Page last updated at 01:39 Asia/Manila, Wednesday, 10 December 2014 PH
Time and again, we have stressed that the complete integration of markets in the ASEAN Economic Community will not happen in one fell swoop. Rather, it will be a work in process that may take at least two decades to complete, as can be gleaned from the experience of the European Economic Community. The resurgence of nationalist or protectionist sentiments is unpredictable, as we have witnessed in the outgoing Administration in Indonesia. The election of a new President who is more open to foreign investments may, however, again change the parameters. Only time will tell. The important thing is for every country to have enough flexibility to change with the times in its objective of promoting sustainable and inclusive development. If more and more countries are really opening up their markets and investment regimes, whether under the AEC or the Trans Pacific Partnership (TPP) agreement, then the Philippines has to be ready to also remove unreasonable restrictions if it is not going to be marginalized in this dynamic Asia Pacific region.
The truth of the matter is the Philippines is the least flexible in Asia because we have enshrined in our Constitution certain restrictive provisions against foreign investments, restrictions which in other Asian countries are only in their laws or executive decrees and can be changed with relative ease. That is why the Resolution of Both Houses No. 1 (filed by Speaker F. Belmonte Jr.) highlights the need to amend the restrictive economic provisions in the Philippine Constitution to allow for freer entry of foreign direct investments in the country should there be a general move of most countries in the region towards less restrictions to FDIs. The nationalists need not be necessarily alarmed. The proposal is just for more flexibility and does not yet involve the actual elimination of the specific provisions in the Constitution. What Speaker Belmonte and other members of the Legislature are recommending is the amendment of the Constitution through an Act of Congress or acting as a Constitutional Assembly by appending the phrase, "except when otherwise provided by law" to the following constitutional provisions affecting FDIs:
1. Ownership of Lands: Article XII Sections 2, 3 and 7
2. Ownership of Corporations: Article XII Section 10
3. Operation of Public Utilities: Article XII Section 11
4. Ownership of Schools and foreign enrolment: Article XIV Section 4
5. Ownership of Mass Media: Article XVI Section 11
It is obvious that nothing will immediately change even if the amending law is enacted through the approval of three-fourths of Congress, voting separately, and subsequently submitted to the electorate for plebiscite. What the law would make possible is the introduction of possible amendments through legislation in the future, which realistically will already be in the next Administration that will be voted into power in 2016. For example, as regards the ownership of land, foreigners will not be automatically allowed to own land in the Philippines once the majority of the electorate vote Yes in the referendum. Some legislators in the next Congress will have to sponsor a bill specifying what land can be owned by foreigners and in what conditions. For example, a bill may be proposed that will allow a foreigner, whether an individual or a corporation, to own the land on which he (it) builds a private residence, office, factory or any other establishment. The bill can be explicit in prohibiting ownership by foreigners of land for pure speculation. It is an exaggeration for those who object to foreign ownership of land to claim that if we open up ownership of land to foreigners, the Chinese or other capital-rich groups will buy our 7,100 islands. Such claims are truly alarmist and just confuse the issues.
Those who point out that hundreds of billions of dollars are invested annually by foreigners in China, even if foreign ownership of land is prohibited in that country, do not consider the fact that China has extraordinarily efficient infrastructures, in contrast with the very poor state of ours, especially airports and railways. Because it is taking forever for us to improve, say our airports, we need sweeteners that can compensate for our inefficient public works. One of those sweeteners is to allow foreigners to participate in the rising prices of the real estate on which they build their residence or business structures. These are the types of arguments that will be heard in Congress once the phrase "except when otherwise provided by law" is put into operation. The nationalists can still argue vigorously against any foreign ownership of land. I am positive, however, that there will be more enlightened legislators who will see the wisdom of amending through legislation the restrictive provisions of our Constitution. Times have changed. The majority of the 50 members of the Constitutional Commission appointed by former President Cory Aquino were nationalists in the mode of the "Filipino First" mentality nurtured by our leaders in the 1950s and 1960s. I should know. I was in the minority. Today, there are more than enough enlightened Filipinos among the new generation of leaders who have realized that "Filipino First" is tantamount to "Rich Filipinos First" and damned the rest. For comments, my email address is email@example.com.