Chacha vests certitude in investment policy— ex-economic managers

AMENDING certain economic provisions in the 1987 Constitution would give certitude and confidence to potential investors in the country and would stir healthy competition among businesses, according to economists and former members of the Philippines’ economic team.

In a statement on Wednesday, the members of the Foundation for Economic Freedom (FEF) said they believe that the Resolution of both Houses (RBH) of Congress No. 7 and its counterpart RBH6 in the Senate will provide “certainty” to the country’s economic policy direction.

FEF includes former Bangko Sentral ng Pilipinas (BSP) governor Felipe M. Medalla, former finance secretary Gary Teves, former economic planning secretary Gerardo Sicat, and other economists and researchers.

“Allowing for flexibility in our economic policy to be more responsive to changing local and global conditions does not throw out the rule book. It merely situates rulemaking in the proper venue,” the FEF said.

“We believe that removing the restrictions is a necessary condition since we have to open the door first for investors to be able to come in. For foreign businesses to benefit from better institutions and processes, they must enter the country first,” the FEF added.

The FEF stressed that existing and potential investors in the areas of telecommunication and transportation must await the resolution of these challenges to be certain of the actual policy of the Philippines.

“The uncertainty in our economic policy framework stems from the contradiction between the restrictive provisions in our Constitution and the attempts to mitigate them through legislation,” the FEF said.

“If the Supreme Court decides to rule that this law is unconstitutional, this will greatly damage the image of the Philippines with foreign investors,” the FEF noted.

The phrase “unless otherwise provided by law” in the Constitution’s economic provisions, as proposed in RBHS 6 and 7, “will render this constitutional challenge moot,” the group said.

Actual competition or even the threat of competition from foreign players will lead local players to improve the quality of and access to, their goods and services if they know that Congress can facilitate new entrants from abroad, the FEF said.

It cited as an example the entry of a third participant in the telecommunications sector and a service provider using satellite technology has prompted dominant players to improve their service and increase capital spending.

The group urged that removing the “anti-fdi” (foreign direct investments) provisions in the Constitution will signal our openness to foreign investment, adding that there is a need to signal that the country is open to FDI and demonstrate a “credible commitment” to this economic framework.

It said the removal of restrictions “is not being proposed as a magic bullet that will cure all ills and should not be seen as neglecting to fight corruption, investing in infrastructure, or improving the rule of law.”

The case of the renewable energy (RE) sector was also cited by FEF, noting how it has attracted billions of dollars in investments since the industry’s liberalization.

The country has been described as the fourth best destination for RE investments and the “new darling” of global RE investors, the group said.

This would create more income and job opportunities for Filipinos as potential investments in Re-related production of equipment like wind turbines and solar panels, and in infrastructure would support expansion in the RE sector.