THE Subcommittee on Economic Reforms (SER) of the consultative committee (Con-com) is deliberating on whether to put a specific number, especially on the limitation of foreign ownership and foreign enterprises, in its proposed economic provisions of a new Charter.
SER Chairman Arthur N. Aguilar told the BusinessMirror they have not decided yet but are considering proposals. Either we craft general guidelines and leave the prerogative of placing the numbers to Congress or to put a number and let Congress amend that figure by law, Aguilar said.
He explained that placing a fixed number would tie the hands of Congress and that the economy might have different wants and needs through time.
“[I]f you handcuff Congress right from the start with a fixed number, you can’t do anything unless you amend the constitution so but then constitutions don’t place a number, they just have general guidelines and leave the rest to Congress, from time to time [Congress] respond[s],” Aguilar said.
Sans a specific number, Congress would have the key to unlock the handcuff because they can amend it by simply passing a law instead of going back to change the Constitution and undergo charter change, he added.
According to the Constitution, ownership of public utilities is restricted to at least 60 percent Filipino capital. Exploration, development and utilization of natural resources through co-production, joint venture or production-sharing agreements with Filipino citizens or corporations or associations limit foreign ownership to 40 percent.
Under Article XII, Section 10 of the 1987 Constitution, “Congress shall, upon recommendation of the economic and planning agency, when the national interest dictates, reserve to citizens of the Philippines or to corporations or associations at least sixty per centum of whose capital is owned by such citizens, or such higher percentage as Congress may prescribe, certain areas of investments.
Aguilar also believes that limitation on foreign ownership is not the sole determining factor affecting foreign direct investments.
“In our discussion on the limitations of foreign ownership, it was brought out to us by our experts that ownership is not the only determinant for the attractiveness of a country,” Aguilar told reporters in a separate interview. “It has to do with consistent policies; it has to do with labor, energy, peace and order, and incentives of course. And ownership is just one of the factors.”
Foreign Affairs Undersecretary Manuel Antonio J. Teehankee also said in an interview other constitutions don’t contain specific regulations with regards to limitation of foreign ownership.
“These restrictions can be more appropriately dealt with by [a] sector, specific to each sector, specific to the needs of economic policy makers,” Teehankee said.
“Based on the survey of constitutions across the region, the general practice is to regulate through specific laws of various sectors not addressed in the specific regulations in the Constitution,” he added.
Aguilar said that they also took up some principles during the subcommittee’s session, especially on liberalization of economic policies.
“When we are liberalizing especially the economy to foreign enterprises, we have to really; one, it has to be on the basis of what is best for the people in general. Two, we have to ensure that Filipino enterprises don’t also get wiped out especially the SMEs, the small and media scale businesses,” he said. “[SMEs] have to have some element of protection otherwise they’d get wiped out.”
Aguilar explained the Con-com members’ discussion sessions on liberalization of trade and the economy were marked by an awareness of its elements.
“We were conscious of trying to balance liberalization on one side and the interest to make sure that it [liberalization] is for the welfare of the people and to balance it out for some sectoral interests of our economy especially small- and medium-scale enterprises.”
On liberalization of ownership of land and enterprises, Aguilar said they will also try to see if they can use a constitutional language that will make it a constitutional imperative for government to be efficient and speedy in processing of business permits and enterprises so that the growth of businesses will be enhanced and not hindered.
There were also discussions that there might be some point in time that the either the president or congress might see the need to form a state-owned corporation to handle a certain type of business or sector.
“[I]f that will be so, the corporation or the state-owned enterprise that is envisioned would act like a private corporation and be governed by corporate governance rules and not necessarily by all the other government restrictions,” he said.
Foreign ownership of land was also discussed during the meeting.
On residential land, Aguilar is also proposing that foreigners who are permanent residents and who need a home will be allowed to own land subject to size limitation prescribed by law.
“So if you’re really a legitimate foreigner and a permanent resident not just a tourist, then you really a need a home so you can own the land that you live in but subject to size limitation so it’s not abused and there’s no land-banking, there’s no land speculation,” he said.
Under the current rules, no foreigner can own land as an individual and if you are a corporation and you want to own land, you have to be at least 60-percent Filipino-owned.
For commercial and industrial and agricultural lands, he said they are still discussing whether they free ownership aside from the 50-percent limitation or just liberalize the term ‘horizon.”
“There’s discussion that from now it’s 50-50; we can stay with 25-25, the lease period, or 50 plus another 25. That’s where the discussion is but we have not finalized it.”
A comprehensive land-use code is also being proposed to the subcommittee. This code is expected to flesh out the federal policy on the use of land applicable to all regions.