Bernardo M. Villegas
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Civil Society for Constitutional Reforms (Part 2)

          TanDem, a part of civil society organized by concerned citizens to promote inclusive growth through political reforms, has proposed to amend the Philippine Constitution of l987 by removing the restrictions, limitations and prohibitions against foreign direct investments.  After consulting a group of experts over a period of six months, the members of TanDem summarized the major reasons for their proposed amendments, enumerate their major arguments.

         The Philippines has embraced massive poverty since the birth of the Republic until today. Out of the present estimated 104 million population, where some 65 million are in the labor force, about 4 million are unemployed while 12 million are underemployed.  To address massive poverty, it is necessary to raise equally massive capital to create or support sustainable jobs.  It costs about Php100,000.00 to employ a single employee for one full year, based on the lowest minimum wage and cost of business operations.  It would, therefore, cost at least a staggering 400 billion pesos to employ all the unemployed for just one year.

         Unfortunately, instead of making use of all available capital resources, whether local or foreign, for job generation, the 1987 Constitution—together with numerous congressional statutes and implementing rules and regulations—have instead chosen to restrict foreign direct investments in several sectors of the economy, to protect the monetary interests of Filipino business people belonging to the “mayaman” class, at the expense of Filipino workers and consumers of the middle and the “masa” classes, who are then systematically deprived of better job opportunities and cheaper goods and services.  These restrictions curtail the fundamental right to employment, which is the most important labor right that gives life to all other labor rights, such as those providing for the minimum wage, working conditions, social security, security of tenure, and self-organization.  Without the actual jobs, all other rights under the labor laws and social legislation mean nothing to the workers.

         About 10.2 million Filipinos live overseas of which some 2.4 million are overseas Filipino workers.  Common sense tells us that it is better to allow foreign investors to move into the country and hire Filipinos locally, rather than force Filipinos to move overseas, many of whom leave their families behind, and then work for foreign employers in a foreign land under a foreign government.  The liberalization of foreign investments, to complement local investments, reasonably lead to job creation (by establishing new business enterprises or expanding existing business enterprises); consumer price reduction (by increasing the supply of goods and services); technology transfer (by adopting and improving foreign technology); access to foreign markets (by tapping foreign investors to sell Philippine goods and services in their homelands); and anti-corruption (by allowing the entry of independent foreign competitors that can counteract the monopoly power of existing Filipino cartels of government suppliers.

         The fear of foreign investors taking over the Philippine economy is outdated.  We are no longer in colonial times during which foreign investors came with their foreign colonial armies who helped them take control of the national economy.  Foreign colonial armies have long gone, with the only the Philippine security forces remaining to protect the interests of the Filipino people.  It is furthermore proposed that a Foreign Investment Council be established to address the risk of foreign governments, cartels and other groups who may pursue agendas prejudicial to the basic securities (external, internal, food, water, energy, environmental, resource, etc.) of the Filipino people.  The institution of a Foreign Investment Council may strike a balance between the need to liberalize foreign investments for economic and social gains, and the need to protect the basic securities of the people and the State.   The existing inflexible legal framework providing for blanket restrictions and criminal liability for violations drive away the legitimate foreign investors while endowing Filipino business people the license to capture the local market for themselves, disregarding the divergent interests of the Filipino workers and consumers. 

         These arguments were not arrived at willy nilly.  They were distilled from volumes of proceedings of many hours of discussion of members of the academe, government, business and civil society.  The only guiding principle was the common good of society, defined as a juridical or social order that enables every member of society to attain his or her fullest integral human development.  By being more open to Foreign Direct Investments, countries like China and Vietnam, have within the last twenty or so years attained higher levels of human development that we have.  It is about time that we do amend the Constitution for the sake of future generations who will benefit most from a more open economy than the one we have lived with over the last thirty years.  For comments, my email address is bernardo.villegas@uap.asia.