charter change

[In This Economy] Stop using the PH economy as excuse for charter change

JC Punongbayan

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[In This Economy] Stop using the PH economy as excuse for charter change
Resorting to charter change just to boost growth is like using a sledgehammer to crack open butong pakwan

We keep hearing in the news that charter change is meant to improve or boost the Philippine economy.

But is that even true? Let’s do a series of quick fact checks.

1) Did the 1987 Constitution stop progress?

Remember the revolting one-minute “EDSA-pwera” ad that ran on January 9, 2024? It claimed that because of the 1987 Constitution, progress stopped, the education system deteriorated, farmers were excluded, monopolies thrived, and inequality increased.

Basically, all ills of our society were blamed on the 1987 Constitution.

But I hope enough people remember or realize that the 1987 Constitution was precisely a reaction to the economic crisis and deterioration that happened during the Marcos dictatorship (1972-1986).

In my book False Nostalgia, I explained at length that the Philippine economy experienced its worst post-war recession in 1984 and 1985. Not only did progress stop, our economy even shrank!

More than half of Filipino families were poor. Meanwhile, the rich became richer, and the monopolies controlled by the Marcoses and their cronies also thrived.

Sure, growth was shaky after the 1986 People Power Revolution. But that was largely because of the political instability during the transition (recall the various coup d’etats) as well as the power crisis and natural disasters in the early 1990s.

Decades since then, it’s undeniable the economy grew under the 1987 Constitution. In fact, economic growth accelerated in recent decades. In 2022, the national income (adjusted for inflation) was 4.64 times its level in 1986. Meanwhile, the average Filipino’s income was 2.24 times higher in 2022 than in 1986.

Of course, it’s valid to say we could have grown faster. But the Marcos dictatorship pulled down our growth trajectory so much. Data show that if we had not experienced a severe economic crisis in the early to mid-1980s, we could be a lot more prosperous now.

Once a leader in ASEAN, the Philippines sorely lagged behind many of our regional peers. Vietnam surpassed our national income in 2020, and Lao PDR is not far behind.

In sum, the 1987 Constitution was a poor, if imperfect, attempt to fix the broken economy and society left behind by the Marcos dictatorship. The economy was way worse before EDSA than after it.

2) Is the 1987 Constitution not written for a globalized world?

In a rare and recent interview with GMA News’ Pia Arcangel on January 23, President Ferdinand Marcos Jr. sat down to talk about many issues.

One thing that stood out was Marcos’ statement that he’s now willing to give charter change a chance.

He said: “The 1987 Constitution was not written for a globalized world…. We have to adjust so that we can increase the economic activity in the Philippines, we can attract more foreign investors.” Recently, the new finance secretary, Ralph Recto, echoed the same view.

(Interestingly, just a year earlier, Marcos said things like: “For me, all these things being talked about, we can do without changing the Constitution.”)

There are two reasons why it feels inappropriate to invoke globalization as a reason for charter change.

First, if you look at the graph below, coming from the International Monetary Fund, the biggest increase in globalization happened from 1980 until 2008. Since the global financial crisis, we’ve been in an era of “slowbalization”: a distinct slowdown of trade and capital flows across the world.

In a way, then, the Philippines missed the almost three-decade wave of globalization since the 1980s. Partially because we were hampered by a severe debt crisis and economic downturn brought about by the Marcos dictatorship, partially because of the 1987 Constitution’s restrictions, and partially because of the economic and political uncertainties post-EDSA.

My colleagues at the UP School of Economics, for instance, have long lamented that we missed the wave of Japanese direct investments in the 1980s and 1990s.

Fast forward to 2024, our Constitution is as liberalized as ever. Even former finance secretary Benjamin Diokno admitted in April 2023 that, “I think we have already opened up our economy.”

As early as the 1990s, we liberalized the financial sector. Former president Rodrigo Duterte also signed one law after another liberalizing trade and investments.

Yet investments are just trickling in, not inundating our country.

Why? As I said in my column last week, “foreign investors are looking at way more things than just the foreign participation rules.” There are other important barriers than what proponents of charter change are letting on.

This is not to say, of course, that it’s futile to try to attract investments now. We can still liberalize investments by relaxing the remaining restrictions in the 1987 Constitution.

But let’s be honest. What else is there to liberalize? I think even politicians are hard put to cite sectors that need liberalizing at this point.

The only remaining constitutional barriers to full foreign ownership are education, media, land, and natural resources. I don’t think any politician will want to let go of land and natural resources. At any rate, there are workarounds such as long-term leases, joint ventures, and service contracts.

As for education and media, the idea was to ensure that Filipinos won’t be too influenced by foreign ideas and opinions. Now this sounds totally anachronistic, given the internet age and social media. Also, can we really expect a tsunami of investments in education and media to come in and save our supposedly ailing economy? I think that’s a stretch.

3) Will charter change boost growth and reduce unemployment?

Finally, lawmakers are painting charter change as a magic bullet for various aspects of our economy.

House Speaker Martin Romualdez, the President’s cousin, said on January 22 that the 1987 Constitution’s economic provisions serve as “barriers that restrict potential growth.” He also said we need to open the economy so that foreign investments can come in to create new businesses, jobs, and livelihood for Filipinos.

Last year, Romualdez similarly said that constitutional change “would further stimulate economic activities, create job opportunities, reduce poverty, and lower prices of goods and services.”

Meanwhile, other House leaders are saying that charter change can even lower unemployment.

Statements such as these betray that some lawmakers are not keeping up with the latest statistics.

Data show that economic growth slowed down in 2023 largely because of the slowdown of consumption spending. This is possibly linked to the acceleration of prices since 2022, as well as the interest rate hikes of the Bangko Sentral ng Pilipinas designed to combat inflation.

Now that inflation has gone down, maybe we can expect stronger economic growth in coming years. Resorting to charter change just to boost growth is like using a sledgehammer to crack open butong pakwan.

Also, for the information of lawmakers, the unemployment rate in November 2023 was already at 3.6%, an 18-year low. Did we need charter change to achieve that? No. (Although we can still do a lot to reduce the underemployment rate, arguably the bigger problem.)

Funnily, Surigao del Norte 2nd District Representative Ace Barbers said that the lower unemployment rate should serve as an “impetus” for charter change. Huh?

All in all, beware of politicians using the Philippine economy (and spewing economic concepts) as an excuse to push for charter change. More likely than not, they do not know what they’re talking about. –

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.

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  1. ET

    I agree with Prof. JC Punongbayan: “All in all, beware of politicians using the Philippine economy (and spewing economic concepts) as an excuse to push for charter change. More likely than not, they do not know what they’re talking about.” And worse is when they know that they cannot use the Philippine economy and economic concepts to push for charter change but continue doing so by LYING to the Filipino People!

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JC Punongbayan

Jan Carlo “JC” Punongbayan, PhD is an assistant professor at the University of the Philippines School of Economics (UPSE). His professional experience includes the Securities and Exchange Commission, the World Bank Office in Manila, the Far Eastern University Public Policy Center, and the National Economic and Development Authority. JC writes a weekly economics column for He is also co-founder of and co-host of Usapang Econ Podcast.