On Wednesday, March 14, the House of Representatives approved on second reading Resolution of Both Houses 7 (RBH7) aiming to relax some constitutional restrictions on foreign investments. (You can read the full text here.)

Let me raise three main critiques here.

First, the timing. Just like the law creating the Maharlika Investment Fund, Congress is obviously railroading this resolution, too. House leaders filed RBH7 on February 19, less than a month ago. They plan to approve the resolution on third and final reading next week, before the Lenten break.

Second, the procedure. The House is pushing for amendments to the Constitution using the so-called “Bernas formula,” named after the late constitutional expert Father Joaquin Bernas, who proposed that amendments to the Constitution may (theoretically) be treated as if making any other ordinary law.

That is, one chamber proposes a bill amending the Constitution, the chamber deliberates on such a bill, a similar procedure is done in the other chamber, then differences are reconciled in the end.

This Bernas formula contrasts with the three official methods enshrined in the Constitution, namely, a constituent assembly (though the Constitution doesn’t really call it that), a constitutional convention, and people’s initiative.

Constitutional experts already flagged that this Bernas formula will surely be met by a constitutional challenge before the Supreme Court.

Third, it appears that Congress is opening up the 1987 Constitution for the sake of opening up to foreign investments in just three sectors: education, advertising, and public utilities. Is it worth all the trouble? I say no.

Let’s dissect Resolution of Both Houses 7, shall we?

Public services

The preamble of RBH7 states that “the nation’s economy policy must be reframed under the demands of this increasingly globalized age, while still protecting the general policy of Filipino-first [sic] that guides the economic provisions of the Constitution.”

Here, already, one should be able to spot a major contradiction. The “increasingly globalized age” that’s mentioned precisely makes the Filipino First policy outdated. Choose a lane!

While they’re at it, they might as well review Section 19 of the 1987 Constitution, which says that: “The State shall develop a self-reliant and independent national economy effectively controlled by Filipinos.” That also sounds like it belongs to a bygone era drastically different from the one we’re now living in.

Another paragraph in RBH7 mentions “there is a need to institutionalize the reforms laid down in the Public Service Act to liberalize industries, promote efficient service delivery, and foster competition as an enduring policy.”

For context, recall that in March 2022, former president Rodrigo Duterte signed a law amending the 1936 Public Service Act. The new law loosened the definition of “public service” and paved the way for 100% foreign ownership in sectors like telecom, shipping, airlines, railways, toll roads, and transport network vehicles.

The problem is that such law is now being challenged in the Supreme Court. Lawmakers say that if the relaxed restrictions are in the Constitution itself, then they won’t be subject to legal challenges, and this could encourage more foreigners to invest in the country.

Sure, but to begin with, investors hardly ever mention constitutional change as a prerequisite for doing business in the country. Most cite excessive red tape, corruption, and inadequate infrastructure as turn-offs. A previous version of the Philippine Development Plan stated that “Investors have pointed to corruption as the most problematic factor for doing business.”

In addition, won’t constitutional reform open a can of worms that could potentially lead to even more uncertainty and disruption if, say, lawmakers tinker with political provisions like term limits?

Education

RBH7 also says that “our children deserve to have access to the best educational institutions, both Filipino and foreign, to ensure that they receive the best training to become globally competitive citizens in the modern world.”

Here we need to be realistic. If this pushes through, just how many educational institutions can we expect to come in and do business here in the Philippines? Can these new schools quench our thirst for foreign capital? Hardly.

If you look at the proposed constitutional provision regarding education, RBH7 wants to restrict foreign investments to educational institutions other than basic education institutions. That is, foreigners can fully own only higher educational institutions and presumably technical-vocational schools. But in fact, if there’s one sector in education that needs the most “saving,” that would be basic education, which is in deep crisis now.

Also, lawmakers seem to be overlooking the fact that education has already been revolutionized by online learning. For instance, top-notch universities abroad (including Ivy League schools) already provide online courses on YouTube and other platforms.

Sure, some of the world’s best universities have branches in many parts of the world. But even the most successful case studies don’t turn out to be sustainable.

For example, the liberal arts program developed by Yale University together with the National University of Singapore had just recently ended, apparently because of clashes in objectives and culture.

Patricia Licuanan, former chair of the Commission on Higher Education, also said in a recent Senate hearing that “foreign universities, while possibly attracted by our large young population, will soon discover after careful market studies that branch campuses in the Philippines will not be sustainable.”

In general, the many problems beleaguering education in the country can’t be fixed by simply bringing in foreigners to set up their own schools.

Advertising

Next, RBH7 says that “the advertising industry currently already has foreign players and liberalizing the same is a logical and sound policy to attract foreign direct investment in that industry.”

This is perhaps the flimsiest of all. First, even lawmakers admit that foreigners are already in the sector. Second, similar to education, will there be a tsunami of advertising firms that will come in and fill the gap of foreign investments in the Philippines? It’s naive to think so.

Third and most importantly, regulating advertising this way seems anachronistic. Latest data show that more than half of ad spending in the Philippines is for online ads. And as mentioned by an advertising veteran in a House hearing, “Content creation can be done anywhere around the world without bringing in people into the Philippines.”

Advertising is limited to Filipinos in the Constitution presumably to make sure that ads contain content that promotes Filipino identity, culture, and values. But what does that even mean in an era when there are literally no barriers to seeing content made from other countries?

If this is the spirit of the Constitution, the better way to go is to bolster regulations in advertising. But even that sounds contrary to the “demands of this increasingly globalized age,” and also the promotion of free thinking among our people.

‘Unless otherwise provided by law’

Looking now at the meat of lawmakers’ proposed constitutional amendments, they really just want to insert the phrase “unless otherwise provided by law” into some provisions of the 1987 Constitution, namely:

1. The 40% foreign ownership cap in public utilities
2. Participation of foreign investors in the governing body of any public utility limited to their share in capital
3. Limitation to Filipino citizens of executive and managing officers of corporations or associations in public utility enterprises
4. Filipino citizens’ control and administration of educational institutions;
5. The 30% foreign ownership cap in advertising
6. Participation of foreign investors in the governing body of any advertising entity limited to their share in capital
7. Limitation to Filipino citizens of executive and managing officers of corporations or associations in advertising entities

Taken together, it’s quite a stretch of the imagination to say that opening up the three sectors will open the floodgates to investments in the country. That’s bordering on delusional.

Voting jointly or separately?

There’s one more troubling aspect to RBH7. Lawmakers want to amend the Constitution “upon a vote of three-fourths (3/4) of all its Members.”

Until now we don’t know if that will be interpreted as a 3/4 vote of the entire Congress (House plus Senate) or if they’ll be voting separately.

The prospect of joint voting is the main sticking point as far as the Senate is concerned. Simply put, it will render them useless. That is why there are, as of now, slim chances that the Senate will pass its own Resolution of Both Houses.

The House leadership gave assurances that they will ensure “voting separately.” But who knows what will happen in the coming months? What if they bully the Senate by showing that they approved their own resolution with overwhelming numbers? What if senators cave in to the pressure?

Most worryingly, what if Congress changes its mind and decides to tinker as well with term limits and other political provisions of the Constitution?

This is why some opposition leaders are changing tack. Said Albay 1^st District Representative Edcel Lagman, “There’s no good strategy against an overwhelming majority because, at the end of the day, it’s a numbers game. That’s why we have released our arguments against economic Cha-Cha, but our target now is not lawmakers whose minds are already fixed on supporting it. Our target now is the media and the people who understand the issues.”

Let’s hope the information campaigns scale up soon, and people get informed asap. The stakes are too high to leave this to the politicians. – Rappler.com

JC Punongbayan, PhD is an assistant professor at the UP School of Economics and the author of False Nostalgia: The Marcos “Golden Age” Myths and How to Debunk Them. JC’s views are independent of his affiliations. Follow him on Twitter (@jcpunongbayan) and Usapang Econ Podcast.