FROM the vantage point of the Senate, discussions on a supposed “Resolution of BOTH Houses” is not likely to have smooth sailing, because of, for one thing, the premature disclosure by the House constitutional amendments panel of its arbitrary hand, i.e., to consider its work as already the equivalent of a constituent assembly process.
Moreover, senators are, for obvious reasons, bothered by a seeming inclination to treat voting by the two chambers as an exercise by just one body—instead of “voting separately” that would prevent the votes of 24 individual senators from being drowned out by the bigger House when the Charter amendments are finally laid down in plenary.
Senators also aired concern over the timing of the latest “Cha-cha” move, which they think could distract from efforts at economic recovery from the Covid-19 pandemic’s onslaught.
Nonetheless, the Senate’s constitutional amendments committee chaired by Sen. Francis Pancratius “Kiko” N. Pangilinan held its own hearing on pending Cha-cha initiatives last January 27, drawing a sterling array of resource persons, including former Supreme Court justices.
Framer’s view
AMONG the early presenters was former Comelec Chairman Christian S. Monsod, who was one of the framers of the 1987 Constitution. Monsod gave three reasons in summing up his opposition to the House-initiated Resolution of Both Houses (RBH) 2, seeking to simply insert the phrase “unless otherwise provided by law” in the economic provisions, thus liberating the Charter—and the economy, supposedly—from restrictions that advocates say are hindering real progress.
First, amending the Constitution is not likely to open any new doors to foreign direct investment (FDI) because for all intents and purposes, they are already open, Monsod said.
Second, “for the quality FDI that we want to attract, it is more critical to address the real hindrances cited by the World Investment Report and other studies like the ADB [Asian Development Bank], which would create a favorable investment climate not just for FDI but for domestic investments as well, which accounts for about 90 percent of the total.”
Third, the former Con-Com member had harsh words for RBH-2, saying “it is not the answer to anything.” Like previous attempts at charter change, Monsod sees it as “just another exercise on the taking and the use of political power for self-serving ends,” adding, “it should not be allowed to succeed.”
He warned strongly against the perils in RBH-2.
‘Insidious’
UNDER the present setup, to change the ownership percentage of the economic provisions, the House must muster 217 votes (3/4 of the total number of congressmen) and the Senate 18 votes.
Once the insertion of “as may be provided by law” is made on the constitutional provisions, “Congress only needs enough votes as in ordinary laws to change the percentage ownership, at worst only about 73 votes in the House and 7 votes in the Senate (50 percent + 1 vote of a quorum, which is 50 percent + 1 of the total number of congressmen or senator as the case may be),” Monsod explained.
He termed RBH-2 “insidious,” because, he stressed, it is framed as an attempt to as simply give the Congress “the flexibility to make actual changes at an appropriate time. But it sets a bad precedent in trivializing our Constitution and forecloses debate at this time because no specific changes are being proposed on the foreign equity caps.”
Beyond the “harmless insertion of one phrase,” as Monsod puts it, is a catch-all trove of powers by which lawmakers working for vested interests can draw limitless opportunities to peddle their powers for favors.
Dangerous, devious
ACCORDING to Monsod, RBH-2, like JR-1, is a dangerous and devious move by Congress,” likening it to “a wholesale transfer of power from the Constitution to the Congress on determining the limitations on foreign ownership of land, natural resources, public utilities, media, advertising and educational institutions.”
Once the magic phrase is inserted, he warned, the constitutional provisions are next to useless, because in their place will be limitless means for “transactional legislation at which corrupt politicians and greedy elite business are very adept at doing.” He cited a few examples.
“Remember Hacienda Luisita and the law that allowed landowners to distribute shares rather than land. Remember how the banking system, unlike in successful Asian countries which forced it to serve development goals, was allowed alternate compliance with the mandate to devote 25 percent of their portfolio to agriculture and agrarian reform to buy T-bills instead. Remember the underfunding of asset-reform programs. Or TRAIN that reduced taxes to the rich. Or the bill intended to correct the pro-mining law in 2015 that quietly died in a committee in the House.”
In short, it will provide “a new and bigger source of illicit money than the pork barrel.”
In an extreme example, what would stop, he said, unscrupulous legislators from going to “rich foreign land developers or mining companies and ask by how much they wish to increase their ownership of land and companies, like in mining?” He made mining an example, noting that “total mineral deposits in our country is estimated at almost $1 trillion or P45 trillion. That’s what’s stake with RBH-2.”
Failure not by Charter, but implementers
SOCIAL justice and human rights lie at the heart of the 1987 Constitution, Monsod reminded one and all, and quickly excoriated those in power, past and present, for “failing in this regard, not because of the Constitution but because we have not fully implemented it.”
While RBH 2, as with previous attempts, purports to “provide decent living conditions to the people and to transform this economic growth into inclusive and solidarity progress among Filipinos—in other words, ‘development’ defined as high growth rate plus equitable distribution of its benefits,” will not succeed because its unique context—the pandemic and the subsequent economic collapse—draws from “outdated data,” he pointed out. For one, the growth cited in RBH 2 pertains to data in 2017-2018 before the pandemic, even as growth was already “declining even before the pandemic.”
Quality of investment
MONSOD, meanwhile, shot down the argument that opening our doors fully to FDI is vital, as any investment is worth attracting because “at least they contribute something” and “everything helps”.
Empirical evidence shows, he said, that “FDI does have a role to play in development but what counts is not the quantity but the quality of the investment. And to determine quality, we need to make a full accounting not just of its benefits but also of its costs (“externalities”) And also take account of such long-term considerations as brownfield vs greenfield investment, its contribution to raising the trajectory of our technological development and downstream plants for our minerals that increase the value added in the country. Despite promises by the mining industry, we have no industrialization based on our natural resources.”
Beyond the growth, inequality is “now a major issue even in developed countries,” and obviously no scattershot attempt at luring FDIs can cure the local ineuquities.
Monsod cited a January 25, 2021 OXFAM Statement based on data from Forbes’s 2020 Billionaires List. It said the Philippines’s 13 billionaires have seen their wealth increase by P637 billion since the pandemic began, enough to give the 11 million poorest Filipinos cash worth P58,136 each.
‘Inequality virus’
WITH what they term as the “Inequality Virus,” the 1,000 richest people on the planet including the 13 Filipino billionaires managed to recoup their Covid-19 losses within just nine months, Monsod noted, quoting the report. However, “it could take more than a decade for the world’s poorest to recover from the economic impacts of the pandemic”.
Instead of addressing the worsening inequality, Congress “prioritizes legislation that reduces taxes to business, including those of billionaires instead of a wealth tax. And promoting RBH 2 as the most urgent legislation at this time of the epidemic,” Monsod rued.
Instead of tinkering anew with the constitutional restrictions, “should we not be concerned why the benefits of growth and labor productivity are not being shared with labor?” Monsod asked.
In 15 years from 2001, real GDP per capita more than doubled at 5.4 percent per year; and labor productivity rose 57 percent between 2005 and 2015 with 3.1 percent per year.
“However, real wages did not move. Aggregate real wage remained flat for 15 years with 7 of the 15 registering a negative growth rate. With the pandemic, that has become worse. What is Congress doing about that?” he asked.
Real obstacles
THE World Investment Report has listed the following as obstacles to FDI, according to Monsod: a) adequate infrastructure; b) skill levels (human capital); c) quality of the general regulatory framework; d) clear rules of the game; e) fiscal determination; and, f) graft and corruption.
Meanwhile, other surveys list corruption, criminality and political instability, among others.
An ADB study by economist Jeffrey Sachs cited the key obstacles to FDI for the Philippines as “wrong policies and weak institutions, essentially the Rule of Law.” And Monsod pointed to the country’s weak performance on Rule of Law indices by various agencies and think tanks.
Given these, a foreign investor, would not necessarily invest in the Philippines even with RBH-2, he said, recalling how the Japanese Chamber of Commerce explained the decision of Japanese manufacturing companies leaving China to invest in Vietnam, Thailand and Indonesia than the Philippines. These Japanese firms “factors such as those mentioned above. Because manufacturing is not even covered by restrictive ownership provisions,” Monsod noted.
By “conscientiously” reckoning with these factors, the Philippines may have more FDIs, “but on our own terms” and without needing Charter change, according to him.
Why, even the “World Bank does not put lifting restrictions on reserved areas for local control as a priority condition to attract FDI,” and “they know that it is a fact of public policy in most developing countries as it was for developed countries when they were themselves developing,” he added.
Finally, the wrong timing.
In Monsod’s view, the FDI that will be drawn by a wholesale easing of Charter restrictions “will consist mostly from the Chinese, with western economies experiencing surges of the pandemic and economic slowdowns and have neither the resources nor the time to engage in investments. China is already recovering and will largely monopolize FDI.”
“Is this what we want?” Monsod asks.