The Possible Effects of Federalism in Philippines Businesses

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Aside from the drastic changes that came with Pres. Rodrigo Duterte’s presidency, the Philippines is now facing the risk of shifting to the federal government. The idea provoked intriguing views across sections in the society and puzzled the Filipino masses of its fiscal effects and impact in the Philippine economy. In fact, Pulse Asia ran a survey showing that 67% of Filipinos contest the change, 18% are in favor, and the remaining 14% are unsure. Most critics believe that it’s part of Pres. Duterte’s scheme to stretch his term. However, he reassured the public that he won’t extend his term beyond the mandated years. The public had clashing opinions on federalism. Tycoons and large sectors share their thoughts for federalism’s economic impact.

To grasp the idea, Outsource-Philippines shares the possible effects of shifting to a federal system. Moreover, we included the views and opinion from seven of the country’s largest trade groups. If knowing federalism’s effect on the Philippine economy sparks your drift, keep on reading.

the philippine flag and the philippine economy

What is Federalism and How Can it Affect the Philippine Economy?

In the first place, what is federalism? Federalism is a type of government that divides the power between the national government and sub-divisional governments. Meaning, it divides our country into sovereign states. And these self-ruling states are even further divided into local units liable for their own progress. We are talking about the charge to develop local industries, build sectors, and preserve their own culture. It may sound intriguing for progressive provinces. However, what setting can we imagine for the rural ones?

3 Beneficial Effects of Federalism on the Philippine Economy

Federalism’s Economic Impact

Above all the effects of the federal system, the improvement of a local economy is one of its pros. Besides, it will allow the local governments to manage their own resources. Meaning, they don’t have to wait for the national government’s consent before they can employ projects and spend for the development of their region.


Who wouldn’t want the freedom to run their own domain? President Duterte wants local government units (LGUs) to decide on their own. It lets them create solutions, employ policies, and make important choices. Aside from owning the credit ones they govern their units successfully, they won’t have to depend on the national government at all.

Fiscal Autonomy

In the current government, the Philippine economy depends on Metro Manila for employment and growing business. That’s the point of the federal system regarding fiscal aspects. LGUs will have their own fiscal autonomy and focus the needs of their region. In the same way, they will have more capacity to address their needs and accommodate their citizens faster.

What Does the Palace Say About Federalism?

The conflicting views of the Filipino masses on federalism depend on various aspects. In fact, Malacañang stated that federalism won’t hold back the development for unprepared regions. As per what presidential spokesman, Harry Roque said, ‘shifting to the federal system won’t cause dire changes in the current projects of the government.’ As what Philstar wrote, Roque said, “Our budget would remain the same, as identified national projects would be devolved and transferred to the Internal Revenue Allotment (IRA) of local government units,”. He even added, “These projects include maintenance of barangay roads and bridges, water supply services, barangay health centers and daycare centers, solid waste disposal system of municipalities, among others.” Meaning, the shift from the federal system continues its present goals.

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Philippines Business Economy Remains Strong

Hence, with all these views on federalism, its possible effects must come with dedicated effort from the government and the citizens. Though the federal system comes with pros and cons, both gov’t and citizen must team up for a better country. In fact, the Philippines survived through dire changes in the world market and economy. Besides, the country remains as one of the top outsourcing countries that gives quality service. Thus, if you’re looking for an outsourcing firm to cater your business, Outsource-Philippines has your back! We have a growing team of pros ready to aid your business. Inquire now! | | | | | | | | | |