Eyes wide open

Published February 1, 2021, 6:00 AM

by Vince Socco

There is a lot of talk these days about Economic Charter change. While the discussions focus on which parts of the charter need to be amended and how, I think the more fundamental issue should be how much of the economy should be enshrined in the constitution.

Economics are, by nature, dynamic. Accordingly, the premise for any constitutional provisions governing the economy are tenuous. They can potentially be overcome by circumstances at some point.

The 1987 Constitution was understandably authored with a very high level of nationalism in letter and in spirit. Coming out of decades of Martial Law and a perceived exploitation of national resources by foreign interests as enabled by the Marcos  Administration, the sentiment was, indeed, relevant to the times. Like a rubber band that was tightly wound, the reaction was a complete turnaround to the opposite extreme state – protectionism against threats both known and unknown. Again, it was totally understandable in the moment and the ensuing years. 

 Fast forward three decades and the wisdom of the charter provisions are, today, the subject of vigorous debate. 

As the present century came to be, globalization rapidly spread around the world and took root. A global village that was connected 24/7 provided an unintended new dimension to the supposition that the “world is flat”. Capital, people and technology moved freely and rapidly across borders. Theoretically, this allowed the most efficient use of economic resources, benefitted consumers through the most competitive prices and rewarded business with optimal returns on investments.

 Due to the constitutional restrictions on various sectors of the economy, it can be argued that the economic provisions handicapped us in the race for foreign direct investments. Investors considered us a risky and restrictive destination – limits on land ownership, limits on foreign ownership in education, media and public utilities, a ban on exploitation of natural resources and prohibitions on the practice of foreign professionals.

   In the hope that riding the tide of free trade would result to more investments in the country, the Philippines was among the first in the ASEAN to embrace liberalization under the auspices of the World Trade Organization. We opened up our economy to a slew of imports at most favored nation tariff rates. Unfortunately, we were not able to attract foreign investors to produce in the country despite our large population base. Our high costs of production, political instability and reduced import restrictions resulted in our being bypassed by the flood of global ventures. The restrictive provisions of the constitution could have been another – perhaps, even more fundamental – reason.

Indonesia and Vietnam have recently started to relax restrictions on foreign investment. To my understanding, though, their ability to do so is through policy rather than constitutional reform. Surely, enabling legislation is needed but it is not necessary to tinker with the 1945 constitution of Indonesia, for example. The Communist Party of Vietnam, on the other hand, has been able to smoothly transition its constitution as a socialist nation. 

How much of the economy, then, should be restricted under the Philippine Constitution? In my opinion, this should be less than more. Managing the economy in line with the sovereignity of the nation should be left to the government. We should refrain from well-meaning shackles that limit our ability to pursue prosperity for the Filipino. To thrive and be competitive in the community of nations, the Constitution should empower government and the people, not limit their aspirations.

Having said that, it is unfortunate that the trust of the people in the ability of government to do right by the nation is lacking. That is probably why we need to fall back on the constitution to preserve our future.

As the debate on economic reform moves into high gear, I think we need to consider how we can unlock and harness the aspirations of the Filipinos and entrust ourselves to duly protect our national interests. The constitution, after all, defines us as a country and a people.

I believe we can liberalize our media, education, public utilities, professional practice and natural resources with the aim of enhancing economic development  and our ability to rise in the global value chain. Ultimately, this will amount to a better quality of life for Filipinos. We should not, however, surrender our vigilance over national interests, in the same way that every other country does. Adequate safeguards should be put in place to arrest abuse and disregard for our sovereign rights.

Economic charter change is worth discussing. We are entitled to a better future and we have to chart it with eyes wide open.

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