Constitutional prohibition on foreign ownership results in dummying – lawmaker

MANILA, Philippines — “Restrictive” economic provisions in the 1987 Constitution should be revised since foreign corporations have been skirting the prohibition on foreign ownership of lands and businesses by resorting to dummying, a lawmaker said Monday.

Cavite 4th District Rep. Elpidio Barzaga Jr. cited as an example some media companies, which, he said, are “just using dummies, in direct violation of our laws,” and are still able to operate in the country.

“Kaya ako since 2007, I was already in favor of Charter change,” he said in an interview over Politiko TV.

The 1987 Constitution limits foreign ownership of land and businesses to only 40 percent and sets aside the other 60 percent exclusively to Filipino citizens or corporations.

The House committee on constitutional amendments is tackling a measure, filed by Speaker Lord Allan Velasco, which seeks to “liberalize the restrictive economic provisions in the Constitution” that supposedly prevents the Philippines “from becoming fully competitive with our Asian neighbors.”

Under the Resolution of Both Houses No. 2, the phrase “unless otherwise provided by law” would be added to the constitutional restrictions that limit the participation of foreign investors in the governing body of entities based on their proportionate share in the capital.

The same phrase would likewise be added to provisions saying only Filipino citizens can control, own, and/or lease alienable lands, public utilities, educational institutions, mass media companies, and advertising companies in the country.

The addition of the phrase “unless otherwise provided by law” means Congress would be given the power to pass laws easing foreign investment restrictions in the country.

Velasco earlier said foreign investments would help offset the effects of the coronavirus pandemic, especially on the country’s economy.

“Foreign investment plays a crucial role in the Philippine economy by supporting domestic jobs and the creation of physical and knowledge capital across a range of industries. The need to attract foreign capital is critical to support our economy’s recovery from COVID-19,” he earlier said in a statement.

Barzaga pointed out that many foreign investors are being “turned away” by the “prohibitive” economic provisions of the Charter, depriving the country of the much-needed foreign direct investments.

He shared that some foreign corporations that are locators of the First Cavite Industrial Estate (FCIE) are complaining to him that they cannot even own lands where they are running their businesses.

The FCIE is a 159.5 hectare industrial subdivision built to service all basic needs of any manufacturing concern of the light-to-medium scale industry.

“Nandito ang mga korporasyon na pag-aari ng Japanese, Korean, Taiwanese, and even some German companies at ang palagi nilang sinasabi, ‘Mayor, we cannot acquire (properties) where we are operating our business. Sa Japan ayaw nila pumayag na mga dummy ang aming gagawin (at sabi nila) ang problema masyado restrictive ang inyong land ownership kaya nahihirapan kami mag invest ng continuously dito sa Pilipinas,” Barzaga said.

(We have corporations owned by the Japanese, Korean, Taiwanese and even some German companies and they always say, ‘Mayor, we cannot acquire (properties) where we are operating our business.’ In Japan, they don’t want to resort to dummying and they’re saying that the problem is that your land ownership kaya is too restrictive and we’re finding it hard to invest continuously.)

He further said Japanese locators even told him that even if they will be allowed to own lands in the country, they won’t be able to bring it home since it is in the Philippines.

“The land, although it’s in our name, will still be in the Philippines,” Barzaga said, quoting Japanese investors.

“And that (constitutional prohibition) deters the growth of your economy in the Philippines,” he added.