Restrictions belong in law
THE solution to what to do about the economic restrictions in the Constitution is quite simple. Do what ex-chief justice Reynato Puno recommended: just repeal all of them entirely, then quickly pass laws to control whatever Congress determines still needs to be controlled. Detail doesn’t belong in a constitution; a general statement of a nation’s policy does. That statement can then be the basis to impose any law they wish under a constitutional general policy statement. Those laws can be amended as the societal environment changes.
I want to be quite clear about this. If Congress wants to change the Constitution to attract foreign investment, then it must remove all the detailed restrictions and replace them with a general statement of what is the guiding philosophy of doing business in the Philippines.
I don’t understand what Congress is doing. In February 2022, someone very cleverly found a way around many of the restrictions on foreigners having a majority in a public utility by defining what a public utility is. It redefined public utilities to a narrower set of sectors: electricity distribution and transmission, seaports, water pipeline distribution and sewerage, tollways and expressways, and public utility vehicles. Therefore, while foreign ownership limitations remain for a few specific public utilities, other sectors within the broader public service category are now open to full foreign investment. But this is just a law that can be changed.
In a highly competitive world where we are far behind in attracting foreign businesses into our country, it needs to be set in stone by changing the Constitution. Vietnam received $36.6 billion in foreign direct investment (FDI) last year. We? A miserly $5.88 billion. An open, fair-to-all economy is one of the reasons.
As to the clauses they wish to open up — education, media, advertising — these aren’t of any serious consequence. They won’t lead to any significant level of investment or even job creation.
To do as Congress is proposing to add those words — “This is a closed society, but we may let you in” — to the existing restrictions won’t work. It will send a negative signal. The message needs to be a positive one. We are an open society, except for a (very) few exceptions as defined in our laws.
Detailed regulations do not belong in a constitution that is meant to last for centuries. Centuries where you can’t foresee what society will need. The first smartphone, a simple one, was first released a mere 30 years ago. Since then the change to the world’s economies has been enormous. And with AI (artificial intelligence) and intelligent robots entering the scene, change is going to be even more dramatic.
Our 1986 Constitution didn’t and couldn’t consider such a different world we would live in. Actually, it’s even worse. The economic restrictions were, in the main, adopted from the 1935 Constitution. We didn’t even have blackand-white TV then. Details belong in law, where change to meet conditions of the time is relatively easy to accomplish and can be amended to meet as conditions change. Our Constitution should set the general tone. It should have something like: “The Philippines is a country that embraces and upholds principles of a free market economy that encourages competition, entrepreneurship, and the free exchange of goods and services both domestically and internationally.”
That sends a positive signal to investors that will make investors feel welcome. That the Philippines is a country that genuinely wants a level playing field for everyone that wants to do business here. And will treat everyone fairly. Doing it this way still gives Congress the power to impose restrictions if it wishes to. For example, a law can be passed that says, “Ownership of land will remain restricted to a maximum of 40 percent for foreigners. But they may lease land for up to 100 years.” It is the law that should set the restrictions, not the constitution.
My position on this is based on my history. I spent 64 years working for four multinationals. Seven of those years, as a regional manager for Asia-Pacific. Seven as president/chief executive officer (CEO) of the Philippine operation of an MNC (multinational corporation). I formed my own company advising some 120 CEOs of both MNCs and Filipino companies in 1982 — 46 years of dealing with top executives. I have spent extensive time in the United States and the United Kingdom working with the leaders of those companies. So I’d suggest it’s reasonable to say I know the way multinationals think, probably more than most.
What also needs to be changed is the restrictive provision to give preference to Filipinos. The Constitution says: “The state shall develop a self-reliant and independent national economy effectively controlled by Filipinos.” It goes on to say: “In the grant of rights, privileges and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos.” What foreigner will want to compete in such a biased (against him) market. It demonstrates an inferiority complex — “Filipinos aren’t as good as foreigners, so we have to protect them.” What nonsense. We are as good as anybody. If we’re not, then we need competition to force us to be so. The consumer deserves the best. Competition provides it. We can learn from more efficient producers to be equally, or even more efficient. I think these clauses are an insult to Filipinos. It’s saying Filipinos are not as good as foreigners. What foreigner is going to bid for a project when he’s told, “You’ve made the best deal, but you still may not be awarded it as we’ll give your Filipino competitor priority.”
Opening up the economy to a wholly level playing field can only benefit the people. China went from poverty to wealth in record time by opening its borders and economic sectors to foreigners.
As to whether voting should be as two separate chambers, or as a whole of Congress, why on earth is this even being discussed. Congress is composed of two separate chambers — under the Constitution. Something the framers only decided at the last minute. Up till then it had been thought a single chamber would do. Someone just forgot to make the change to the draft. Anyway, surely the congressmen recognize that they are two equal, independent chambers that respect each other and work separately. This is what they do in creating laws, why should changing the Constitution be any different?
What Congress is proposing won’t work. What Chief Justice Puno recommends is all that needs to be done. It then puts us into the group we have to compete with. That group, the Association of Southeast Asian Nations, does not have constitutional restrictions. If they have any restrictions at all they’re limited, and they’re imposed by law, not in their constitution. I’ll repeat it, replace all the specifics in the Constitution with a general statement. And pass whatever laws you want to cover restrictions.