Villafuerte

LRay hails support of foreign, local biz groups for economic amendments

April 18, 2023 Ryan Ponce Pacpaco 153 views

THE support of foreign and local business groups for constitutional reforms to attract more investors is the latest proof that stripping out the outdated provisions in the Constitution restricting foreign participation in local businesses is the fast way to spell a dramatic jump in foreign direct investments (FDIs) needed to keep the economy on its high growth path and accelerate poverty reduction, according to Camarines Sur Representative LRay Villafuerte said Tuesday.

One of the lead proponents in the House of Representatives of constitutional reforms via the Constitutional Convention (Con-Con) route, Villafuerte said the fresh backing of the Management Association of the Philippines (MAP) and the American Chamber of Commerce of the Philippines (AmCham) for constitutional reform has “shattered” the position of other business groups that a makeover of constitutional provisions on the domestic economy has become superfluous because of four new laws designed to enhance the local investment climate.

“The full backing of such prominent local and foreign business groups as MAP and AmCham for constitutional reform to attract more investors has buttressed the position of Charter Change advocates in the Congress like [me] that only a makeover stripping out the antiquated, protectionist economic provisions of our 36-year-old Constitution could enable the Philippines [to] keep up with, let alone overtake, neighboring economies that have become major FDI hubs way ahead of our country,” Villafuerte said.

Villafuerte said the Constitution’s 40%-cap on foreign ownership of certain major Philippine businesses “explains the nonstop decline in FDI inflows to our country despite its status as one of the fastest-growing economies in Asia before and after the COVID-19 pandemic.”

“Thus, tweaking our Constitution at the soonest to do away with its economic provisions that have apparently spooked overseas investors has become a must because the President’s economic managers themselves have stressed the importance of investments to stimulating economic activity, creating jobs and attacking poverty,” said Villafuerte, president of the National Unity Party (NUP) that is a staunch backer of a Con-Con to tackle constitutional reform, as advocated by the House leadership under Speaker Martin Romualdez.

MAP and AmCham had separately supported “Charter Change” for so long as such would only “cover economic-related constitutional provisions.”

“Our stand is that we agree, provided that it is limited to the economic provisions,” MAP President Benedicta Du-Baladad told reporters.

AmCham Executive Director Ebb Hinchliffe said, meanwhile, that his group is likewise supportive of the move to amend the Charter’s economic provisions to help encourage more FDIs into the country.

“We support the economic changes to the Constitution. That is the best thing we can do to get more FDIs in the country,” Hinchcliffe said.

Villafuerte noted that in last week’s Philippine Economic Briefing (PEB) in Washington DC, Socioeconomic Planning Secretary Arsenio Balisacan said that creating more quality jobs is crucial to the Marcos administration’s goal to pull down poverty incidence to a single-digit level by 2028.

“Getting the quality of jobs available is so crucial to achieving our poverty target. To make that happen, we need to get investments,” Balisacan told leaders of American businesses at the PEB.

Other business groups earlier said they used to support Charter Change but no longer do now because of recently enacted laws that have already addressed “many of the impediments” to higher FDI inflows.

These investor-friendlier measures that are being cited by the other business groups that believe constitutional reform is “no longer necessary” include the four laws co-authored by Villafuerte in the 18th Congress – the Corporate Recovery and Incentives for Enterprises Act (CREATE); and the amendatory laws to the Public Service Act (PSA), Foreign Investments Act (FIA) and the Retail Trade Liberalization Act (RTLA).

Villafuerte asserted, though, that this view by these business groups now opposing constitutional reform has been punctured by: (1) the position of MAP and AmCham that amending the economic provisions of the Constitution is actually needed to attract more overseas investments and (2) the latest Bangko Sentral ng Pilipinas (BSP) data on the plunge of FDIs to a 20-month low in January to US$448 million, or almost half (45.7%) of the US$824-million investments that entered the country in the same month last year.

The same BSP data showed that January’s US$448 million net inflows were lower than the US$634 million-worth of net FDIs in December 2022 and is the lowest since the US$426 million investments reported in May 2021.

For Villafuerte, the continuous decline in FDIs despite the domestic economy’s strong post-pandemic recovery under the Marcos administration is “a telling mark that the Philippines will have difficulty keeping up with, let alone overtake, our Southeast Asian neighbors that have become excellent investment hubs ahead of us, despite such investment-friendlier measures and our country’s pre- and post-pandemic status as one of the region’s economic outperformers, because these four new laws stopped short of letting foreigners own or control 100% of certain major local enterprises.”

He pointed out that the National Economic and Development Authority (NEDA) announced last March the release of the implementing rules and regulations (IRR) of Republic Act (RA) No. 11659 or the amended PSA Law.

The NEDA said in a March 20 statement that upon its effectivity last April 4, the amended PSA “shall enable the liberalization of key public services by allowing full foreign ownership of businesses in select industries…”

But Villafuerte noted that the NEDA itself confirmed in the same March 20 statement that the Constitution’s foreign ownership cap remains in certain businesses, as “public service utilities such as electricity transmission and distribution, water and wastewater pipeline distribution system including sewerage, petroleum and petroleum products pipeline transmission systems, seaports, and public utility vehicles remain subject to the 60-40 percent foreign equity limitation.”

Hence, said Villafuerte, “Doing away with the restrictive economic provisions of the Constitution to clear the way to greater FDI inflows is a matter of urgency, given that there are economic experts who believe the low volume of net investment inflows last January will likely be the norm this year in the face of headwinds such as the [stubbornly] elevated inflation, high-interest rates, and a weakening global economy.”

MAP supports, though, constitutional reform through the Constituent Assembly (Con-Ass) approach in lieu of Con-Con, which is the same recommendation of the draft panel report endorsed by the Senate committee on constitutional amendments and revision of codes chaired by Senator Robinhood Padilla.

Villafuerte had welcomed, nonetheless, this Con-Con recommendation of the Padilla-chaired Senate committee because this will at least “keep the process of constitutional reform going in the 19th Congress.”

“As what I have said before the congressional break, it’s beside the point whether the Senate would take a look at improving our Constitution by way of a Con-Con or Con-Ass. What is important at this stage is for the Senate to consider amendments to our flawed Constitution, so the 19th Congress can come up with a consolidated measure green-lighting a Charter makeover, preferably before 2023 is over,” he said.

Even if the Senate committee were to end up approving the Padilla-drafted committee report endorsing Con-Ass instead of Con-Con, Villafuerte said “this would keep the ball rolling” on Charter Change, more so because Speaker Martin (Romualdez) himself had said he was open to considering any Senate proposal on how to amend the Constitution.

Before the Speaker aired in a March 24 statement his openness to discussing any mode to amend the 1987 Charter, Villafuerte had already expressed the same position and proposed that Charter Change proponents in both the Senate and the House meet during the six-week congressional break to try finding “common ground” on how to pursue long-needed constitutional reform this year.

“Speaker Martin’s openness to any Senate proposal on how to pursue constitutional reform, despite the supermajority support in the House for a Con-Con to pursue the makeover, augurs well for a meeting during our congressional break between Charter Change advocates in both chambers to try finding common ground on how to do it before the year is over,” Villafuerte said.

Villafuerte said that “If we do nothing to reform our Constitution by ridding it of its antiquated protectionist provisions restricting foreign ownership of, or participation in, Philippine businesses, the odds will remain against our country becoming an investment magnet in the region, despite its status as among Asia’s fastest-growing economies pre- and post-pandemic.”

All 45 members of NUP, which is the “biggest power bloc” in the House next to the ruling party Lakas led by Romualdez, all voted before the March 24-May 7 legislative breaks for both Resolution of Both Houses (RHB) N0. 6 proposing constitutional reform via a hybrid Con-Con, comprising elective and appointive delegates, and House Bill (HB) No. 7325 that will be RHB 6’s implementing law.

NUP’s 45 members are among the 301 or almost 96% of the House’s 114 members who had voted for the twin measures, indicating the overwhelming support for constitutional reform in the bigger chamber under Romualdez’s leadership.

HB 7325 had consolidated four Con-Con bills introduced in the chamber, including HB 4926, authored by Villafuerte.

“President Marcos made the bold – and correct – decision last year to relax health protocols and other Covid-related restrictions in order to lead our economy back to normalcy and send the clear message to overseas investors and tourists that the Philippines has reopened for business,” he said.

“It will be such a waste of the Marcos government’s exceptional push for a strong post-pandemic economic recovery if we are to do nothing to support that, instead of complementing such effort with a long-needed makeover of our Constitution to let a lot more foreign investors help sustain our drive for robust and inclusive growth,” he added.

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