J. Albert Gamboa l February 3, 2023 l The Manila Times
ECONOMISTS and business leaders proposed amendments to Articles 12 and 16 of the 1987 Philippine Constitution years before the Covid-19 pandemic. They focused particularly on the economic provisions that limit foreign ownership of land and certain businesses to only 40 percent while setting aside the other 60 percent exclusively for Filipino citizens or corporations.
This outdated scenario has undoubtedly led to stagnation in the flow of foreign capital into the Philippine economy. Many of our Asean (Association of Southeast Asian Nations) neighbors now allow majority or full foreign ownership of local companies. Under Singaporean law, for example, foreign companies can incorporate a local subsidiary and own 100 percent of its shares.
Foreigners looking to establish a business in Southeast Asia’s most developed nation would thus be able to enjoy the same benefits as Singaporean-owned corporations. Malaysia, Indonesia, Thailand and Vietnam have also passed legislation relaxing ownership limitations for foreign investors — resulting in a surge of direct investments that have bypassed the Philippines.
During the administrations of former presidents Fidel Ramos, Joseph Estrada, Gloria Arroyo, Benigno Aquino 3rd and Rodrigo Duterte, there were several attempts to amend the economic provisions contained in Articles 12 and 16 of the Constitution. But they all failed due to the suspicion of Filipino voters that the push for Charter change was actually a smokescreen to extend or do away with the term limits of elected officials.
Last week, the House of Representatives committee on constitutional amendments held a public hearing to deliberate several bills and resolutions on proposed constitutional reforms. This came after representatives Lord Allan Velasco of Marinduque and Gus Tambunting of Parañaque filed a joint resolution seeking to amend the Constitution’s economic provisions.
Meanwhile, Representatives Bienvenido Abante Jr. of Manila, Luis Raymund Villafuerte Jr. of Camarines Sur and Richard Gomez of Leyte filed three House bills calling for a Constitutional Convention (Con-Con) to be composed of delegates from each legislative district who will be elected simultaneously with the barangay (village) officials in October 2023.
Naturally, the reaction of legal and economic experts who were invited as resource persons in the public hearing was to thumb down Charter change again. They must have thought that these proposals were merely ploys of the legislators to perpetuate themselves in power.
Retired Supreme Court Justice Vicente Mendoza raised concerns on the cost and propriety of a “Con-Con” by asking: “Is it proper for Congress to vote additional powers to itself?” Former Comelec chairman Christian Monsod also told the panel that “political dynasties now control Congress, and electing the delegates by district will only result in a mirror image of the composition of Congress with the same control of outcomes by the dynasties.”
House Speaker Martin Romualdez should once and for all get the ball rolling on the necessary charter amendments by persuading his colleagues to concentrate on the economic provisions only. Having just come from Switzerland where he accompanied President Ferdinand “Bongbong” Marcos Jr. to the World Economic Forum in Davos, he knows that the only way to sell the proposed Maharlika Investment Fund (MIF) to foreign investors is by lifting current ownership restrictions in critical sectors.
To assuage the serious reservations expressed by a dozen business associations against the MIF, Albay Rep. Jose Clemente “Joey” Salceda recommended that the fund be private sector-driven and the seed capital sourced from the securitization of dividends from government-owned and -controlled corporations (GOCC). He said the GOCC dividends were real surpluses that should be used as initial funding for the MIF, which will eventually be listed in the Philippine Stock Exchange to make it more attractive to foreign investors.
Whatever the outcome of these deliberations, one thing is clear: the key to our economic progress is the inflow of foreign direct investments which will only be achieved if the ownership restrictions on foreigners are liberalized.
*** The author is the chief finance officer of the Asian Center for Legal Excellence and vice-chair of the Finex ethics committee. The opinion expressed here does not necessarily reflect the views of these institutions and The Manila Times. #FinexPhils www.finex.org.ph