Php 70.00 Vol. 47 No. 07 • July 2013 - IMPACT Magazine Online!

ARTICLES
partnership program (PPP)
encourages local and foreign
private companies to invest
in economic activities and
provide them with risk guarantees
to ensure their profits.
Aquino’s, as well as past
governments’, economic
policies have in many ways
already reduced the Constitution’s
economic provisions
to mere rhetoric. But a much
watered-down charter will
remove options for a legal
recourse to defend national
patrimony and people’s
rights amid the intensifying
role of foreign corporations
in the economy.
Before the House announced its plan
to push Cha-cha, the renewed call for Constitution
amendments came from foreign
chambers of commerce like the American
Chamber, Japan Chamber of Commerce
and Industry, the EU, among others. The
US is determining Philippine economic
policy through its so-called Partnership
for Growth (PfG) with the country while
the EU is forging a bilateral EU-PH free
trade agreements (FTA). These countries,
faced with a prolonged economic crisis,
are seeking greater access to the country’s
natural resources and economy given the
already limited space for growth in their
own economies. All these entail further
pressure on the Philippine government
to amend the Constitution.
Foreign recommendations
Foreign economic institutions have
been straightforward about advancing
their economic interests in the Philippines
through multilateral and bilateral
dealings. In recent years, no less than
the JFCC and the Office of the United
States Trade Representative (USTR)
recommended constitutional adjustments
to allow foreign business to expand their
ownership of Philippine resources, utilities
and services.
The primary recommendation of the
JFCC was to “amend Constitution restrictions
on Foreign Direct Investment (FDI)”
and to “further liberalize FDI laws”. Aside
from constitutional amendments, the
JFCC also enumerated changes in laws,
which it believes hinder foreign capital
from entering the Philippine economy.
These include laws on fiscal incentives,
labor, and the negative list in the Philippine
constitution that bars foreign equity from
100% and below, including the following:
mass media; practice of all professions;
trade enterprises; cooperatives; private
security agencies; small-scale mining; utilization
of marine resources; and nuclear
weapon and pyrotechnic manufacture,
repair, stockpiling and distribution.
The JFCC enumeration also included
sections in the Constitution that regulate
and prohibit monopolies and limit foreign
equity from 60% and below in areas
such as exploration, development and
use of natural resources, public utilities
such as telecommunications, facilitation
of overseas employment, among others.
This negative list is similarly cited in the
Constitutional provisions identified by
the USTR as barriers to more open trade.
Ideally, foreign direct investments can
play a key role in development, and the
country should strategically restrict and
strictly regulate foreign investment to gain
net benefits for the economy. However, an
extremely open investment environment
such as the one created by the Philippine
government in its race-to-bottom with
other countries to attract investors does not
provide such conditions. Compared with
other Asian countries where governments
provide a responsible intervention in their
economy, the Philippines is seen to be at
a disadvantage: it has not attracted much
investment, and has not been able to extract
much advantage from existing investments
because it gives too many local incentives
to foreign investors. Foreign investment
has to be regulated to be developmentally
beneficial.
Profit over people still the bottom line
The country’s experience in the past
decades shows that creating a very open
environment for foreign investments does
not bring about economic development or
improved people's welfare in the country.
Today, the record high 11%
unemployment rate, insufficient
wages, poor social
services, weak agriculture
and manufacturing are all
significant indicators of
the country’s worsening
economy.
While the Philippine
government continues to
further open up the economy,
there has been a trend
worldwide against liberalizing
and towards protecting
the economy. In 2010,
for instance, 36 countries
pushed for economic restrictions
on foreign investment
in the natural resource
and financial sectors.
Cha-cha to remove the nationalist
economic provisions will reinforce the
worst aspects of Philippine economic
policy-making and drastically reduce the
country’s policy space for real progress.
The last decades of globalization have seen
increased foreign trade and investment
driven by a systematic neoliberal economic
policy offensive by the advanced
countries. The globalization period from
1981 to 2010, however, also saw that the
economy actually contracted – in 1984,
1985, 1991, and 1998. Overseas remittances
have also been a much greater
contributor to growth especially since
the mid-1990s than foreign investments.
These general trends give cause to question
the FDI and national development
connection. It underscores the fact that
the quantity of investment cannot in and
of itself be assumed to be a good thing.
Should Cha-cha push through, this
would result in the further diminished
government control over the economy and
compromise sovereign rights of Filipinos
over its resources. The Philippine government,
including the House representatives
pushing for Cha-cha, should realize that
the 1987 Philippine Constitution has provisions
on a “self-reliant and independent
national economy” and strident concern
for equity, redistribution and social justice.
In spirit, the present Constitution is propoor,
pro-people and pro-Filipino; it just
needs to be put into practice. I
FILE PHOTO
(IBON Foundation, Inc. is an independent
development institution established in
1978 that provides research, education,
publications, information work and
advocacy support on socioeconomic
issues.)
8 IMPACT • July 2013