Page last updated at 04:45 UTC, Monday, 10 February 2020 PH
The pro-rich Filipino restrictions found in the 1987 Constitution might have done only limited harm to the majority of our citizens in the past when we were still known as the “sick man of Asia.” Few foreigners had the appetite to venture into our lagging economy, in contrast with our neighboring Asian tigers. The times have changed. The Philippines is today considered one of the most attractive emerging markets, not only in Asia but all over the world. A recent study from Oxford Institute lists the Philippines as the second most promising economy among emerging markets during the next decade or so, following India and followed by Indonesia and China. The developed countries to our north as well as in the European Union have excess capital that they cannot invest profitably in their home countries because of demographic decline and rapid ageing. Japan is the perfect example. There is a very noticeable heightened interest among Japanese investors in the Philippines because of the continuing low-growth scenario they are facing in their own country. We can observe the same phenomenon among South Korean, Taiwanese, Hong Kong and Singaporean investors. Now is the time to strike and open up our economy to investors in our strategic industries such as infrastructures, public utilities, media, tertiary education and smart cities or townships. Because of the advent of the digital economy, also known as the Fourth Industrial Revolution, there is a convergence among such sectors as telecom, media and computers so that it is counterproductive to limit foreign ownership in one or more of them.
It is obvious that it was a mistake to have enshrined the restrictions against FDIs in the basic law of the land. The global, regional and local economies are constantly changing in a vertiginous pace. As the former Chair of the House Committee on Constitutional Amendments in the previous Administration, the Honorable Loreto Leo S. Ocampos, charter change as regards FDIs is intended “to make the economic policies more flexible to meet the ever-changing dynamics of domestic and foreign economic environment. The economic provisions should not be carved in stone in the Constitution. Economic policies are better addressed by electorally-accountable bodies of government. Simply put, economic questions can easily be remedied by simple legislations.” That is why the above-mentioned amendments I propose will not be done in one fell swoop. The language of the amendment being proposed by the Lower House is very clear. In each provision of the Constitution involving a restriction, an amending clause will be added, i.e. “unless otherwise provided by law.” The insertion of this phrase into our Constitution will now give way to the present and future Congresses to specify the actual amendments to the present provisions. For example, instead of the 60-40% limit in favor of Filipino ownership in public utilities, a law can be passed allowing foreigners to own 70% or more of the capital stock of a strategic industry. Another example would be the very controversial issue of foreign ownership of land. Legislation could be passed allowing foreigners to own the land on which they build a factory or a commercial venture, nothing more, nothing less. This will answer the concern that foreigners may buy the whole country if we allow them to own land. I think it is unfair to prevent a foreign group to benefit from the appreciation of the land on which it builds a factory or any other productive establishment.
Any one who thinks that the Build Build Build program under the present Administration will be abandoned by future Governments does not realize how much our country has been left behind by our Asian neighbors in infrastructure development. I am not only referring to how the Asian tigers (Singapore, Taiwan, Hong Kong and South Korea) have reached First World status by building airports, bridges that span islands, bullet trains and road networks that have surpassed the quality of infrastructures of many more advanced countries in North America and Europe. I am also referring to our ASEAN peers like Indonesia, Vietnam, Thailand and Malaysia who have now their own Build Build Build programs that can leave us behind if we relax in our own efforts. Over at least the next twenty years, we have to sustain what the present Government has begun and such present and future efforts will need vast amounts of capital that we cannot afford to spend without endangering our fiscal stability (just think of the disastrous consequences of over borrowing of countries like Argentina, Venezuela and Greece, economies which already reached middle-income status way ahead of us!). We will need very large doses of Foreign Direct Investments to help us catch up with the rest of the world in infrastructure development, including those infrastructures vital to the Fourth Industrial Revolution such as the converging sectors of telecom, media and information technology.
As I wrote in a position paper during the last Administration, the “Filipino First” policy might have served an important purpose of safeguarding national sovereignty during the era of the Cold War in the last century, when small countries like the Philippines were being used as pawns by the world powers. The “Filipino First” policy, however, no longer makes sense in today’s more globalized economy, despite the aberration of U.S. President Trump’s “America First” policy. FDIs are direly needed for the Philippines to attain an accelerated GDP growth rate of 7 to 10% in the coming years. Only then can we bring down our poverty rate to the single-digit levels already attained by our more progressive neighbors, including China, which at the peak of its high-growth periods in the 1980s and 1990s was attracting $100 billion or more of FDIs.
The first article that has to be amended is that which appears in the Declaration of Principles in Article 2, Section 19 which reads: “The State shall develop a self-reliant and independent national economy effectively controlled by Filipinos.” As mentioned above, the irony is that this provision has only preserved the feudalistic and monopolistic structure of the Philippine economy. It would be better to rephrase this article as follows: “The State shall develop a self-reliant, productive and competitive economy that will serve the interest of the Filipino people.” To attain inclusive growth, preference should be given to the welfare of the vast majority of the Filipinos who belong to the lower-income groups and who are the main beneficiaries of increased FDIs as more jobs are generated and improved infrastructures are provided to the public. (To be continued) .