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19 more groups buck federal shift

More organizations have joined the call to the Duterte administration to weigh the cost and risks of shifting to a federal form of government, a group said Tuesday.

The Management Association of the Philippines said 19 big groups from different sectors had joined the groups of businessmen who had previously expressed their apprehension on the planned shift from presidential to a federal form of government.

The 19 organizations are Alyansa Agrikultura, Asia Pacific Real Estate Association, Bankers Association of the Philippines, Foundation for Economic Freedom, Institute of Corporate Directors, Investment House Association of the Philippines, Judicial Reform Initiative, National Real Estate Association, Organizations of Socialized Housing Developers of the Philippines, People Management Association of the Philippines, Philippine Constructors Association, Philippine Institute of Certified Public Accountants, Philippine Women’s Economic Network, Semiconductor and Electronics Industries in the Philippines, Inc., Shareholders’ Association of the Philippines, Subdivision and Housing Developers Association, Tax Management Association of the Philippines, UP School of Economics Alumni Association, and Women’s Business Council Philippines.

In a joint statement, the groups said at this time, when the financial markets in the developing countries were being roiled following the difficulties of Venezuela and Turkey, it was all the more important that all sectors joined the call for fiscal prudence, more dialogs and a well-considered approach in the shift to a federal form of government. 

“Both the private and public sectors cannot be perceived as lacking in resolve on the fiscal front, seeing how financial markets are so sensitive. Hence, the ongoing meltdown occurring in some beleaguered markets,” the groups said.

“For this reason, many other organizations join the seven large business organizations in calling for legislators to weigh carefully the costs and risks associated with the proposed monumental shift to a federal system of government.”

On Aug.12, the Cebu Business Club, the Employers Confederation of the Philippines, the Financial Executives Institute of the Philippines, the Makati Business Club, the Management Association of the Philippines, the Philippine Chamber of Commerce and Industry and the Philippine Exporters Confederation Inc. urged the legislators in a joint statement to consider the implications of a shift to federalism on the country’s finances. 

The groups cited reports indicating an alarming cost to the would-be multi-level government under a federal system. Preliminary estimates ranged from P72 billion of the Philippine Institute for Development Studies to P130 billion of the National Economic and Development Authority.

The fiscal deficit is estimated to reach 6.7 percent of the gross domestic product, which is way beyond the sustainable 3 percent target of fiscal managers, an internationally recognized prudential limit. 

The groups worry about the dire consequences that such fiscal imbalance could have on the economy and the flagship Build Build Build program of the Duterte administration. 

“We, too, believe in the need to adhere to the public finance principle ‘funds follow function’. Accordingly, we echo the concerns of fiscal and economic experts about the ambiguous provisions on the division of revenue and expenditure responsibilities between the proposed federal government and its federated regions,” the groups said. 

The groups commended the Neda, the economic managers in the Department of Finance, the Department of Budget and Management, the Bangko Sentral ng Pilipinas, as well as the researchers in the PIDS for their transparency in openly sharing their analysis and airing their concerns to the public. 

The groups supported and joined their call for a more detailed analysis of the fiscal impact of federalism to serve as basis for the deliberations in Congress. 

Topics: Duterte administration , Management Association of the Philippines , Alyansa Agrikultura , Asia Pacific Real Estate Association , Bankers Association of the Alyansa Agrikultura , Asia Pacific Real Estate Association , Bankers Association of the Philippines
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