Renewing the Cha-cha push, Philippine lawmakers recently announced that hearings will be held on amending the 1987 Constitution. This is purportedly to attract foreign investments that are much-needed by the contracting economy. House Speaker Lord Allan Velasco’s Joint Resolution No. 2 suggests inserting the phrase “unless otherwise provided by law” in crucial Charter provisions restricting foreign ownership in public utilities, land, natural resources, businesses, education, mass media and advertising. Duterte-backed Senators Francisco Tolentino and Rolando Dela Rosa crafted their own versions of the same proposal.
But changing the Philippine Constitution to remove restrictions on foreign ownership in said areas will put us in a worse situation than we are already in, considering the market-oriented framework of the Philippine government.
Contrary to hyped expectation, foreign investments have not been the solution to joblessness nor spurred development. For instance, foreign direct investments have been rising from the 2000s until 2017 – but the army of unemployed and underemployed Filipinos still rose to a huge 11.5 million in that period. This figure corrects for the underestimation in officially released unemployment figures.
The majority of these investments have been in electricity and gas, manufacturing, real estate activities, construction, and finance and insurance activities. They delivered profits to big companies but have not contributed to long-term Philippine economic development. The country’s industrial base, for instance, has only become shallower and more import-dependent.
Removing caps on foreign ownership and liberalizing the said sectors will be a good thing for foreign corporations and their local partners. However, it will definitely allow foreign plunder of our land and natural resources. It will allow foreign control over goods and services that the government should be providing affordably and efficiently to the public. It will mean foreign influence on the institutions that not only provide us information but also shape our culture as Filipino citizens and nation-builders.
Mining liberalization in the Philippines is a stark example of how foreign domination extracts local wealth for foreign industrialization and profit. The biggest mining companies in the Philippines come from the United States, Australia, Canada, Norway, Switzerland, and China. They caused the export of minerals and mineral products to almost double from 2016 at US$2.35 billion to US$4.04 billion in 2018, at the cost of environmental destruction and depleted resources for the country’s future industrial development.
Meanwhile, internationally, the trend is towards protectionism rather than liberalization with countries deciding to strengthen their respective economies as the global economy slows. The Global Trade Alert (GTA) reports 17,171 protectionist measures implemented worldwide since 2009, of which 7,311 are by the group of seven (G7) advanced capitalist countries. This is more than the 6,949 liberalizing measures recorded.
The repeated political maneuvers of past administrations seeking term extension have always included proposals to change the Charter’s economic provisions. This is to get foreign and local elites to support their bid to cling to power. These have been blocked time and again by civil society opposing the obliteration of the remaining nationalist and protectionist provisions of the Constitution.
Pursuing economic Cha-cha in the middle of a public health crisis and unprecedented economic decline smacks of putting vested interests first over squarely addressing the urgent need to create and save jobs, incomes and small businesses. If the claim is that this will help the economy recover, there are other measures that will have more immediate and direct impact – spending on strengthening the health system, giving households cash assistance, and supporting the majority of Philippine enterprises that are micro, small and medium-scale.
Foreign investments can play a role in domestic economic progress. But this is only if the national government regulates them to ensure that they contribute to developing local industries. This includes ensuring greater use of local manpower, sourcing more inputs from local firms, and technology transfer. ###