TRADE SECRETARY Ramon M. Lopez said a shift to federalism will mean that regions will have to compete to attract investors, regardless of the aid available to the poorest regions.
“It will be a more competitive scenario where states will compete with each other. It won’t be one province per state. It will be groups of provinces. If the region is poor it will receive assistance from a fund, but the least-developed ones will really have to attract investment,” he told reporters in Pasay City on the sidelines of the 6th Competitiveness Summit held Thursday.
He said the shift will be accompanied by a “balancing mechanism” in the form of greater incentives that can be offered by least developed areas.
“They can attract more investment if they have the flexibility to offer more incentives. In our case we support incentives being offered possibly at the local level. But the overall incentive scheme has to be aligned with that of the federal government. Right now we have many incentives; whether or not they are used is their call,” he added.
Business groups have expressed support for the country’s economic managers who called for a review on the fiscal risks associated with a move to federalism.
Mr. Lopez said that the Department of Trade and Industry (DTI) supports further study of the economic implications and benefits of shifting to federalism.
“Of course I support a further review but what’s important is in this federal system the regions raise their competitiveness. Any form can work as long as it functions well,” he added, noting that the system’s success will also depend on low levels of corruption. — Janina C. Lim
