Bernardo M. Villegas
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Misguided Nationalism (Part 1)

           Speaker Sonny Belmonte will be remembered by posterity as the legislator who planted the seeds for the eventual triumph of authentic nationalism.  As the realistic politician that he is, he has given up in trying to convince the Executive branch about the wisdom of amending the economic provisions in the Philippine Constitution that unreasonably restrict foreign direct investments.  The election fever is already in the air and there are other priority concerns of the Government, especially to undo the great damage done by the inability of the Executive to implement vital infrastructure projects already funded by the budget, not to mention its lack of competence in rolling out numerous projects under the Public Private Partnership scheme.  I agree that President Benigno Aquino III should completely focus on spending as much as possible on public works for the remaining months of his mandate so that we can bring back the economy on track at least at 7 percent GDP growth for the rest of the year and pave the way for an 8 percent growth in 2016 and beyond.

          I am optimistic, however, that well informed people like Speaker Belmonte can convince the next Government that removing the restrictive economic provisions in the Constitution will promote the common good of future generations of Filipinos.  Let us start with the very timely reminder from the Catholic bishops that “the social encyclicals of the Church bear witness to the fact that the Church has always considered social justice an area of her competence and solicitude.”  All of us should be grateful for this reminder about the social doctrine of the Church as the source for  “the principles for reflection, the criteria for judgment and directives for action which are the starting point for  the promotion of an integral and solidary humanism.”

          One of the most important directives for action we find in the social doctrine of the Church is the preferential option for the poor.  We should gently remind the Bishops that the misguided nationalism that has been enshrined in the Philippine Constitution has been partly responsible for the continuing poverty of millions of Filipinos, especially in the rural areas.  By advocating the very questionable “Filipino First” policy, the Constitution and the laws deriving from it have given to the Filipino elite who have the monopoly of capital in the Philippines the monopolistic or oligopolistic control of vital industries, especially in the public utilities sector. The poor never benefit from “Filipino First” policies because they obviously do not have the capital to develop our resources.  They benefit from the employment generated by those who can invest risk capital, whatever the nationality.  With very good intentions, those who are afraid that our natural resources and domestic markets may be “exploited” by foreigners have actually encouraged some Filipino entrepreneurs to inflict their poor quality of services or goods at higher prices on tens of millions of hapless Filipinos.

    Paradoxically, communist countries like China and Vietnam, have been more open to foreign direct investments (as can be seen in their FDI figures compared to our measly levels) because the leadership in these countries realize that the very active participation of foreign investors in their local markets force the local elite to shape up and be competitive.  In my last trip to Vietnam, I learned that by July 2015,  foreigners will be allowed to actually own land in that emerging market that is giving the Philippines real competition in attracting factories that are  moving out of China and other Northeast Asian economies.  The Vietnamese government benefits from greater flexibility to adapt policies to changing global, regional and local circumstances.  In contrast, the hands of the Philippine government are tied by an inflexible Constitution.  The phrase “as may be provided by law” that is the very essence of CHACHA will give the Philippine Government that flexibility which our neighboring countries have.

          I was very understanding toward my colleagues in the Constitutional Commission in 1986 when they turned down many of my suggestions as Chairman of the Committee on the National Economy to be more open to foreign ownership of resources in the Philippines.  I remember arguing sarcastically that a foreigner who owns the land on which he builds his residence or factory cannot possibly bring the land with him when he returns to his country.  But the majority of the Commissioners then were still traumatized by what they perceived as the abuses of the Marcos regime in allowing more foreign participation in the Philippine economy.  Also, many came from the age of “nationalist industrialization” and “Filipino First” trade policies reminiscent of Quezon’s “I prefer a Philippines run like hell by Filipinos to one run like heaven by foreigners.”  The historical facts speak for themselves:  nationalist industrialization policies were responsible for the inward-looking, protectionist, and capital-intensive economic strategies that dragged  the Philippines from being one of the most developed countries in East Asia in the fifties and sixties to the “sick man of Asia” by the end of the last century and the beginning of the new millennium.  The present concentration of Philippine poverty in the rural areas is the unintended result of this obsession with industrialization that became blind to the need for farm-to-market roads, irrigation systems, post-harvest facilities, etc. that the small farmers needed to make a decent living. There were even thought leaders during this “nationalist industrialization” binge who considered focusing on agriculture as treasonous because, according to their mistaken view, agriculture would just keep Filipinos as “hewers of wood and drawers of water.”            

         I think that enough time has transpired since 1986 to demonstrate to Filipinos what prominent economists like Dr. Gerardo Sicat of U.P. have shown with abundant empirical evidences.  FDIs in our neighboring countries have significantly helped them to combat mass poverty and even to improve governance because of the more developed institutions in the home countries of foreign investors in eradicating corruption.  As a Filipino Bishop says correctly, foreign investors are attracted by good governance so that we should exert more effort in fighting corruption, instead of amending the Constitution.  We must point out, however, that removing unreasonable restrictions against FDIs can bring in more foreign companies that can help us fight corruption more effectively.  Despite the very commendable efforts of the present Administration to improve governance, the wheels of justice move very slowly in prosecuting corrupt officials.  In contrast, because of more mature institutions, the US Government can act more swiftly in bringing corrupt officials to justice even beyond the US shores.  Just witness how the US legal system was able to extend its jurisdiction to officials of the international football association FIFA, regardless of nationalities.  There was also the recent case of a top American official of a local construction company who was arrested by US law officer for an alleged crime he committed in Colombia.  The more widespread presence of foreign investors can actually speed up our anti-corruption campaign because we would get the assistance of international agencies especially in such cases as money laundering and bribing. (To be continued.)