60-40 capital sharing retained in proposed federal system
The proposed federal constitution as drafted by the Consultative Committee (Con-Com) will retain the “burdensome” 60-40 capital sharing between Filipinos and foreign investors.
This was revealed to The Manila Bulletin yesterday by former Senate President Aquilino Q.
Pimentel Jr. after he and other members of the committee, chaired by former Chief Justice Reynato Puno, submitted a copy of the draft to Senate President Vicente C. Sotto III at the Senate building.
To soften the impact of the current 60-40 capital sharing of corporations, Pimentel said the central government and 18 federated regions would extend incentives to foreign investors.
In the 15th Congress (2010-2013), then Senate President Juan Ponce Enrile and then House Speaker Feliciano Belmonte pushed for amendments to the current 1987 Constitution aimed at amending the “stringent” 60-40 capital sharing provision.
At present, Filipino corporations are usually hard up in coming up with the required 60 percent of the capital needed in the formation of multi-billionpeso corporations.
Pimentel stressed that foreign investors should be encouraged to come into the country “to affect (Philippine) economic development through these incentives.”
Faster dev’t The 60-40 capital sharing formula is retained because committee members feared that foreign investors might overwhelm or control Filipinos in the management of corporations, he explained.
What kind of incentives that the central government or federated regions can extend was not discussed during the brief media interview.
Asked whether the voting among the 19 members of the committee to retain the 60-40 sharing in the draft Federal form of government was a “majority” or “unanimous,” Pimentel replied: “There were no serious objections.”
Asked how he sees the effect of a proposed federal government on the economy because of the retention of the current 60/40 capital sharing, Pimentel said economic development would be faster.
Under the current 31-year-old Constitution, Pimentel said that every investment that comes to the country needs to go through the National Economic and Development Authority (NEDA).
“This time, the federated regions, there are 18 of them, will have the power to invite investors to go to their communities and provide incentives, unlike before, they go through the NEDA and that takes a longer time,’’ he said.
“With this revision, the federated states can provide work for their people. No more going to Manila to find jobs,’’ he added.
The committee said the distribution of powers is critical to the federated Constitution as it shows clearly how powers that used to be with the national government would now be the sole purview of the 18 proposed federated states.
Puno said President’s State of the Nation Address (SONA) at the opening of the third regular session of the 17th Congress on July 23 is expected to expound on the proposed federal form of government. (With a report from Charissa M. Luci-Atienza)