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?
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.