COMMENTARY

Tips from Malaysia’s federalism

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COMMENTARY

Much discussed these days is the Philippines’ proposed shift to a federal structure of government. This proposal, which is at the core of the Duterte Administration’s reform program, would transfer significant portions of powers from the present centralized unitary government based in Metro Manila to the planned 11 Federal States throughout the country. The aim is to empower the regions to craft policies and programs best suited to their localities and hasten the overall development of the nation.

With the new Administration committed to pursuing federalism, a key question is, which type of federal structure would be suitable for the country?

There are some 25 nations that are described as distinctly federal systems, such as Mexico, Argentina, Brazil, Nigeria,Russia and the United States. There are also federal-parliamentary ones, notably Australia, Canada, Germany and closer to home, Malaysia.

With a total land area of 330,803 square kilometers (sq km), which is comparable to the Philippines’ 343,448 sq km, a fairly successful development track record and being the sole Asean country with a federal set-up, Malaysia is a fine first place to check.

Federal-parliamentary Structure. Malaysia has three levels of government, namely the federal government, 13 state governments and the local units. The head of government is the Prime Minister, who is the head of the majority party or coalition in the lower house of Parliament. Malaysia also has a constitutional monarchical system, with a Yang di-Pertuan Agong (king) as titular head of the nation, just like in Thailand and Japan.

Each of the 13 state governments is led by a chief minister, who is the leader of the majority party, or coalition in the State Assembly, while the head of the state is the Sultan (for the nine traditional Malay states, with their royal families) or the governor (for the four non-Malay states). The nine Sultans compose the Conference of Rulers, and from among them the position of Agong is elected and rotated every five years.

Matters that are reserved for the federal government include defense and security, foreign affairs, education, social security, trade and industry, communications and health. The state governments, on the other hand, are responsible for local government matters relating to the Islamic religion and Malay custom, land, mines and water supplies, public health and sanitation, drainage and irrigation and social welfare. The 13 states have their own state constitutions, but the Federal Constitution remains the supreme law of the land.

Sustainability of the state governments
One of the main proposals, as laid out by former Senator Aquilino “Nene” Pimentel, Jr., is for 11 states for the Philippines: four in Luzon, four in Visayas and three in Mindanao.

Some people have asked whether these states will be economically viable, arguing that Central Luzon, Southern Luzon and Metro Manila maybe the only economically productive regions, and that lumping poorer provinces with richer ones may just pull down the latter.

The Malaysian experience may be instructive here. The matter of economic sustainability seems not to have mattered when they started on the road to unification and then federalism in the late ‘40s. They took on as given the existing historical Malay sultanates and then the former British possessions, with wide disparities in land area, population and level of development, and turned them into states. Thus, relatively tiny Perlis (with only 821 sq km and a current population of 227,025) has the same privileges as a state as Pahang (36,137 sq km, 1.44 million people), or vast Sarawak (124,450 sq km, 2.4 million people). This is the so-called asymmetric federalism, which is also seen in Canada, Germany and the US.

Malaysia has the usual listing of sources of revenue for the federal and state governments, similar to the Philippines’ national and local revenue sources. The Federal Malaysian Constitution specifies a number of taxation powers for the states, notably incomes from lands, mines and forests, and liquor shops; business registration; service fees; license fees, as well as allows for emergency funds and returns from state-owned enterprises.

To ensure balanced development among the states, their Federal Constitution provides five types of grants from the federal government, namely capitation grant, state road grant for maintenance of state roads, specific purpose grant, contingencies fund, and state reserve fund.

As noted by House Speaker Pantaleon Alvarez, the proposed states would retain 80 percent of their resources and incomes, and remit only 20 percent to the central government. These will be supplemented by funds from an Equalization Fund Administration to bridge the resource gaps among the various states, adds Senator Nene Pimentel.

Another question is whether the federal set-up will lead to the adoption by each state of their respective court system. These may result in differing applications and interpretations of the Federal Constitution and federal laws, just like in the US, and complicate the administration of justice in the country, says a leading jurist.

Not necessarily so. The judicial system in Malaysia is a federalized body operating uniformly throughout the country. Its judiciary is largely centralized, so the Philippines’ current judicial system need not be affected by a shift to federalism.

A federal territory of Metro Manila, anyone?
An attractive feature of the Malaysian system is the concept of federal territories, specifically for the capital Kuala Lumpur, the offshore financial center Labuan and the federal administrative center Putrajaya. These are federally administered territories, similar to Washington, DC, and overseen by a federal minister.

This approach enabled Malaysia to build a well-planned administrative center starting in the early 1990s, away from the overcrowding and congestion in Kuala Lumpur. It made possible the relocation of federal ministries and agencies to more suitable premises, facilitated coordination among them, and transformed a former oil palm plantation into a new highly valuable development zone.

At present, local mayors individually and collectively, through a coordinating commission, manage the affairs of Metro Manila, with predictable results for all to see. The adoption of a federal territory structure may lead to solutions to the incessant traffic jams, perennial flooding, woeful lack of parks and public spaces, and other urban ills that have plagued the once lovely metropolis.

Malaysia’s federal system has its share of challenges, with the continuing tussle between the federal government and Sarawak state over revenue sharing from oil and natural gas extracted from the latter as a case in point. So one needs to look at federal systems in other countries as well, and pick and choose the better features.

The Philippines has had a unitary system for some 80 years since Manuel L. Quezon’s Commonwealth Government, and seen its strengths and weaknesses. With trust in the maturity of the Filipino people, it may be high time to have an upgrade and test out federalism.

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1 Comment

  1. Leodegardo Pruna on

    While the shift from unitary to federalist form of government shows glitter of hope for sustainable development, the Filipino people should be made aware as well as understand what the change is all about and how the shift could affect their lives and welfare. God bless the Philippines.

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