While Charter change (Cha-cha) for the sake of easing restrictions on foreign capital is “necessary,” such a move would not be enough to attract more investors, according to a prominent group of economists and sociopolitical thinkers.
“Other conditions, such as a rule of law, good infrastructure and ease of doing business, among others, must be present to compete with other countries in attracting foreign investment,” Foundation for Economic Freedom (FEF), a policy advocacy group, said in a statement on Thursday.
“However, removing these restrictions is a necessary first step,” FEF added.
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Founded by former finance secretaries, FEF members include economist and National Scientist Raul Fabella, former central bank governor Felipe Medalla and former Finance Minister Cesar Virata, among others. Virata served in the Cabinet of Ferdinand Marcos Sr., father of the President.
President Marcos said he would study the latest signals from the House of Representatives led by his cousin, Speaker Martin Romualdez, to initiate moves to amend the Constitution in order to make the country “an investment-friendly place.”
Lagging behind
Romualdez on Dec. 12, 2023, said the House would tackle economic Cha-cha this year. But for Senate President Juan Miguel Zubiri, constitutional amendments are not needed “at this particular point in time,” noting that most senators are against it, including the President’s sister, Sen. Imee Marcos.
There were attempts made during the previous administration to relax the protectionist provisions. But they fizzled out despite then former President Rodrigo Duterte’s huge popularity, amid concerns that the sitting administration would only extend term limits to stay in power.
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But before stepping down from Malacañang, Duterte enacted two key reforms to open the economy to more foreign investments.
First was the Retail Trade Liberalization Act, which sought to simplify and ease restrictions for foreign retailers that wish to set up shop in the Philippines. The other was amendments to the Commonwealth-era Public Service Act, which opened industries once deemed off-limits to foreign capital—such as telecommunications, airlines and railways—to full foreign ownership.
The FEF said that while these reforms were “commendable,” the Philippines still lags behind its Southeast Asian neighbors in foreign direct investment inflows.
Limit to economic
The group therefore believed that the constitution must be amended to allow 100 percent foreign ownership in key industries like mass media and renewable energy.
“It is crucial to emphasize that the Philippines is open to foreign investments, especially as one of the last countries where restrictions on foreign ownership are embedded in the Constitution,” the group said.
For now, it remains to be seen whether Mr. Marcos and Romualdez have enough political capital to make Cha-Cha happen. But FEF warned that any constitutional amendments should be limited exclusively to economic provisions. “This focused approach reduces the risk of political controversy and division, ensuring the swift passage of crucial amendments to the economic provisions of the Constitution,” the group said. —Ian Nicolas P. Cigaral