MANILA, Philippines – A month before the official election period kicks in, the country’s largest business groups have joined foreign chambers of commerce in a final push for Congress to pass a legal resolution that seeks to ease constitutional restrictions on foreign investment.
“We, the undersigned Philippine business groups and foreign chambers of commerce, state our strong support for Resolution of Both Houses 1 (RBH1) Proposing Amendments to certain Economic Provisions of the 1987 Constitution of the Republic of the Philippines particularly to Articles XII, XIV and XVI, principally authored by House of Representative Speaker Feliciano Belmonte, Jr,” read the statement released on December 6, by a coalition that includes the Makati Business Club, the Federation of Filipino-Chinese Chambers of Commerce and Industry, the Management Association of the Philippines, and the foreign chambers of the US, Canada, Europe among others.
They argued that easing the 40% foreign investment restriction will be critical in light of the country’s aim to join the Trans-Pacific Partnership, honor commitments to the ASEAN Economic Community, and forge an advanced free trade agreement with the European Union.
Critics argue that the resolution will only kill local industries.
Belmonte’s track to change charter
The resolution that was originally filed by Speaker Feliciano Belmonte Jr seeks to employ a new mode to amend the Philippine Constitution, a move that has been constantly blocked by fears that they are ploys to adjust presidential term limits. (READ: Belmonte’s charter change train takes off)
Both chambers are taking the legislative track to include the phrase “unless otherwise provided by law” in certain sections of Articles XII (national economy and patrimony), XIV (education, science and technology, arts, culture and sports), and XVI (general provisions). Passing the resolution itself will not automatically ease constitutional limits to foreign ownership, but it will allow Congress to eventually pass new laws that will open the specified industries one by one.
RBH1 has been approved on 2nd reading in the House plenary. But the 3rd and final reading vote would require approval of three-fourths of the members of the House instead of the usual majority vote. Speaker Belmonte has placed passage of the resolution among his highest legislative priorities during the recently resumed House session.
The 1987 Constitution expressly allows for 3 modes to change amend it: Constitutional Assembly, where the two chambers of Congress meet as one body; Constitutional Convention, whose members shall be elected; and People’s Inititative, where the citizens can collectively propose amendments. Belmonte maintained that his track is allowed under the constitution.
Senate President Franklin Drilon also promised the business groups that the Senate will discuss the counterpart resolution authored by Senator Ralph Recto after RBH1 is approved by the House.
Many of the country’s business groups have voiced their opposition to foreign restrictions in the past. “We believe that achieving our goal of sustainable and inclusive growth requires the generation of a significant number of jobs. Attracting massive amounts of foreign investments, meanwhile, is among the best means by which to create these employment opportunities,” the statement read.
The groups also highlighted several points in support of early approval of RBH1:
- Since the year 2000, Filipino business leaders and economists have recommended replacing the constitutional restrictions on foreign equity with specific laws. RBH1 is the first serious effort to undertake this often-recommended reform.
- The constitutions of almost all countries in the world do not contain restrictions on foreign investment. Most countries who do impose some restrictions on foreign investment do so through legislation or administrative orders that can be changed to suit shifting national priorities.
- If approved by Congress, and subsequently in a plebiscite, the amendments would allow Congress to pass future laws to change the current constitutional restrictions. The usual legislative procedures would be followed, with hearings and full consideration in both the House and the Senate and possible presidential vetoes. In the meantime, each restriction will remain in place.
- Much has changed in Asia since the restrictions were placed in the 1987 Constitution. The Philippines has joined the World Trade Organization (WTO) and agreed to open trade and investment within ASEAN and with ASEAN Plus partners, Australia, India, Japan, Korea, and the People’s Republic of China.
- Recently, the ambitious Trans-Pacific Partnership was agreed upon by 12 countries, which account for 40% of global GDP. Because the TPP provides for minimum barriers to cross-border investment flows among members, the Philippines may not be able to join unless some restrictions can be reduced.
- The Philippines’ population has more than doubled since 1987. Amidst this development, the largest economic challenges are high poverty levels, ensuring inclusive growth, and reducing underemployment. Today, more than 10 million Filipinos work abroad given the lack of good employment opportunities at home.
- The Philippine government should maximize the amount of foreign investment generated as a means to drive down unemployment and underemployment levels. While there has been a significant increase in FDI since 2010, amounting to over $6 billion (P 282.1 billion) a year in 2014, this represents only 5% of total FDI in ASEAN, which is small considering that the Philippines accounts for 16% of the population of ASEAN. Note as well that in recent years, ASEAN has received more FDI than China, estimated to be in the amount of $100 billion (P4.702 trillion) per year.
- There have been only two significant liberalizations (covering casinos and retail trade) in the Foreign Investment Negative List over the more than two decades since the important 1991 reforms in the Foreign Investment Act.
- Constitutional restrictions on foreign ownership on certain industries will remain until Congress and the President enact specific laws to remove or amend them.
“There is no better time than now to begin the process of updating the outdated restrictions in our Constitution through RBH1. The Philippines has enjoyed enhanced economic prospects and is on the radar screen of the international investment community—and these will be further improved by higher foreign investments,” the statement read.
This, the groups said, forms the basis of why congressmen and senators should “make history and swiftly pass this reform measure that will aid in our joint effort to improve the country’s investment climate, create more and better jobs for Filipinos, reduce poverty, and achieve inclusive growth.”
The following business groups signed the letter:
– Federation of Filipino-Chinese Chambers of Commerce and Industry
– Financial Executives Institute of the Philippines
– IT and Business Process Association of the Philippines
– Makati Business Club
– Management Association of the Philippines
– Semiconductor and Electronics Industries in the Philippines, Incorporated.
– American Chamber of Commerce of the Philippines
– Australian-New Zealand Chamber of Commerce of the Philippines
– Canadian Chamber of Commerce of the Philippines
– European Chamber of Commerce of the Philippines
– Japanese Chamber of Commerce and Industry of the Philippines
– Korean Chamber of Commerce and Industry of the Philippines
– Philippine Association of Multinational Companies Regional Headquarters, Incorporated. – Rappler.com
$1 = P 47.03
Businessman image from Shutterstock
There are no comments yet. Add your comment to start the conversation.