Constitutional changes may see the Philippines become a federal state



In 2016 when Filipinos elected a president hailing from beyond the Metro Manila/Luzon region – home to much of the country’s traditional political elite – they also initiated a major push for far-reaching reforms to the constitution. This change, supported by Southern Leyte-born President Rodrigo Duterte, may soon see the Philippines become a federal state.

Long Pedigree

The idea of the Philippines as a federal republic goes back to the earliest days of the country’s modern history, with the nation’s 7641 islands certainly making a geographical case for decentralisation. Three major groupings – Luzon, the Visayas and Mindanao – were suggested as potential federal states by 19th-century Filipino nationalist leaders, with the idea also being a response to the centralisation of Spanish colonial power around the capital city of Manila. This focus on Manila as the seat of power was later adopted by the independence movement as it became viewed as an important tool in building a unified nation.

With the fall of President Ferdinand Marcos in 1986, however, there was a major push back against what was seen as a centralist accumulation of authority, and with the 1991 Local Government Code some spending, taxation and borrowing powers were devolved to local government units (LGUs). This decentralisation was credited with some success in boosting political participation and the creation of a raft of subnational groupings, such as the League of Cities of the Philippines and the League of Municipalities of the Philippines.

Yet, despite this reform, the central authorities continued to hold and exercise a great deal of power, both fiscally and politically, while Metro Manila has leapt ahead in terms of economic development. Thus, the idea of federalism has re-emerged, first unsuccessfully back in 2008 and then again with President Duterte.

Historically, the rationale for such a change has been largely two-fold. First, there is the argument that giving more power to a series of federal states will boost economic development beyond the main metropolitan centre of Metro Manila and help in addressing regional imbalances; second, proponents believe that federalism is a way of bringing more permanent peace and security to parts of the country that have historically been subject to separatist conflict.

Imperial Manila

On the economic side, the National Capital Region (NCR), which includes Manila, continues to be the dominant regional economy. Figures from the Philippine Statistics Authority (PSA) for 2017 show that at current prices the NCR was responsible for P6.02trn ($118.9bn), or around 36.4%, of the country’s total P15.81trn ($312.3bn) GDP. The population of the NCR, however, comprised 12.9m people, out of a national total of 104.9m, or around 12.3%.

The numbers become even more imbalanced when the two regions either side of the NCR – Central Luzon and Calabarzon – are included. In 2017 these three areas accounted for some P9.8trn ($193.6bn), or 62%, of the Philippines GDP. In terms of population, however, they accounted for just 39m people, or 37.2%.

Average incomes also demonstrate the wide gap between regions. For the NCR, the per capita income for 2017 was P465,691 ($9200) – around three times the national average of P150,649 ($2980) and more than eight times that of the poorest region, Bicol, where per capita income stood at just P52,927 ($1050). Only two regions posted average incomes higher than the national average that year – the NCR and Calabarzon. Thus, 27 years after the new Local Government Code was introduced, regional differences remain defining characteristics, with the NCR still very much the country’s economic powerhouse.

Structural Issues

Thanks to the 1991 law, however, LGUs do have an automatic right to internal revenue allotments – money granted to them from the central government. Yet, the centre has tended to remain dominant, thanks to its control of major national funding programmes, budget allocations and, as some critics argue, a tendency by successive governments to favour political allies over local needs. The result is a concentration of central funding in a few areas. LGUs have often also failed to fully capitalise on their local revenue-raising options, and instead sought to lobby for extra funding from the centre.

“The result is that we have a missing middle,” Jonathan E Malaya, assistant secretary, Department of the Interior and Local Government, told OBG. “We have over 80 provinces, mostly very small and all relying on the national government for direction. We lack a real regional government acting as a political unit.”

A virtuous circle has also set in, with areas that attract funding also then attracting more business and investment as enterprises seek to benefit from upgraded infrastructure and a growing business ecosphere. In the fourth quarter of 2017, for example, PSA figures show that 29.5% of the Philippines’ total approved foreign investment going to Calabarzon, 25.4% to the NCR, and 22.6% to Central Luzon. This, in turn, creates more demand for central government funds. The converse is also often the case, with areas that lack investment attracting fewer businesses or even losing business to other, more developed regions.

Changing the Flow

As an outsider to the traditional Philippine centre, President Duterte is perhaps more conscious than many of his predecessors of the need to focus on the outer regions. Thus, the current government has emphasised regional spending in its Public Investment Programme (PIP) 2017-22. According to officials from the National Economic Development Agency, the majority of the PIP’s 5600 programmes and projects are outside Metro Manila.

The federalism initiative, however, represents an opportunity for a far more fundamental change in the way regional development is approached. In 2016 the president signed an executive order establishing a consultative committee (ConCom) to review the country’s existing 1987 constitution, with this committee still at work at the time of publishing. The ConCom is expected to consider a range of proposals and study federal and decentralised systems in other countries to find the best way of implementing such a system locally. One proposal was made in 2017 by Pantaleon Alvarez, the house speaker, proposing a 14-state federal system, along with the creation of a new capital on Negros Island. In January 2018 a further proposal for a five-state system was made by a subcommittee in the House of Representatives’ Committee on Constitutional Amendments, advocating that each state have its own constitution, capital, flag, anthem and government seal.

Broader Goals

Indeed, the federalism debate has also been used as an opportunity to re-examine many other constitutional provisions. A February 2018 a proposal from Aurelio Gonzales Jr, the deputy majority leader, and Eugene de Vera, the deputy minority leader, would lift many of the restrictions on foreign ownership in the 1987 charter, for example. Other proposals include ending the current restriction on a single presidential term and extending the president’s powers.

These supplementary ideas have created an amount of additional controversy around the issue, however, with allegations that the debate is being used to widen certain politicians’ interests and even restore dictatorship. February 2018 also saw a further suggestion made by the League of Provinces of the Philippines, which argued for all 81 provinces to become federal states with no regional amalgamation.

There is clearly a wide variety of opinions on what form a future federal Philippines might take. The debate has also spilled over into whether or not elections scheduled for 2019 should be postponed, as they may clash with a possible constitutional referendum.

The ConCom is due to draft a proposed federal constitution itself in time for the president’s state of the union address in July 2018, with officials also stressing that the eventual form will be uniquely Philippine in character. “We are not copying a federal system from any part of the world,” Ding Generoso, ConCom’s spokesperson, told local media in April 2018, adding that the eventual draft would try to create a bayanihan (working together) system. The year ahead will see how successful the Philippines will be in reaching this ideal.