Restrictive constitution slows down FDI growth

CEBU, Philippines – The Philippines' restrictive Constitution is causing the slow growth of foreign direct investments (FDI) in the country, an economist said.

Andrew James Masigan, also a political analyst and businessman, said that among the restrictive provisions of the Constitution are: the prohibition of foreigners to invest in sectors such as utilities, media, telecommunications, education and mining; restriction from owning a land; and imposition of equity caps.

There are economic losses caused by Philippine laws, Masigan said during an economic forum organized by the Cebu Business Club last Friday.

Masigan said this also explains why power cost in the country is one of the most expensive; and internet speed is very slow.

Masigan revealed that 20 of the country's largest listed conglomerates control Philippine business because the Constitution allows them to.

While move had been made to amend the economic laws of the Constitution, it had failed because of lack of President Aquino's support.

He said the country gets the least amount of FDIs among its ASEAN neighbors at $6.2 billion last year, well below Indonesia's $24.5 billion.

In the first quarter this year, FDIs further plunged 50.4% to $851 million.

The economist pointed out the country needs investments to create jobs, noting that economic growth has not translated to enough jobs.

Another challenge of the country is solving poverty which, Masigan said, has not improved since 2003 in terms of minimizing it.

"26% of our population still live below the poverty line," he said, adding the country's growing population is contributing to the poverty problem.

Infrastructure woes

Moreover, Masigan also made an emphasis on the government's lack of investment in infrastructure, which has significantly affected economic growth.

"We are not investing enough to fuel our growth," he said.

Bottlenecks in bureaucratic processes were cited to have contributed to the slowdown in public infrastructure spending.

Masigan emphasized that the Aquino administration's public-private partnership (PPP) program is simply not enough to address the investment gap, adding there's room for more public investment.