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Policy uniformity crucial if PH adopts federalism

A federal form of government might work for the Philippines but authorities need to ensure policy uniformity, the European Union’s envoy to the country said.

Speaking to reporters at the sidelines of an infrastructure forum on Friday, EU Ambassador to the Philippines Franz Jessen said investors would prefer to deal with one set of laws and incentives if the country decided to adopt federalism as sought by President Rodrigo Duterte.

“I think it’s important that the security of the investments is, of course, maintained and the economic environment is comparable with the different regions,” he said, noting that “when the European investor looks at the Philippines it’s much easier to look at this as one legal framework for the investment rather than different frameworks…”.

“On the business side, of course it is easier when you have one set of labor laws rather than different sets of labor laws in different regions. The same when we talk about incentives. If you start having different rules for different regions then it’s complicated for me,” Jessen added.


Asked to comment if the shift would be beneficial for the Philippines, Jessen said “it’s not for us (the EU) to judge whether it’s okay or not.”

“In Europe we have 28 member states with different traditions in terms of federalism. We have different models in Europe and our view is that different models can work very well so it depends on the country and the specific circumstances,” he added.

“If that’s what the [Philippine] government and the people want then we will have to work with it. I don’t know if that could happen or not. I’m not predicting any outcome. Let’s see what the government decides.”

A draft federal charter drawn up by a Duterte-appointed consultative committee has been criticized by economic managers and local business chambers have also raised concerns.

Finance Secretary Carlos Dominguez 3rd told the Senate earlier this month that the Philippines could lose its investment grade credit rating given confusing fiscal provisions in the draft charter, while Socioeconomic Planning Secretary Ernesto Pernia warned that the shift could cost the government at least P120 billion.

Both have come under fire for their comments but have found support with the business community, which issued a joint statement last week urging lawmakers to carefully weigh the costs and risks of federalism.

“We encourage full, open and dispassionate dialogues on this proposed shift in form of government, keeping in mind its long-term impacts on future generations of Filipinos. As always, the business community stands ready to work with our political and economic leaders to bring about sustained and inclusive economic growth in the country,” seven of the country’s largest business groups said.

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