Economic experts threw Wednesday their all out support to the House of Representatives’ efforts to amend the restrictive economic provisions of the 1987 Constitution to make Philippines “more foreign investment-friendly” and to “accelerate” the country’s economic recovery.
Former National Economic and Development Authority (NEDA) director general Dr. Ernesto Pernia said it is “right time” to launch the economic Charter change.
“Because as you can see, although the economy has really been clobbered by the pandemic, it is recovering slowly––it is getting out of the hole little by little––and we need to accelerate that getting out of the hole,” he told the House Committee on Constitutional Amendments’ first hearing on Resolution of Both Houses No. 2, principally authored by House Speaker Lord Allan Velasco.
“We really need to push that, including allowing FDI (foreign direct investments) in the country, so this recovery will accelerate and then become fuller and more beneficial to the country and its people,” he pointed out.
Pernia, a professor emeritus from the University of the Philippines School of Economics (UPSE), laments that the Philippines is the “most restrictive” in terms of foreign direct investment (FDI) and thus, has been lagging behind its Southeast Asian neighbors, including Malaysia, Thailand, and Indonesia.
“We really cannot be competitive with our ASEAN neighbors, much less in the global economy, if we do not open the economy; that is why easing or lifting the provisions on foreign participation in the Constitution is critical,” he said.
Another professor emeritus from UP, Dr. Gerardo Sicat, said the House’s efforts to amend the economic provisions of the Constitution will send a good signal to the global business community that the country is improving its domestic business environment.
According to the first director general appointed to head the NEDA , the existing restrictive economic provisions in the 34-year old Charter hampered the economic progress, describing them as the “original sin.”
Sicat then asked the panel members to read his column titled “Now is the time to amend the restrictive economic provisions in the Constitution,” which lays down the benefits of economic Cha-cha.
He cited that among the benefits of economic Cha-cha, together with complementary and wise economic policies are sustained and a higher level of per capita GDP growth; higher level of employment for Filipino workers; improved overall level of productivity for the Filipino worker; better nutrition of our worker’s children and capability to support their schooling; enhanced capacity of workers to finance family housing and other needs; the improved capacity for the state, through an upgrade of its finances, to undertake programs to ameliorate the conditions of those in poverty; and a rising standard of living for all Filipinos.
Dr. Raul Fabella, the only Filipino economist recognized as a National Scientist, relayed to the panel that he is in favor of lifting the constitutional limit on foreign ownership to make the Philippines more foreign investment-friendly.
However, the UP School of Economics professor emeritus warned that “if we are not investing more for ourselves, I don’t see why foreign investors will do so.”
Gary Olivar, fellow of the Foundation for Economic Freedom, noted that the country’s growth has historically been primarily driven by consumption rather than investment.
“The fact of the matter is that the Philippines has attracted the least amount of foreign direct investment during the past 25 years,” he said.
“The main point of Constitutional reforms is to make the country more attractive in FDIs that would help propel sustained economic expansion.”