COMMENTARY: On the economic prescriptions of the new charter

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MELBOURNE, Australia (MindaNews/24 February) — President Rodrigo Duterte’s historic win was brought about by the 16 million voters who believed in his promise of change. Admittedly, a couple of promises have been “adjusted” to be more consistent with current conditions. Nonetheless, many of the President’s followers still expect his administration to work towards a complete overhaul of the current system. And this particular responsibility now falls on the administration’s Consultative Committee (Con-Com) on constitutional reform.

Note that one of the mandates given to the Con-Com in the President’s Executive Order No. 10 is to review the economic policies prescribed in the 1987 Constitution. Obviously, President Duterte expects recommendations that will drastically improve the economic regime governing the country’s development.

Many amongst charter change advocates believe that this leap forward can only be accomplished by liberalizing key industries such as telecommunications. Some would even go as far as opening the utilization of our natural resources to foreign entities. The core selling point of this extreme proposal is the potential influx of foreign direct investments (FDI) to the country.

Without a doubt, working towards the infusion of additional monetary resources in our economy is imperative. But the guarantee that FDI numbers will significantly increase offered by the proponents of economic liberalization is not really one that we can take to the bank.

In a letter submitted to the Senate Committee on Constitutional Amendments, the Makati Business Club cited three major impediments to FDI growth in the Philippines: “(1) the perception of high levels of corruption in government; (2) restrictive foreign ownership rules; and (3) uncompetitive labor compliance costs.”

Obviously, simply removing foreign ownership restrictions would not bring in more FDI to the country. For the other two obstacles must be addressed as well. And given that we currently rank 101st in the Corruption Perceptions Index 2016, opening industries to foreign ownership without the accompanying governance and labor reforms will probably only result to modest, if not minimal, growth in FDI levels.

Nevertheless, the administration’s Con-Com should still give serious consideration to lifting foreign ownership restrictions. The Philippine Development Plan 2017-2022, particularly Chapter 16 National Competition Policy Framework, provides a more acceptable rationalization for such a reform:

“Market competition promotes inclusive economic growth. It is a cross-cutting strategy to expand economic opportunities and increase access to such opportunities.”

Article XIV, Section 4 (2) of the 1987 Constitution provides: “Educational institutions, other than those established by religious groups and mission boards, shall be owned solely by citizens of the Philippines or corporations or associations at least sixty per centum of the capital of which is owned by such citizens.”

Removing such restriction makes it plausible to imagine learning institutions such as Carnegie Mellon establishing a campus in Naga, Bacolod or Marawi. And while investors in the field of education may not bring spectacular numbers in terms of FDI, if the scenario painted here does eventuate, a whole range of economic opportunities immediately becomes available to Filipinos in these areas.

Moreover, having world-class universities in regions outside of Metro Manila satisfies the constitutional right of all citizens to access quality education. Needless to say, this move aligns with the President’s federalization directive.

The Con-Com should also reconsider the restriction found in Article XVI, Section 11 (1) which states: “The ownership and management of mass media shall be limited to citizens of the Philippines, or to corporations, cooperatives or associations, wholly-owned and managed by such citizens.”

Again, removing this obstacle makes it possible to envisage international film outfits establishing a fixed presence in a region such as CALABARZON. This region not only has the biggest population in the Philippines but it is an area rich in history and replete with amazing scenery. Remaking this region in the mold of Auckland, New Zealand would not be mere wishful thinking.

The Con-Com can likewise consider liberalizing the advertising industry. Presently, under Article XVI, Section 11 (2), only Filipino citizens or corporations or associations at least seventy per centum of the capital of which is owned by such citizens can participate in this field.

Removing this restriction can pave the way for international boutique firms to set up shop in major growth centers such as Cebu, Davao and Cagayan de Oro. Again, advertising agencies may not bring in staggering amounts of FDI, but they can bring a lot of economic opportunities along the value chain for Filipinos in these cities.

It is important to remember though that economic liberalization does not automatically mean the absence of government regulation. The intervention of the state in these sectors is still necessary in order to ensure trade practices are fair and just, consumer rights are protected and our national patrimony is preserved. Simply put, the welfare of the community must still be the priority over and above everything else.

Incorporating the reforms suggested here in the draft charter will be controversial. But then again, President Duterte has never been afraid to make bold moves. (MindaViews is the opinion section of MindaNews. Michael Henry Ll. Yusingco, a practicing lawyer, is the author of the book “Rethinking the Bangsamoro Perspective.” He conducts research on current issues in state-building, decentralization and constitutionalism.”)

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