Three members of the body that drafted the 1987 Constitution on Monday opposed the plan to amend the Charter, but foreign companies operating in the country – the expected beneficiaries of the proposal – supported the government's efforts to ease property restrictions. foreign currency in economic sectors that are still protected. by the Non-Filipino Investor Charter.
These opposing views on Charter change (Cha-cha) were aired during the resumption of Senate subcommittee hearings on constitutional amendments and code revisions on Both Houses Resolution (RBH) No. 6, which seeks to amend certain economic provisions of the Constitution.
Economist Bernardo Villegas, who headed the national economy and heritage committee of the 1986 Constitutional Commission, said this was not the opportune time, as the government has to face two pressing economic conditions.
First, he said, President Marcos and his economic team should address the country's “scandalous” poverty incidence of 21 percent, currently the worst in the Southeast Asian region.
Secondly, he added, the government needed to guarantee at least US$15 billion in foreign direct investment annually until the end of the President's term in 2028.
However, Villegas agreed that it was necessary to modify the Charter to make the economy more attractive to foreign capital.
“I am the first to say that sooner or later we will have to amend this very imperfect Constitution of 1987,” Villegas said at the hearing chaired by Senator Juan Edgardo Angara.
“The question now is the moment”, he emphasized. “I don’t think we need Cha-cha today.”
Liberal investment laws
Two other authors of the Constitution, lawyer Rene Sarmiento and Florangel Braid, also rejected the amendment to the Charter.
“The review of economic provisions will not be the 'Midas touch' that will unlock the Philippines' economic prospects and promises,” Sarmiento said.
According to him, the amendment of parts of the Charter “will be the spark that could set off a fire on the prairie of successive changes relating to political, judicial, social justice and human rights provisions”.
Braid, who participated in the online hearing, said the 40 percent constitutional limit on foreign ownership of large companies must be kept intact to protect the country's sovereignty and security.
For retired Supreme Court Senior Associate Judge Antonio Carpio, Cha-cha prosecutors have given “false reasons” by blaming the ban on full ownership of foreign companies for the country's weak economic growth over the past four decades.
In fact, he said, the Philippines now has “one of the most liberal foreign investment laws” following the March 2022 enactment of Republic Act No. 11659, which amended the Commonwealth-era Public Service Act.
Protection by legislation
In support of the Charter change are the Joint Foreign Chambers of the Philippines (JFC), which brings together the American, New Australian, Canadian, European, Japanese and Korean chambers of commerce in the Philippines, representing more than 3,000 member companies in various sectors. .
“We are of the opinion that removing economic restrictions would facilitate increased foreign investment in sectors where such investment is currently restricted,” said Julian Payne, president of the Canadian Chamber of Commerce of the Philippines, who represented the JFC during the hearing.
Payne said the JFC recognized that the government's mandate and duty in all countries was to protect the national interest.
“This happens in every country,” he said, but noted that for most national economies, this interest was protected through the use of legislation or executive action, “not the Constitution.”
“The advantage of using legislation or executive action is that with these forms of regulation, both the legislature and the executive can quickly adjust to changing business conditions in the international environment,” highlighted Payne.
“If the Filipino people decide to amend the Constitution, we will actually be in favor of removing the economic restrictions in the Constitution,” added Florian Gostein, executive director of the European Chamber of Commerce in the Philippines.
Shut down by bureaucracy
Although he agreed with foreign chambers, financial industry representative Eduardo Francisco, president of BDO Capital and Investment Corp., said foreign investors were turned away not by ownership limits “but by red tape, red tape and corruption.”
“Just to give an example, for the foreign investors we talked to about renewable energy, 167 signatures are still needed for a project to be approved. Therefore, even if we have the Renewable Energy Law, trade liberalizations and tax benefits, [the approval process] it takes so long that it takes about five years,” Francisco said.
READ: Dalipe to senators: are you in favor of changing the Charter or not?
“That’s crazy, 167 signatures,” Angara noted.
“It’s actually dropped, a few years ago (the required signatures) were 250. But unfortunately, 167 is really, I agree, crazy. That's actually the real bottleneck. Therefore, even though we all want to have more and cheaper energy, what prevents investors from actually achieving the project is all the bureaucracy”, said Francisco.
“I also agree with the external chamber… any change that can improve investment (climate) in the country. But what's most important are the low-hanging fruit[s] …if Your Excellencies can do something there, it will really help to stimulate more investment,” said Francisco. INQ