17 May 2018 | 1:00 PM | Shangri-La Hotel, Makati

NEB LeagueofProvinces inthe philippines 05

Secretary Benjamin E. Diokno, PhD

Department of Budget and Management (DBM)


        To all the local executives in attendance, esteemed guests from the private sector, colleagues in the Cabinet, ladies and gentlemen: Good afternoon.


        Before we proceed with our discussion, allow me to give some brief remarks on the DBCC decision on the FY 2019 Internal Revenue Allotment (IRA). Along the way, I’d also like to give my thoughts on the fiscal and economic implications of the proposed shift to Federalism.


        Last April 24, the DBCC held its 172nd meeting to deliberate on economic and budgetary matters. The collegial body decided that pending the decision of the Supreme Court on the consolidated cases of Enrique Garcia vs. Executive Secretary Paquito Ochoa and Mandanas,, vs. Executive Secretary Paquito Ochoa, the IRA revenue base shall be maintained as laid out by DBCC Resolution No. 2003-02, entitled, “Defining the Revenue Base of the Internal Revenue Allotment (IRA).


Taxes where a portion has been earmarked by law for designated local government units and all other collections of similar nature are excluded from the computation of the IRA to avoid double-counting.


        On Federalism, we reiterate our stance that “financing follows the the assignment of powers and functions among the different levels of government.” Regardless of the model of federalism to be adopted, the intergovernmental fiscal relations must be clear. I refer, specifically, to the assignment of expenditures, taxing powers, intergovernmental fiscal transfers, and even access to capital markets.


        The lessons from our experience in decentralization suggest that there must be a clear assignment of functions among different levels of government, alongside the authority and capacity to effectively carry out these functions. This will ensure that the form of government to be adopted will be effective and sustainable.


Concurrent or shared powers should be avoided as these create gray areas where duplication and overlapping of functions are likely to happen, which often results to wastage of resources. The spirit of Federalism is to closely match what citizens want and what government provides. Adding unnecessary layers of bureaucracy are not in keeping with the spirit of Federalism.


Keeping these things in mind, the most viable configuration of regions under a Federal system of government must take into account the readiness of the areas to be consolidated as “federated regions”.


While the Consultative Committee to Review the 1987 Constitution (ConCom), as well as the LPP, are inclined to endorse the model where there are seventeen (17) federated regions, it is important to base our analysis on a reliable index, which will show the readiness, viability and sustainability of each possible configuration.


The ConCom has considered the use of the Readiness Index for Sustained Economies Under PHederalism (also called the RISE UP indicators). Subject to the inputs of the Philippine Statistics Authority, National Economic and Development Authority, Philippine Institute of Development Studies and other appropriate authorities, the use of such index for determining the most viable configuration of federated regions is strongly recommended.


Of course, an index aggregating numerous variables cannot capture all the nuances of such a complex exercise as devising a federal form of government. But perhaps it can direct our discourse in the right direction.It is noted that based on the RISE UP Indicators the following configuration is recommended:


Federal Capital composed of:

  • NCR
  • District of Cebu (Cebu City)
  • District of Davao (Davao City)


8 Federated Regions:


1. Northern Philippine Federated Region composed of the provinces of Regions 1, 2, and CAR

(Baguio City as capital)

  • RISE-UP Rating: 0.40, rank 6


2. Central Luzon Federated Region composed of 7 provinces (Angeles, Pampanga as capital)

  • RISE-UP Rating: 0.45, rank 2


3. Southern Luzon Federated Region composed of the provinces of Regions 4A and MIMAROPA (4B) (Batangas City as capital)

  • RISE-UP Rating: 0.46, rank 1


4. Eastern Philippine Federated Region composed of the provinces of Bicol and Eastern Visayas Region (Sorsogon as capital)

  • RISE-UP Rating: 0.40, rank 7


5. Greater Visayas Federated Region composed of the provinces of Regions 6 and 7 (Bacolod City as capital)

  • RISE-UP Rating: 0.43, rank 5


6. Northern Mindanao Federated Region composed of the provinces of Regions 9, 10, and 13 (Cagayan de Oro City as capital)

  • RISE-UP Rating: 0.43, rank 4


7. Southern Philippine Federated Region composed of provinces of Regions 11 and 12 (Davao City as capital)

  • RISE-UP Rating: 0.44, rank 3


8. Philippine Bangsamoro Federated Region composed of the ARMM provinces (Mainland/island as capital)

  • RISE-UP Rating, 0.36, rank 8


The suggested regional configuration appears reasonable. And it makes economic and political sense. But it will be subjected to further study.


In terms of timing, the plan is to have a completed plan, including congressional and presidential approval before the 2019 Mid-Term Elections.


The Filipino people has to ratify this plan to coincide with the 2019 elections. Then there is a transition period of three years. Everything will be in place by 2022.


As we move along, let us keep in mind the ultimate objectives of Federalism: to bring about equitable development, one that is not dominated by “Imperial Manila”; and to bring lasting peace to the underdeveloped regions, especially Mindanao.


Thank you.



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