• Amend the Constitution to attract more FDI?


    Will we suddenly become the darling destination of foreign direct investments (FDIs) if we amend our Constitution to remove its 40 percent limit to foreign ownership of land and mines and its limitations to alien ownership in certain sectors, like public utilities?

    Apparently not.

    The latest United Nations Conference on Trade and Development (UNCTAD)’s World Investment Prospects Survey, (this is for 2013-2015), tells us that transnational corporations (TNCs) are more concerned about a country’s corporate tax regime and its being regionally integrated than other issues. The latter obviously because it means the foreign investor would be able to make more money from exporting its products made in the host country.

    Many negative factors deter investors, according to the UNCTAD survey. The most negative of these factors to foreigners considering a country as a major investment destination are (1) terrorist threat concerns, (2) rising trade protectionism, (3) commodity price volatility (threats of inflation, in other words), (tied with) national disasters and pandemics and energy security concerns.

    Of all the countries of the world China is the most desired investment destination. The Philippines is tied with Turkey and Hong Kong as No. 19 choice for foreign direct investment.

    Among the developed economies the United States is No. 2 over all (under China). Germany among the developed economies is No. 2 (under the US) but No. 5 as overall FDI destination choice.

    Whether a country has laws restricting foreigners from being owners of certain businesses and industries apparently has little to do with investors choosing that country.

    PH already most liberal to foreigners
    The Philippines, for all the constitutional restrictions and laws on foreign ownership, has proved to be most liberal to foreigners who know how to go around these laws by cleverly layered corporate ownership.

    This has been most successfully done by the Indonesian-Chinese Mr. Anthoni Salim, who owns the many Philippine companies that his employee—and partner, the wizard of finance and corporate organization Mr. Manuel V. Pangilinan, has managed to arrange for Mr. Salim to own and/or control. Among such companies are the Manila Electric Company, the Philippine Long Distance Company and its subsidiary Smart, Maynilad Water, the newspapers BusinessWorld and Philippine Star and others that now belong to the Salim Empire.

    It is therefore a big lie – “the biggest lie about Cha-cha,” according to our columnist, Atty. Brigido Dulay—that the Constitution must be amended to correct the anomaly of our country getting very very little foreign direct investment compared to China, Vietnam, Thailand, Indonesia and Malaysia.

    But why then are there lawmakers in both the House and the Senate and media people campaigning hard for a Cha-cha to effect these amendments?

    Why, as Atty. Dulay asks, are they “foisting the biggest lie on the Filipino people: that removing the 40 percent cap on the foreign ownership of land, natural resources and certain industries will bring a deluge of foreign direct investment (FDI) that will spur the country’s economic growth.”

    Indeed this is a “false and flawed formula that’s been debunked in numerous surveys and studies by renowned global institutions,” says Atty. Dulay, other than the UNCTAD survey we discussed above.

    These surveys show that FDI owners who have gone to our fellow Asean-member countries are attracted to those countries because of their industrial productivity. These prove to them that these countries have high quality labor and the business environment that make efficient manufacturing possible.

    Prosperity and the RH Law
    Another attraction is the prosperity of the general population—unlike us whose massive poverty can be seen in the child-prostitutes and beggars. Our government is trying to cure this by passing a Reproductive Health Law that will cost about P29 billion a year—instead of using that money to create employment opportunities to solve the poverty problem.

    Perhaps the RH Law will even turn off alien investors who will see in its being a priority that this country must be governed by absolute idiots who cannot appreciate the economic power that a large population—if cared for well—represents.


    Please follow our commenting guidelines.

    1 Comment

    1. Since we protect our industries from foreigners thru our 60-40 law, foreign investors can only enter our economy thru:

      -Joint venture with the government (e.g., the defunct and corruption-riddled National Broadband deal).
      -partnership with Filipinos or Filipino companies who must own at least 60% of the company.
      -Financing and technical schemes (e.g., oil industry)

      So, the question is: What kind of investors does RP attract?

      -the Chinese government (NBN)
      -the Chinese oligarchs who are willing to bribe politicians (the gambling tycoons from HK and China)
      -foreign investors who are willing to bribe politicians (Piatco deal and the recent $30 million MRT extort under Aquino’s term)
      -foreign investors who are willing to use dummies and exploit our foreign investment laws

      Yes, we attract foreign investors who are bold and crazy enough to use dummies and exploit our protectionist laws.

      we don’t attract the best and most compassionate foreign corporations. Instead, we attract corrupt, stingy corporations who are willing to circumvent our laws and to bribe our politicians.

      Why blame or chastise Indonesia’s Salim family when they’re merely one of the creations or beneficiaries of our protectionist laws….?

      21 of 33 sectors in Philippines are under strict 60/40 equity and no foreign equity provision in Constitution according to World Bank while remaining sectors may allow up to 100 percent ownership but they are not allowed to invest here or they are complied to 60/40 equity, if they didn´t meet requirements by FIA of 1991 and retail trade liberalization act of 2000.