Last Tuesday members of President Duterte’s Charter change (Cha-cha) consultative committee (Con-com) voted in favor of a presidential form of federal government, the same system followed in the United States.
The federal-presidential system adopts the current setup of a national government with three branches—Executive, Legislative and Judiciary—but with the country divided into federal states having their own legislature and local governments.
The President’s Con-com said they will next focus on Charter amendments concerning the economy using inputs from business chambers and advocacy groups.
The Joint Foreign Chambers (JFC) of the Philippines, the Makati Business Club (MBC), the Financial Executives Institute of the Philippines (Finex) and the Management Association of the Philippines (MAP) have already submitted their position papers to the committee.
Finex, MBC and MAP said in their joint statement that there is a need to amend the Constitution to make it “more adaptable and responsive to current social and economic realities.”
“We believe this is a necessary action in helping us realize the aspiration of a more inclusive and sustainable growth,” the statement read.
The group called for easing foreign-investment restrictions, as this “may also be critical” in meeting their commitments to the Asean economic community and strengthening trade ties with other countries.
“The Philippines has enjoyed enhanced growth prospects and is on the radar screen of the international investment community—and these will be further improved by higher foreign investments coupled with improved environment in doing business in the country. It will be unfortunate if the Philippines fails to take advantage of this golden opportunity and realize the potentials that a liberalized trade and investment regime will bring,” the statement read.
In its statement, the JFC said “restrictions on foreign investment make the economy less competitive by imposing constraints to growth that result in lower investments, fewer jobs, poor infrastructure and noninclusive development.”
Foreign chambers of commerce and other big business interests have been clamoring for Cha-cha to remove foreign-investment restrictions for the longest time. There is really nothing new in these noises.
They have been very vocal in criticizing restrictions on foreign ownership of land and other nationality requirements in public utilities, including those on electricity, water, telecommunications, public transportation and other sectors, such as banking and advertising. Their premise has always been that lifting foreign ownership or nationality restrictions (as others prefer to call them) would lure more investors into the country, but is it really just these restrictions in our Constitution that impede the influx of foreign investments?
There have been other complaints for sure, like the lack of infrastructure, the high cost of electricity, corruption, the flip-flopping state policies and other problems.
Corruption has been a major issue in partnership agreements between local and foreign entities. More than a few foreign companies have tried to bend the rules by getting dummies in order to get a sweetheart deal from the government.
Is the system to blame? Are the nationality restrictions at fault? Or is it the greed and corruption of those involved?
Some say that corruption can be avoided if our Constitution is more open to foreign investors, if there were no nationality restrictions to begin with, because then there would be no need to circumvent the law through dummies.
Maybe, and maybe not.
There will always be investors, be they foreign or local, who will skirt laws and government regulations in order to do business. The bottom line is, we also do not want the wrong kind of investors here in the country.
If they cannot follow our laws, should we change our laws to accommodate them? Or should we first try to eliminate graft and corruption and the unscrupulous government officials who favor under-the-table deals? There are many who believe that economic reforms need not require changes in the Constitution.
True, our total foreign direct investments are still measly compared to our neighbors in the region. We need more investment vehicles for more foreign investments to flow in for sure. However, let us not put all the blame on the limits of foreign ownership and the 1987 Constitution.
The Philippines has enjoyed strong economic growth even without Cha-cha. Many foreign investors still see the Philippines as a good country to invest in despite our so-called nationality requirements.
Image credits: Jimbo Albano