Opportunity

The Consultative Commission charged with making proposals for constitutional reform decided the citizenship requirements limiting investments and property rights ought to be scrapped.

There is nothing novel in this conclusion. It is the same conclusion reached by the Preparatory Committee for Charter Change convened by former president Joseph Estrada. It is the same argument against the 1987 Charter by the groups that initially pressed for amendments during the Ramos administration. Indeed, it has been the concern of economists since 1987, when the present charter was unveiled and submitted to the people in an urgent plebiscite where not enough time was available to dissect the contents of the basic document.

Those provisions were installed there by old-style ideologues without the benefit of economic wisdom.

From the day those provisions were written, they were at odds with the realities of the modern economy. They foreclosed possibilities for drawing in investments at a time of intense competition among economies for precisely those investments.

An investment drought happened immediately after the 1987 charter was ratified. Numerous large investments – such as the General Motors manufacturing facility for east Asia that decided to move to Thailand – were lost. Those that tried to invest in our inhospitable policy environment got caught up in protracted court cases. The few that managed to inject investments in our economy operated with a higher cost of doing business, enriching only a few smart lawyers who acted as dummies.

Recall how the citizenship restrictions in the 1987 Charter forced the Mining Act into a decade-long litigation on the matter of its constitutionality. Western Mining Corporation of Australia, which could have put in billions of dollars in investments in the Socsargen area and billions more in national revenues simply pulled out in exasperation.

The citizenship restriction on investments in media production facilities is particularly anachronistic.

It was a provision put in on the stupid argument that it would protect our culture and information infrastructure from "foreign influence." But in a multimedia world, all that restriction accomplished was to cripple our capacity to create media content and force us to import Latin American telenovelas and Korean serials.

One European non-profit enterprise engaged in producing content for Asian television wanted to build its production center in this country. That might have created tens of thousands of quality jobs for our artists and media talents. But they could no do that here because of constitutional restrictions.

The longer we keep those outdated citizenship restrictions on media production facilities, the more we will fall behind in the competition. The more quality jobs we will lose. The more our media establishments will fail to take advantage of opportunities for partnerships and joint ventures, condemning us to local monopolies and parochial content.

If we were to add up all the investment opportunity costs we incurred because of those constitutional restrictions, it should be arguable that as a consequence of these unenlightened provisions we lost more economic opportunities than corruption and political turbulence combined.

Having lost the opportunity to generate jobs locally, we have been condemned to exporting our workers. Our manufacturing has hollowed out. Our domestic economy is driven largely by the consumption demand generated by the repatriated incomes of what, proportional to our population size, is the largest migrant labor force in the world.

A restrictive investment environment is the principal cause of our economic woes. The latest study shows that the Philippines is at the tail-end of the list of beneficiaries of direct foreign investment. In our region, we outrank only Myanmar and Laos – two countries whose populations combined are less than the population of Metro Manila on a Sunday.

In a misguided effort to lift our national economy by its bootstraps, the obsolete ideologues responsible for inserting those protectionist provisions succeeded only in shooting our economy’s foot.

In China, any investor who comes in with a sufficient volume of capital receives a small gift from the government: the parcel of land on which his production facility will stand. It is a reassuring gift that encourages the investor to invest in a physical plant.

The Chinese are a lot more pragmatic than we are. Giving the investor his parcel of land encourages long-term investment that assures the Chinese economy improving productivity.

By contrast, because we could not assure investors the security of owning the land on which their physical plant is built, we try to compensate by offering tax holidays. Tax incentives not only drain potential public revenues, they also encourage short term investments. Firms come in with highly portable enterprises to take advantage of the tax holiday and pull out before the tax incentives run out, resulting in labor insecurity.

Restriction on land ownership has discouraged expatriated Filipinos from bringing home their life savings and investing in property. The same restriction has discouraged investments in agro-business that would have gone a long way in capitalizing our stagnant agricultural productivity.

I will not be surprised if the leftist groups who thrive, not on the progressive inclinations of Marxist theory, but on the stultifying orthodoxies of 19th century nationalism will raise a ruckus about this proposal to withdraw citizenship restrictions on investment.

I hope they will argue from the facts rather than from the delusions of outdated belief systems. If they do, they will be arguing against a tidal wave of evidence, data and logic.

If they do, they will be spitting against the wind and find themselves arguing as well against our people’s best interests.

It is in the end a choice between importing jobs to the homeland or expelling millions of our people to seek jobs elsewhere, continuing an economic diaspora that has taken great human toll on Filipinos.