Palace: Liberalizing Charter will increase GDP, reduce poverty

Malacañang said yesterday that lifting the restrictive economic provisions of the 1987 Constitution can dramatically increase the country’s growth rate by as much as eight percent annually and reduce poverty to less than 10 percent in 10 years.

Executive Secretary Eduardo Ermita also said shifting the current form of government to a more politically stable unicameral parliamentary system will protect hard-won economic gains.

Ermita said studies have shown that countries under a presidential system have experienced more coups and other violent political upheavals compared with nations run by parliaments.

Citing research done by the Charter Change Advocacy Commission (ad-com) on the political and economic effects of amending the 1987 Constitution, Ermita said the country’s economy cannot fully take off because of constitutional limits, which put the government’s gains at risk because of political uncertainty, though progress is already being made.

"More liberal provisions in high-growth areas will bring in an additional four percent growth in Gross Domestic Product (GDP) and push the annual growth rate (up) to eight percent," Ermita said in a telephone interview. "This will bring down poverty levels to 10 percent or less in 10 years."

Ad-com Commissioner Romela Bengzon, who conducted the study, said the Philippines was able to achieve 22 consecutive quarters of growth, which reduced the poverty incidence among families from 28 percent to 22 percent. This translates into two million Filipinos graduating from poverty, Bengzon said.

She added that foreign direct investments in the first quarter of the year reached $430 million, 11 percent higher than the $386 million in such investments recorded over the same period in 2005.

The country also posted a surplus of net portfolio inflows of $2.8 billion and reversed net outflows of $1.7 billion last year, she added.

Bengzon said the "efforts and economic policies of the current administration have merited remarkable results" despite the restrictive economic provisions of the Constitution that hamper the entry of foreign capital.

On their own, Filipino businesses do not have the capital for large-scale mining or oil drilling, labor intensive factories, power and water utilities, advanced colleges and universities, modern engineering, cinema or entertainment and advertising, she said.

"This is because of our low savings rate of 18 percent of GDP — only one-half of the 35 percent needed to spur investments," Bengzon said.

The provisions in the Charter seen as economically limiting are Articles XII (National Economy and Patrimony) and Article XVI (General Provisions), which cover the areas of exploration, development, utilization of natural resources and the ownership of industrial, commercial and residential land as well as the operation of public utilities, ownership of tertiary educational institutions and the practice of professions — particularly in high-technology fields. Also restricted by these constitutional provisions are the ownership and management of mass media firms and the ownership and management of advertising companies.

A brief survey of similar constitutional provisions in neighboring Asia-Pacific countries and territories — Singapore, Malaysia, South Korea, Thailand, Hong Kong and India — showed that they either have more liberal rules, such as allowing full foreign ownership of land, or have no economic restrictions at all.

"We need to protect and sustain our economic gains by changing our Constitution, taking out the restrictive economic provisions and shifting to a unicameral parliament that fuses the executive and legislative branches, which is a structure that provides for greater consensus," Bengzon said.

"Even with wise economic policy, maintaining long-term political stability upon which economic prosperity depends, requires a supporting constitutional and legal structure," she said, quoting Louisiana State University Law Center professor John Baker.

Ermita said that, according to a study by the University of Hawaii, of 33 countries under a presidential form of government, 30 experienced coups while, of 42 nations under a parliamentary system, only 13 went through coups.

He also cited another study of developing countries that were democratic for at least a year between the years 1973 and 1989, which showed that 40 percent of the countries run under a presidential system experienced a coup, compared with only 18 percent of countries run by parliaments.

He added that the "military coup susceptibility rate" was at "10" for countries run under a presidential system, compared with a risk rate of only "five" for countries run under a parliamentary system.