Open Discussion #5: What are we looking for in a Federalism proposal?

President Duterte explains Federalism to top aides

Federalism is proposed by President Duterte as a solution to the nation’s enduring problems, able to cure everything from poverty to bad governance to infrastructure development by ending Imperial Manila’s claim to power, resources, and importance and thereby allowing the joyful, harmonious, and efficient regions to cut through all the crap.

I’m reminded of the masterful sales job done by the Wizard in the “The Wizard of Oz”. Speak with a booming voice, overladen with authority, and the innocent citizens will worship their imagined godly vision of what, in real time, is actually just a creaky old snake-oil salesman with a good microphone lording it over a nation from behind a curtain in the . . . um . . . Palace.

Federalism certainly sounds nice to the uncritical mind, of which there are roughly 103.95 million in a nation of 104 million people. So let’s put on our thinking hats and decide what we will be looking for when a proposal comes rolling out of the Legislature sometime not too far off.

Here’s an earlier version done by Senator Pimental the Elder, if you are inclined to get into some specifics:  Pimentel Draft Federalism Bill (pdf).  I imagine the new legislation will be built on this prototype.

For myself, I am skeptical that the regions are really better at anything than National, unless it is corruption. Government offices everywhere are stacked with friends of the entitled, not competent technocrats operating under an incentive system that gets excellent results. So we are likely to empower the normal sloppy inattention to details and overbearing entitlement that we see today. So I’d be looking for how leaders are selected and how corruption is weeded out.

I’d also be looking for how the poor regions will be made whole by revenue allocations from the rich regions, and how, exactly, to stop the rich from stopping allocations to the poor. My unhappy vision of Federalism is three gloriously rich regions looking down on about a dozen poverty riddled, angry regions, all 15 of them carping about National’s interference and incompetence. I would like to see how the people writing the legislation propose to actually make the Philippines into a real NATION.

Perhaps they will delegate that task to Senator Pacquiao. I’ll follow up on that.

What will you be looking for?

* * * * * * *

During open discussion, any subject may be raised. There is no such thing as ‘off topic”. However, respectful discussion is always in order. Rude language or crude photos are not appropriate, as this is a public space. Teaching and learning from original commentary, with relevant reference to outside resources . . . that’s what we aspire toward . . .

146 Responses to “Open Discussion #5: What are we looking for in a Federalism proposal?”
  1. Bill In Oz says:

    A start to federalism : tax raising. Which taxes will continue to be raised by the National government and which by the states ? I suggest that GST and income tax continue to be a national taxes.
    Why ? Because they raise huge amounts of revenue and can thus be a source of revenues to be redistributed in a needs based way.

  2. Steven Rood says:

    Details on the fiscal situation:

    The 2016 ratio of tax to GDP in the Philippines was 13.7 percent. Former DOF Undersecretary Nene Guevara used 10% of Gross Regional Domestic Product (GDRP) as a guesstimate of what a locality could raise from its own economic activity.

    She also estimated 70 billion as the cost of running a regional government. Since we don’t know the number/specification of states, she just used the current administrative regions.

    Her results (published in the Inquirer on January 15 (there’s a nice graph but I can’t paste it in here) were that only NCR, Region 3, and Calabrazon would raise enough local revenue to run their government (Region 7 — Cebu — comes close).

    So, “Federalism” is not a matter of “keeping more of your local taxes instead of sending them to Manila” since most places don’t have a lot of economic activity and aren’t vigorously taxing their own residents. It will be, just like the current situation under the 1991 Local Government Code, most of the local revenues will continue to be transfers or “equalization” from the National Government.

    • Bill In Oz says:

      Yes I am aware of this Steven. The key aspect of Federalism is that it will give states the opportunity to decide the rates for those taxes that they will control.

      An example : vehicle registration tax or land sale tax ..

      The history of economic development in Australia shows that state governments, being smaller and this closer to direct voter needs, have always attempted to encourage local development. This in turn generates jobs, incomes, taxes and a positive future. The states have done this in competition with each other.

      Creating that opportunity in the Philippines will create change

    • Good to have your experienced insights registered here, Steve. I think you cite a critical point of consideration. Most provinces NEED Manila and the few productive provinces, and separating them seems to me to be a sure path to enduring poverty for much of the nation. Unless there is a clear statement in the laws to make them whole.

  3. timowp17 says:

    I’m considering the naming and division of its constituent states.

    I suggest that the carving of states should be based on current, geographical and ethnology-linguistic situations.

    The draft bill’s naming is too much on cardinal directions. We should rely less of it.
    Why not learn from the U.S., Germany, Malaysia for some inspirations of naming the divisions?

    Under my proposal:

    * Region I will still be the State of Ilocos, but Pangasinan has got to go on their own.
    * The entire Region II will still be the State of Cagayan.
    * The entire CAR will still be the State of Cordillera.
    * Region III might have to cut off. Pampanga, Bataan, Nueva Ecija and Tarlac will be the State of Pampanga due to the major river. Zambales might have to live on their own. Aurora and Bulacan are misplaced and might move in to a new state.
    * Region IV-A will have to admit Aurora and Bulacan but to appease non-Tagalogs, they have to dub a new name: the State of Rizalia (named after Rizal).
    * Region IV-B will have to let Palawan go on their own. The rest will be called the State of Mimaro.
    * Region V will maintain as the State of Bicol.
    * Region VI will be called the State of Panay.
    * Region VII will be called the State of Cebu
    * Region VIII will be called the State of Leyter-Samar
    * Negros Island Region will still carry the name as the State of Negros.
    * Region IX will still be called the State of Zamboanga
    * Region X will still be called the State of Bukidnon
    * Region XI will be maintained as the State of Davao
    * Region XII will be called the State of Cotabato.
    * Region XIII will be the State of Caraga
    * ARMM will stay, as it was proposed, the State of Bangsamoro

    Overall, I would carve it into 22 states, including the Federal Capital Region of Manila.

    • Bill In Oz says:

      That means just slightly bigger provinces than now. I think it would not work. Critical mass is important

      • timowp17 says:

        Indeed but I’m defending my proposal as different states need different conditions and it means different and distinct specializations and potentials that will make up their economical contribution.

        Though let’s admit, converting all 81 provinces into constituent states will have an excessively tangled juridical overlap in certain kinds of laws such as of eminent domain, penal laws and taxation.

        • Instead of so many states, why not just 3—- Luzon , Visayas , & Mindanao (with the autonomous regions still in play, but subsidiary to the 3 states? like the Navajo Nation in Arizona & New Mexico; or Yakama in Washington state).

          Luzon can be New England, handling finance, tech ; Visayas can be the West Coast here handling innovation, entertainment ; then Mindanao can be like Alaska or Hawaii handling leisure and tourism—- do away with all the extractive industries.

          Divert fisheries to the East, invite tourism to the West side (ie. Palawan, etc.). Then focus on using all that water as natural highway.

          I never understood why there where stars on the flag, symbolically presented, but no real use for the terms Luzon, Visayas & Mindanao—– make ’em states! don’t break it up too much.

          • timowp17 says:

            The island groups — and the flag — we have right now will still be the same under my approach. Just like regions in the US, the federal government will still use such divisions for reporting references.

            Moving right along, I would rather keep bicameralism in the federal government and the duration thereof. The Senate will be 44 — two for each state — while the House will have a maximum of 300 — all single-member districts. During their election, half of the Senate will be up as all of the House will be up. During the hypothetical transitory provision, the first of the top two candidates in the Senate will take the full term; the second, half.

            State governments will go unicameral but the elections are not on the same period as the federal. 21 states will be raffled and will be drawn by lots if it belongs to Class 1, 2 or 3.

            • The United States didn’t automatically become 50 states overnite, it was incremental and states were shaped in order of “maturity” , once they were ready for statehood then they became states, hence why I think starting at 3 then either staying at 3 or further divvying up, but if there’s any lessons to be learned from these United States is that each state after the original 13 had to essentially “prove” their mettle (ie. state governance, an economy, etc.)

              here are some maps,

        • Bill In Oz says:

          I think that we would all agree that a major feature of the Philippines is that each province ( with very few exceptions ) is dominated by a single extended powerful family : the oligarchs.

          I have an agenda with supporting Federalism : dissolving the oligarchical nature of Filipino politics and making it more democratic.

          One thought in my head is that if the Philippines was composed of 6-7 major states, the province based oligarchic families would be forced to compete with each other for power. And be forced to seek support from the people in elections via party system.

          Another thought is that each of the states should be based on the same language/cultural group : Eg. Bicolandia or ‘Tagalogia’ ( with the NCR, Manila separate still ) or ‘Bbisayanda’ or Mountain State.

          And yes I am aware of the idealism implicit in this.

          • Hey, Bill… do you guys have counties in Australia? How prominent of a role do they play, they’re instrumental for property tax here (which I know little of); but play a key part in law enforcement and corrections, the Sheriffs and DAs are county specific.

            Those are California’s counties (with a bit of trivia 😉 ) :

            • Bill In Oz says:

              Lance we have shires or districts councils. But they do not have any law enforcement role as in the USA Shires , district councils, do levy ‘rates’ on property to pay for local government activities like local roads, parks, sewerage, rubbish collection & sorting, street lighting and land zoning. But the rate is quite small compared to the USA. It is not a property tax.

              The state government organises education, schools etc with a State wide system with State standards ( and more recently joint national standards via Committee of all the state ministers for education. The state law is enforced by state police, courts & jails. Ditto for emergency services. States revenue comes from a multitude of sources : registration on all vehicles, property sale taxes, levies for various services ( like the ‘firies’ and ambo’s ) fines paid for law enfringmenta like speeding tickets etc. Driving license fees, etc etc.

              States also get funds from the Federal government : The Nation wide GST is levied on all services and processed foods and other goods. All the procceds of this tax are handed on to the states by the Australian government. Who gets what proportion of the total pool of GST money is always a big argument. It is sort of worked out on population percentage with ‘loadings’ for other factors like huge distances, or unemployment rate (= the poverty level) in a given state.

              It’s complex but it works.

              • Thanks, Bill. I forgot to mention counties also run hospitals here, not to mention elections, and they can also render huge swaths of land protected areas, for recreation and conservation. I just also looked up Canada and they don’t have counties either. I wonder if they can use the county system in the Philippines.

              • Bill In Oz says:

                Public hospitals are state organised in Australia with with money provided under funding agreements from the Australian government. Local councils ( = Shires in rural areas ) also own and manage small local parks etc. But major parks & wilderness areas are State government organised and managed.

                I suspect that the county system in terms of size would not work in the Philippines. There are already provinces and they are roughly ‘counties’ i i size. But nearly all the provinces are dominated by local oligarchical families.

    • The islands and languages for sure help make the delineation logical. Yours seem good to me, and 22 is better than 12.

  4. I read a post in FB. The gist is this which I agree 100% – Before federalism is discussed, first pass a non-watered down law that should once and for all prohibit political dynasty.

    My take:

    Anti-political dynasty is already enshrined in the 1987 Constitution. The law that was required to make this happen has not been enacted to this day because the lawmakers themselves have sprung from generations upon generations of political dynasty. The people elected them, are we to say that the people and the generations that followed are in favor of this set up which is in violation of the fundamental law of the land… or did they not understand the constitution that they and their forebears overwhelmingly ratified 3 decades ago?

    Although, one may ask: why insist on federalism when the Ilocandia region is already ruled by the Marcos family down to the conjugal dictators’ and their relatives’ grandchildren, same with the Binay’s in Makati, Estradas in San Juan, Manila and Laguna, etc…etc.? Something to do with tax and power allocations, I suppose.

  5. We are such a small country, smaller even compared to some states of the US of A.

    We are an archipelago, with so much dividing us – bodies of water, different dialects, customs and traditions.

    Federalism will divide us further.

    And woe unto those poor provinces and regions who cannot support themselves and will be at the mercy of politicians from richer areas.

    Why do the Pimentels insist on this federalism to the extent of supporting, enabling and defending a dictator in the making, a vigilante LGU leader who openly is in league with the plunderer families of Marcos, Estrada and the alleged plunderer Arroyo – a set up which is totally against the principles of genuine democracy and good governance that the elderly Pimentel has fought for for so long and which he, together with the rest of freedom loving Filipinos had won in EDSA 1 and 2 people power.

    Nene Pimentel, were you sincere at all in that fight or were you among those who expected too much as a reward for themselves from those victories and were disappointed, that now you resorted to “kapit sa patalim” modus operandi?

  6. karlgarcia says:

    CDP roadmap to federalism, 2017-2028

    DURING the 8th Centrist Democratic Party (CDP) congress that was held at the Marco Polo Hotel in Davao City last May 6, Senate President Koko Pimentel presented the PDP Laban’s federal-parliamentary model which is a hybrid of the US and German systems. He described it as “…semi-presidential and semi-parliamentary but uniquely Filipino”. His presentation was thorough and detailed, and it was apparent that the model was borne out of the PDP Laban’s experience and grasp of the Philippine situation over the years. It was a formidable reflection too of what is in the mind of its main sponsor, President Rodrigo Duterte, their party chairman.

    Some basic features of the political structure is the retention of a universally elected president as head of state with specific powers granted by the soon to be revised 1987 Constitution. It has in effect a “strong federal president” but one who does not assume all the responsibilities of running the bureaucracy of government. Thus, the designation “semi-presidential”.

    The legislative body retains the two houses—with a twist. Senators will be elected by the states, similar to the two senators from each of the 50 US states comprising the 100-member US Senate. The Senate has certain veto powers over some of the actions of parliament but it is strictly not a “lawmaking body”.

    The parliament is the equivalent of the current House of Representatives with members elected from each of the 11 states of the Philippine Federal Republic. And the political party that has the majority of MPs gets to choose the prime minister, the head of government. Majority of lawmaking powers emanate from this body and only from among the MPs will come the prime minister. The current “party list” are embedded in the party and are allotted seats in parliament on a proportional basis.

    All these are models to be discussed and debated publicly and none is “itinaga sa bato” (written in stone), as Senator Koko said. But the main thrust of PDP Laban is that federalism must be in place before President Duterte steps down from office in 2022 – a good 60 months from today.

    Closer to German model
    The CDP “Roadmap to Federalism” presented by the author, hews closer to the German than the US system. For one, the executive and legislative bodies are fused into a unicameral (one body) parliament; with the party which gets the most number of members of parliament elected choosing the Prime Minister, the head of government. The President, elected from among the members of parliament, surrenders his membership to any party and becomes the head of state – and like the current Queen of England has ceremonial duties, none political. The President who holds office for five years is given some powers by the Constitution – like that of commander in chief.

    The PDP Laban and CDP positions are not that far apart as to the political structures, differing only in the time element. The PDP Laban’s thrust is transition to a federal parliamentary government within 60 months. CDP looks at a longer horizon even beyond 2022 – after President Duterte’s term.

    To put this in perspective, federalism is intricate and complex. It is the antithesis to an aberrant unitary government practiced over a century, where values of political patronage have permeated the body politic.

    The CDP roadmap is thus designed to mitigate the shock to the body politic arising from the purging of traditional political practices through the immediate passage of reform laws, now pending in Congress. Furthermore, the critical process of transition to a parliamentary-federal republic has to be in place in the revised constitution so the assurance of its continuity is safeguarded by the constitution itself even beyond the term of the current President.

    3 major steps
    The CDP federalism roadmap is simplified in three major steps:

    1. To put in place four preconditions while revising the 1987 Constitution: political party reforms now pending in Congress; pass a universal freedom of information law; instigate electoral reforms; and make the ban on political dynasties executory in the constitution. The time frame here is two years with a plebiscite by May 2019.

    2. The transition into a parliamentary government, known as “party government” because of the pivotal role of political parties.

    3. Provinces and highly urbanized component cities are allowed to evolve first to an autonomous territory. Government can’t impose on the body politic the territories that will eventually become states in a federal format. Provinces and cities need to negotiate as to actual territories and population to encompass a bigger state; the considerations of the natural resources and wealth; the similarity of customs and language; and even the seat of the state capitals. All this will need time and with guidance from parliament.

    By the time the President steps down, the parliamentary government will be in place. The prime minister or head of government will be chosen by the political party majority or through party coalitions. The president or head of state will be elected from among the members of parliament. Transitory provisions in the 2022 Constitution may allow DU30, by then 77 years of age, to be the head of state, with lesser powers but with his political ascendance intact. Or if he so chooses, he may retire.

    (This article is an excerpt from a speech delivered at the CDP Party Congress in Davao City, May 6, 2017. For the entire speech, please access

    • chemrock says:

      Karl, I’m too lazy today to read the links.

      One thing that I do not see in your description. Who gets to be in the cabinet? Will they be elected officials or appointees. For me, I see appointees as an anomaly to universal suffrage. I mean who voted Mocha Uson for heaven’s sake.

      • karlgarcia says:

        Yes, there must be proposals for the cabinet of a president who does not deal with the beaurocracy, maybe the controlling party in the parliament, who knows?
        The good thing with Mocha appointment is she will be in a magnifying glass, open to public scrutiny.

    • Francis says:

      I like the CDP plan—the fact that they emphasize laying the groundwork via crucial reforms like FOI before federalism is quite nice. I also prefer the CDP’s stronger focus on federalism as opposed to the PDP-Laban plan’s focus on semi-presidentialism. To be honest—many problems (like the weakness of our political parties and the overwhelming chains of patronage) with the political system of the country rest with the fact that lot of powers and resources are pretty centralized in the hands of the President. Thus—I am suspicious of semi-presidentialism; I can’t help but feel we have too much of an obsession with “Messiah” figures to actually best utilize the nuances of semi-presidentialism/not fall back into the “Great Man” addiction-delusion.

      We need parliamentarism to break the bad habit of our trapos seeing themselves as a feudal vassals to a King-President with patronage. Having our trapos live without the lure of patronage—and having a PM who can’t exactly give patronage without fear of consequence ’cause of the Sword of Damocles/Vote of No Confidence—means that our trapos will move from a boss man-vassals kind of organization to a more egalitarian organization….that…who knows…may make them more inclined to embrace bonds of political principle rather than bonds of mere political expediency.

      • edgar lores says:

        Will federalism/parliamentarism solve the problem of turncoatism?

        • Bill In Oz says:

          No Edgar, not necessarily.

        • Francis says:

          Federalism—I honestly dunno.

          Parliamentarism—yes, I think. At least in the theoretical long run.

          The problem with our majoritarian presidential system is that it makes our party system revolve around the “one gigantic river of resources” that is the Presidency. Our parties were weak to begin with—being “cadre” parties rather than “mass” parties—and they can’t get any stronger under the current system because the Office of the President has all the pork. And the legislators can’t exactly check the influence of the Office of the President—impeachment is only viable in extreme situations and no pork means no bacon for the district constiuents plus means no patronage machine means no votes means no power. To cut the long story short = logically, there is no incentive for legislators to stick together separate from the President; optimum strategy is to gather around the President for pork.

          A parliamentary system will change all that. The President had two things that placed him above the legislators: his legitimacy was separate (elected by the people) from the legislators and the main means of checking him are quite restricted in utility like impeachment and the CA—both of which can be negated by patronage. Under a parliamentary system—the PM’s legitimacy will be tied to parliament (elected among the MPs) and he or she can be checked by a vote of no confidence—far less of hassle compared to impeachment.

          It will be rough in the short-term. The PM will probably be acting like a President, ’cause that’s all she/he will know. And it will hold for a short while. MPs will troop to the PM as the PM has the pork. Until…one MP gets the bright idea of wanting to be the guy/gal to distribute the pork. And this bright MP whispers to his/her peers about this whole “vote of no confidence” thing. And it does truly work—because parties are weak in the PH and mainly organized by personalistic rather than ideological ties. And the bright MP becomes the new PM…until another bright MP gets the brilliant idea of…so on and so forth.

          In the chaos of this short-term scenario—the long-term optimum strategy will be different. In the Presidential System—the only constant was that the giver of patronage was fixed every six years from a vote by the people as a whole. So if you wanted to maintain power in the long-run, you adapted to whoever was the giver of patronage every six years. In the Parliamentary System—the giver of patronage is no longer as “fixed” since a vote of no confidence from the legislators themselves can easily unseat a PM. A PM needs a majority (or at least a plurality) of you and your peers (as legislators) to stay in power. So to get to the goodies of patronage is no longer about flattering the dude/dudette who gets the nod from the people every six years, but to be part of the group (the majority) that gets their PM into office. And in the long-run, who will be able to get the goodies of patronage then: the clannish proto-parties built around personalistic ties will squabble over resources and prove the adage that friends + family & money don’t mix, or the programmatic parties with the party discipline to be reliable blocks of support for any PM. To cut the long story short: the new optimum strategy in a parliamentary system is ideally that of party discipline. Not because it is moral—but because it is necessary to survival in the political arena.

  7. josephivo says:

    One should look at federalism as a tool. And a hammer one can be used to build a house or to chisel a white marble Pieta as Michelangelo did, but one can also try to hit my head as hard as he can. And there are so many different type of hammers. So what are we talking about? The intentions, the type of federalism that fits the Philippines best or both?

    Some principles on intentions:
    • To be efficient take decisions at the lowest level possible, as a parent decide if your kid can
    play outside, as a global body decide on global climate change. Family, barangay,
    municipality, province, federal region, nation, Asean, global on UN level. The optimal level for
    each decision varies as function of impact, uniqueness and complexity.
    • Increase the feeling of belonging requires regional cultures as common heroes and heroic
    events, common language, common food specialties, etc. Promote explicitly.
    • Solidarity between the regions.
    • A willingness to search and implement best practices.
    • Accept the good intentions of each level but build in checks and balances at each level and
    between the levels with good arbitration methods to solve conflicts.
    • Don’t invent the wheel, a lot of experience on federalism exists.

    Some principles on the method:
    • Avoid overlaps of responsibility. Two bodies deciding over the same matter will create endless
    discussions and friction.
    • Zero overlaps by dynasties, members of the same family active on different levels
    • Complementarity should be the rule.
    • Define the default level, is the higher level responsible for undefined fields or the lower level?
    • Cheap transparent (innovative) democratic elections.
    • Extensive communication with the public by the press, the academe, the social media,
    • A long term view with gradual implementation steps.

    • Avoiding overlapping responsibilities is critically important, I think. But it does not give poor provinces any new productivity or way to get richer.

      • josephivo says:

        Poverty strongly correlates with the power of dynasties in the area, here and in the rest of the world.

        As a starter, federalism should be used to implement strict anti-dynasty rules. If not it will be a waste indeed, especially for the poor provinces indeed.

    • NHerrera says:

      Along the same line as josephivo, the larger context is one involving the “six honest serving men” — why, when, what, who, where and how — of which the Federalism Proposal and what to look for, the subject of the blog, involves the how component. It is probably right to focus on this component since it seems the steamrolling of the Federalism idea may not be avoided anymore, plebiscite notwithstanding. Still, touching the larger context may still be part of the discussion. For example, the why, who and where still loom significantly when one considers the internal and external factors (the China factor, among others) impinging on the Federalism concept.

  8. Cory already gave substantial autonomy to local governments via the Local Government Code. Before that the power of the central government was enormous – Quezon even had the power to suspend or remove provincial governors, mayors and even school principals just like that… Tony La Viña wrote that the powers of a Philippine President (even now, in their somewhat reduced form) were patterned after the powers of a Spanish or American colonial governor.. I say Erdogans wet dream.. But Cory gave free hand to her OIC mayors (Binay, Duterte etc.) in exchange for their support…

    What did substantial powers for LGUs lead to all over the country – I think dynasties became stronger. Some in fact went into ventures like jueteng, some like Duterte in Davao killed – from 1986 onward, one should never forget that the original Alsa Masa / DDS was with Cory’s and FVR’s blessing.

    Federalism, in whatever form it is implemented, would probably turn the Philippines into what it was in 1521 – plus a few powerful regions dispensing favors with strings attached to the other rajahnates, I mean regions, that are poorer. Sugbu (Cebu), Maynila (Manila) – AND Davao (instead of Butuan).

    • Bill In Oz says:

      Irineo, my local district council has 30,000 people in it. But there are 2-3 wealthy family ‘names’ who have a lot of ‘influence’.

      On the other hand the South Australia state government governing 1.5 million people, displays this much less as there are many wealthy families and they compete with each other. Plus the ‘politically interested class’ is much bigger and has a big influence.

  9. sonny says:

    Be it federal or unitary governance, individual decisions must be undergirded by relationships such as this, I feel. (Found this bit scanning Yahoo News).

    • sonny says:

      From individual level to territory to state as we mull this federalism over and you have the time, you might want to watch this movie: THE JACK BULL.

  10. edgar lores says:

    “For myself, I am skeptical that the regions are really better at anything than National, unless it is corruption.”

    Corruption. This is the killer.

    One can change the structure of government in any which way, but unless the problem of corruption is addressed, then no structure, however perfect, will work.

    An anti-dynasty prescription is just one pill to loosen the plaque of corruption.

    There are many forms of corruption, not just inordinate familial power. There are abuses of power, bribery, embezzlement, dishonesty, nepotism, unethical conduct, corporate, administrative, judicial, petty, spiritual, and many others.

    Corruption is endemic and cultural. It infects all branches of government. Not even the Ombudsman Office, the Sandiganbayan courts, and the Supreme Court are exempt.

    Slay corruption and you slay the dragon.

    (Sorry for the mixed metaphors.)

    • Bill In Oz says:

      What about domesticating the dragon ?

      Queensland where you live now Edgar was not so long ago awash with corruption. A police commissioner was jailed for it. A minister of the crown was too.

      Increased prosperity did for corruption ! And that means development & economic growth to fuel prosperity. And competition for electoral support by a state’s wealthy families.

      • edgar lores says:

        And Eddie Obeid in NSW.

        That’s the thing about Oz — corruption is not institutionalized.

    • NHerrera says:


      A simplistic Mnemonic to the complex problem:

      • NHerrera says:

        On the other hand, as already expressed, we may have this loop:

        Prosperity >> through some mechanism? >> reduced corruption >> more prosperity.

        And that mechanism is via some form of Federalism?

    • Bill In Oz says:

      Joe, I see that you have edited out my comments on corruption in Queensland, Australia, in earlier times. My point was & is, that corruption is not unique to the Philippines and that it has happened, even for long periods of time, even in a country like Australia. It was common & pervasive in Qld from the 1920’s t the early 1990’s under many state governments.

      The cleaning of the Augean stables in Queensland began with the calling of the Fitzgerald Royal Commission in 1987. Fitzgerald’s report in 1989 documented the extensive & top to bottom, corruption in the Qld police force. At the state elections afterwards new government took power with 65% of the popular vote. The police commissioner was afterwards jailed for corruption as was the Minister for police Kevin Hince. The rooting out of corruption continued for a some years.

      I think that this history provides evidence that corruption can be eliminated. And suggests some processes that might be useful in the Philippines.

      Edgar may not know of this as it dates from before he migrated to Australia & Qld. But it is all documented online.

      • I didn’t edit anything, and read the comment. So if it is gone, I suggest a seance to rid your abode of poltergeese.

      • edgar lores says:

        Bill, thanks for the info. I came here in late 87. I heard some of those names but was not focused on Queensland news. Nothing registered.

        • Bill In Oz says:

          Poltergeese ? That is a new species for me. Migrating to new roosts via the web no doubt. And silent too as we heard nothing last night disturbing our rest…

          Ahh well no harm done so far.

  11. I personally am not for Federalism specially at this current time.

    But from a pure “self- thoughtless discussion” standpoint. the devil is always in the details. The Pimentel Sr. from the top of my head proposed 10(? can’t remember exactly amd i’m too lazy to check) and 1 Regional Capital (the current NCR)

    the division is something like North Luzon, Central Luzon, etc. and my first thought was, what happened to CAR? isn’t that they are entitled to their own autonomy? why are they lumped with North Luzon then? and do we really think that Pampanga will agree that the regional capital would be located in Tarlac under Central Luzon? (admittedly though, all those thoughts are baseless and basically was just pulled out of my bum. but after this, I stopped looking at the details. and moved on.)

    so that got me thinking, is there any other way to divide it without really lumping provinces together that might not be cordial to each other? and I said.. huh! it’s already there! why not just use the current provinces as the division! the system is already in place, there are governors, board members, etc. you just have to extend the powers or something.

    but there in lies the problem, and really the main reason of my objection at pushing for federalism at this point. Political dynasties. we forget that even under our current unitary system. these political dynasties flourish.

    Can you imagine what would have happened in Maguindanao under the Ampatuan if we had been a federal country? they will practically own the whole state/region and the national government can’t intervene. (or Ecleo of Dinagat Island, Garcia of Cebu, etc etc etc?)

    sure, there are advantages, but unfortunately, the disadvantages are really huge at this point and besides, I think Federalism is just the dolly for their real goal of shifting our horizontal form of Government from Presidential to Parliamentary… well about that, I really don’t have a strong opinion, but I guess the only question I have for that is, “Are Filipinos ready to not directly elect their leader?”

    But after all that, I’m not a lawyer, I’m just a bystander and all of these are just conjectures so have a nice day. 😀

  12. NHerrera says:


    A rather sad contrast between the Leaders of the top two world powers:

    * US’ Donald Trump and his obsession with media amid the latest news on the firing of FBI Director Comey and the continued investigation of the Russian role in the previous Presidential election;

    * China’s President Xi Jinping to unveil his grand economic plan for the world on May 14 and 15 at an international summit on his “One Belt, One Road” policy initiative — to be attended by 28 heads of state and top officials from more than 60 nations — a coming out party for the Asian giant to forge a new global economic order by drawing on the millennia-old tradition of the Silk Road trading route.

  13. That the entire hierarchy of subsidiarity has to be looked at is evidenced by Bill and LCPL_X’s discussion about counties – every level has to have its respective funding and responsibilities – and of course its cooperation with the adjacent levels has to be well-defined to work together well..

    These would be the hierarchies in German federalism – collective municipalities here can also be “Kreis” or counties, sometimes a Kreis has a city in the middle – Munich rural county is the small municipalities around Munich, all with the same plate number prefix “M” and some institutions in common while others are independent. Thus there is a common Straßenverkehrsamt (like LTO) for Munich rural county, but each municipality has its own mayor.

    Larger German states have in addition to municipalities and counties so-called districts or Bezirke. Somewhat more like Philippine provinces except they have no elected governors, they just have a bureacracy appointed by state level. Bavaria, the largest state in area, has seven districts:

    • Out of curiosity I looked at what the District Government of Upper Bavaria in Munich does.. it has around 1500 employees and regulates airspace, mining, medicines, professional examinations, insurance firms, animal feeds (Bavaria is still very agricultural) and more..

      as for the monetary aspect of German federalism, there is a complex system of rich states helping poorer ones develop, there is a constitutional aspect of “equivalent living conditions” in the Federal Constitutions budget articles – it is a bit like the EU system of money transfers.. .. “In order to ensure that this process guaranteed a unified budgetary policy, and to avoid the free rider problem, the federation and states budgets have been reviewed by a Stabilitätsrat or Stability Council since 2009. This council is a joint committee of the federal government and states, established to monitor budgetary management and adherence to European standards of budgetary discipline. Its establishment originated in the Federalism Reform II, a change to the constitution concerning the relationship between the federation and the states, and is regulated by the constitution. The State and Federal Finance Ministers, as well as the Federal Minister of Economics are all members of the Stability Council.”

      • – just found out that districts means Kreise… so you have Federation, State, Governmental districts, counties/districts/Kreise, municipalities – within municipalities you may have municipal districts, the closest thing to barangay in size.

        The Governmental district of Cologne where I once live contains Aachen, Bonn, Cologne and Leverkusen (cities) and everything in between – they did take care of residence permits for foreigners (a Filipino association met a district President once on this matter) and speed limits, what I have not forgotten is that a certain district President Antwerpes was responsible for 100 km/h speed limits in the Autobahnring circling Cologne, I hated them in my early 20s…

        Who owns airports? Another interesting aspect.. Munich airport is a private firm owned 51% by the Federal Republic, 26% by the State of Bavaria and 23% by the City of Munich. There often are solutions like that in Germany, “public-public partnerships” so to speak.

  14. The big picture of German federalism with all levels.. details vary per state… what is important is that all states are represented in the Bundesrat which is the Upper House of a bicameral Parliament.

    • Of course you have the issue of how powers are distributed between Federal and State levels… this picture is the American example..

      the thing is.. NO TWO FEDERAL SYSTEMS ARE EXACTLY THE SAME.. each is attuned to the cultural specifics.. Switzerland has county-sized cantons which are effectively federal states… it has a rotating Presidency in a seven-person Federal Council… and more..

      • edgar lores says:

        I like this diagram. It makes clear the delineation of responsibilities.

        Under National Powers, I note the function of “Set standards for weights and measures.” In Australia, there used to be a problem of different rail gauges such that trains could only travel to the state border and no farther. The problem has been largely rectified but the problem still persists.

        As for “Establish postal system,” I would interpret this today as setting up a national broadband network.

        • Bill In Oz says:

          “In Australia, there used to be a problem of different rail gauges such that trains could only travel to the state border and no farther. ”

          Irinea, When train systems werre first being developed in the UK, there were many different gauges. Nobody thought of a “National rail system ” then. It was at that stage that trains arrived in Australia.

          The first railway was inn Sydney and was set at an Irish gauge ( 5’3″ ) by the chief engineer. The Melbourne followed suit with 5’3″. However the chief rail engineer in Sydney died and his replacement decided to change the gauge in Sydney to 4′ 8 1/2″ ( Four foot, eight and a half inches ) without consulting with Melbourne rail people who had already invested in engines and carriage etc.

          The result was a standoff. Eventually the different rail systems met at Albury. And then all passengers had to change trains. I remember doing it around 1.00 am once. Bloody nuisance.

          Just to make things even more interesting & difficult, somebody discovered that 3’6″ gauge train tracks were cheaper and easier to lay. Sp Qld & SA went for the cheap option in some lines.

  15. chemrock says:

    For me, federalism is contingent on political party reforms. If this is not done, federalism or any other form of governance will do nothing to change Philippines politics. 3 crucial reforms I want are :

    1. All parties must lay out their political ideologies publicly.
    2. No one with any criminal records are allowed to join any political party.
    3. Turncoatism is not allowed.

    As regards turncoatism, of course members are allowed to resign and join another party. Elected members who resign from a party automatically relinquishes his/her seat which will be regarded as vacant and open for re-election. If it were not so, it firstly, represents an outright cheating against the electorate; secondly it throws the parliamentary concept in chaos and thus destabilises a country.

    Political dynasty is a major problem in Philippines. There are restrictions in legislature but nobody is paying attention. You can legislate all you want but it will never be applied. I believe in reforms (1) above, if a party strongly believes in anti-political dynasty and they state that clearly in their platforms, and walk the talk, the electorate can be persuaded.

    • edgar lores says:

      I like the idea of unseating turncoats. I think there should be the added penalty that turncoats cannot run for office in the next one or two succeeding elections.

      Consider this scenario: here is a member of parliament (MP) who is personally close to his electorate and belongs to the current administration. He senses his party will lose in the next election because of poor performance. He jumps party say, 3-6 months before the election. A special election is unlikely to be called because it is too near the regular election.

      In effect, the MP is timing his jump and sacrificing the last months of his term in order to gain another full term with the party in power.

  16. chemrock says:

    My gut feel is that Philippines can never change if we look to the same bunch of political actors to spearhead the drive. The same self-interest, motivation, and rivalries remain.

    For Philippines to change, instead, look to a total revamp of the civil service. The Philippines civil service is one of the most inept in the world. It is absolutely politicised, corrupt, inefficient and delivery of services are dismal. There are at least 10,000 political appointees and helicopter-dropped civil servants often bypass quality assurance resulting in great frustrations to thousands of rank and file who are honestly trying to contribute and make a career as govt employee. Can you imagine the ripples of discontent the Uson Mocha appointment caused?

    Put in the technocrats and let them run the show. For heaven’s sake lets have less attorneys and more specialist professionals in appropriate positions. Look at the the splendid performance of the BSP. They did well because of the independence they had. No interference by the Executive and Legislative.

    Singapore and HK thrived because of good civil service, and I would think many other countries which are running well is all due to the same basic reason. IT’s the service that’s running the country, not the politicos.

    • It will be fascinating to see if US service (institutions) will rid the land of an ethically/legally(?) challenged president. I’m betting the PH does not have that kind of institutional integrity. The US? hmmmmmmmmmm

    • Bill In Oz says:

      Chemrock there was a time when I thought that Australian buraucracires were reasonably easy to manage. However recent experience has changed my mind somewhat.

      All residents here are supposed to have a Tax File Number before working. It used to be got by getting the form at a “Newsagent”, filling in a form and sending it to the Australian Tax Office. It came by return post or even email.

      My lady needs a TFN to work so we have gone through hoops and still not got it.

      Now we are all supposed to do it online and fill a form online. But frankly it is toooooo bloody complicated. And twice the website has deleted my lady’s application meaning ‘start again’ after 45 minutes filling the bloody form.

      I then rang the ATO & demanded a paper form. It arrived after 2 weeks. We filled it in with 4 bits of accompanying identity documents and sent it off in the mail. It came back demanding more Identity documents.

      This has happened 3 times so far. And my lady i still waiting.

      There is but one phrase to describe the people who do this : “Bureaucratic fuckwits “!

      I received far better treatment from bureaucrats in the Philippines.

      • chemrock says:

        Nothing is perfect Bill. Such kind of slip ups occur even in the most efficent agencies anywhere in the world. But it it;s a systems or process flaw, it’s up to the people to give feed backs and demand improvements … via your votes. This does not mean party change, but the minister that’s in charge.

        I’m glad you’re happy with your experience in Philippines. You appear to be in the minority. I wonder if you had the chance to go to the NBI or NSO offices whilst in the Philippines. They are cash cows, doing something that you can easily do online for free.

    • Bill In Oz says:

      De-politicising the public service is one of the best steps a nation can take to eliminating corruption and improving efficiency. It was done here Federally in the 1920’s by establishing a public service commission with commissioners appointed for a given term and not appointed by a newly elected government.

      There are now public service commissions in each of the states and territories with the same independence from the politically elected class.

  17. NHerrera says:


    This interview of Rappler with Cuisia, former Central Bank Governor, at the time of Presidents Cory Aquino and Fidel Ramos, is rather enlightening to a layman like me. He speaks well of the bona fides and appointment of Espenilla as the new Governor of BSP.

  18. popoy says:

    If I may, it is hard if not impossible to de-politicise public service if one’s to go by politics as theory and practice when politics is the “authoritative allocation of values in society (David Easton)”. A corrupt poltician (plunder), a department secretary, a justice or magistrate down the line to clerks and janitor (from large scale to petty thievery and bribery) all doing public service ideally must allocate values of competence, integrity etc. (a janitor also on the take?) in their offices.
    I read that in medieval Europe, a kingdom has to tar, feather, and quarter; hang eight innocents of ten sentenced as criminals, and erred in sentencing some poor people for Transportation to a distant continent. All is well that history ends well. Look at UK and Australia, NOW. It is a stretch but believe Milton Esman who said it like “trace it man”: the cause is man, the root is man. The Bureau of Customs, the BIR, and the DPWH, hotbeds of corruption in the Philippines had been completely de-politicised. It is not about politics per se, eh; unless politics had been criminalized.

    I conjecture: de-criminalize society somewhat and you will somehow havethe politicised public service of Great Britain and Australia, I might even add that of Canada too. Make no mistake I have in mind an ocean not a decomposing leaf floating in it like PresDu30.

    • Bill In Oz says:

      Low pay & resultant poverty will always generate corruption in a public service. Pay the poor bastards well ! And de-politicize their service. Grant them a reason to be proud of their work for the Filipino people.

      Watch then how they do ! If a few remain incorrigible, sack them & jail them smartly to remove the completely the corrupted with no bail.

      The honest rest of them, watching will cheer in their hearts and work all the better for it..

  19. popoy says:

    I view Federalism (may be authoritarianism, fascism, Nazism too. eh) as nitty gritty offspring of larger ISMS like Capitalism and Communism. Recent history suggests there’s been hybrids or bastards of these two parental ISMS. Is China now Commie-Capitalist? After Glasnost et tu Russia? Is the Philippines still in the labor (not yet in the delivery) room to be born Hybrid-Commie or Democrat-Commie or premature putok-sa-kawayan?

    I conjecture Constitution (or Constitutionalism) written or unwritten is really the point at bar, and must be the umbrella of governance and the way of all society. Think of constitution and you will not have to think of Hitler, Mussolini, Ceausescu, Pinochet, Marcos, etc. Here in TSOH (I will look for the file) I wrote about Federalism and ended up advocating a Constitution. Whether which one is horse or carriage like federalism is horse pulling constitution as carriage would do well as discourse positions in TSOH.

    • Bill In Oz says:

      Can anyone here name any other country with a population of 104 million people, which is unitary state ? I cannot name one save for the Philippines. The Philippines is the major exception to the rule of nation states being ‘federal’ in character.

      Even Russia and China are Federal in character.

      • Edgar Lores says:

        The Philippines is the 12th most populous country!

        1. Indonesia – population of 257.6 million is unitary and presidential.
        2. Bangladesh – population of 166 million is unitary but parliamentary.
        3. Japan – population of 127 million is unitary but a constitutional monarchy.
        4. South Korea – population of ~50 million is unitary and presidential.

        I believe only Indonesia fits the bill if we are talking unitary and presidential. It is also archipelagic.

        • Bill In Oz says:

          Thanks for that Edgar. I forgot about Bangladesh & Japan.

          Indonesia was unitary & presidential until around 2000. It has changed in recent years; what they call provincial government units are much more important than under Suharto.

      • The PH has its provinces and cities/municipalities, each with certain responsibilities, rights and funding. For example, storm preparation and recovery are local responsibilities. Tacloban (Yolanda) was a local calamity that the National Government wanted to take charge of, but Mayor Romualdez refused to sign off on it, and then proceeded to blame national for failing to respond, and that represents the kinds of tugs and pulls in any kind of decentralized order. I think the Duterte formula will give additional taxation and spending powers to provincial units. The national/local relationship will continue to be acrimonious because of the ethical immaturity found in personality politics. The structure is immaterial, I think.

      • josephivo says:

        Belgium 10 million and federal 🙂

  20. Reposting from Francis Del Rosario Yuseco

    Fervently hope President Duterte reads this before it is too late.

    No Need to Borrow, Borrow, Borrow
    In Order To Build, Build, Build

    By: Francis R. Yuseco, Jr.

    Introduction – No Choice But To Become Self-Reliant

    In a country beset by debilitating poverty, unable to pay decent wages to pay its government workers, confounded by its inexcusable inability to defend itself which is in-your-face exploited by both China (offensive) and the United States (defensive), conflicted by its decades long internal insurgency the root cause of which is the perennial lack of the necessary national budget and the unequal distribution of wealth ; regrettably our national policy has always been to rely on predatory foreign debts for the country’s infrastructure needs.

    The announcement of President Duterte’s economic and infrastructure team is the most recent but regrettable example. The team announced the construction of the Luzon North and South railways, a Metro Manila subway and the Mindanao Railways.

    The members of the team further announced that the President will soon be signing the pertinent Official Development Assistance (ODA) Agreement with Japan and China in November. After it has been signed, the President will unwittingly condemn the succeeding generations of Filipinos to impossible to pay debts that will have to be passed on from one generation of clueless and hapless Filipinos to another ad infinitum.

    President Duterte and his team would have long departed to the great beyond. However, they will leave behind them a fool’s legacy and trail of debt and perpetual dependency on various foreign technologies which current Filipino engineers, scientists, inventors can very well tackle if he only gives them a fighting chance.

    Eternal Global Taxpayers Subsidies for Railway Systems

    It is a given fact that except for the Hong Kong Metro – which offsets its operating losses from its real estate and advertising revenues – all railways systems in the world are miserably bankrupt. They continue to survive mainly because of the eternal subsidies in United States Dollars and Euros provided by their respective country’s taxpayers. The table below shows some of these annual subsidies:


    Germany €17.0 Billion
    France. €13.2 Billion.
    Italy. € 7.2 Billion.
    Spain. € 5.1 Billion.
    United Kingdom. € 4.5 Billion.
    Switzerland. € 4.3 Billion.
    China. US $ 130.0 Billion

    Filipino Taxpayers Subsidies Aggravated By Weak Philippine Peso Because of National Policy of Mendicancy Rather Than Self-Reliance

    Because our government leaders insist in perpetuating a national policy of dependency and mendicancy instead of pursuing the State Policy of attaining Self-Reliance as explicitly provided for in Articles II and XIII of the Philippine Constitution; the approximate subsidy of P7.0 Billion per year per each Light Railway Transit (LRT) line becomes worse every year due to the effective cost of foreign debt borrowings owed by each and every Filipino

    Effective Cost of Borrowing of Philippines Three Rail Lines Average a Minimum of 350 % Per Annum .

    With the current Philippine Peso to US $ at P49.00: $ 1.00, the effective cost of borrowing for the Philippines on its three (3) rail lines are as follows:

    Line. Financial Closing Date. Exchange Rate. Effective Cost

    1 1981. P7.80:$1.00. 640%

    2. 1994 P24:$1.00. 220%

    3. 1996 P26: $1.00. 190%

    Thus, whereas in 1981, the LRT 1 needed to generate only P13.26 ( P7.80 + P5.46 operating cost ) to pay every $1.00 of loan, now it would need to generate at least P83.34 in gross revenues to pay the same $1.00 of loan the Philippine government borrowed originally in 1981

    The Philippines Solution To Wipe Out Global Taxpayers Subsidies Was Registered in 1989 or Ten Years Before the Bus Rapid Transit (BRT)

    Ten (10) years before the global phenomenon Bus Rapid Transit ( BRT) became a byword, as early as 1989, the Philippines already proposed its more expansive version/solution called The Philippine Track Mass Transit System. It is registered under Philippine Copyright Number 4656 and its elevated version under Philippine Copyright Number 4664. It is now known under its Utility Patent 2-201100013 Philippine Track Rapid Transit System (PRT).

    Notwithstanding a National Center for Transport Studies (NCTS formerly the University of the Philippines Transport Study – UPTTC) supporting it, it was rejected by the first Aquino administration for allegedly being ” unproven, merely theoretical and with a limited systems capacity.”

    In 1989, no body in the Philippines ever heard or knew of a similar but limited version was already successfully operating in Curitiba, Brazil. It was and still known as the Rede Integrade de Transporte ( RIT).

    World Bank Transport Expert Disseminates Internal Memorandum on Philippine Rapid Trackways (PRT)

    Even as the DOTC rejected the PRT, World Bank transport expert
    Gerhard Menckhoff sought out the author. After learning more about the PRT, he then wrote and disseminated an Internal Memorandum dated April 30, 1990 why the Philippines and other countries should implement the PRT.

    Nowhere in his memorandum did Menckhoff ever mention Curitiba, Brazil’s RIT.

    Cabinet Secretaries Sign PRT Contract On October 15, 1997. Date is Pivotal in the Annals of the Philippines and Global Mass Transit History

    On October 15, 1997 after another exhaustive study, the Philippine government approved the implementation of the PRT to an All Filipino consortium for implementation on two major corridors in Metro
    Manila – the C5 corridor and the Commonwealth Avenue.

    Signatories for the Philippine government were DOTC Secretary Arturo T. Enrile and after his untimely demise, Secretary Josefina T. Lichauco, DPWH Secretary Gregorio R. Vigilar and MMDA Chairman Prospero I. Oreta.

    The PRT Front Page Signing Caught the Attention of the American Bus Association and The United States Federal Transit Authority ( USFTA)

    On August 31, 1999 after numerous correspondences, the American Bus Association President George Wynne sent a facsimile letter to the PRT consortium informing the Philippines that the United States Federal Transit Authority then headed by Administrator Gordon Linton, that the United States was now going to also reinvent bus service in the USA, the features and operating characteristics would be similar to the PRT.

    Administrator Linton would tag the reinvented bus service with the catchy but grammatically wrong Bus Rapid Transit or BRT.

    Asian Financial Crisis and DBP Demand For P1.0 Billion Real Estate Collateral

    The PRT project failed to launch due to the sudden demand of the Development Bank of the Philippines for a P1.0 Billion worth of prime real estate collateral after the onslaught of the Asian Financial crisis

    With the Mighty USA Rather Than The Dysfunctional Philippines Taking the Lead, There Are Now 180 Cities Worldwide Successfully Operating Their PRTs/BRTs Sans Taxpayers Subsidies With The Same Efficiency As Rail-Based Mass Transit Systems.

    Empirical data from these countries show that the operating efficiency and long-haul capacities of these bus based systems can match the operating efficiency and long-haul capacities of rail-based systems as shown by the following:

    City. Daily Passengers. City Daily Passengers

    A. Ottawa, Canada. 200,000. D. Bogota, Colombia. 1,600,000
    B. Xiamen, China (elevated) 300,000. E. Tehran, Iran. 1,800,000
    C. Jakarta, Indonesia. 350,000. F. Curitiba, Brazil. 2,300,000
    D. Istanbul, Turkey. 800,000
    E. Guangzhou, China. 1,000,000

    D. Long-Haul Capacity. Distance in Kilometers. Distance in Kilometers

    A. Ahmedabad, India. 70. E. Tehran, Iran. 150
    B. Curitiba, Brazil. 81. F. Jakarta, Indonesia. 208
    C. Em-oh- Sanat, Iran. 100. G. Cape Town, South Africa. 330
    D. Bogota, Colombia 108. H. Tshwane, South Africa. 472

    The Intelligent Trackways (Intel Track) – The Philippines More Expansive and Dynamic Version To the PRT/BRT

    Intelligent Trackways are contiguous tracts of land of at least 15 meters to 30 meters width interconnected and fenced off by sturdy and well-designed physical barriers that can be opened and closed near the Trackways loading and unloading stations. The interconnected tracts of land are then asphalted or build with recycled plastic to create a Trackway. The Trackway can be stretched as far as thousands of kilometers, as needed As it is completely fenced off, it becomes a completely controlled and therefore, completely programmable environment.

    As a completely programmable environment, the Trackways operator has the absolutely freedom to program all the Trackways operating activities. These are the centralized management if its headways, dwell times, distance and design of its loading and unloading stations, average speed, top speed, command post communication, monitoring, dispatching and ticketing system from a centralized command post.

    The centralized command post becomes Intelligent as is controlled by a satellite based Supervisory Control and Data Acquisition (SCADA), Global Positioning System (GPS), telemetry, Closed Circuit Tele Vision (CCTV) and 5 Way Video and Audio Communication Systems. Hence, Intelligent Trackways or Intel Track

    The Department of Science and Technology Road Trains

    The Department of Science and Technology (DOST) Road Trains are rolling stocks which are forty (40) meters long and are able to carry or transport 240 passengers at any given time. They are Road Trains because their carriageways are merely asphalted or concreted roads not steel rails requiring the installation of imported bogeys. Hence, they are Road Trains that can also load, unload agri, fisheries and other cargo products. Their average speed can match the operating efficiency of the USA Amtrak.

    Combining the use of the Philippines Intelligent Trackways with the DOST designed Road Trains for passengers, agri, fisheries and other cargo products; the Philippines can lead the way in liberating the global citizens from having to perpetually subsidize bankrupt railways for all their respective country’s mass transit needs

    Self-explanatory Tabular Presentation of Similarities and Differences Between the Intelligent and Profitable Trackways versus the Bankrupt and Subsidy Draining Railways Should Be Enough For the Government To Give Its All Out Support.

    The introduction of even a limited pilot project of even a distance as short as ten (10) to twenty (20) kilometers say, along the abandoned Philippine
    National Railways (PNR) Right of Way (ROW) between Calamba to Batangas can be made as a show window for this possible new global phenomenon.

    Along the route, new and vibrant industrial and economic zones, farm estates, public markets with post harvest facilities, autonomous and self- sustaining townships, new and dynamic tourist attractions can be built.

    The informal settlers living along the Trackways will be trained with the Technical Education and Skills Development Authority (TESDA) in carpentry, masonry, plumbing, sewing, auto mechanic, etc.

    As stated, the Intel Track can be extended to thousands of kilometers as needed.

    Immediate Empowerment of Farmers, Fisher Folks and Consumers

    The Installation of the Philippine Trackways and the use of DOST road trains for cargoes will immediately increase the earning capacities of our farmers and fisher folks while bringing down food prices for all consumers.

    Whereas before, our farmers and fisher folks have to suffer the ignominy of being taken advantage of by middle men is the purchase and transport of their produce, they can by themselves would be able to transport their produce from farm and sea gate all the way to the urban market outlets.

    Consequently, whereas before in the absence of a reliable transport and distribution market mechanism, they have to sell their produce at say, P5.00 per kilo, the middle men in turn, will sell their produce anywhere from P40.00 to P50.00 per kilo.

    Now our farmers and fisher folks as early as 2018 can sell the same produce at P25.00 per kilo. They would be able to increase their earnings four to five times. Concomitantly, food prices for the entire country will decline substantially.

    Process of Reverse Migration and Decongestion Will Occur As a Matter Of Course.

    As all these new and vibrant economic and industrial zones, farm estates, public markets with post harvest facilities, autonomous and self-sustaining townships complete with green technology built homes, schools, clinics, sports complexes, churches, car rentals, park and ride facilities, brand new loading and unloading stations with coffee shops, bank branches, convenient stores will all be along or adjacent to the Trackways, the process of reverse migration and urban decongestion will occur, as a matter of course

    Grassroots Initiative For Self-Reliance, Industrialization, Exportation Can Start From the Convergence of the Barangays.

    Ordinary citizens appalled, sick and tired of paying predatory foreign loans from their forced subsidies which if channeled to the other pressing national needs can initiate a grass roots movement for self-reliance, industrialization and eventual exportation of the Intel Track and the DOST Road Trains.

    Congress on the other hand, can refuse to appropriate unnecessary and incremental budgets for debt servicing once they listen and learn from the people that the Philippines has an alternative solution that can create exponential economic growth to the widest section of society.

    Maximum Use of Domestic Financial Markets

    Moreover, with the domestic financial markets owning total resources in excess of P13.1 Trillion and enjoying robust liquidity in search of viable infrastructure projects, there is absolutely no need to resort to availing predatory foreign aids, grants and loans

    Yet, sadly without the ordinary Filipino knowing it, our national policy has always been to rely on foreign borrowings and continue subsidizing very few and very lucky oligarchs at the expense of millions of Filipinos.

    This national policy is instituted by appropriating billions of taxpayers monies to subsidize the operations of major infrastructure projects owned and operated by the country’s oligarchs.

    This national policy will continue unless we embark on an honest-to-goodness policy of Self-Reliance.

    The Philippines Can Still Reemerge As the Global Leader in Subsidy Free Mass Transit Systems.

    Empirical data has already established that the PRT/BRT can systematically, efficiently, economically, and seamlessly mass transport up to 1,800,000 passengers per corridor up to distances close to 500 kilometers.

    Common sense dictates that so long as there are available contagious tracts of land and number of Road Trains that can be dispatched, the number of passengers and distances can correspondingly also increase. Similarly, if the Road Trains can mass transport passengers, there is no reason why they cannot be also used to mass transport agri, fisheries and other cargo products efficiently, economically, seamlessly and of course, completely subsidy-free. Please see audio-video presentations.

    Instead of condemning the Philippines and the Filipinos into a permanent and viscous cycle of dependency and mendicancy to foreign loans and imported technologies intentionally structured to make them impossible to pay, the President should give the marching orders to his Cabinet Secretaries to strictly enforce the Constitutional policy of Self-Reliance.

    He should also instruct them to strictly enforce the pertinent laws thereto. These Constitutional mandates and pertinent laws are as follows:

    Resounding Constitutional State Policy

    Article II of the 1987 Constitution itself declares it a State Policy for the country to become Self-reliant.

    Article XIII mandates the country’s government leaders to optimize the use of home-grown Science and Technology to improve the national life.

    Sufficient Laws

    The country has more than sufficient laws to enable the citizens reach its elusive goal for self-reliance.

    RA 8293 The Intellectual Property Code of the Philippines reiterates the State policy for self-reliance. Moreover, it mandates all citizens supposed to be led by government officials to give priority, protection and utilization for duly registered Philippine copyrights, patents and trademarks.

    RA 7459 The Invention and Inventors Incentives Act provide sufficient tax and tariff incentives to promote and propagate the full bloom of Filipino inventions. The law again mandates the citizens led by government officials to give priority, protection and utilization to duly registered Filipino copyrights, patents and trademarks.

    RA 9184 The Government Procurement Law underscores the seriousness of the necessity of attaining self-reliance by exempting from public bidding infrastructure and other projects in order to protect, prioritize and utilize all duly registered Filipino copyrights, patents and trademarks.


    The choice is clear. The Philippines can either perpetuate its negative and tragic culture of dependence and mendicancy where current and planned new grants and loans will just be passed on from one generation to another.

    The economic growth rate of the country can still go up. But the growth will essentially come from the sacrifices of our Overseas Filipino Workers at great social costs to their respective families. The other source is still the Business Outsourcing industry the value-added of which, is very minimal.

    Or we can start the process of self-reliance, industrialization and exportation. We can show to the world that we can be a global leader in saving their billions of taxpayers subsidies in dollars, euros, yens, SK wons, yuans, etc. These saved billions can now be channelled to their other more pressing national needs like increasing the salaries of government workers, building more infrastructures, improving their educational and hospital systems, etc.

    Indeed, once these other countries follow the lead of the Philippines in saving its billions of unnecessary taxpayers subsidies; we can permanently reverse the outflow of precious foreign exchange into their continuing inflow on our way to true and sustained industrialization.

    • chemrock says:

      I’m a skeptic about BRT as an alternative to MRT/LRT in metro Manila. The built up is simply way too dense. It would mean the BRT taking away a portion of existing roads, it just won’t work.

      Metro Manila has no other options than to go underground. Sub-ways is the only viable option.Fortunately the admin is using the Japanese for the sub-ways, so at least the confidence level is much higher.

      Regarding the subsidies mentioned, it needs a bit further study to comment on it. But basically, money spent on the hardware of the infras should be considered investment. Just like building of roads and hospitals and bridges, they are sunk cost and should’nt be considered subsidies.It is only in the operations that we should be concerned as to it’s economic viability. Measure the revenues against operating costs (includes interest on loans). If it’s negative, that govt subsidies come into the picture. So a big deal depends on pax carried. The numbers are there for metro Manila, but for Mindanao, I don’t think there will be sufficient pax numbers to cost-justify the infra.

      The important thing for the sub-way infra is the govt should try to attain as much technology transfer as possible. Aim to build up critical mass of local expertise. Problem is with such projects in Philippines, the core actors — those hanger-on oligarchs – they simply want a quick buck. So they go for fixer fees, that’s all. They don’t build local knowledge. So a great opportunity t propel the country forward is lost.

      • Thanks for the response, chemrock.

        We had a truly horrible experience with our LRT/MRT infrastructure…. the maintenance problems, the lack of locally produced spare parts, the guaranteed return on capital on the part of the investors, matters that you so thoroughly discussed in your articles published here (truly appreciate that)….we are searching for other options that could somehow lessen the burden of debt repayment for the future generations of Filipinos by being a little more self reliant.

        Taking away a portion of existing roads is problematic, I agree but the advantage there, I think is the shorter time it will take to transport people and produce which will be a boon to the economy. I hope this idea should be given a chance, at least to be discussed, explore the problems and disadvantages and come up with solutions to them that would be beneficial to the country. How about subways financed by JICA and PRT in places where it will be viable?

        As in during the Marcos regime, am afraid that the Filipino people will also be left paying for fat commissions and tongpats.

      • josephivo says:

        Talking about public transport, I was in Makati yesterday, all these new towers, all the new towers under construction, all the 5 story deep construction pits, impressive!!! But all attracting traffic, their accessibility essential for making profit. Isn’t a small group collecting the profits and all of us have to pay the bill for providing access… A prime example of a “rent” economy.

        Will federalism reduce “rent”?

        • chemrock says:

          Absolutely Joseph. That’s why in my old article on traffic congestion I mentioned that all stakeholders need to play a part and bear some cost/pain. For condos/highrise office buildings — the need to allocate a certain built up ratio for parking for residents and visitors.

      • karlgarcia says:

        From BGC to Makati and Pasay, they say that instead of a subway, they will do it Via BRT thru tunneling.

    • karlgarcia says:

      Exhibit A:

      Exhibit A:
      Our Domestic passenger and Cargo system is controlled by Chinese.

      Negros Navigation Co., Inc. (NENACO) was one of the oldest domestic shipping companies in the Philippines. It was also one of the largest companies in the passenger transport business in the Philippines.[1] Its main hub was the renowned Pier 2 in Manila North Harbor. NENACO later merged with SuperCat, SuperFerry and Cebu Ferries to form 2GO Travel, the second largest Philippine shipping merger next to the William Lines-Gothong Lines-Aboitiz Shipping merger (WG&A) in 1996. At the same time, the China-Asean Investment Cooperation Fund, a private equity fund wholly owned the government of the People’s Republic of China through an equity infusion gained a controlling interest in Negros Navigation and subsequently changed the company into the 2GO Group with 2GO Travel its shipping-company subsidiary. The ‘NENACO’ brand was retired in mid-2012.

      Do not worry, the Filipinos got it back 😉
      The brick and mortar shopping malls will be taken over by online shopping.
      Mall owners got to reinvent themselves
      Original point
      Chinese Pwned us.

  21. New Philippine Debt of $167 Billion Could Balloon To $452 Billion: China Will Benefit

    Anders Corr ,


    According to the South China Morning Post on May 12, “Philippine Secretary of Budget and Management Benjamin Diokno estimated some US$167 billion would be spent on infrastructure during Duterte’s six-year term, under the slogan ‘Build! Build! Build!’.” That could increase current Philippine national government debt of approximately $123 billion, to $290 billion. But that does not include interest. High rates of interest that China, the most likely lender, could impose on the new debt could balloon it to over a trillion U.S. dollars in 10 years. More likely according to my analysis, at 10% interest the new debt could go to $452 billion, bringing Philippines’ debt:GDP ratio to 197%, second-to-worst in the world. That understates the burden to the Philippines, as existing national government debt would also accrue interest over that time, and such interest was not included in the analysis. Dutertenomics, fueled by expensive loans from China, will put the Philippines into virtual debt bondage if allowed to proceed.
    Effect of $167 billion in new debt on the Philippines, in terms of principal plus interest and debt:GDP ratio, over ten years. Source: Corr Analytics Inc

    Corr Analytics Inc

    Effect of $167 billion in new debt on the Philippines, in terms of principal plus interest and debt:GDP ratio, over ten years. Source: Corr Analytics Inc

    Duterte and his influential friends and business associates could each benefit with hundreds of millions of dollars in finders fees, of 2-7%, for such deals. Duterte reportedly sought to fast track some deals, and has publicly mooted the possibility of declaring martial law for a wide range of issues, including drugs, traffic, and the situation on Mindanao. Debt imposed on the public through corruption, fast-tracking or under martial law should be considered odious debt, and not repayable. The only way to stop such unjust debt is for the terms to be entirely transparent to the Philippine public in advance, for full cost-benefit analyses to be done by an independent authority on each deal, and for the Philippine Congress to vote on whether each deal proceeds. Failing that will lead to virtual Philippine debt bondage to China.

    The attached chart shows how $167 billion of new Philippine debt will affect the Philippine economy over a period of 10 years, at different possible interest rates. It assumes monthly compounding of interest and is based on a standard compound interest formula. The effect will be very different depending on the rate of interest — which neither the Duterte Administration nor China has divulged. The Philippine people must demand to know and agree to this interest rate before the deals are signed.

    Even at 5%, which is nearest the lending rate of interest published by the IMF and World Bank for the Philippines, the effect of such a large sum would be an increase in debt (in addition to existing debt) of $275 billion after 10 years. That would bring the Philippines’ debt:GDP ratio to approximately 136%. But at 20%, the maximum interest rate that might occur in a debt-distressed country like Argentina or Venezuela, the debt could balloon to $1.2 trillion in 10 years. That is an unlikely worst-case scenario, but worth calculating as an illustration of the importance of the interest rate.

    The interest rate that China will offer the Philippines on such a large sum relative to GDP is likely higher than the World Bank rate, but likely lower than say 15%. Without much needed transparency from the Duterte government and China on the rate, conditionality, and repayment terms of $167 billion of new debt for the Philippines, the public should assume, to forestall a worst-case scenario, that the rate would be somewhere between 10% and 15%. Over 10 years, that could ballon Philippines’ debt:GDP ratio as high as 296%, the highest in the world.
    Recommended by Forbes

    At any likely interest rate, the Philippines will have trouble repaying $167 billion in debt, plus interest, to China. The Philippines will have to give political and economic concessions to China in order to repay annual interest, or renegotiate such a large quantity of debt. That could include political concessions, for example giving up territory or oil rights in the South China Sea or Benham Rise, or it could include economic concessions, for example selling China its national companies, or agreeing to below-market rates on exports to China. Mongolia once agreed to sell coal to China at 11% of the global benchmark price in order to secure a loan to repay other loans. It could happen to the Philippines if it falls behind in interest payments on $167 billion.

    In the worst case scenario, China would deem the Philippines too risky as its debt grows, and stop such renegotiations and another country, like Russia, could step in with even stiffer terms. This is currently happening to Venezuela, where in the last few weeks people are starving and dozens have been killed in anti-government riots. Venezuela took extensive loans from China, and could not repay them when the price of oil dropped. Venezuela’s President Maduro, who depends on the high-interest loans to keep his government in power, is so far indebted that China will no longer extend significant capital. To repay China, Maduro is seeking new loans from Russia. This is rightly resisted by Venezuela’s National Assembly, which wants the right to approve loans. Maduro tried to shut down the Assembly in response, and has been able to continue to seek the Russian loan against the Assembly’s wishes. Something similar could happen to the Philippines in 10 years, depending on interest rates agreed to in the coming months. These interest rates, and all details of the deals, need to be made public and approved by the Philippine Congress, or the loans should not go through.

    The Philippines is at a crossroads. Duterte and his political allies are seeking billions in loans at unknown interest rates from China, whose companies stand to benefit by offloading idle Chinese industrial capacity to build costly infrastructure for which no proper cost-benefit analysis has been done. Duterte and his allies could gain hundreds of millions of dollars each in finder’s fees from such loans that the Philippine taxpayer will have to pay. This should be considered odious debt if the terms are not transparent to the public in advance, if public cost-benefit analyses are not done for each deal, and if each deal is not approved by Congress. The Philippine people must be forewarned about the dangerous China deal. Buyer beware. Caveat emptor.

    • chemrock says:

      I believe the writer is wrong on these :

      – The interest rates she mentioned on the Chinese loans seem way too high at this point in time. Do not seem realistic.
      – The interest projection based on monthly compounding is definitely not correct as far as such international financing goes. There is no compounding. The rates would either be special verly long term fixed rates, or floating rates based on LIBOR+.

      • Still, I believe transparency is very much in need here so people can be made aware of the present and future implications of the various MOAs entered into by our government so we can make an informed and well disseminated response. As it is, we are being kept in the dark, they act as if they own the country and they can decide however and whichever they want to, hence this uninformed and erroneous speculations.

        IMF, WB loans could be in accordance with international financing rules. Can we say the same with Chinese loans? Are they required to conform with them?

        • karlgarcia says:

          If it is accurate that we are paying for non existent ZTE and North-South rail like we did for Bataan Nuclear power plant, this is unacceptable!

          Brautigam’s book might shed some light on the incredible problems that the Philippines has found itself embroiled in with regard to China-funded projects like Northrail and the NBN-ZTE, both contracted during the China-friendly administration of President Gloria Macapagal Arroyo.

          Both projects have been canceled—with no railway and broadband network in sight—but they have left a trail of huge debts that continue to bleed the nation’s coffers. We might remember the cases that were filed and the political scandals that attended both projects. But only a few may know how much money has been paid to the China National Machinery and Equipment Corporation Group, which was supposed to supply the railway system that would link Metro Manila to Central and Northern Luzon, and the China Eximbank that provided the bulk of the financing.”

      • Hope and pray that the Philippines will not suffer the same fate as with Sri Lanka and other countries who availed of substantial loans from China.

        China Tells Sri Lanka: We Want Our Money, Not Your Empty Airport

        Sri Lanka has a debt problem. After more than a decade of taking out huge loans to build large-scale infrastructure — most of which hasn’t yet produced adequate returns — the country is now struggling to make payments, and is looking for another way out.

        A potential exit strategy was to offer China debt for equity swaps, which Sri Lanka’s Prime Minister Ranil Wickremesinghe recently proposed to China’s Ambassador Yi Xianliang. China was offered varying degrees of control over some of Sri Lanka’s biggest infrastructure projects, including Mattala International Airport and portions of the Hambantota deep sea port, and Sri Lanka would receive some debt relief.

        China’s response to this offer was publicized earlier today in Colombo’s Sunday Times: We’re not interested. The Chinese ambassador replied that “it was not possible according to China’s laws.”

        However, China was clear that it extends its “fullest cooperation” and that such deals should be conducted via investors on proper commercial terms.

        This point is key: while China’s government will not swap debt for equity they will help clear the road for Chinese companies to take over key projects in Sri Lanka. IZP, a Chinese informational technology company, has been put forward as a potential purchaser of Mattala International Airport, while COSCO is looking into expanding operations at the Hambantota deep sea port.

        Sri Lanka’s debt situation is severe. The country is currently in $58.3 billion deep to foreign financiers, and 95.4% of all government revenue is currently going towards paying back its loans. This means that out of every hundred dollars the government brings in only $4.60 is going towards essentials like education and public services.

        • karlgarcia says:

          There is always the Venezuela example, they will ptobsbly default, but threy already gave so much oil, what has Sri Lanka provided, Garments? Tea? China has those stuff.

          • karlgarcia says:

            Soon many high stakes “gamblers “will also bet that we default in our loans.


            • And our economic team are saying that it will be good for us if our currency depreciates, they mean they would prefer it to depreciate (devalue) rather than to appreciate.

              They are in a borrowing spree, they want currency depreciation, the plunderers are back, what if the OPEC decides to decrease production and hike oil price – devaluation plus oil price hike, we prefer to import rather than be self reliant, plunderers at the helm, is that a recipe for economic crisis or what?

              Am not an economist, so I’m confused..mightily confused…and anxious.

              • karlgarcia says:

                All is not lost. Speculators will get rich. So Filipinos are good at second guessing, that makes us good speculators.

                Credit Default Swaps, rather than pester Chempo, I just googled.


                Click to access BSP_1b_cao_presentation.pdf

              • chemrock says:

                Currency appreciation or depreciation are double-edged swords. There always be benefits in one area and disadvantages in some other areas. In the case of the peso depreciation those admin illuminaries chose to talk of the benefits only. What they mentioned are absolutely correct technically, however they chose to keep silent on the other side of the coin. Which means it wasn’t a balanced view, which means they have not been honest to the public. Or to view it another way, it’s more expensive to maintain and build those reserves. There are many other negatives for

                Take for example one specific bad for depreciation. It is now more expensive to maintain and build foreign currency reserves. Another is the foreign ccy loans, more pesos are needed to pay the same amount of loans. The golden era of infras just got more expensive. I wonder if they have imputed the 10% increase into their original plans. There are many other negatives.

                Generally currency depreciation impacts prices negatively. It is already apparent as inflation is now at 5 year high of 3.5%. Managing stable prices is the responsibility of the BSP. And here the selection of Espinella over Guingogundo as the next central bank governor is in my opinion, unwise. It’s picking a back office guy over a front office guy. Guin is the one managing monetary policies under Tentangco’s watch. Much of Tetangco’s credits must have been on the back of Guin’s work. Having been overlooked and loosing to a much younger and less experienced Espinella, will Guin resign? That would be a great loss. But in any case, better Espinella than any other sycophants.

              • karlgarcia says:

                Why look at the failure in Venezuela,Africa and Sri Lanka. China did its Build Build Build.
                This happened.


                China’s White Elephants: Ghost Cities, Lonely Airports, Desolate Factories

                Enlarge this image

                Luliang’s planned “Liquor City” has run short of funding. Workers have yet to finish this replica of the Great Wall, which is supposed to surround a massive factory complex producing baijiu, an often expensive Chinese hard liquor.

                Frank Langfitt/NPR
                When you drive the new expressway to the airport in the Chinese city of Luliang, you are as likely to come across a stray dog as another vehicle. When I recently drove it, a farmer was riding in a three-wheel flatbed truck and heading in the wrong direction. But it didn’t matter. There was no oncoming traffic.

                That’s because the city’s $160 million airport, which opened in 2014, gets at most five flights a day and as few as three. Officials began building the airport when this coal town was still booming. Since then, though, global commodity prices have plunged as China’s old industrial economy has sputtered. The airport has become a white elephant.

                “Because this place is economically backward, the flow of passengers is small,” says Wu Dexi, a local corn and tomato farmer who brought his 78-year-old mother to the empty terminal because she wanted to see an airplane for the first time. “People’s income is too low, they can’t afford this.”

                No country has built so many roads, bridges and airports as quickly as China. Many projects, including the nation’s remarkable high-speed rail network, have had big benefits.

                But Anne Stevenson-Yang, research director at J Capital Research, an economic research firm in Beijing, says the government has simply built too much. She says lonely airports like the one in Luliang are not uncommon. There’s another one northwest of Beijing in Hebei province, in a place called Zhangbei.

                “It’s an impoverished county,” Stevenson-Yang says. “They built the airport in order to increase the revenue of the county. But nobody ever agreed to land there.”

                In other words, the airport in Zhangbei has no planes.

                Stevenson-Yang says local officials across China have greenlighted lots of infrastructure projects not because they make economic sense, but just to boost GDP. Now, she says, some are having the opposite effect: They’re dragging growth down.

                Enlarge this image

                Luliang’s airport opened in January 2014. Today the $160 million facility handles just three to five flights a day.

                Frank Langfitt/NPR
                “This is why, as fast as China rose economically, this is as fast as it will decline,” says Stevenson-Yang. “During the rise, all of these things were accelerating GDP and now they’re sitting around as costs.”

                Despite a lot of recent bad economic news, it’s important to remember that China’s economy is still growing. Projects that sit empty one year can rumble to life the next.

                Wade Shepard documents some of the country’s deserted new cities in his book Ghost Cities of China: The Story of Cities without People in the World’s Most Populated Country. Recently, he took a Russian TV crew to see one outside Shanghai.

                “We’re walking around and — oh, no, all of a sudden, I see cars,” Shepard recalls. “There are people!”

                “Within the 10 months since the last time I’d been there, people had been flooding into this area,” Shepard says. “It just shows how quickly these things can change.”

                One project that’s unlikely to change anytime soon is Luliang’s new “Liquor City.” It’s a gigantic complex of ancient-style Chinese pavilions covering an area the size of several pro football stadiums, surrounded by an unfinished, life-size replica of the Great Wall.

                Inside, factories were supposed to pump out tons of high-priced white liquor — called baijiu in Mandarin — for which the region is famous. Baijiu is made from grain, and high-end brands have been a staple at official banquets. As recently as 2012, baijiu sales were a staggering $92 billion.

                Today, though, Liquor City looks like an abandoned movie set.


                The project was to be funded largely by coal revenues, which collapsed with the drop in global prices. In addition, planners failed to anticipate the Communist Party’s anti-corruption drive, the biggest in modern Chinese history. China’s leader, Xi Jinping, launched the campaign nearly three years ago, cracking down on lavish spending for which officials have been notorious.

                Enlarge this image

                A state-owned company started building “Liquor City” in a suburb of Luliang to help diversify the economy away from coal. But a massive anti-corruption campaign has damaged demand for expensive Chinese baijiu, or white liquor, and for now, the factory complex remains unfinished.

                Frank Langfitt/NPR
                “Now things are bad,” says Lu Cuie, who runs one of the scores of white liquor stores in town. “High-end liquors don’t sell at all. Officials don’t buy. No one buys.”

                Before the crackdown, Lu could sell more than $14,000 worth of alcohol for a single event — big money in this poor part of central China.

                “On average, when an official held a wedding banquet or birthday party, the banquets used to last three to four days,” says Lu, who wears a shirt with the face of Audrey Hepburn emblazoned on the front. “Now, it’s simply impossible. It only lasts one day and the scale is much smaller.”

                Fenjiu, the state-owned company that’s building Liquor City, refused to discuss the project. Lu and other local shop owners say the company is struggling and relies on bank loans to pay employees.

                When I ran into some managers outside Liquor City’s unfinished gates, I asked when it planned to open. They shook their heads wearily and laughed.

              • chemrock says:

                Sorry in my above comment in response to Mary, last 2 lines in para1 are irrelevant. Don’t know how come it got there.

                Whilst here, just like to add this. Admin said depreciation is good. Import prices go up, so govt collects billions of additional import duties. That’s good. More money for the budget. Guys, if you have executives like this running the country, you are screwed. If they want more funds from duties, simply increase the rates, no need for ccy depreciation. Won’t increases in tarrifs come back to hit consumers? My gawd! was my reaction when I read that.

              • chemrock says:

                Karl – on credit default swaps.

                Warren Buffet call all these derivatives financial weapons of mass destruction.

                You better hope the various loans to Philippines do not become the reference obligations in CDS. In other words, lenders do not buy CDS to hedge their loans to Philippines. CDS are OTC over the counter products, meaning unregulated, thus open to manipulation. Sellers are big banks. Sellers manipulate CDS prices which in turn affects interest rate on loans. That was what basically happened to Greece. Their loan interest rates became unteñable.

                Due to investigation s ongoing into CDS manipulation, many big banks have now pulled out of this market. Warren Buffet has cleared out his entire portfolio.

      • karlgarcia says:

        Help me on this, does this imf debt calculator use some sort of compounding?

        • NHerrera says:

          Thanks Chief (Librarian) for that link on the IMF’s Calculation of Grant Element.

          The calculator is useful in showing how various elements, especially the interest of the loan component of an offered financial package can change the picture of the seemingly nice grant component. See the table below where I played with numbers using the calculator.

          As an example, consider an offered financial package with the loan and grant components, respectively, as 20 Million and 10 Million in some currency. Now to a politician without considering all the parameters — or purposely faking the impact of the terms — may right away exclaim: Wow, this is great; imagine giving a 33% grant for the total package of 30 Million; how very nice.

          But it will not escape the eagle eyes of the knowledgeable at NEDA and DOF.

          First note that the discount rate of 5% used by IMF is to be considered as some sort of threshold. Below that, the interest rate on the loan component is considered good, above that, especially much above that is considered bad.

          Now look at the table: if the interest rate on the loan component is 5%, the grant element of the financial package is as it should be — about one-third or 34.24% (corresponding to the ratio, 10M/(20M +10M). If the interest rate on the loan is 3%, the grant element is 46.08% — that is, we are benefiting not only from the outright grant, but also because of the low interest rate. Now look at the number in red with interest of the loan at 10% — the effective grant element reduces to 4.62%; the nominal percentage of the grant from the financial package evaporates.

          So, it is still true: beware of those bearing gifts; they do not have to be Greeks. Examine the engine under the beautiful hood.

        • chemrock says:

          I’ll be very frank with you. I don’t know what to make of the calculator. I think it is something internal for the IMF. The borrower is likely to be not concerned with this.

          To understand about loans, let me simplify it this way:

          1. A loan may be at fixed rate or floating rate. Fixed rate is a one time rate throughout its life but it’s not easy to get a commercial fixed rate for a term over 10 years. Most of these long term fixed rates are govt-to-govt assistance type of loans.

          2. Majority of commercial loans are floating rate, which normally allows the borrower to select 3 or 6 month terms. Rates are usually fixed at a number of basis points (eg 125) over 3 or 6 months LIBOR or SIBOR etc. What this means is that the rates are reset constantly. Eg if borrower take 3 months and SIBOR is 3%, then the rate is set at 4.25%. At the end of the 3 months the borrower pays the interest and get to select the next interest period again, 3 or 6 months. Lets say borrower picks 3 months and SIBOR is now 3.5%, the rate is reset at 4.75%. In a rising interest rate scenario, of course the borrower will select longer term, ie 6 months. This reset goes on throughout the life of the loan.

          2. For loan (1) funds would normally be dumped one shot into the borrower’s bank a/c. For (2) which are mostly proect financing, funds are disbursed at various times, mostly according to schedule. These are called draw-downs by the borrowers.

          3. The financing could be in securitised form. What this means is each time the borrower makes a drawdown on the loan, they will issue the required security such as Notes or Bonds. When it comes to securitised loans, the interest could be in the form of coupons or deep discounts. Coupons would work very much like the floating rates in (2) above. For discount instruments, there are no quoted interest rates. In the primary market, ie when the borrower first issues the paper, the market determines the price. Borrower receives the fund net of the discounts and for the duration of the instrument, he is not bothered with interest payments. The bank takes the papers and they can trade them in the secondary market.

          4. Loans can of course be in the form of current account overdrafts. This form of financing, there is no repayment term, only a facility extension, normally annually. The interest is computed on the daily balances. The question is how often is the interest computation done. It’s normally every month, in which case we say it is compounded monthly basis becasue each month the interest is calculated and added to the overdraft balance. There may be instances of daily compounding, or other periods.

          (1) (2) and (3) are for mega financings.

          Beyond (1) – (4) I have no idea what IMF calculator is all about. Normally in mega financings, in addition to the interest, there are all sorts of other hidden costs — management fees, utilisation fees, commitment fees, etc.

          Hope this helps.

          • karlgarcia says:

            Thsnk you for the enlightenment.
            Now all I need is to find the switch of the lightbulb in my brain.

            Thanks for your patience.

          • chemrock says:

            Sorry, last para was left hanging. What I meant to say there are all sorts of hidden costs or complexities in some loans, such as the grant portion in the IMF loan. So their calculator is probably to help them figure out the real cost, of course based on some assumptions. NH worked on that basis I think.

            • karlgarcia says:

              Thanks to you both

            • NHerrera says:


              If I may illustrate further using my previous post and table as basis with some changes:

              Financial Package A

              20M Loan, 10M Grant, 6% interest 20 years maturity, 5 years grace period >> results in a grant element from the IMF calculator of 28.31%

              Financial Package B

              20M Loan, 3M Grant, 2% interest 20 years maturity, 5 years grace period >> results in a grant element from the IMF calculator of 37.40%

              In this cases, Package B is better than Package A. It is on that basis, I believe that the IMF calculator is handy and useful.

    • karlgarcia says:

      What self reliance? we can’t bid out license plates that will involve only local players.
      We would think that all they need are recycled tin cans.

      • Yes, karl..that’s true, sad but true…we even import the ordinary knives and paper toilet dispenser.

        But, reading from an excerpt of the above post which I shared:

        “The Department of Science and Technology (DOST) Road Trains are rolling stocks which are forty (40) meters long and are able to carry or transport 240 passengers at any given time. They are Road Trains because their carriageways are merely asphalted or concreted roads not steel rails requiring the installation of imported bogeys. Hence, they are Road Trains that can also load, unload agri, fisheries and other cargo products. Their average speed can match the operating efficiency of the USA Amtrak.

        Combining the use of the Philippines Intelligent Trackways with the DOST designed Road Trains for passengers, agri, fisheries and other cargo products; the Philippines can lead the way in liberating the global citizens from having to perpetually subsidize bankrupt railways for all their respective country’s mass transit needs

        Self-explanatory Tabular Presentation of Similarities and Differences Between the Intelligent and Profitable Trackways versus the Bankrupt and Subsidy Draining Railways Should Be Enough For the Government To Give Its All Out Support.”

        We have inventors and scientist that have been inventing and developing products which became popular worldwide – the fluorescent lights, for one, and many others. Another is the one that former POTUS Obama, during the last 2015 APEC summit has encouraged. He himself invited Aisa Mijeno (the APEC star) on national TV for the product presentation. The former POTUS did his best to lead her and the Philippine government in the right direction to support our Filipino scientists and inventors who have long been neglected.

        Their inventions and ideas could have given us self reliance if only they were given the support of their own government…alas! our leaders prefer to use other countries’ products on credit so they can line up their pockets with fat commissions and tongpats.

        • chemrock says:


          The govt’s role is enabler, it’s the business people that moves the country forward. But the problem is when it comes to projects, the govt and cronies are interested only in fixing deals, thus missing the opportunities to maximise on those projects, gain knowledge and technologies, and capitalise on that. Take for example the sub-ways — there is much that can be gained from that project itself, but the cronies are not positioning the country for that. Take MRT and LRT — nothing has been localised.

          None of the technologies are one time super leaps. They are all incremental steps. The infras give lots of opportunities for gaining and building on these technologies. It’s this aspect of infras that I’m more excited about. Getting Chinese loans and Chinese engineers to build the infras are the easy part. Building on the technologies and localising knowledge and expertise is the golden fruit. But I don’t have much hope for this.

          Let me give you an example — Singapore (that’s what I know). We build our MRT, some stretches of it were underground. Of course we had lots of foreign contractors and expertise. After that, we accquired the knowhow and gone on to construct our own huge underground storage facility for petroleum. Take defence. We have gone on to build our own naval vessels, lots of other weaponries, we are one of the few nations that have drone-capabilities.

          • Thanks again, chemrock….and I apologize if due to our lack of knowledge and expertise, we seem to ask endless questions and clarifications, and though you have already explained it before we seem to still not get it. Your patience is truly appreciated. Please bear with us a little longer.

            Going back to your comment that the government is the enabler and it is the business sector that moves the country forward.

            Precisely, this is the kind of problem that bugs us since time immemorial…there is such a thin line between government and business sector, let’s face it….the lobbyist and the campaign fund provider are one and the same…Gian Lopez declared, Senator, your brother killed a mountain…or words to that effect, if my memory serves me right.

            His cronies financed Marcos’ numerous election victories for himself, his wife and children…These cronies businessmen then cornered all the business opportunities available, even those pioneering business did not escape their unbridled greed, it’s either give up the controlling share or be in jail for some trumped up charges in the name of national security, I know, a friend had to leave the country to escape their clutches.

            History has repeated itself during the admins of Estrada and GMA, and now, Duterte. Remember his hypocritical sympathy for Gina Lopez..duh…can he afford to disappoint his mining friends who financed his presidential campaign and provided helicopters, etc. much the same way he dared not disappoint BBM/Imee/GMA and China.

            Businessmen (not all) are in cahoots with the corrupt government now, just as in the regime of Marcos, Estrada and GMA.

            So where do our inventors, scientists and pioneering industries can go for support?

            I wish we had the patriotism of your countrymen, the South Koreans and the Japanese, be it in the government, business sector or in the middle class and poor citizens.

            • chemrock says:

              To be fair Mary, we need to split the businessmen into 2 categories. One bunch are the cronies. They suck up to the one in power to corner projects, licences, resources etc. They can’t compete without being cronies. This group gives nothing to the country, they only take. Then there are the normal businessmen. They build businesses on their own capabilities. However having invested heavily in the country, they need to be politically nimble in order to safeguard their interests. Many from this group would have bought insurance by providing donation to more than 1 political bigwigs. I would have viewed Ramon Ang’s and Floirendo’s contributions Duterte differently. It would be good if the country can progress to the level where real businessmen need not have to be unduly concerned with political figureheads and simply focus on help building the economy. Alas we are not there yet.

              • We are not there yet, I agree. I hope we will be.

                Meanwhile Duterte and Mocha and her tribes are ranting against oligarchs…the oligarchs that are not yet cooperating with and supporting them, but are silent on Greggy Araneta, the other cronies of the Marcoses and former FG / GMA.

              • karlgarcia says:

                In your essays about Chinese take over like in malls and Transco.
                I will say that we have Villar for malls and Razon for transco.

                But Unfortunately Villar sells Chinese products and SM has Cultura Pilipinas and what is the name of that largest dustributor of Filipino handi crafts. But Having Villar going toe to toe with the Chinese is good enough for now.

                And I see Razon not as an Arroyo crony, but as a conqueror, he and his group operates ports all over the world including China. Arroyo may come and go, but ports and gaming are here to stay.

              • karl

                Razon is a BFF of the former FG Arroyo. I reas somewhere that the RORO was rushed mainly for his benefit, although the rest of the Pinoys benefited also. He entered the Forbes list of Filipino billionaires right after that and the NGCP venture…that’s the worst arrangement that our country has entered into (with CAPEX passed on to the power consumers, all the advantages to them and woe to the household consumers who have to suffer high power rates). That’s with the Chinese also.

                National Grid Corporation of the Philippines
                From Wikipedia, the free encyclopedia

                Founded January 15, 2009; 8 years ago
                Headquarters Quezon Avenue cor. BIR Road, Diliman, Quezon City, Metro Manila, Philippines
                Key people
                Du Zhigang (Chairman)
                Henry Sy, Jr. (President; 2010 – present)

                The National Grid Corporation of the Philippines (NGCP) is a private company that was created on January 15, 2009 through RA 9511. It is a consortium of 3 corporations, namely Monte Oro Grid Resources Corporation, Calaca High Power Corporation and the State Grid Corporation of China. As the franchise holder, it is in charge of the operation, maintenance and improvement of the Philippine government or state-owned (through National Transmission Corporation or TransCo) national transmission facilities and system, controls the supply and demand of power by determining the power mix through the selection of power plants to put online (i.e., to signal power plants to produce power, as power plants will only produce power or feed their power to the transmission grid when directed by NGCP). As a common carrier, it must provide non-discriminatory access to its transmission system. It is subject to the standards set by the Philippine Grid Code and the Transmission Development Plan. It also updates the daily power situation outlook for Luzon, Visayas, and Mindanao by determining the available capacity, system peak, and gross reserve (all of which are in units of MW or megawatts).

                On December 12, 2007, 2 consortia bid for a 25-year license to run the Philippine power grid – privatization of the management of the National Transmission Corporation (TransCo): the consortium of Monte Oro Grid Resources Corp., led by businessman Enrique Razon, comprising the State Grid Corporation of China, and Calaca High Power Corp., WON in an auction conducted by the Power Sector Assets and Liabilities Management (PSALM) Corp. as it submitted the highest offer of $3.95 billion, for the right to operate TransCo for 25 years, outbidding San Miguel Energy, a unit of San Miguel Corporation (bid of $3.905 billion), Dutch firm TPG Aurora BV and Malaysia’s TNB Prai Sdn Bhd. Jose Ibazeta, PSALM president and CEO remarked: “We are very happy about the successful turnout of the bidding for TransCo. PSALM handled the privatization of the government’s transmission business with utmost transparency and judiciousness.”[1][2][3]

                On December 1, 2008, former president Gloria Macapagal-Arroyo signed the RA 9511 which gives it the franchise to operate and maintain the transmission facilities of TransCo.

                On January 15, 2009, it officially started its operations and management over the national transmission system. It continued to do all transmission projects that were planned or unfinished by TransCo in its first few years and makes or plans any new projects through the Transmission Development Plan (TDP).
                Franchise Law

                The NGCP’s 50-year franchise only covers the operations, management, and maintenance of the transmission facilities which was given to the private investors and the right of eminent domain necessary to construct, expand, maintain, and operate the transmission system. However, concession, unlike outright sale, allowed Philippine government, through TransCo, to retain or continue the ownership of the country’s said facilities or assets such as poles, towers, cables, substations, land where the facilities are located (the right-of-way or ROW), and many more.[4][5][6] It is renewable for another 25 years. The franchise started on January 15, 2009 and will end on December 1, 2058.

                Board of Directors

                Below is a table listing the board of directors of NGCP.
                Name Position
                Du Zhigang Chairman
                Henry Sy, Jr. Vice-Chairman
                Robert Coyuito, Jr. Director
                Jose Pardo Director
                Francis Chua Director
                Wen Bo Director
                Ma Ruoxin Director
                Liu Xinhua Director
                Anthony Almeda Director
                Paul Sagayo, Jr. Director

              • karlgarcia says:

                I knew you would expound on the National Grid.
                I have read your comments about them before.
                About Roro, see my note about Nenaco and Henry Sy having a “minority stake” in it, because logistics is the wave of the future of shopping.
                Razon is the premiere port authority now, and ICTSI opening up of the Tanza Port will cut traffic ( actually transferred traffic)going to Laguna and Batangas.

              • karl

                You really know how my mind works, hahaha…

                Can’t help but connect the dots leading to the Arroyo and friend’s joint ventures with the Chinese…remember this one – was that JMSU in the WPS that the SC has declared unconstitutional? How about NBN ZTE deal, sorry kung na mix up ko siguro ang alpha abbreviations….going by memory here (which was affected by high levels of TSH)

                … could be the reason why Arroyo supported Du30 in the last election, ditto with the Marcoses and who knows, maybe Estrada…now happy days are here again for them all and woe unto us, and the rest of the unsuspecting Filipinos.

              • karlgarcia says:

                All abbreviations are correct. 😄

              • [In 2008, Bayan Muna petitioned the Supreme Court to void the Tripartite Agreement for Joint Marine Seismic Undertaking (JMSU) in the West Philippine Sea among the Philippine National Oil Co. (PNOC), China National Offshore Oil Corp., and the Vietnam Oil and Gas Corp.

                Named respondents in the said case were former President Arroyo, the Secretary of the Department of Foreign Affairs, the Secretary of the Department of Energy, the PNOC Exploration Corp. and the PNOC.

                “With the JMSU, the Arroyo administration effectively sold out the country to the Chinese. The Philippines has no more control and supervision over the exploration of our petroleum and other mineral oils under the Tripartite Agreement; this should not happen again,” the veteran solon said.

                Former Bayan Muna party-list Rep.Teddy Casiño, one of the petitioners in the case, described the Petition as a “nationalist assertion to defend our territory.”

                “We petitioned the SC to stop the respondents from further implementing the agreement to avoid ‘grave and irreparable injury’ to the country’s economy and patrimony, national sovereignty, territorial integrity and national interest. The Constitution only allows the exploration, development and utilization of natural resources by the State in co-production with Filipino citizens or corporations with at least 60 percent of the capital owned by Filipinos,” said Casiño.

                Through the JMSU, China was able to discover and confirmed the enormous reserves of natural gas in Recto Reed Bank, where one field already holds about 2.7-3.4 trillion cubic feet of the valuable resource. “China is now very zealous in taking over these rich natural gas deposits as evidenced by its aggressive stance in the area,” Zarate stressed.

                “Any future joint exploration with China must protect the interest of the Filipino people and should contribute to the country’s economic development. It must also recognize our territorial integrity and sovereignty over the area now rightfully ruled as ours. There must be no repeat of the highly unequal JMSU,” he said.]

                I seemed I spoke too soon, whatever happened to that 2008 petition to the SC? My memory is not that good, and I can’t find the correct link.

                Chief Librarian, karl… may I seek your capable expertise?



                The Supreme Court (SC) must rule on the constitutional controversy raised by lawmakers against the Joint Marine Seismic Undertaking (JMSU) before the Duterte government makes any commitment with China for another joint exploration of the West Philippine Sea (South China Sea).

                Reacting to reports that government appeared in favor of the joint exploration in the contested waters, Bayan Muna Rep. Carlos Zarate and former congressman Neri Colmenares urged the SC to consider the urgency of issuing a ruling on the legal issues they raised against the JMSU filed in 2008 by the then opposition congressmen.

                “The resolution of the JMSU question is now crucial in the face of possible bilateral and multilateral talks between the Philippines, China and other claimant parties in the West Philippine Sea,” said Zarate.

                Colmenares, who openly assailed JMSU during his term as congressman, said the SC must rule on the petition to declare the agreement void while talks of joint exploration with China are still on-going. “It was the Philippine government itself who committed treachery by allowing China unhampered exploration of the WPS in 2007, thru the JMSU,” said Colmenares.

                He noted that the JMSU gave China unbridled exploration in the contested waters and thus, was able to pinpoint the location of natural gas and oil in the area.

                The discoveries, Colmenares said, prompted China’s “aggressive actions in the disputed area.”

                “It’s almost 10 years since Bayan Muna challenged in the SC the Chinese encroachment in our territory. We urge the court to decide and rule that unbridled and unhampered joint explorations is unconstitutional,” he added.

              • karlgarcia says:

                I saw only one article saying that JMSU was decided as unconstitutional, but several articles asking the SC to decide on it.

              • karlgarcia says:

                No SC ruling yet.

              • After 9 long years?, what a shame, SC…shame on you

              • thanks, karl. until next time, haha

  22. karlgarcia says:

    Duterte has succeeded in turningmy aytention aeay from EJK into this heavy debt burden China Silk Road thing.

    • There is nothing wrong and everything good in multi-tasking.

      Let’s fight, EJKs, the borrowing spree from China, the Federalism with dynastic families,, BBM and the Arroyo and their ilk’s resurgence in the political arena with their plundering tendencies, the return of dictatorship, Free De Lima, ICC case now that we have proven that the Congress is not interested in investigating Duterte and his private vigilantes with the support of PNPs, the pivot of Du30 towards China and the Communist Party of the Philippines, the traitorous dumping of our hard earned victory in the Hague over the WPS case, the total breakdown of civility and the horrifying popularity of P.I. and other swear words now being mouthed by kids and adults alike etc, etc.

      He loves Jose Ma. Sison and hates Sen. De Lima so much, that’s very clear.

      We need to be vigilant not only in one area but in the whole system of governance, let’s not be easily distracted.

  23. Jose Guevarra says:

    I think it’s time to talk about this again, now that there is actually a draft charter with Congress. Like it or not, we have to think about this. I am hoping someone can talk about federalism in other countries first. What worked? What didn’t? Why? Can we use these as models for the Philippine context? If so, which elements? How do we adapt these? If not, why?

    What’s the best way to put it into place, if we actually decide to go with federalism? Time, money, other resources required?

    How do we make sure we’re protected from vested interests of politicians dictating how federalism will occur?

    The current draft: why is it generally bad? Are there elements of it that actually good?

    In the end: in spite of ourselves, why would we go with federalism? Or why not?

  24. Jose Guevarra says:

    Population and geography, to me, seem to be the best way to divide into states. It gives every state roughly equal footing to begin with. This is the part of the US model that I don’t agree with. Just because the US states already existed before the country did does not mean that states of unequal populations should have equal representation in the Senate. And in the Pihilippine context, the regions we now have have no political bearing anyway; there is no need to keep them the way they are. With this in mind, NCR would be its own state with 12 million people. Following the same principle with the rest of the country (minus ARMM) creates maybe 8 others. Palawan may have to go with maybe Western Visayas. I honestly don’t know how to deal with ARMM (or Bangsamoro, if this one gets ratified); maybe its own state. So I see 10 states total.

  25. karlgarcia says:

    Copy your comment in the new discussion blog about federalism.

Check out what others are saying...
  1. […] However, I beg to differ. Federated countries such as United States, Canada, Malaysia and Germany, sparely used cardinal directions in naming their states or provinces. I already made my proposal of names in an open discussion in Joe America’s The Society of Honor blog last year: […]

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