Bernardo M. Villegas
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Do We Need Charter Change Now? (Part 1)

         From the very outset, let me declare that the Philippine Constitution of 1987 is a highly imperfect document.  As one of those who drafted the Constitution, being a member of the Constitutional Commission appointed by former President Corazon Aquino, I can attest to the fact that many of the provisions that found their way to the final draft of the Constitution were written in a highly emotional state by individuals who were suffering from the general trauma of the Filipino people as a result of the tumultuous last years of the dictatorship under President Ferdinand Marcos Jr. which culminated in the EDSA Revolution of 1986. To be frank, the 1987 Constitution—though written with the good intentions of being pro-Filipino—turned out to be an anti-Marcos or anti-martial law document.  There was an obsession with loading the basic law of the land with so many provisions that would guarantee that a dictatorship would never ever return.  This meant that the Constitution, instead of being a Basic Law, turned out to be  a long-winded listing of legislative measures that do not belong to a fundamental law.  The Philippine Constitution is the only basic law in the whole Indo-Pacific region with very detailed provisions on how the economy is to be managed by the Government. That is why, practically all the amendments that are now being proposed as regards economic issues end with the phrase, “unless otherwise provided by law.”  Those provisions should never have been enshrined in the Constitution in the first place. They are subject to changing circumstances and do not have anything to do with immutable principles like the right to life, liberty, the pursuit of happiness, private property, etc.  These changing circumstances are even made more evident by the VUCA (volatile, uncertain, complex and ambiguous) world in which we live today.

              This fixation of the large majority of the members of the Commission was especially focused on the possible stranglehold of the domestic economy by foreigners.  The years of martial law saw the Philippines veering more and more towards a more open policy towards foreign investors.  Since President Corazon Aquino wanted to make the composition of the Constitutional Commission as democratic as possible, she rightly appointed people from the entire ideological spectrum, i.e. people from the left (some were self-declared Marxists) to the Center (those upholding the social doctrine of the Catholic Church) to the extreme right (those who believed in neo-liberal principles based on free markets). Predictably, such a composition of the Commission led to some very emotional debates.  To illustrate, there were some sessions on the participation of foreigners in the Philippine economy that were characterized by raised voices and even outright shouting bouts (one Commissioner strongly opposed to foreign investments actually started shouting at some foreigners sitting at the gallery as observers of the proceedings).  In that same session, one especially incensed Commissioner actually threw an ash tray at another (fortunately, it did not hit the mark).

  For full disclosure, I was one of the few who believed that the good of the Filipino people (especially the poor) could benefit from large doses of Foreign Direct Investments.  I told the others in no uncertain terms that limiting the entry of foreign direct investments in a country like the Philippines that was and is still starving from lack of long-term capital in the name of “Filipino First” was actually equivalent to “Rich Filipinos First, Never Mind the Poor”.  Restricting the entry of foreign capital led to the capture of strategic and vital industries like public utilities by the moneyed Filipinos who established. monopolies or oligopolies.   The economic elite were the only ones with access to long-term capital that is vital to the establishment of public utilities.   The monopolies or oligopolies that were established in the energy or telecom sectors, for example,  were  so inefficiently operated that they victimized the common Filipinos with poor services and high prices in the absence of competition from new entrants from abroad.

 Needless to say, despite the fact that I was the Chairman of the Committee on the National Economy, I lost all the debates about a more open economy to the coalition of leftists and the large majority of the Commissioners who were products of the ultra-nationalist, Filipino-First generations of the fifties and the sixties. This explains why there were so many restrictions enshrined in the Constitution against Foreign Direct Investments in such areas as public utilities, land ownership, media, advertising, higher education, etc.  The rest is history.  Because of these restrictions that prevailed since 1986, the Philippines was attracting the lowest levels of FDIs.  Although there were other reasons for the failure of the Philippines to attract FDIs (e.g. red tape, political instability, corruption) a major reason was the inability of foreigners to own more than 40 % of the industries in which they were interested.  For example, a very comparable country to the Philippines is Vietnam.  This socialist country has allowed 100 percent foreign ownership of major industries since 2014.  No wonder, it has attracted FDIs at 2 to 3 times the level of the Philippines.  Last year, for example, it attracted more than $25 billion while we obtained less than $10 billion.

              Would all of these justify the efforts of some people in Congress to introduce Charter Change at this particular time of our economic trajectory?  My answer is No.    The first reason is that since, as I explained above, the Philippine Constitution requires a thorough revision sooner or later. I am not in favor of a piece meal approach to the amendment process.  The fundamental law of the land is an organic document and all the provisions must fit into one consistent whole.  A piece meal approach may only worsen one of its major weaknesses which is that some provisions are not compatible with one another. For example, despite the fact that the final vote was for a bicameral congress, through an oversight, some provisions that assumed a unicameral one were retained (the very root of the controversy about whether or not the three-fourths vote needed in some particular acts of Congress as a whole should be applied jointly or separately to the two chambers). My view is that the only efficient way to make a thorough revision of a very imperfect Constitution is by a Constitutional Convention whose members are elected by the voters.  This could be timed with the general elections of 2028.  This will give the present Administration sufficient time to achieve the two-pronged goals of accelerating GDP growth from its present 6 to 7 % annually to what I consider is a doable 8 to 10 % as well as to bring down the poverty rate to single-digit level.  These two primordial goals of the present Administration will require the full attention of our political leaders.  Charter change would just constitute an unnecessary distraction.

              The question that may  be asked, though, is whether or not it is precisely urgent to do a piece meal revision of the remaining constitutional provisions that restrict FDIs because without opening advertising, media, higher education and land ownership to 100 % ownership, it would be difficult to attract the amounts of FDIs needed precisely to start growing the GDP at 8 % or more and to lower the poverty incidence to single-digit levels.  My answer is that with the amendment of the Public Service Act allowing 100 % ownership of practically all vital infrastructures (airports, railways, subways, telecoms, renewable energy) the Philippines is already poised to attract some $15 to $20 billion of FDIs annually in the form of these vital infrastructures that have the greatest multiplier effects on the entire economy.  Upgrading our airports and other transport-related infrastructures will facilitate the strong recovery of both domestic and foreign tourism which can result in our receiving as much as 15 to 20 million tourists a year ( a figure our Southeast Asian neighbors have already attained and even surpassed). Improved transport facilities will also enable us to be a major logistics center in the entire Indo-Pacific region. Our significantly improving the telecom industry through greater foreign participation will give a bigger push to our IT-BPO sector, helping the Philippines to be a veritable hub for data centers in the entire region. Improved telecom facilities will also help us keep pace with our neighbors in the so-called Industrial Revolution 4.0 (Artificial Intelligence, Robotization, Internet of Things and Data Analysis).  To be continued.