The Department of the Interior and Local Government (DILG) of The Philippines has officially launched Federalism Roadshows that will bring educational lecture/seminar style interactive civics lessons to Filipinos who want to learn about some of the constitutional reforms that President Rodrigo Duterte has long championed.
Of course any opportunity to educate people throughout The Philippines about the benefits of federal constitutional reform is necessarily a good thing, especially when such events are held in the Autonomous Region in Muslim Mindanao (ARMM) where people are naturally concerned with gaining more rather than surrendering the hard won political autonomy that President Duterte has delivered.
But while the first government sponsored federalism roadshow in the ARMM was generally considered a success, it is equally clear that the audience present gained a partial rather than a complete picture of what constitutional reforms could deliver. Likewise, those who attended the DILG roadshow appear to have been given the impression that there is only one option for reform when in fact there are several contrasting options that all Filipinos have a right to learn about.
The problem with the federalism roadshow in the ARMM stems from the fact that it appears the that proposals being explained were limited to those contained in the The Consultative Committee (ConCom) draft constitution. While the ConCom draft does propose federalising The Philippines, it retains a presidential/congressional system that is not entirely dissimilar from the present system that has clearly failed to deliver a single democratic mandate for the nation. When two competing branches of a legislature can theoretically also compete with both a directly elected President and a separately directly elected Vice President, this is a recipe for deadlock rather than a system of streamlined democracy.
It is for this reason why several other proposals including those endorsed by Duterte’s political party PDP-Laban call for a federal-parliamentary system rather than the federal-presidential system proposed by ConCom. The following chart produced by the Correct Movement outlines the fundamental differences between the major proposals for reform that currently exist.
As one can see, of all the drafts, the ConCom is the least progressive as apart from federal reforms it neglects to create a parliamentary system, while it also retains crippling restrictions on foreign direct investment.
During grass roots federalism roadshows throughout the world, Correct Movement leader Orion Perez has explained why of all the proposals for reform the ConCom is the worst while by contrast, any of the other three largely achieve the three step goal of federalism, parliamentary democracy and an end to constitutional restrictions on foreign direct investment.
While it has been said by certain sceptics that some Filipinos are not even ready to learn about a parliamentary system, the fact of the matter is that unicameral parliamentary systems are vastly more straightforward than bicameral presidential/congressional systems. This is especially true of the needlessly complicated system established by the 1987 Constitution of The Philippines.
A step by step guide to understanding parliamentary democracy
Throughout the world, the most common way of electing members of a national parliament is either through a party-list proportional representational system or through a first past the post system. In a party-list proportional representation, voters select from a list of parties and which ever party gets the most votes, gets the most number of members of parliament after the election. This system is designed to give all parties, including small parties, a proportional share of seats in a national parliament.
By contrast, in a first past the post system, each party selects a single candidate for a constituency/district and people vote for an individual candidate and his or her party at the same time.
Here’s how each system would look in The Philippines:
a. Party-list proportional representational
Sarah lives in Metro Manila and on election day votes for PDP–Laban. Assuming most people in the country vote like Sarah, it means that PDP-Laban will send the greatest number of party members to parliament. Sarah’s neighbour Maria votes for the Liberal Party. Assuming the second largest group of Filipino voters are like Sarah, it means that the Liberals will send the second highest amount of party members to the new parliament.
Crucially, this style of parliamentary party lists has no practical relationship to the same term that is used to denote the highly confused and downright deceiving system through which some individuals are elected to the current Philippine House of Representatives. A parliamentary party-list is simply a means of voting for one’s party of choice as contrasted with voting for a single-member who represents a given party as in the first past the post system.
b. First past the post
Sergio lives in Davao city zone A (large cities usually have more than one zone in first past the post systems). Sergio supports PDP–Laban and in his area, PDP–Laban’s candidate for member of parliament is Rodrigo Roa Duterte. Therefore, Sergio checks the box that says ‘Rodirgo Roa Duterte, candidate for PDP–Laban’.
Weighing the options
Most parliamentary systems, particularly the more modern ones, tend to use a form of party-list proportional representation. However, during the most recent election for Russia’s parliament, the State Duma, officials decided to allow some areas to vote in a first past the post system while the majority of Duma deputies (members) were elected via party-list proportional representation.
In a federal Philippines, the most effective way to vote for a member of parliament would be for all localities to vote on the basis of a party list whose members will be determined via proportional representation, while additionally, each federal unit of the country will have a set number of single candidates who will be voted for on a first past the post basis.
In such a system, Sarah who lives in the would-be federal district of Metro Manila will cast one vote for the party of her choice (PDP-Laban, Liberal, Nacionalista etc), while also voting for a given number of candidates for her federal district, for example, three representatives who will be unique to Manila. Here she can vote for candidates all from the same party, or three candidates she personally likes from different parties. This also allows independent candidates a chance to enter parliament.
Such a system will guarantee that a healthy mix of party popularity combined with that of stand-out individuals at a federal level, will help to comprise a balanced yet diverse make-up of a parliament.
In a party list proportional representational system, the parties get to choose which representatives will be the first to enter a parliament. Traditionally this means that party leaders and would-be cabinet ministers get the first seats available, while further seats are allocated to the younger and less experienced candidates. In reality, this means that if a party gets few votes, its leader and senior party figures will enter parliament while other junior members will have to wait and hope that their party gets more votes at the next election. By contrast, a highly popular party could see both the party leadership and a large number of younger candidates win seats.
Whichever party wins the most votes will get to form a government. This means that the winning party’s leader will become the Prime Minister/Head of Government. The Prime Minister can then choose which fellow party members of parliament should take on important cabinet positions including Secretary of Foreign Affairs, Secretary of Finance, etc. If the winning party gets less than 50% of parliamentary seats, the party will likely have to form a coalition government with one, two or even three other parties in order to form a government.
Unlike in a presidential system where cabinet members can be appointed from anyone in the nation, in most parliamentary systems, cabinet members must first be elected to parliament, something which is quite easy in the party-list system, as would be cabinet members are put towards the top of the party list. For example, if a party leader wants a certain individual to be his Secretary of Foreign Affairs, the party leader will simply put such an individual high on the party-list. This insures that all national officials have to face the electorate, while all parties with a serious chance of governing will be able to get their top officials into the parliament.
Term of a parliament
The lengths of most parliaments range from 4 to 7 years. For The Philippines, based on the current term length of the office of President, new elections for a parliament should be held once every six years. However, in a parliamentary system, if a government becomes unpopular, it can be voted out by a majority of members of parliament. This is called a ‘vote of no confidence’. Votes of no confidence are especially common when the ruling party is part of a coalition.
In order to make The Philippines even more democratic than many other parliamentary systems, major issues should be decided via referendum. Such a system has been most successful in Switzerland. Here, while the parliament debates and votes on many new laws and regulations, for major issues, the people have a direct say.
It is crucial that in such a parliamentary system, it is written into constitutional law that all such referendum votes are legally binding, meaning that parliament can not vote to overturn the will of the people as expressed in a referendum.
To make things even more democratic, if enough citizens sign a petition asking for a referendum on holding new elections before the end of a six year parliamentary term, they should be able to hold a nationwide referendum asking if they want new elections sooner. This allows the public to hold their own votes of no confidence, should a government become highly unpopular.
The Supreme Court in many parliamentary systems, is able to hold parliament to account, were parliamentarians to vote through measures which violate the constitution. Such a system tends to work effectively throughout many nations.
In parliamentary republics, there are typically weak Presidents whose role is generally ceremonial. To save costs, all members of parliament should also be eligible to run for president. Therefore, one could have parliamentary elections and presidential elections on the same day. For example, in a parliamentary system, Rodrigo Duterte could stand as the leader of his party, while also running for the less important role of President. If his party wins the parliamentary election and he personally wins the presidential election, he will hold both titles. If he were to win the parliamentary election but lost the presidency, he would still hold the most power, but could not be referred to as President when travelling abroad. Likewise, if he won the Presidency but his party did not come out on top in the parliamentary vote, his role would be limited to a ceremonial position while the Prime Minister would be the country’s most important political leader.
The clear advantages of parliamentary democracy
A unicameral parliament is among the most efficient and most democratic ways to run a modern government. Such a system has clear advantages over the convoluted and often adversarial system in place today. This is of course, just one proposal, there are other varieties of parliamentary system as well as other original ideas that can and should be debated before The Philippines embarks on a positive road to political change.
The need for Foreign Direct Investment (FDI)
The key to success in the majority of these Asian economic “tigers” was an openness to foreign direct investment (FDI) during initial stages of economic modernisation. In The Philippines, President Duterte is well aware of the importance of FDI which is why he recently signed executive order 64 in order to implement modernisation to current FDI restrictions. That not withstanding, the 1987 Constitution’s 60/40 rule still prohibits more than 40% foreign investor ownership of most major ventures and projects in The Philippines. Yet within the confines of the anti-FDI Constitution, Duterte has still managed to open up the country to more FDI than any of his predecessors ever had the courage or foresight to do.
According to executive order number 64, the following sectors will now allow for a 100% share of FDI:
— Internet businesses, excluded from mass media;
–Teaching at higher education levels provided the subject being taught is not a professional subject (i.e., included in a government board or bar examination);
–Training centres that are engaged in short-term high-level skills development that do not form part of the formal education system;
–Adjustment companies, lending companies, financing companies and investment houses; and
–Most wellness centres
Furthermore, while previous legislation limited FDI in the construction of locally funded public works as well as the repairs of public works to 20% and 25% respectively, according to the new executive order, construction and repairs of locally funded public works will now allow for a top level of 40% FDI in line with existing Constitutional restrictions.
From ‘Build, Build, Build’ to Invest, Invest, Invest
Chinese President Xi Jinping is weeks away from an historic visit to The Philippines which will take place after the APEC summit in Papua New Guinea. The visit will encapsulate the blossoming of what Xi called a “golden era in relations” between the two nations and one that has been characterised by Philippine President Rodrigo Duterte in the following way:
“I am into business. I am not going into war. We can postpone that war 100 years from now. In the meantime, I need the resources for my country to make the people comfortable and provide education for the children and food on the table.
It’s one-stem and China and the Philippines will bloom, and you and I are in the middle of the flower”
While Duterte’s rapprochement with China has already made a mark on Philippine history, his model of joint cooperation with China has now been adopted by ASEAN (the Association of South East Asian Nations) as the model for progress in future dialogue with Beijing over matters relating to territorial rights in the South China Sea.
For The Philippines itself, China looks to invest in up to eighteen separate infrastructure projects that will help to expand President Duterte’s ‘Build, Build, Build!’ strategy to modernise the nation in order to boost trade, create jobs and catch up with ASEAN partners whose domestic infrastructure is far ahead of The Philippines due to decades of political neglect prior to Duterte’s 2016 election.
Philippine Budget Secretary Benjamin Diokno has spoken optimistically about the deals that are currently being “ironed out” prior to Xi’s visit. Among the substantial projects in The Philippines to be financed by Beijing include: “the New Centennial Water Source-Kaliwa Dam Project, the 581-km. Philippine National Railways (PNR) South Long Haul Project, the PNR South Commuter project from Manila to Los Baños, Laguna, and the Binondo-Intramuros and Estrella-Pantaleon Bridges Construction Projects”, according to an official statement from PTV.
Diokno also stated that when Xi visits there is a high likelihood that the Chinese President will offer further aid to redevelopment in The Philippines including for the city of Marawi in Mindanao which continues its recovery process after a sustained ambush from Daesh (ISIS) aligned terrorists.
This comes as both China and Japan look to be engaged in competition for the development of modern rail systems in The Philippines. According to reports, China will clinch the deal to invest in the construction of the $3.21-billion Philippine National Railways (PNR) South Long Haul Line while Japan will underwrite the construction of a much needed subway rail system for Metro Manila.
Duterte’s win-win for The Philippines
President Duterte’s decision to inaugurate a new era of positive relations with the Chinese superpower has already paid dividends in terms of consecrating an important partnership that will help to ensure sustainable economic development in The Philippines as well as laying the framework for stronger pan-Asian security cooperation over serious matters including the narcotics trade, piracy and terrorism. Beyond this, while difficult to ascertain from simply walking near the locations of future megaprojects, Chinese investment in The Philippines will have a transformative effect on future generations in terms of living standards, quality of social life and job opportunities.
A frequent criticism about any megaproject is that the short term benefits are not forthcoming. Such a myopic analysis however negates the reality that even as long term projects are being constructed, the local economy benefits from growth in industries which naturally arise in order to provide for the presence of a new large scale workforce. Thus, even before the final ribbons are cut on the new projects, the economy will benefit from not only cash injections that allow the projects to get off the ground, but will also see the medium term creation of new industries that flourish symbiotically with the megaprojects in question.
Furthermore, by balancing relations between China, Russia, the United States, Korea, Japan, Turkey, India and fellow ASEAN partners, Duterte’s win-win model of diplomacy means that more and more countries are now interested in being a part of the rapid development of national infrastructure in the country.
Taking advantage of Chinese economic openness
At a time when China is taking measures to racially open up its substantial domestic market to foreign goods, now is the time to take advantage of a two-way street involving a new era of Philippine openness to FDI which will result in the country producing more goods that will be attractive to the Chinese market as well as to the Japanese, Indian, European and American markets and also to the markets of fellow ASEAN states and their mutual free trading partners.
If such measures are taken – measures which explicitly require changes to the 60/40 rule of the 1987 Constitution, it can be assured that the 18% growth in Philippine exports to China under Duterte could see an exponential rise in the coming years as Duterte’s reformist policies could be further unleashed in order to usher in a new era of Philippine industrial productivity that would be greeted by the millions of eager customers in China and other major target markets for future Philippine exports.
The final step
Duterte has laid the stage for The Philippines to continue to bolster its sources of attraction to foreign investment. However, there remains one stumbling bloc to realising the full potential of Duterte’s drive for infrastructural modernisation. The constitutional restriction on FDI in The Philippines is holding back potential future investors from making the most of a modernising Philippine nation. Currently, the so called 60/40 rule as inscribed in the 1987 Constitution prohibits a foreign investor from controlling more than 40% of his or her Philippine based business or construction project.
To understand how the growth rates of a country can skyrocket in the aftermath of inviting copious amounts of FDI and embracing free trade, one needs to examine the statistics of the early years of Lee Kuan Yew’s independent Singapore. Between Singapore’s (forced) independence in 1965 and the world’s first modern energy crisis in 1973, Singapore’s growth rate averaged 12.7%. Even when the 1973 oil crisis put pressures on both developed and developing economies, Singapore still managed to maintain an illustrious 8.7% growth rate in the mid 1970s.
In Malaysia under Mahathir, an opening up to FDI saw an average growth rate of 8% between 1986 and 1996. Focusing on the early 1990s, specifically the period between 1991 and and 1995, China’s economic growth rate was 11.8% while Singapore held steady at an average of 8.6% while Malaysia was just .1 percentage point behind its island neighbour. And yet during this period when Cory Aquino was “supposed to” modernise the economy of The Philippines, economic growth was a mere 2.4%, just .4 percentage points higher than the 1st world American economy that itself was going through a recession for much of the early 1990s.
Likewise, while China is the world’s top industrial producer, the country is also the global leader when it comes to receiving FDI. This reality helps to crush the myth that industrial development and the receiving of FDI are somehow contradictory. The opposite is in fact true.
Although Duterte has achieved sustained economic growth that alluded many of his predecessors, it is important to remember that not long ago The Philippines impeached pro-FDI president Joseph Estrada while former President Gloria Macapagal-Arroyo’s economic openness drive was ultimately crushed under the weight of an entangled political system. As The Philippines was besot with the political stagnation of the 1990s and early 2000s, Malaysia, Singapore, China, Thailand, Indonesia and Vietnam continued to forge ahead both prior to and in the gradual aftermath of the 1997 Asian economic crisis.
The reasons for this are clear enough. While Singapore and later China, Malaysia and Vietnam opened up to ever more FDI, in 1987 The Philippines adopted a new constitution which specifically restricted foreign direct investors from having control over more than 40% of their investment (the so called 60/40 rule). By restricting foreign investors to minority ownership, The Philippines became automatically less attractive than its faster growing neighbours.
While to Duterte’s great credit, he has managed to manoeuvre through the convoluted political system established by the 1987 constitution more ably than any of his more reform minded predecessors, this simply is not good enough. A country like The Philippines today should not be measured against Singapore and Malaysia’s growth rates decades after initial reforms were made but should instead be in a position to aspire to the kinds of mega-growth numbers of Singapore in the late 1960s and early 1970s as well as those of Malaysia in the first fifteen years of Mahathir’s time as Prime Minister.
The reason for this is that while growth tends to stabilise in economies that have matured into their new reformist realities, The Philippines has yet to make such reforms. In this sense, from a point of view of economic policy, The Philippines today is 53 years behind Malaysia, 40 years behind China and 37 years behind Malaysia.
Because of this, if a Philippine government managed by Duterte or someone sharing his policies and goals were to preside over a constitution with few restrictions on FDI and likewise if Duterte was leading his government from a unicameral parliament rather than a presidential administration at odds with two bodies of a legislature, the numbers that The Philippines could see today might well be closer to the double digits of growth that Singapore had after its reforms while it would almost certainly break the all important 8% threshold as Malaysia repeatedly did during the reformist drive of Mahathir.
This is why while it is impressive that The Philippines is even breaking the 6% threshold under an outdated and reactionary constitution – this is simply not good enough. President Duterte is doing all he can within the constraints of the 1987 constitution. If these shackles were lifted, there is no doubt that The Philippines would go from a country trying to catch up with itself to one that could replicate the economic miracles of Singapore and Malaysia within the framework of Filipino aspirations and cultural characteristics.
Duterte and FDI in summary
Duterte and Xi stand on the cusp of making the most out of a long overdue flowering of Sino-Philippine relations. While other nations now excited about the prospects of further investment in The Philippines, the time is now right to abolish the crippling 60/40 rule in order to make the most out of the spirit of economic modernisation that Duterte has brought to the nation.
Duterte’s new executive order is certainly taking the country in the correct direction, yet until the 60/40 rule is fully abolished, the economic opening of The Philippines will remain a work in progress.
While the ConCom draft achieves federalism for The Philippines, it leaves out two important elements that are required to make any constitutional changes achieve their goals of improving the economy, re-shaping politics and helping the people of The Philippines. In order to take advantage of the window of opportunity for meaningful long-term sustainable reform that Rodrigo Duterte has opened, The Philippines must adopt not just federalism but at the same time must adopt both parliamentary democracy and an open economic system that embraces rather than shuns FDI.
Because of this, any educational events on federalism that only focus on the incomplete ConCom proposals are giving Filipinos an incomplete picture of that which is required to change the country for the better in a way that builds on the reforms that President Duterte has already achieved.