Statement before the
House of Representatives
Joint Committee Hearing on the Bangsamoro Basic Law
February 28, 2018
I begin by expressing my full support for the formation of the Bangsamoro Autonomous Region through the enactment of a basic law. This will allow for a more substantial autonomous arrangement that meets the expectations of the citizens of Mindanao or of the Islamic faith. In turn, this should be a major step towards promoting harmonious co-development in Mindanao.
Having said that, the Department of Finance underscores the fact that the stable economic fundamentals and strong growth momentum we enjoy today has been due to three decades of fiscal discipline. The national government, often at great political cost to itself, saw through the difficult structural adjustment programs to work down what once was a crushing debt load.
Today, our people are ready to reap the rewards of long years of sustained fiscal discipline. Our credit ratings are at their best and our financial system is sound. We expect increased investment flows drawn by the expectation that the national government will continue with its sterling record of fiscal management.
While the Department of Finance has a number of comments on a number of sections of the bill covering the funding of the proposed transitional government, we wish to emphasize two main points for today’s discussion.
First, any proposed funding scheme should be programmatic, transparent, performance-based and phased. For instance, the law should put in place mechanisms to ensure that block grants given to the autonomous region are handed over only in tranches, subject to performance audits.
The implementation of plans and programs must be clear and reliable to ensure effective and efficient utilization of funds. These are the criteria of modern governance. Ensuring them will help in winning broader public support for the proposed autonomy arrangement.
Second, the fundamental requirements for sustained growth such as hard infrastructure, new communications technologies and efficient administration systems apply to the Bangsamoro region as much as it does to the rest of the Republic.
Fiscal provisions in the BBL, for instance, allow the Bangsamoro government to issue bonds along with other revenue-generating measures. We are afraid this would not succeed unless the autonomous region first achieves fiscal discipline, and demonstrates it. Fiscal autonomy is earned. It should be attained with the end goal of economic self-sufficiency and sustainable development. The provisions of the proposed law must ensure that in order to win public support.
Surely, the envisioned autonomous regional entity cannot borrow money at cheaper rates than the national government. Our national government has enjoyed improved credit ratings because, for over three decades, we exercised fiscal discipline even if this required absorbing political costs.
For the same reasons, the envisioned autonomous regional government could not float bonds at spreads tighter than if the national government floated these. If the autonomous region could not finance itself at better terms than the national government, how can it support itself?
We need time to build capacity for the autonomous region. Time is necessary to build the credibility at governance, win a suitable credit rating and demonstrate a capacity for exercising fiscal discipline.
We need to bring the economic activity in the autonomous region emerging from this law to a higher level. We all know the Autonomous Region of Muslim Mindanao (ARMM) has the lowest gross national income among the country’s regions. Based on 2016 data, the per capita Gross National Domestic Product in the National Capital Region (NCR) was the country’s highest at 432,000 pesos, and that of ARMM was the lowest at only27,000 pesos at current prices. ARMM’s per-capita GRDP is only six percent of NCR’s.
In 2016, the NCR’s economy grew by 7.5 percent, while the ARMM’s expanded only by 0.3 percent in real terms. Reinvigorating the economy in the autonomous region is necessary to ensure the success of the BBL.
Furthermore, we recommend that lawmakers should look at past experiences in devolving certain basic services to learn from them and take into consideration these lessons when crafting the BBL. The law should be open to changes. Allowing autonomy to evolve by abandoning its mistakes and strengthening its positive aspects is much better than having a rigid system with a lot of gray areas. In the end, what is important is we develop as a nation that is united, rather than divided.
Devolving power is a process. It requires some hard thinking. It requires time to build capacities, grow institutions and evolve appropriate civic cultures. When it comes to reinventing the institutions of governance, haste may sometimes make waste.
I recall, nearly three decades ago, there was such exuberance about enacting a Local Government Code that will significantly devolve government functions. I was then serving as Secretary of Agriculture and Alfredo Bengzon was serving as Secretary of Health in the administration of President Corazon Aquino. We two strongly opposed the devolution of two government functions covered by the agencies we headed. These were agriculture and health.
We both thought that policies and standards ought to be in the hands of the national government. The local governments were simply at that timenot ready for the devolution of hospitals and agricultural programs. They needed time to build capacity and raise resources.
Alran and I lost that debate.
Consequently, reality bit and it bit hard. Soon enough, local governments were returning hospitals to the Department of Health. They were facilities too complex and too expensive for the local governments to handle. Since devolution, public health had not improved. In some areas, it deteriorated.
Agriculture suffered. It became, and remains to be, a drag on the economy. In many areas, rural poverty worsened. It might have been better for everybody if the national program for agriculture was maintained. The national government should have strictly monitored how the local governments implemented national government programs.
The poor state of our public health services and the stagnation of our agriculture might not be entirely caused by devolution. But very clearly devolution did not cause marked improvement that it promised to be. I venture to say we are worse off.
I hope that mixed outcomes of our experience with devolution will enlighten discussion on the Bangsamoro Basic Law. The first lesson, I suppose, is that it does take time to evolve new institutions of local governance into place.
The end goal of devolution or an autonomous setup of some form is to bring economic development to the people of the area covered by this arrangement. Let us make sure that the law enacted for the purpose of establishing a Bangsamoro entity is designed precisely to make economic progress more feasible in its defined area.
We are confident that all the efforts, patience, sacrifice and hard work put in by these industrious committees will bear fruit with the passage of theBangsamoro Basic Law. Rest assured that the Department of Finance is committed to continue working closely with our representatives in Congress.