MANILA, Philippines — Thirteen local and foreign business groups have called anew for the swift approval of a reform measure that seeks to amend the economic provisions in the Constitution, as this legislation is deemed critical for the Philippines to remain a favored and competitive investment destination.
The business community was referring to the Resolution of Both Houses 1 (RBH1), which proposes to amend three articles in the 1987 Constitution of the Republic of the Philippines. This was principally authored by House Speaker Feliciano Belmonte Jr.
Specifically, the resolution seeks to include the phrase “unless otherwise provided by law” in some sections of Articles XII (national economy and patrimony), XIV (education, science and technology, arts, culture and sports), and XVI (general provisions).
If approved by Congress, and subsequently in a plebiscite, the amendments would allow Congress to pass laws to change the current constitutional restrictions. The usual legislative procedures would be followed, with hearings and full consideration in both the House and the Senate and possible presidential vetoes. In the meantime, each restriction would remain in place, the groups explained in a statement issued Sunday.
The business groups believe that such amendments, which will eventually lead to the easing of restrictions on foreign investments and ownership, will enable the government to achieve its goal of a sustainable and inclusive economic growth.
They explained that massive amounts of foreign investments would create many quality job opportunities that can benefit people at the grassroots. Easing foreign investment restrictions may also be critical in light of the country’s commitments to the establishment of the Asean Economic Community; its aspiration to join the TransPacific Partnership; and its goal to forge an advanced free trade agreement with the European Union.
“It is our strong position that there is no better time than now to begin the process of updating the out-dated restrictions in our Constitution through RBH1. The Philippines has enjoyed enhanced economic prospects and is on the radar screen of the international investment community—and these will be further improved by higher foreign investments. It will be unfortunate if the Philippines fails to take advantage of this golden opportunity and realize the potentials that a liberalized trade and investment regime will bring,” the groups said.
RBH1 has been approved on the second reading in the plenary but the third reading vote requires approval of three-fourths of the members of the House.
Speaker Belmonte, according to the business community, has placed the passage of the resolution among his highest legislative priorities in the recently resumed House session. Senate President Franklin Drilon meanwhile has reportedly committed that the Senate will discuss the counterpart resolution after RBH1 is approved by the House.
Business groups further pointed out that the constitutions of almost all countries in the world do not contain restrictions on foreign investment. Most countries that impose some restrictions do so through legislation or administrative orders that can be changed to suit shifting national priorities.
There have been only two significant liberalizations (covering casinos and retail trade) in the Foreign Investment Negative List in more than two decades since the important 1991 reforms in the Foreign Investment Act.
“Much has changed in Asia since the restrictions were placed in the 1987 Constitution. The Philippines has joined the World Trade Organization, agreed to open trade and investment within Asean and with Asean+ partners namely, Australia, India, Japan, Korea, and the People’s Republic of China. Recently, the ambitious TPP Agreement was agreed upon by 12 countries, which account for 40 percent of global (economy). Because the TPP provides for minimum barriers to cross-border investment flows among members, the Philippines may not be able to join unless some restrictions can be reduced,” the groups said.
“The Philippine government should maximize the amount of foreign investment generated as a means to drive down unemployment and underemployment levels. While there has been a significant increase in FDIs since 2010, amounting to over $6 billion a year in 2014, this represents only 5 percent of total FDI in Asean, which is small considering that the Philippines accounts for 16 percent of the population of Asean. Note as well that in recent years, Asean has received more FDI than China, estimated to be in the amount of $100 billion per year,” they added.
The joint statement was issued by Federation of Filipino-Chinese Chambers of Commerce and Industry; Financial Executives Institute of the Philippines; IT and Business Process Association of the Philippines; Makati Business Club; Management Association of the Philippines; Semiconductor and Electronics Industries in the Philippines, Inc.; American Chamber of Commerce of the Philippines; Australian-New Zealand Chamber of Commerce of the Philippines; Canadian Chamber of Commerce of the Philippines; European Chamber of Commerce of the Philippines; Japanese Chamber of Commerce and Industry of the Philippines; Korean Chamber of Commerce and Industry of the Philippines; and Philippine Association of Multinational Companies Regional Headquarters, Inc. SFM