Foreign chambers say economic Charter change to lift FDI
FOREIGN CHAMBERS of commerce in the Philippines on Tuesday asked lawmakers to lift foreign ownership limits in the 1987 Constitution, saying this would boost foreign direct investments (FDIs) in the country that is considered one of the least attractive in Southeast Asia.
“Our group supports the easing of restrictions of foreign direct investment wherever this is possible. We are of the opinion that the removal of economic restrictions would facilitate increased FDI in sectors where such investment is restricted,” the Joint Foreign Chambers of the Philippines (JFC) said in a Feb. 26 letter addressed to House Speaker Ferdinand Martin G. Romualdez.
The JFC sent the letter as congressmen are deliberating on the Resolution of Both Houses (RBH) No. 7, which seeks to lift economic restrictions in the ownership of public utilities, educational institutions and advertising. The resolution proposes to insert the phrase “unless otherwise provided by law” in the sections of the Constitution that restrict foreign ownership in these sectors.
“The advantage of using legislation or executive regulation is that it allows both the Legislature and/or the Executive to quickly adjust the regulatory environment for FDI in order to adapt to changes in technology, comply with requirements of international treaties, or take advantage of new opportunities to benefit in the global economy,” the JFC said.
FDI net inflows to the Philippines declined by 13.3% to $7.58 billion in the first 11 months of 2023, from $8.74 billion in the comparable year-ago period.
The JFC is composed of the American Chamber of Commerce of the Philippines, Australian-New Zealand Commerce of the Philippines, Canadian Chamber of Commerce of the Philippines, European Chamber of Commerce of the Philippines, Japanese Chamber of Commerce & Industry of the Philippines, Korean Chamber of Commerce of the Philippines, and the Philippine Association of Multinational Companies Regional Headquarters, Inc.
Meanwhile, former Supreme Court Justice Adolfo S. Azcuna, who was a member of the 1971 Constitutional Convention and 1986 Constitutional Commission, said including the phrase “unless otherwise provided by law” in Charter would only allow the provision to be changed through legislation.
“After such amendments are adopted, then Congress can adopt a master foreign investment law that will cover the framework for allowing foreign investments in our country including, if necessary, safeguards such as reciprocity,” Mr. Azcuna told lawmakers.
“Economic provisions must be responsive to changes in economic conditions, therefore I believe that we should change the provisions to make them flexible,” he added.
Adoracion M. Navarro, senior research fellow at the Philippine Institute for Development Studies (PIDS), said amending the economic provisions of the Constitution does not mean the economy will be subject to 100% liberalization.
“Requiring legislation for liberalization of FDI entry in certain sectors will entail deep scrutiny of each sector and will mean that prioritization will have to be employed by Congress,” Ms. Navarro told lawmakers. “There will have to be an investigation first of which sectors urgently need a liberalization law.”
National Economic and Development Authority (NEDA) Undersecretary Rosemarie G. Edillon said increased foreign investments in the public utilities sector would help lower power costs, improve the telecommunications sector, and modernize the manufacturing sector.
“We only have low value-added manufacturing here in the Philippines, we do not have any multinational company that does research here in the Philippines and it’s really because we do not have a pool of researchers [and] scientists,” she told the committee.
Meawhile, Camarines Sur Rep. Gabriel H. Bordado, Jr. said the provisions of the 1987 Constitution are enough to make the local education sector globally competitive.
“Filipino children can still be given access to the best schools while allowing Filipinos to retain control and administration of educational institutions,” Mr. Bordado told the committee.
Congressmen aim to vote on constitutional amendments before the Holy Week break. — Beatriz Marie D. Cruz