Economic bills are not just urgent but imperative

KUDOS to President Rodrigo Duterte for following the recommendation of his economic team and certifying as urgent proposed amendments to the Public Service Act, the Foreign Investments Act and the Retail Trade Liberalization Act. The ball, as the saying goes, is now in Congress’ court.

Finance Secretary Carlos Dominguez 3rd said the President had certified as “urgent” Senate Bill 2094, or “An Act amending Commonwealth Act 146, otherwise known as the Public Service Act”; SB 1156, or “An Act promoting foreign investments, amending thereby Republic Act 7042, otherwise known as the Foreign Investments Act of 1991”; and SB 1840, or “An Act amending Republic Act 8762, otherwise known as the Retail Trade Liberalization Act of 2000.”

In a letter to Senate President Vicente Sotto 3rd on April 12, Duterte said the passage of the measures will “address the immediate and continuing need for legislative reforms to provide a more conducive investment climate, increase job opportunities, foster more competition, and further spur the country’s economic growth,” particularly in the wake of the economic downturn brought about by the coronavirus pandemic.

Secretary Dominguez and his colleagues in the administration, as well as some progressive voices in Congress, have long sought revisions to these laws as an alternative to the more difficult and less popular idea of revising economic provisions in the Constitution.

In earlier comments, Dominguez observed that “[i]t is preferable, of course, to achieve the liberalization reforms in one blow. But if there are things that we can do to open up the economy through administrative measures, we must implement them. If there are areas that we can liberalize by amending our existing laws, then let’s do that.”

The country “should have the flexibility to be able to adjust and maximize economic opportunities as, and whenever, necessary,” he added.

The impact of the proposed amendments to the three laws will be to liberalize their provisions to some extent, allowing greater participation of foreign investors and professional service providers in areas that have been off limits or significantly restricted until now. One key factor in the administration’s decision to push harder for these reforms is their potentially positive effect on regional economic integration.

“We will not recover alone. The best way forward for the region is to resume integration and cooperation in earnest,” the Finance chief has said.

On their own, the liberalization proposals will attract much badly needed new investment to the Philippines, providing opportunities for business and employment growth, and that is enough to make the bills under consideration urgent. With the Philippines needing greater cooperation from its peers in the Association of Southeast Asian Nations (Asean) in both economic and political matters, however, the proposed changes become imperative.

Realization of the full potential of the Asean Economic Community is years behind schedule, and while the fault for that can by no means be laid solely at the Philippines’ feet, we can hardly demand action from any of our neighbors before taking care to eliminate any obstacles presented by our own laws. In terms of PERSISTENT ISSUES SUCH AS CROSS-BORDER PROFESSIONAL PRACTICES, fiNANcial market linkages and multicountry business operations, the proposed amendments contribute a great deal to the resolution of some remaining questions and, very likely, will encourage our Asean counterparts to accelerate their own reform efforts.

Unfortunately, our enthusiasm for the prospects of substantial economic reforms must be tempered by reality; efforts to advance these proposals have been made almost since the very beginning of President Duterte’s term but have been frustrated until now. After all, it took Congress nearly three years to pass the Corporate Recovery and Tax Incentives for Enterprises or Create Law, which was a far less complex measure than the three liberalization bills.

Nevertheless, we shall remain optimistic. The House of Representatives has lately displayed a noteworthy sense of urgency in dealing with economic measures and can perhaps encourage their seemingly more distracted colleagues in the Senate to follow suit, particularly since widespread support for economic liberalization is likely to be a key election issue. We will be watching with great interest how things develop.