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MANILA – Business leaders on Monday raised questions over the proposed federal shift, doubting whether it could spur development across poor regions, and warning it might also give rise to local warlords.

But a member of Malacañang’s drafting committee urged the group to first examine the proposed federal constitution “and see whether it will work.”

The committee is “98 percent” done with the drafting and expected to approve it this week, said Arthur Aguilar, a member of the experts’ group formed by President Rodrigo Duterte.

Aguilar and fellow consultative committee member Edmund Tayao on Monday presented major portions of the draft before officials of Philippine Chamber of Commerce and Industry (PCCI), who were vocal about their reservations.

“I think (I) will not be amiss in saying that this room is filled with a lot of people with fears of a federal government,” said Sergio Ortiz-Luis Jr., president of the Philippine Exporters Confederation Inc. and PCCI honorary chairman.

“Is there any urgent reason why we have to go through this, through all these risks?And if it fails, who will pick up the pieces?”

Aguilar and Tayao discussed proposals to liberalize the economy, spread wealth more equitably across 18 federated regions, and other key reforms under the draft federal constitution.

FEAR OF FEDERALISM

Ortiz-Luis expressed concern that businessmen might now have to deal with regions with different laws and tax rules. 

Businessmen wary over bureaucracy, taxation under federalism: De Ocampo

“If they don’t like your face, you’ll not be able to operate there. So those are the fears that we have,” he told a forum in Makati City, warning “warlords” might get elected under the federal set-up.

Aguilar said the consultative committee was not eyeing 18 “separate republics.”

“Frankly, honestly, most respectfully, I would request, let us stop chasing ghosts,” he told the businessmen.

“We have been imagining and fantasizing on our fears of what will happen. First, do us a favor of looking at our draft and see whether this will work.”

Under the Concom proposal, the federal government will get 50 percent of the total revenues while the remainder will be divided among the federated regions. 

An equalization fund will also be set up to assist poorer regions. It will be equivalent to 3 percent of the annual national budget based on the current proposal.

Combined with other taxes, the fund can provide federated regions an estimated P53 billion annually based on 2017 computations, said Tayao.

Aguilar urged business leaders to give federalism a try.

“The concern is poor regions will be left behind. My question is aren’t they left behind now? Because if you leave things the way they are, please tell me, are they going to go? We have to try something new,” he said.

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