Removing the foreign investment restrictions in the 1987 Constitution will prevent future judicial and regulatory challenges and will reduce uncertainty among multinational companies, a former finance secretary said.
Margarito B. Teves, a finance secretary under former president Gloria Macapagal Arroyo, in a letter to senators noted that the amendments to the Public Service law are facing two judicial challenges in the Supreme Court.
“There is a risk that the Supreme Court may declare that Congress has no power to define public utilities and render the reform unconstitutional," Teves said.
He also added that there is a possibility that the reform to liberalize renewable energy (RE) can be challenged if the restrictions in the Constitution are not removed.
“Since the reform, three foreign companies recently entered the offshore wind market promising 10,900-megawatt (MW) potential capacity. These judicial risks can give the impression to foreign investors that their investments can one day be at risk, thereby creating an environment of uncertainty," the former finance chief said.
The economic charter change will place the country’s foreign-investments legal framework in part with its Association of Southeast Asian Nations neighbors, Teves said, as the Philippines is the only country in the region where restrictions in foreign ownership are embodied in its Constitution.
"Outright removal of these restrictive economic provisions will open the sectors immediately. Nevertheless, Congress has the power and flexibility to impose appropriate limitations, restrictions, conditions for ownership or safety nets should circumstances warrant these adjustments without going through the long and difficult process of a constitutional amendment," he further said.
Teves also urged the Senate to lift the Constitutional restrictions on land and natural resources, and mass media.
"Removing restrictions on land ownership will provide an opportunity to use idle lands either for agricultural purposes or for business ventures will enable small landowners to earn from their land while creating livelihood opportunities in many parts of the country resulting in more widespread and balanced development,” he said
“This is particularly beneficial for idle lands in areas outside Metro Manila. These idle lands can be used for business or commercial purposes and help in regional growth," he added.
The current Resolution of Both Houses No. 7 or "RBH7" pending in the two chambers of Congress covers only advertising, education, and public utilities.
As for mass media, Teves emphasized that while other ASEAN countries also restrict foreign investors, "these are not enshrined in their constitutions but are embodied in laws or administrative orders, making them more flexible and easier to change in the future."
Teves likewise proposed to tweak the "Filipino First" provisions in the 1987 Constitution, particularly Article II, Section 19 into: "The State shall develop a self-reliant and independent national economy for the benefit of all Filipinos."
"Our proposal will help clarify that the overriding objective of control is not in terms of ownership but, more importantly, an economy that works for the interests and needs of all Filipinos," he explained.
Teves also proposed revising Article XII, Section 10 into: "...in the grant of rights privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified investors."
"The proposal is grounded on who can best serve the interest of the Filipino people, regardless of their nationality. Amending the wording of the declaration of principles will create consistency in future laws that Congress may enact, thereby removing the possibility of another constitutional challenge," he said.
Finance Secretary Ralph G. Recto earlier said that he supports the initiative of removing economic restrictions in the Constitution to further liberalize the economy.