Bernardo M. Villegas
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No Secrets in the Internet

           While reviewing the records of the plenary sessions in which I participated in the drafting of the 1987 Philippine Constitution, I was amused to no end reading some of the reasons cited by the nationalists and the advocates of Filipinization of public utilities why the investments of foreigners in the telecom sector should be limited.  Without the need to identify the Commissioners who presented the arguments, let me just reflect on how unsound are the arguments limiting foreign direct investments in Philippine telecommunications, considering the technological advancements that have occurred since 1986, when the Constitution was drafted.  A major reason cited to limit the foreign equity in the telecom industry was the alleged serious threat to our national security and to our sovereignty if foreigners had control of our telecom facilities.

          In the Records of the plenary sessions on August 23, 1986 one can read the following statements of one of the Commissioners:  "Under modern technology, is the monitoring of communications text possible?  Yes, it is possible particularly when foreigners control the country's communications.  During a national emergency, such as war or revolution, our international telecommunications may be subject to tapping, monitoring or 'eavesdropping' by the foreign multinationals because foreign interests are involved.... The argument that this can be done even if Filipinos control and manage these communications facilities is true, but it is apparent that it is a lot easier and all the more risky if non-Filipinos are in control.  In fact, modern technology has made these 'monitoring' activities easier to do and more efficient...Therefore, the argument is that communications facilities are a danger to security considering the fact that communications facilities such as remote sensing can even monitor resource-rich areas of the Philippines.  Thus, other multinational agencies, which are ahead in terms of knowledge about the natural resources of the country, pose a threat to our national security as well as economic sovereignty."

          One does not have to be a telecommunications or IT professional to realize that the arguments cited above to prevent foreigners from owning a controlling interest of a telecom company in the Philippines do not hold water.  In this era of "wikileaks", hacking and cyber attacks, no national telecom facilities are safe from outside forces who are interested in getting to know our secrets in the internet.  There are no secrets in the internet.  As in the case of the "wikileaks", even the most sophisticated facilities of an advanced country like the United States can be hacked by internet spies.  Our most recent experience with the website of the Department of Budget and Management (DBM) is a testimony to the futility of "Filipinizing" telecom facilities to prevent or even just minimize cyber attacks against our confidential records.  Last April 27, Budget Secretary Florencio Abad alerted government agencies about possible hacking of their websites after the DBM website was defaced by suspected Chinese hackers in protest against the country's claim over the Scarborough Shoal.

          It is about time we give up these lame excuses for not allowing more foreign equity in the telecom industry of the Philippines.  We should amend the Philippine Constitution in order to allow foreigners to own even 100 percent of a telecom enterprise in our country.  One major reason is that allowing foreigners to compete with our local companies can address the constant danger of an oligopoly being established in the industry, to the detriment of the consumers.  We still have one of the highest prices for international telephone calls in the region, to the great disadvantage of, among others, the ten million OFWs who want to be in continuing contact with the relatives they left behind.  A second reason is that technological advances have led to a converging of the telecom, computer, information technology and media into one integrated sector.  Allowing foreigners to participate more freely in this converging sector will help us leap frog into the digital era of the twenty first century.  It will enable our booming Business Process Outsourcing (BPO) sector to more rapidly upgrade into the more sustainable Knowledge Process Outsourcing (KPO) industry, where the Philippines will increasingly have a competitive advantage in the global economy because of the demographic winter faced by most advanced countries all over the world.

          If these ideas are too revolutionary to our so-called nationalists, let us at least make sure that we do not narrow even further the ability to foreigners to invest in our telecom enterprises.  As I have argued in another article that will appear in this paper, it is not reasonable to define the 40% allowable foreign equity in public utilities as applying only to the voting shares in a public utility, instead of the total capital, whether common or preferred.  In 1986, even the predominantly pro-Filipino Constitutional Commission to which I belonged clearly rejected the recommendation of the U.P. Law Center to define capital as "the voting stock or controlling interest."  The Records of the plenary sessions will show that it was the mind of the Commissioners to define capital in the broad sense of the total subscribed capital stock of the corporation.  Until we can amend the Constitution to allow 100 percent foreign equity in the telecom industry, let us at least respect the mind of the Commissioners in the 1986 Constitutional Commission.  For comments, my email address is bernardo.villegas@uap.asia