WE support Speaker Feliciano Belmonte Jr.’s initiative to amend the provisions of the 1987 Constitution that bar foreigners from putting their money in the Philippine economy, except in cases where they are minority stockholders in corporations owned and controlled by Filipinos. We believe that, if it succeeds, this initiative will increase foreign direct investments (FDI) in the Philippines by at least fivefold and bring us, more or less, on a par with our better-performing Southeast Asian neighbors.
Though we denounce any bashing of the Philippines, right now the following numbers depress us: According to the August 2014 Association of Southeast Asian Nations (Asean) FDI statistic database, of the total FDI net inflow in the region in 2011, 2012 and 2013, which amounted to $334 billion, the Philippines received $8.5 billion, or 2.6 percent, of the total. This figure is superior to the Lao People’s Democratic Republic’s 0.3 percent, Cambodia’s 1.6 percent and Myanmar’s 2.1 percent, but inferior to Vietnam’s 7.3 percent, Malaysia’s 10 percent, Thailand’s 10.6 percent, Indonesia’s 15.1 percent and Singapore’s 49.6 percent. Brunei Darussalam received 0.7 percent, but it hardly needs FDI.
It has been this way for the last 40 years.
Those opposed to constitutional amendments say the Constitution has nothing to do with our dismal performance in attracting FDI. Things that impede the flow of FDI include the lack of infrastructure, inconsistent regulatory practices (like our disregard of bidding rules that we ourselves have set up), and even shortsighted and amateurish foreign relations (like refusing to apologize for a mistake, on the ground that only one person did it).
They have a point there, but still, despite the President’s travels around the world and his efforts to invite foreigners to invest in the Philippines, the favorable grades from credit-rating agencies, and the pronouncements by some pundits that we are the best economic performer in Asia and will continue to be so in the next few years, things have not turned around for us. Those trips, carried out at enormous expense, yielded near-zero results; and those ratings and pronouncements are not much more than hot air.
Constitutional restrictions do have a bearing on our mediocre ability to attract foreign investment. As far as can be ascertained, our country is the only Asean member that has constitutional prohibitions on foreign investments.
Can’t we do any better in attracting FDI? Yes, we can—by getting rid of the restrictive provisions of our Constitution, as Belmonte proposes to do.
At this juncture, we pause to answer the “nationalistic” argument: that foreign investors are out there, ready to jump on us and exploit us the moment we lift the constitutional restrictions. This argument has got it all wrong: Foreign investors are not ready to pounce on us. There are only foreign investors looking around for opportunities to make money. They will go to where the opportunities abound; and certainly not in countries that are inhospitable to them, especially as there are many other countries competing with each other to welcome them with open arms.
We hope Belmonte gets all the support he needs. If he succeeds on this initiative, it can serve as a defining moment of his speakership.
Image credits: Jimbo Albano