AQUINO: STABLE ECONOMY, NOT CHA CHA, TO BRING IN INVESTMENTS
MANILA, OCTOBER 4, 2011 (STAR) By Delon Porcalla - Amending the economic provisions of the Constitution is no guarantee for faster growth or bigger foreign investments, but a stable economy is, President Aquino said yesterday.
“If I’m asked my personal opinion, I don’t think Charter change is a necessary tool, a necessary move at this point in time. I don’t agree that it’s the way to grow the economy,” Aquino told Palace reporters.
The 1987 Constitution was conceived during the administration of his late mother, former President Corazon Aquino.
Aquino’s Liberal Party allies in the Senate and in the House of Representatives – among them Sen. Franklin Drilon and Speaker Feliciano Belmonte Jr. – were pushing for changes in the economic provisions of the Charter through a constituent assembly.
Many lawmakers have expressed belief that some provisions in the Constitution are turning off foreign investors and hampering growth.
Although not keen on having the Constitution amended, Aquino stressed he is open to discussing the matter with his political allies.
“Of course I need to hear both sides. We’re in a democratic country, at least all of these ideas should be explored,” he said.
He said China is alluring to foreign investors despite its being an authoritarian state, chiefly because of its stable economy and large market.
“We know how laws in China work but China has such a huge market and that’s what’s attracting investors,” he said.
Malacañang earlier said amending the Charter through a constituent assembly would be up to Congress but it would not be a priority of the Aquino administration.
“There is no priority to amend the Constitution, whether it’s limited to the economic provisions. (Budget) Secretary (Florencio) Abad has already mentioned the reasons for investor confidence in the country, what we need to address in order for further foreign investment to come in,” presidential spokesman Edwin Lacierda said.
“However, we cannot impose on the legislature if that is what they are looking into. It’s something that we respect, their decision, but from the executive point of view... there is no need,” he said.
Is Charter change necessary?
by Man at the Market Jesse E.L. Bacon II 10/04/2011
When the world was created, the Creator made sure that human beings, his prized creatures, have ample supply of their life-sustaining needs for their survival by making sure that every part of this world will be Eden to everyone with all his bounties found above, on and under the ground.
All the bounties we can find on Earth are the Creator’s divine gift to sustain life in every given territory. Thus, the divine gifts found in our country are for the Filipino people’s exploitation and enjoyment to uplift the life of every citizen of this nation.
If there is so much misery and suffering in our land on account of poverty, it is not because of our country’s lack of natural resources but the Filipino people’s inability to exploit, enjoy and savor for their own good and welfare these divine gifts. Since the occupation of our country by foreign powers from Spain up to the present, the exploitation and enjoyment of our natural resources had never been ours but of foreigners and their few local business partners.
Analogically, our situation could be likened to a family where the income of the bread winner is enjoyed by the neighbors with the members of the family left with only the crumbs to enjoy. This may just be an analogy but in reality this is the situation we have been forced into by the foreign powers and their local cohorts who control every facet of our nation’s life.
This fact about the sad state of our country was the overriding thought in the minds of the framers of the 1987 Constitution when they fought for the inclusion of restrictive provisions with regard to the exploitation and utilization of our natural resources.
The constitutional commission that had progressive and left-leaning members in it wanted the interest of the Filipino people placed over and above the interest of any foreign business enterprise in the exploitation and utilization of our natural resources.
These restrictive economic provisions in the 1987 Constitution are what the leadership of both chambers of Congress want amended through a constituent assembly with each chamber voting separately on all proposed amendments.
This congressional move is not totally unexpected. And the manner by which they want the amendment effected is of no moment.
Why do they want to do away with the Constitution’s restrictive economic provisions?
The primordial purpose, according to the proponents themselves, is to give foreign business interests a free hand in the exploitation and utilization of our natural resources. Why would they do this?
Let us not forget that our Congress, the House of Representatives and the Senate, is teeming with corporate lawyers personally lawyering for foreign business interests before or their law firms now that they are national legislators, and local businessmen or their surrogates who have foreign business partners.
Given their economic interests, understandably, these solons will work for what is economically beneficial to them.
What is beneficial to the people doesn’t mean anything to them. Their class interest defines and dictates their outlook as legislators. We don’t have to be students of Marx to know and understand the naked truth behind the move of Congress to throw into the waste basket the Constitution’s restrictive economic provisions.
In fact, the country is just lucky that the progressive elements with the left-leaning members of the constitutional commission succeeded in marshalling the inclusion of these provisions in our 1987 Constitution. If that constitutional commission was lorded over by the interests that now control Congress, we would not have these provisions in our Constitution at all.
And don’t bite those avowals that they will not touch the other provisions of the Constitution especially those that have to do with term limits.
We should understand that aside from being the tentacles of foreign business interests, Congress members are dyed-in-wool politicians as well.
There is no denying that every politician dreams of staying in power not only during their lifetime but the lifetime of the succeeding generations that will follow them.
Be assured that they will also do away with this restrictive provision barring their stay in power for a lifetime and even beyond. This is how dangerous this proposal is.
(Reactions to email@example.com)
RELATED EARLIER NEWS REPORT
Is Charter change really necessary? REPORT FROM GMA7 NEWSTV
(Following is the transcript of the segment "Analysis by Winnie Monsod" which aired on News on Q on April 27, 2009. Prof. Winnie Monsod is the resident analyst of News on Q, which airs weeknights at 9:30 p.m. on Q Channel 11.)
Every Philippine President after Cory Aquino has either spearheaded or has been behind attempts to change the Constitution, and frankly, although their motives seem to be of the highest, if one goes beneath the surface - and not very deeply at that - one finds that the motivation is really self-interest.
The latest attempt goes under the guise of promoting economic growth and development, of generating jobs and reducing poverty.
And so, there is this move to amend the so-called economic provisions of the Constitution, which restrict foreign ownership and/or control of certain economic activities.
Their argument goes like this: the restrictions on foreign ownership are anti-growth and anti-poor.
Why? Because they have closed the door on foreign direct investment or FDI.
Have those economic restrictions, really closed the door, imposed a binding constraint, stifled, foreign investments in the Philippines?
Let's look at land ownership. Has the prohibition on foreign ownership of land become an immovable object? Well, when one can lease land for up to seventy five years, let's face it, land ownership becomes immaterial.
China is the biggest single recipient of foreign direct investment, accounting for over 34% of total FDI, and it allows no foreign ownership of land.
But, it has industrial and exporting processing zones like we do where very long term leases can be had. No problem.
As to the prohibition on foreign control of certain industries, like public utilities, or media, or advertising, etc., let's just take one example - PLDT. Giant telecommunications. It is controlled by First Pacific, an Indonesian multinational - just because Manny Pangilinan is a Filipino doesn't change that fact.
So, the question is: How did a public utility, a telecommunications company, get to be controlled by foreigners?
Simple: a very liberal interpretation of what constitutes "total capital." And in any case, it is not unusual for companies to be controlled even when ownership is limited to 40% or even 20% of common stock.
Bottom line here is that those economic restrictions in the Constitution haven't really closed the door to foreign investment. The door has been open, complete with incentives. The fact that FDI has not come in is another matter.
Let us not blame the Constitution for that. Let us instead find out, from empirical research, what it is that attracts FDI to a country.
Investors list down the most important factors influencing their decisions to invest in a country: what are they?
1. Adequate infrastructure
2. Skill levels (or human capital)
3. Quality of the general regulatory framework
4. Clear rules of the game, meaning no uncertainty, everybody knows what the rules are
5. Fiscal determination, meaning to say that the government is not going to get into fiscal crisis that will reduce the value of foreign investments.
OK, look at that checklist. Of the 5, we can lay claim to only 2: skill levels and fiscal determination and that may be temporary.
Certainly our infrastructure is woefully inadequate, our rules of the game are constantly changing, and the quality of our general regulatory framework is - well, judge for yourself - SEC, ERC, etc.
You think that is too harsh a verdict? Just look at where the Philippines is as far as the Corruption Perception Index of the Transparency International is concerned, or for that matter, the Global Competitiveness Index, and you will find the Philippines at basement levels, certainly below average.
In other words, if we really want to attract Foreign Direct Investment, touching the Constitution is like barking up the wrong tree.
And in any case, let us never make the mistake that FDI is automatically going to result in greater growth, more employment, and poverty reduction. It actually depends on the quality or the kind of FDI that comes in.
So many studies show that as much as 25% to 45% of FDI projects have deleterious effects on national income and economic growth.
Finally, how will the Constitution be amended? The proponents have the answer too: by Constituent Assembly to save money and time. Congress constitutes itself into such an assembly, then the provisions will be lifted. Easy as pie.
Of course, Congress, not having a track record for fulfilling its commitments, there is already widespread suspicion that the lifting of restrictions on foreign ownership is just an excuse, the thin edge of the wedge, and once the Constituent Assembly is formed, well all the other amendments, like parliamentary form of government, lifting of term limits, etc., etc. will also be taken up.
© Copyright, 2011 by
PHILIPPINE HEADLINE NEWS ONLINE
All rights reserved
PHILIPPINE HEADLINE NEWS ONLINE [PHNO] WEBSITE