Icing on cake (2)
The agents of disinformation continue to spread deceptions regarding the Charter change effort that has become a constant distraction despite the criticisms being debunked time and again.
In a recent Bloomberg interview, President Bongbong Marcos needed to fend off another cheap shot at using Charter change to extend his term.
“The proposals for the amendments to the Constitution are solely concerned with economic provisions, things like ownership of corporations... So the political structure of the Philippines, there’s no proposal to change that. I’m not quite sure where it came from, but it’s being used as a stick to beat this issue over our heads,” according to PBBM.
Based on a Congressional Policy and Budget Research Department or CPBRD study, the amendments to the restrictive economic provisions of the Constitution will be the final touch to reforms to ease the flow of foreign capital into the country.
The Philippines falls behind its ASEAN peers in attracting foreign direct investment, or FDI, primarily due to several legal restrictions imposed across multiple sectors of the economy, the report of the congressional think tank indicated.
The CPBRD bared data showing that media stands out as the most heavily restricted in the Philippines, among the 22 sectors covered by an FDI index in 2020, scoring 0.913.
Following closely are business services (0.791), transport (0.655), and telecommunications (0.650).
Most of these restrictions are equity-based, stemming from foreign ownership limitations ranging from 40 percent to 100 percent.
Manufacturing (0.068), financial services (0.115), and distribution (0.153) had the least restrictions.
The study provided evidence that easing the regulatory barriers, specifically the foreign equity restrictions, has the potential to attract FDI inflows, according to the CPBRD.
It said that a 10-percent reduction in foreign equity restrictions, as measured by the index, is projected to generate an average increase of around 7.7 percent in the outward FDI position from source to host countries.
Based on the report, policymakers may consider reviewing and revising foreign equity restrictions or regulations to foster a more welcoming and favorable investment climate for foreign investors.
It added that reducing barriers to foreign entry, such as ownership restrictions or bureaucratic hurdles, can help enhance local firms’ competitiveness, facilitate technology transfer, stimulate job creation, and foster sustainable economic growth.
“By implementing favorable tax policies and maintaining stable prices, countries can create an environment that encourages foreign investors to establish businesses and make long-term investments,” it indicated.
The report added that a stronger perception of government corruption control and a greater quality of human capital could increase FDI. It highlighted that by emphasizing investing in education, skills training, and governance reforms, countries can establish an environment that promotes economic growth and attracts foreign investors looking for stable and transparent business opportunities.
The study also pointed out that while easing restrictions on foreign ownership has the potential to encourage FDI, it is just one piece of the puzzle in making the investment climate attractive.
Easing restrictions on foreign ownership should be seen as just one component of a broader set of reforms aimed at enhancing the country’s attractiveness to foreign investors, according to the report.
“Policymakers and investors should consider a range of other factors that can either attract or deter foreign investment, including market size, geography, economic stability, tax rates, labor force quality, and political stability, among others,” it suggested.
These factors must function together to maximize the potential in the region. “Taking a comprehensive approach enables countries to make informed decisions that promote FDI, thereby fostering economic growth and integration in the region,” the CPBRD indicated.
Moreover, the need to relax the constitutional restrictions on ownership has been recognized by several past administrations, making it incumbent upon PBBM to make the aspiration a reality.
“The Philippines falls behind its ASEAN peers in attracting foreign direct investment, or FDI, primarily due to several legal restrictions.
“The study also pointed out that easing restrictions on foreign ownership has the potential to encourage FDI.