Two prominent economists agree that current moves to liberalize the restrictive economic provisions of the Philippine Constitution should be supported and that the amendments being introduced should be approved sooner rather than later.
Congress is currently conducting preliminary hearings on Resolution of Both Houses No. 2 (RBH No. 2) authored by Speaker Lord Allan Velasco, seeking to add the phrase “unless otherwise provided by law” on sections of Articles XII, XIV and XVI of the Constitution.
Eminent economist Dr. Bernardo Villegas, who is also one of the framers of the 1987 Constitution, said that the Philippines is one of the fastest emerging economies in the world, averaging 6 percent growth before the pandemic hit. Villegas added that the country’s economy is still expected to grow, even in the midst of a pandemic.
“We are rated high in terms of financial strength because over the last 10 years, we have strengthened our financial institutions. Now, we are considered to have one of the best central banking system in East Asia,” Villegas said in a virtual forum entitled “RBH 2 and Its Impact on Economic Liberalization.”
Villegas, known as “prophet of boom”, said the country is poised for a dynamic growth in the next 10 years, and the amendments to the restrictive economic provisions of the Constitution will help in further boosting the profile of the Philippines to foreign direct investors.
“The Asia Pacific Region has not fallen into the extreme positions of protectionism like Brexit, America 1st. Within our region, because of the comprehensive regional economic partnership that was just signed, we are still open to trading and investing with one another,” Villegas said.
Villegas cited the country’s low agricultural output as a prime example where direct foreign investments could propel the agricultural sector through much needed capital and technological inflow.
“China and our Northeast Asian neighbors are struggling with food security. They will need as much food as possible for their people, and Thailand and Vietnam are already taking advantage of this situation,” he said.
In the same forum, Anthony Abad, a lawyer who specializes in international trade, said that a Constitution rarely includes specific economic provisions such as foreign direct investments (FDI).
“There is usually a general statement that focus on the promotion of national development. In fact, most Charters of other countries are short and concise,” Abad said.
Abad also stated that the Philippines ranked highest when it comes to FDI regulatory restrictiveness, according to the 2019 Organisation for Economic Co-operation and Development’s (OECD) restrictiveness index. The country accounts for only 6.3% of the entire FDI in the ASEAN region.
Abad added that while a Constitution should provide limits to the powers of Government, it should not hinder the ability of the government to act for the benefit of the country, especially in times of need like the COVID-19 pandemic.
“There’s going to be a dramatic effect just by the act of removing the restrictions and liberalizing economic provisions in our Constitution. We’re coming from a low base. The Philippines is notorious for its protectionism and protecting specific companies, specific business and political interests from competition,” said Abad, who also provides technical assistance to multinationals, governments and academic institutions on matters of trade policy.
“There is a need to revise the Constitution. it is not written in stone to the extent that we are compromising our ability to alleviate poverty, to ensure that everyone is well-fed. The capital has to be there. we cannot do it as a closed system,” Abad said.
“Certainly having a Constitution which has this illogical arbitrary numbers restricting investments is not going to help attract the capital that we need,” Abad concluded.