Experts, officials clash over economic ‘Cha-cha’
WHILE legal and business experts told the Senate on Monday that the government must first fulfill its poverty reduction goals and streamline bureaucratic bottlenecks that deter the entry of foreign investors, the finance department maintained its openness to easing economic restrictions in the 1987 Constitution.
“The question right now is timing and removing all those restrictions, today is not the right time to amend, 21% of Filipinos are still living in poverty,” Bernardo M. Villegas, economist and one of the framers of the 1987 Constitution, told the Senate hearing on Resolution of Both Houses (RBH) No. 6, which seeks to ease Charter-based restrictions on foreign investments.
Earlier, President Ferdinand R. Marcos, Jr. asked the Senate to review economic provisions of the Constitution amid calls for a people’s initiative to push for Charter change (Cha-cha). His administration is aiming to reduce poverty incidence to 9.0% by 2028.
“Right now, we should have a single-minded focus on the scandal that 21 percent of our population is living in demonizing poverty,” Mr. Villegas told the Senate.
Based on the latest Philippine Statistics Authority (PSA) report, the poverty rate for the first half of 2023 decreased to 22.4% from 23.7% in the same period in 2021, bringing the estimated number of Filipinos whose income was not enough to buy basic food needs to 9.795 million. In 2021, the figure was 10.945 million and 9.031 million in 2019.
BDO Capital and Investment Corp. President Eduardo V. Francisco told the same hearing that foreign investors have mainly been complaining about the slow bureaucracy and red tape when approving foreign-funded projects.
Citing his experience with foreign investors, Mr. Francisco said it takes about 167 signatures to approve a foreign investment renewable energy project, adding that it used to take 250 signatures to get projects up and running.
Former chief justice Hilario G. Davide, Jr. earlier told senators that Congress should focus on cutting red tape and corruption instead of easing foreign restrictions under the 1987 Constitution.
For its part, the Department of Finance (DoF) reiterated that it is open to easing economic restrictions in the 1987 Constitution same as the President’s stance.
“Allow me to make it clear. This administration’s position in introducing reforms to the Constitution extends to economic matters alone, for those strategically aimed at boosting our economy. Nothing more,” Mr. Marcos said last week.
“We are echoing the position of the President to consider the economic provisions of the Constitution so that certain sectors of the economy are opened up,” Finance Undersecretary Bayani H. Agabin told the senators on Monday.
The Joint Foreign Chambers of Commerce in the Philippines (JFC) also reiterated its stance of supporting easing foreign economic provisions in the current Charter at the same hearing.
“It (JFC) supports and promotes open international trade, free investment and improved conditions of business that’s what we advocate,” Canadian Chamber of Commerce of the Philippines President Julian H. Payne, speaking for the JFC, said. “The Joint Chambers of Commerce supports the easing of restrictions on foreign direct investment (FDI) wherever this is possible.”
He added that removing these restrictions would boost FDI in sectors where foreigners have limited ownership.
The Senate is in the middle of deliberating on the RBH 6, which is seeking to ease foreign ownership restrictions in education, public utilities and advertising.
DEBATE ON PUBLIC UTILITIES
Mr. Payne said that using legislation or executive action instead of restrictions in the Constitution would allow for more timely adjustments with international business conditions, citing recent amendments to the Public Service Act.
Congress earlier passed changes to the 85-year-old law to allow full foreign ownership in domestic shipping, telecommunications, shipping, railways and subways, airlines, expressways and tollways, and airports.
Senator Mary Grace PoeLlamanzares, who sponsored the Senate bill amending the Public Service Act, said opening up public utilities to foreign ownership could “open a can of worms” might threaten national interests.
“This is not just a discussion about the entry of foreign capital and businesses,” she said at the hearing in mixed English and Filipino. “Other countries would be able to country our water, electricity, seaports, gasoline and our public utility jeeps. Are we ready for this?”
“The Philippines today has one of the most liberal foreign investment laws in ASEAN (Association of Southeast Asian Nations) as well as in Asia,” former Supreme Court Associate Justice Antonio T. Carpio told senators on Monday.
“The Philippines without amending the Constitution has passed several laws to open the economy to 100-percent foreign ownership.”
HOUSE LEVELS WITH PRESIDENT ON ‘CHA-CHA’ FOR INVESTMENTS
Meanwhile, the House of Representatives will follow the President’s push for economic amendments to the 1987 Constitution to allow more foreign investors into the country.
“The House will follow the President,” Albay Rep. Jose Ma. Clemente S. Salceda said in a news briefing.
“Effectively, the instruction of the President is [to] let the Senate do its work on RBH (Resolution of Both Houses) 6,” Mr. Salceda said.
“In effect, I think we’re shelving PI (people’s initiative)… because that is the instruction of the President,” Mr. Salceda said, in hopes to brush off the politicizing of Charter change.
Mr. Salceda said that opening the economy to foreign direct investments would help achieve the Marcos administration’s goal of achieving upper middle-income status by 2025.
He said that upper middleincome status begins at $4,256 gross national income (GNI) per capita. The Philippines’ GNI per capita is around $3,950, Mr. Salceda noted, and is expected to grow at $4,466 by next year. “So, we need to grow our GNI per capita by a combined 13% between 2024 and 2025 to make it, or around 6% per year in 2023 and 2024,” Mr. Salceda said in a separate statement.