These days there has been much opposition to the general idea of amending the Constitution. The common suspicion is that it would be used by those in power for purely political ends.
But keeping things as they are is an obstacle to progress. Reviewing the current Constitution is always good, especially when it leads us to acknowledge lost opportunities and areas for improvement. At least for economic purposes, reviewing and amending the Constitution would be good for the nation – and Filipinos happen to agree.
According to a Pulse Asia survey conducted in March, most Filipinos believe that lifting the constitutional restrictions on foreign investments would lead to a better economy.
Commissioned by the international think tank Stratbase ADR Institute, the survey among 1,200 respondents revealed that 64% of respondents believe lifting economic restrictions may lead to “an increase in high-quality jobs with higher salaries and better benefits.”
More than half, or 56%, said services to stakeholders will be better while 54% believe the prices of goods and services will decrease.
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On April 3, the Stratbase Institute, in partnership with Democracy Watch Philippines, held a consultative discussion among multisectoral experts on the potential repercussions of amending the restrictive provisions of the Constitution. The consensus was that Filipinos stand to benefit greatly from the entry of foreign investments.
First, jobs. Foreign investments that would come as a result of relaxed ownership restrictions would create more and better jobs. “That is almost an objective criterion,” said Canadian Chamber of Commerce of the Philippines president, Julian Payne.
“The question of whether it creates high-paying jobs is relative to what you are comparing it to or what your expectations are,” he added.
Second, competitiveness. Susan Bulan of the Foundation for Economic Freedom, a public advocacy organization, said bringing in more players, whether foreign or domestic, will increase competition and contestability in the market. “The threat of competition will result in better services and lower prices,” she said, citing a 2007 study that showed a 10% decrease in airfare per kilometer for at least two airline companies in the Philippines after liberalization.
“This is because competition creates a dynamic pressure on locals to improve themselves,” said lawyer Tony Abad. A corollary to this is that the lack of competition explains the decline in quality.
FEF board member and former Finance Secretary Gary Teves said that since wages do not judge automatically or that quickly, competition – which foreign investors can provide in relation to our existing manufacturers – helps.
Here’s a concrete example. The recent amendment to the Renewable Energy Act of 2008, which now allows full ownership of renewable energy (RE) projects, has attracted substantial investments in the RE sector. Specifically, the Philippines now has the potential to become a manufacturing hub for RE. “This means that people from all sorts of skill levels will have access to a means of livelihood,” said FEF lead economist Cha Ubarra.
There are job opportunities in various RE-related activities: economic and innovation policy analyst Emmanuel Doy Santos said these include construction, installation, and transport of various technologies and solar panels.
The lifting of ownership restrictions also highlights the impact of renewables in lowering energy costs. “That will not only lead to job generation; it will also improve the quality of life,” he said.
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FEF said it is abundantly clear that lifting all economic restrictions in the Constitution is crucial to bringing in much-needed foreign investments.
Teves said the Philippines is the only country in Southeast Asia with restrictive economic provisions in its charter, emphasizing that we need to be at par with our neighbors as a way of complementing President Marcos’ foreign trips to woo investors to invest here.
He warned of dire consequences: “If the legal framework in the Philippines is so different from the others, investors might say ‘let’s go to the next country.’”
“While amending the Constitution is neither a silver bullet nor a guarantee for success, one thing is clear,” said Abad. “If you keep the Constitution as it is, you’ll keep out the investors.”
During the forum, Ubarra made an appeal to those criticizing initiatives to amend the charter’s economic provisions, specifically the youth: “The Constitution that we have in place right now was put together before you were born. So, what you're working so hard to protect did not have you in mind when it was put together. Take your power. Create a Constitution. Create a foundation law that is suited to your realities,” he said.
This is economic freedom: acknowledging that everything changes, that what may have worked in the past may not necessarily work in the current context, and that we need to periodically evaluate existing policies to gauge whether they are still good for the purpose for which they are created.
The Philippine economy has been stalled by many factors, and we have lost countless opportunities because of a misplaced sense of nationalism that has hampered our growth and stunted our potential. Opening up different sectors of the economy to foreign investment is not compromising our sovereignty as long as we put in place ways to safeguard the supremacy of Filipinos, prevent others from taking over what is rightfully ours, champion the interests of our people, and strengthen our institutions. On the contrary, it could be a single big act of patriotism that will empower our people and jump start a multi-generational era of economic prosperity and total well-being.
We hope our lawmakers will seize this opportunity to finally release our nation’s potential with enabling constitutional reforms that will be responsive to the fast evolving dynamics of the global economy.
Rupert Paul Manhit is the COO and managing director of think tank Stratbase Group. He is the executive director of Philippine Trade Foundation (Phils Inc.)