EO 444: A New Push for Decentralization and Federalism?

A workshop to tackle Federalism issues, organized in cooperation with the Citizen's Movement for a Federal Philippines (CMFP) and the Department of Interior and Local Government (DILG).



Maximizing Decentralization – Citizen’s Movement for a Federal Philippines (CMFP) in discussion with the Department for Interior and Local Government (DILG)

Pursuant to Executive Order (EO) No. 444 of 2005, the Konrad Adenauer Stiftung (KAS), in coordination with the Citizen’s Movement for a Federal Philippines (CMFP) held a conference entitled, “EO 444: A New Push for Decentralization and Federalism?” at the Parklane International Hotel in Cebu City from April 4 – 6, 2008.

The meeting tackled the joint agenda between the members of federalist movement from all over the country and the decentralization program of the government headed by the Department of Interior and Local Government (DILG). Klaus Preschle, country representative of the Konrad Adenauer Stiftung, stressed the importance of bringing together the members from both groups in an exchange of ideas towards similar goals.

Department of Interior and Local Government (DILG) Undersecretary Austere Panadero represented the government side and tackled what the government has been doing towards the goal of decentralization, taking into account the recently signed E.O. 444, which calls for a review of the on-going decentralization process, and E.O. 669, which called for coordination with local government towards the long-term goal of federalism.

Panadero gave a “cursory review” of the past 15 years of decentralization in the Philippines. His presentation focused on three parts: 1) the assessment of decentralization by looking into the economic and social conditions in areas outside the National Capital Region (NCR), the fiscal and financial conditions of Local Government Units (LGUs), and decentralization and governance issues; (2) a brief account of the recent developments in the pursuit of decentralization as policy and lastly; (3) the challenges in pursuing decentralization at this time and the proposed framework for the strategic review of decentralization.

He began by contextualizing the implementation of decentralization to target and to improve development outcomes. According to Panadero, the facilitation of economic development and improvement in efficiency and distributive equity; achievement of effective local governance and efficient management of the local development process; realization of a more meaningful local autonomy and local democracy and the establishment of a coherent organization of local governments matched with appropriate capacities were the objectives of the implementation of decentralization. Guided by these objectives, the devolution to LGUs of the areas of service delivery, regulatory functions, development initiatives such as the authority to undertake entrepreneurial activities and popular participation through the legitimized participation of civil society in local governance would hopefully lead to the development outcomes of (1) broad-based economic development; (2) poverty reduction and faster human development; (3) fiscal autonomy and (4) improved governance at the local level.

Among the notable findings Panadero shared were the following:

The Philippine economy’s geographical structure remains unchanged within the last 15 years as Luzon continues to dominate economic contribution with Visayas increasing its share within the last four years. Thus, economic activities, despite moving away from the National Capital Region (NCR) are still concentrated on Luzon creating a disparity in overhead capital infrastructure across regions. This disparity could be translated into “opportunity” through the creation of growth centers for the growth of the regions and agriculture sector.

In terms of local social development, there is mediocre poverty and human development progress due to inadequate expenditures for the social sector. Social expenditures in relation to the total LGU expenditures decreased from 18% in 1998 to 14% in 2005. The provinces in ARMM and Mindanao continue to have the highest poverty levels.

For LGU fiscal and financial autonomy, despite reforms for this area, it was found out that LGU financing is still heavily dependent on national government which limits the supposed autonomy it should enjoy. Moreover, some of the key issues include the inadequacy and inefficiency of LGU borrowings.

For participation and governance, LGU autonomy significantly increased as evidences of broader public and community participation in planning and decision making became visible through the rise in the number of NGOs and their active involvement in service delivery. Despite these, there is still weak capacity for governance especially in revenue mobilization and service delivery. There is also an inadequate coordination between and among tiers of government resulting in missing services.

With these, Panadero stressed that while key gains have been attributed to decentralization, a number of key challenges still need to be addressed which can be categorized into four: 1) Institutional - weak planning and coordination mechanisms; 2) Access to financing – limited access to finance investment and social sector projects; 3) Infrastructure – inadequate infrastructure facilities at the local level and; 4) Capacity building – lack of capacity to facilitate local economic development.

Clearly, looking into the current state of decentralization in the Philippines, a lot more have to be accomplished for its improvement. Better monitoring of LGU performance and engagement and enjoinment of LGUs in promoting private-public sector participation are key for the future.

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Park Lane International Hotel, Cebu City


Klaus Preschle