Page last updated at 02:54 Asia/Manila, Wednesday, 16 November 2011 PH
Among the overly nationalistic provisions in the Philippine Constitution that have to be amended is the extremely wordy Article 12, Sec. 1 that really reads like a piece of legislation with phrases like "promote industrialization and full employment based on sound agricultural development and agrarian reform, through industries that make full and efficient use of human and natural resources, blah, blah, blah." I am amused when I read this article because I remember presiding as Chair of the National Economy Committee over hours and hours of debates and compromises among leftists, centrists, and rightists who all wanted an adjective or verb added to reflect their respective ideologies. This is a perfect example of what I have been saying that the Philippine Constitution as it is now is one of the longest and most verbose in the world because of the completely divergent ideological views of the people appointed by former President Corazon Aquino. In order to accommodate all the ideological concerns, the Constitution turned out to be a hodge-podge combining the features of a basic law of the land and a long piece of economic and social legislation. For this reason, I completely endorse the proposed amendment reducing Article 12, Sec. 1 to about one-fourth of its original length: "The goals of the national economy are (a rising national income); improving productivity as the key to raising the quality of life for all, especially the underprivileged; and more equitable distribution of opportunities, income and wealth."
Article 12, Sec. 10 is the provision directly affecting foreign direct investments because it mandates Congress "to reserve to citizens of the Philippines or to corporations or associations at least sixty per centum of whose capital is owned by such citizens, or such higher percentage as congress may prescribe, certain areas of investments. The Congress shall enact measures that will encourage the formation and operation of enterprises whose capital is wholly owned by Filipinos." The proposed amendment is admirable for its brevity: "The State shall regulate and exercise authority over foreign investments within its jurisdiction and in accordance with its national goals and priorities." This phrasing leaves room for the State to disregard the "Filipino First" mandate if, as has been demonstrated in the Philippines, it merely redounds to the good of the monopolists and feudal lords who have taken control of the Philippine economy under the name of nationalism. There are many situations in which a larger presence of foreign investors in strategic industries in the Philippines, especially those that need abundant long-term capital, may actually promote the good of the underprivileged, liberating them from the clutches of the Filipino elite.
Article 12, Sec. 11 is amended so that the main consideration is not the ownership structure but the quality of service that a public utility will render to the ultimate consumers. That is why, the amended provision reads as such: "No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to individual citizens of the Philippines or to corporations or associations organized under the laws of the Philippines; nor that such franchise, certificate of authorization be exclusive in character or for a longer period than 50 years. Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteration, or repeal when the common good so requires. The State shall encourage equity participation by the general public." There is no equity restriction for foreigners and no mention of management being reserved only to Filipinos. I would like to see the day when electric distribution companies, water utilities and transport corporations can be owned by corporations registered in the Philippines but with majority foreign ownership. Such possibility will not only open some of the most capital-intensive sectors to much needed long-term foreign capital but also to the best practices in management and technology from all over the world, to the benefit of the consuming masses.
Article 14, Sec. 4, which has to do with educational institutions is also to be amended so that the prohibition against foreigners participating in the ownership of universities and other post-secondary educational institutions is removed. The Philippines lags very much behind its East Asian neighbors in the quality of tertiary education, which requires vast investments in teacher salaries and development, modern classrooms and equipment, research endowments, and instructional materials. Foreign capital can supplement the very inadequate resources private universities in the Philippines have to attain global standards of university education, as can be observed in such territories as Hong Kong and Singapore that have embraced partnerships with the best universities and graduate schools in the world, such as Harvard, Northwestern, INSEAD, Cambridge and Oxford. The revised version of Article 14, Sec 4 is, therefore, very welcome. It reads: "No educational institution shall be established exclusively for aliens and no group of aliens shall comprise more than one-third of the enrollment in any school. The provisions of this subsection shall not apply to schools established for foreign diplomatic personnel and their dependents and, unless otherwise provided by law, for other foreign temporary residents." The new version focuses on the intended beneficiaries of the provision, who are the Filipino students and not on the ownership of the schools. It would have the wholesome effect of preventing permanent residents from abroad from establishing educational ghettos and monopolizing scarce quality teachers by offering them higher salaries. It reflects the right kind of patriotism by which the concern is for the consuming public and not the nationality of the suppliers of the service.
The transitory provision that is proposed under the amendments deals the final blow to the wrong kind of nationalism: "Upon the effectivity of the amendments to Articles II, XII, XIV of the Constitution, all provisions of existing Laws and Regulations, imposing nationality prohibitions or restriction on the acquisition and ownership of private lands classified in accordance with law as commercial or industrial, the grant of congressional franchises, the ownership and operation of public utilities, mass media, advertising, educational institutions, and the exploration, development and utilization of natural resources, are hereby repealed unless otherwise later provided by law."
A special word about Article 12, Sec. 2 which is all about the disposition of public lands and the exploration, development, and utilization of natural resources. As it stands in the present prevailing Constitution, the provisions are so complicated and abstruse that they lead to a great deal of confusion and misinterpretations which in turn can result into endless legal disputes and influence peddling in the various branches and departments of Government. Much of these endless disputes and debates can be avoided by adopting the proposed amendment which reads as follows: "All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils and all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources, are owned by the state. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development and utilization of natural resources shall be under the full control and supervision of the state. The state shall protect the nation's marine wealth in its archipelagic waters, territorial sea, seabed, and exclusive economic zone. The state shall regulate the development of the nation's natural resources towards the efficient use of these resources for the (common good) consistent with sound environmental policies. The Congress may, by law, reserve the small-scale utilization of natural resources to Filipino citizens, or corporations or associations sixty per centum of whose capital is owned by such citizens."
I am hopeful that Speaker Feliciano Belmonte and Senate President Juan Ponce Enrile will assign the highest priority to fast tracking these amendments through a joint session calling for a constituent assembly and voting separately, the most expedient and acceptable form of amending the Constitution, considering the urgency of increasing the rate of investment in the country. I also fervently hope that President Benigno Aquino III will keep the promise he made during the campaign that he will prioritize the amendment of the economic provisions of the Constitution to make it more foreign investor friendly. This initiative, next to fighting corruption, will contribute most to eradicating mass poverty because it will enable the Philippines to attain the goal of growing its GDP at 7 to 10% annually in the next five to ten years. With local capital alone, there is no way we can attain that goal. For comments, my email address is email@example.com.