risks – of the proposed shift.
Lopez told reporters in an interview at the sidelines of the 6th Regional Competitiveness Summit which also unveiled the Cities and Municipalities Competitiveness Index that he agreed with the statements of other macroeconomic managers, particularly the Departments of Finance and Budget and Management and the business groups to weigh the financial implication of the shift to a federal system of government.
“I will concur as to what the exercise will do. The review of the financial implication I’m there and I won’t refute that because that is really needed. Before we shift that’s the overarching condition, that is what is needed to be established first,” he said. DOF data showed that a hefty P1.651 trillion is needed to comply with the draft federal charter’s 50:50 revenue sharing scheme, which will be given in a form of internal revenue allotment (IRA) to the federated regions.
Once the question of financial feasibility has been cleared, Lopez said that will be the time to talk about devolution of powers and functions.
He could only surmise that perhaps Filipinos are not yet ready of the proposed shift because this has not been clearly explained or understood.
But as far as the DTI is concerned, Lopez said this has been clear to them in all of the consultations they participated in on the competitiveness impact – more efficiency in its functions and operations, ease of doing business, flexibility among the states to attract investors with customized incentives packages.
“From our end we are more of looking more into the functions that are going to devolve, which will go to the Federal government or to the states,” he stressed.
For example, he said, one state can attract more investments in their localities if they have the flexibility to offer more incentives although the overall incentives, which may be provided under the proposed SIPP (Strategic Investment Priorities Plan) have to be aligned with the Federal government. It is the call of the states to use or not, but they will have to compete with each other.
He cited that some investors chose to locate in a particular state because it offers lower corporate and income taxes than others. This will lead to a more competitive scenario where each state will compete with the other state, which is composed of provinces.
Least developed states will also be given assistance by the Federal government. But these poor states have the opportunity to make themselves more attractive to lure investors.
“So, the Federal system will have that flexibility. I am looking at the operability rather than risks and costs because that is the work of the macro guys,” he added.