A boost for Cha-cha from Spain?

We had it coming. That, perhaps, would be the more sober reaction to what amounted as a direct dig from Oscar Via Ozalla, director of trade and investments of the Spanish Ministry of Trade and Industry.

As bannered in this newspaper last Friday, the Spanish businessmen had expressed concern "over the inefficiency of the bureaucracy and inadequacy of infrastructure in the Philippines which they said were discouraging foreign investments from pouring into the country."

The more bothersome part of the story was the portion about the statement of Ozalla, that while he did not want to criticize the Philippine government, it was important to point out that its efforts were not enough to attract greater investment into the country, despite the Arroyo administration’s fiscal and economic reforms.

"I know that you have made steps in the right direction. They are still not enough because Spanish companies need more." This was a direct quote from Señor Ozalla that our reporter included in her story on the June 28 forum held at the Spanish capital, which was attended by many of the host country’s businessmen. Also present in that forum was Philippine Trade and Industry Secretary Peter Favila and presumably, members of the country’s trade delegation.

One would have expected that being an official of the host country, Ozalla would be diplomatic about it and put his message across a little more gently. But no, he laid it on thickly, even mentioning the inability of Congress to pass the 2006 budget that, he said, could delay infrastructure development and the delivery of social services.

I could only imagine the discomfiture of Secretary Favila and the other Filipinos in the forum as Ozalla continued to fire away in carino brutal fashion. He said the Philippines must find the right framework and must work double-time to get more investments from Spanish businessmen who are now searching globally for places where they could invest their money.

Businessmen, of course, will always go where adequate infrastructure and an efficient bureaucracy will ensure a hospitable climate for their investment and enable them to realize a decent return for their money.

As far as infrastructure is concerned, Ozalla may well be echoing the observation made last May by Joachim von Amsberg, World Bank country director for the Philippines. In a report on the Philippines, Amsberg had noted that infrastructure development in the country has failed to keep pace with rapid urbanization and high population growth.

"This situation has serious consequences on the country’s competitiveness and in particular, its growth and poverty reduction targets, including the Millennium Development Goals," the WB official was reported as saying.

Amsberg was right on the button regarding the effect of these issues on the country’s competitiveness. In the 2006 World Competitiveness Yearbook, the Philippines ranked 49th overall among 61 countries surveyed. It ranked 14th among 15 countries in the Asia-Pacific region, and occupied the last spot – No. 61 – in terms of basic infrastructure. The survey was conducted by the International Institute for Management Development (IMD) which is based in Switzerland. IMD released the results some two months ago through the Asian Institute of Management (AIM), its partner in the country.

To improve our attractiveness as an investment destination, Favila said we should be aggressive in marketing the Philippines and in developing new strategies as Vietnam and China have liberalized their policies with respect to the land issue.

"We cannot do that without amending the Constitution. But we cannot just watch. We have to do something," Favila was quoted as saying.

Amending the Constitution to ease current restrictions on the entry of foreign investors is one of the amendments that advocates of Charter change have been pushing. They contend that liberalizing economic policies will bring in much needed foreign capital in critical areas which neither the government nor the private sector have the resources to develop.

Allowing the entry of foreign investors in these restricted areas will solve the inadequacy in infrastructure and the perennial problem of joblessness that consign millions of Filipinos to a life of misery and want. This is what lawyer Romela Bengzon, former deputy secretary general of the Constitutional Consultative Commission, has been hammering on.

Now also a member of the Constitutional Change Advocacy Commission (Adcom), Bengzon says the criticisms that Ozalla and the Spanish businessmen aired in this regard come as an unintended boost to Cha-Cha and serves to affirm the need for reforms in the political and economic structure of the country.

She paints a dismal picture of the employment situation, pointing out that in the past 10 years spanning three administrations, unemployment ranged between 10-11 percent; and underemployment stood at 25 percent of the country’s 40 million workforce.

A corporate law practitioner and investment counselor, Bengzon is quite knowledgeable on the subject of foreign investments. The law firm that she heads as managing director has helped foreign clients set up joint ventures, financing projects, or enter into full or partial equity participation in Philippine companies. Some have organized foreign subsidiaries and representative offices in the country. All these resulted in thousands of jobs.

The figures she ticks off appear impressive – if these can be realized. She claims that if the Constitution is amended to liberalize the entry of foreign capital, investments can rise in three years from the current 18 percent to the 35 percent needed for sustained development. Gross domestic production can double in eight years, and in 12 years, the country can see a 100 percent increase in present per capita income of $1,100 which is equivalent to about P58,300 under the present exchange rate.

"We can finally lick poverty and catch up with our neighbor nations," Bengzon enthused. She hastens to add though, that economic reforms would be meaningless if the political structure is not reformed as well, and this should come through a shift to the parliamentary system with a unicameral legislature. Such a shift, she says, will eliminate the inherent gridlocks in a bicameral legislative system that often, also results in paralyzing conflicts with the Executive branch.

Bengzon and her Adcom colleagues find solid support from Senator Edgardo Angara, chairman of the opposition party, Laban Ng Demokratikong Pilipino (LDP). During the party’s National Congress at the Manila Hotel last May 24, Angara said that the LDP has consistently advocated amendments to the Constitution since 1992. He assailed the "anachronistic political and administrative structure of government that largely accounts for our country’s appalling underdevelopment, in contrast with our more dynamic neighbors."

Added Angara: "There is need to open up our highly protected investment system that has thoroughly discouraged investments and job creation in the country. We need to lift restrictive regulations on foreign investments, including management of educational institutions, mass media and advertising, to make it more flexible. Flexibility in regulation of foreign investments in key areas of the economy such as natural resources, fisheries, telecommunications, roads and highways is important."

Favila, Ozalla, Amsberg and Angara. Openly or impliedly, they seem to be humming the same tune that the Adcom people and the rest of the pro-Cha-cha gang are playing. The question is, will the rest of the country dance to their music?

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