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Ex-Neda chief Monsod: Amending Charter is not key to boosting FDI

Monsod

Economist Solita “Winnie” Collas-Monsod, attending a Senate hearing on a proposal to amend the Constitution to attract more  foreign investors, maintained there is no need to tinker with the 1987 Charter in order to accomplish such.

Allaying apprehensions, Monsod, Professor Emeritus at the UP School of Economics, thumbed down the move to revise the 1987 Charter in order to relax restrictions on entry of foreign investments.

Monsod shared her views on a proposal to amend the economic provisions at Friday’s hearing of the Committee on Constitutional Amendments and Revision of Codes, chaired by Sen. Robinhood Padilla.

Appointed as socioeconomic planning secretary of the late President Corazon “Cory” C. Aquino, Monsod dumped claims that the economic provisions of the Constitution closed the door to foreign direct investment (FDI), asserting such was “not borne out by the facts.”

Monsod maintained that amending the Constitution is “not likely to open any new doors to foreign direct investments because, for all intents and purposes, the doors are already open.”

She stressed that “it is not necessary to amend the Constitution.”

“What’s more,” she added, “Amending the Constitution will not bring in FDI unless the factors affecting FDI are addressed. It is not sufficient to amend the Constitution.”

Monsod testified before the Senate panel tackling Resolution of Both Houses No. 1 seeking to convene the 19th Congress as a Constitutional Assembly to propose amendments to certain restrictive economic provisions in the 1987 Constitution, as well as Senate Resolution No. 6, which seeks to review and study the Constitution.

Monsod also cited a list of studies that she asserted had flagged various factors and determinants in decisions to invest in the country, and said, “In none of these studies was there any finding or conclusion that the economic provisions [of the 1987 Charter]” represented a “binding constraint to investments.”

The World Investment Report, for one, tags the following as the key factors affecting investor decision: adequate infrastructure, human capital, quality of the regulatory regime and clear rules of the game, and fiscal determination.

Other studies put “economic, political and social stability” high among the things that investors consider,” followed by the country’s rules and market size, Monsod said, noting that the Philippines, with its 110 million population is “a very big market,” which should make it attractive to investments.

In recent years, said Monsod, much of what were previously framed as constraints supposedly arising from the economic provisions limiting foreign equity in certain sectors and industries have been hurdled, either by liberal interpretation, or by legislation or creative financial systems.

The 18th Congress, for one, enacted three amendatory bills deemed to help investors work around the seeming restrictions of the Charter—the new Public Services Act that redefined utilities; the Foreign Investments Act; and the amended Retail Trade Liberalization law.

Besides being the wrong solution to weak investment flows, opening up the country to another long-drawn Charter revision process presents both financial and opportunity costs, according to Monsod.

“There is a financial cost in convening a Constituent Assembly or a Constitutional Convention,” she said, and an “opportunity cost” in terms of the time that the process will take away from “other more pressing” national issues and problems.

Finally, she said, it poses the risk “of increasing” opportunities for “rent-seeking activities,” because many lobby groups will come in to pitch amendments to the Charter framers.

She clarified, though, that she did not think  that panel chairman Senator Robinhood Padilla is engaged in rent-seeking, “but if you give it [the chance to amend] to them, you open up” the avenues for rent seeking.

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