There really is no limit to absurdity. One of the priority bills of the Legislative-Executive Development Advisory Council (LEDAC) is to extend foreign investors’ land lease limit from the current 75-year maximum to 99 years. Mistaking more for better, the chairperson of the committee on trade and industry of the House of Representatives (HOR) is proposing an even longer 198 years.
The 1987 Philippine Constitution sensibly prohibits foreigners from owning land in the country. There is basically a similar prohibition in Vietnam, Thailand, Brunei, Myanmar and Cambodia with only land use rights in Indonesia and Laos; only Malaysia and Singapore allow foreign land ownership.
The Investors’ Lease Act of 1993 however does allow the long-term lease of private land to foreign investors for an initial period of up to 50 years, with a one-time renewal option for not more than 25 years. Most ASEAN countries already allow leases of 50 years or more.
The logic for extension is trite and tired. It’s to try and make the country more appealing to foreign investors or, as pandering to profit-seeking foreign capital is always euphemistically put, “improving the investment climate.”
What’s wrong with the proposed extension to 99 years? The most basic error is that it bizarrely and blindly assumes that the country’s development most of all depends on foreign investment and we have to do everything to attract it. This ignores how a well-designed local industrial policy framework is absolutely essential and a prerequisite for foreign investment to contribute to strengthening Filipino firms, improving domestic capital accumulation, and fostering indigenous science and technology.
There’s always a lot of hand-wringing about how the Philippines is left behind when it comes to foreign investment. This is oddly oblivious to how the total foreign investment in the country has soared from US$1.3 billion in 1980, equivalent to 3.5% of gross domestic product (GDP) then, to US$119 billion in 2023, equivalent to 27.3% of GDP now. Measured relative to the size of the economy, the Philippines in effect has more foreign investment now (27.3% of GDP) than China (20.6%), Taiwan (17.2%), South Korea (16.6%) and even Japan (5.9%).
The policymakers and economic managers who ignore data and continue to fetishize foreign investment also seem oblivious to how that decades-long surge in investment also saw the worst decline in the country’s manufacturing and agriculture sectors. Since 1980, these have fallen to their smallest shares of GDP in 75 years and in the country’s history, respectively.
The current maximum of 75 years is already quite long as it is – stretching back nearly to Philippine independence in 1946. That additional 24 years is in any case irrelevant especially with this not even being a concern for foreign investors. The much bigger and more immediately relevant constraints to their profitability are expensive power and poor infrastructure, erratic and corrupt governance, and a large but still very poor internal market.
The proposal to increase the land lease limit to 99 years really won’t make much difference in making the Philippines more attractive to foreign investment, and certainly won’t mean anything for long-term economic development. If the extension to 99 years misses the point, then the extension doubling this to 198 years is even further off the mark.
The proposal for lease extension is moot. This is just the latest of already endless distractions from the real urgency to come up with a strategy that prioritizes industrialization and equity over a close-minded fixation on increasing foreign investments without understanding how this should contribute to urgent systemic change.
That the LEDAC makes the extension one of its 28 priority bills just highlights how the country’s economic development policy is so narrowly obsessed with trying to please foreign investors and is unable to envision long-term structural transformation.