Despite the Philippines’ obvious and dire need for Foreign Direct Investments (FDIs)—especially given the scarcity of domestic long-term capital due to our low savings rate and high debt-to-GDP ratio—we still hear voices echoing President Quezon’s infamous words: “I prefer a Philippines run like hell by Filipinos to one run like heaven by Americans.” Some economists still question the importance of FDIs in helping the BBM Administration achieve its laudable goals: attaining annual GDP growth as high as eight percent and reducing the poverty rate to a single digit by 2028.

For this reason, I was very glad to read a rejoinder from the Foundation for Economic Freedom, Inc. (FEF) to a UP School of Economics Discussion Paper. While the UP paper objected to the Lower House's current moves to amend restrictive provisions in the 1987 Constitution (moves I also object to, though for different reasons), it unfortunately ended up throwing cold water on President BBM’s admirable efforts to attract FDIs across the developed world.

I have a personal stake in this debate—specifically on whether FDIs are essential to attaining First World status in the next two decades. I have spent more than forty years of my professional life traveling the globe to promote FDIs into the Philippines through private-sector "road shows," much like President BBM is doing now.

It was always an uphill climb. For most of the last forty years, the Philippines was known as the “sick man of Asia.” To make matters worse, we faced various restrictions against FDIs, particularly after they were enshrined in the 1987 Constitution. I can attest that when foreigners listed their reasons for hesitating to invest, alongside red tape and corruption, there was always the complaint that they could not own a majority share in large-scale investments like infrastructure, power plants, and telecom facilities.

Foreign ownership has always been a sticking point, especially following the FRAPORT scandal at the Manila International Airport. From these personal experiences, no sophisticated multiple regression analysis will convince me that foreign ownership is not a primary issue. Over the last decade, the feedback in these road shows has been consistent: investors are flocking to Vietnam not just because of lower energy costs and wages, but because foreigners can own 100% equity in practically all large-scale investments. I am convinced that Vietnam overtook us in per capita income in 2020 largely due to these FDI-friendly policies.

It is unfortunate that the tenor of the UP paper deteriorated from merely objecting to "Cha-Cha" (Charter Change) under current circumstances to a general lukewarmness toward FDIs. I fully agree with the FEF’s rejoinder:

“[The UP paper] fails to take into consideration the long history of anti-foreign direct investment (FDI) policies in our 1935, 1973, and 1987 Constitutions, which all espoused the protectionist economic model... Given the state of our economy vis-à-vis our neighbors who have taken a more liberal route, the model has clearly failed.”

The FEF is a public advisory advocacy organization dedicated to economic and political literacy, good governance, secure property rights, and market-oriented reforms. It is composed of professionals and academics who defend free enterprise and the principle of subsidiarity—the idea that what can be accomplished efficiently by individuals and small groups should not be taken over by a higher body, least of all an all-powerful State. In practical terms, it defines freedom as the ability to purchase land for crops, secure well-paying jobs, expand small businesses, or develop technology to address climate change.

The FEF has been instrumental in several "game-changing" measures:

- Republic Act No. 11659: Amends the 86-year-old Public Services Act, opening telecommunications, expressways, airports, and shipping to 100% foreign ownership.

- Republic Act 10023: Allows Filipinos to receive free patents on residential lands without a land title, removing expensive court processes.

- Support for Liberalization: The FEF has backed the Rice Tariffication Law, Open Skies Policy, and the CREATE Act, among others.

While the UP paper relies on data models, the FEF points to real-world results. For example, the renewable energy (RE) sector saw a massive boost once it was opened to 100% foreign equity. According to Undersecretary of Energy Sharon Garin, Bloomberg now identifies the Philippines as the fourth-biggest destination for RE investments and the "darling" of the industry.

The multiplier effects here are significant. We are looking at potential investments in manufacturing wind turbines and solar panels for both domestic use and export. To support this, ten seaports must be developed to transport and build these heavy components. The primary beneficiary will be the planned Luzon Economic Corridor connecting the ports of Batangas, Manila, Clark, and Subic Bay, alongside international ports in Iloilo and Cagayan de Oro.

To be continued.