WE are encouraged by the action of the House of Representatives earlier this week in quickly passing the so-called economic cha-cha (charter change) bill, formally called Resolution of Both Houses 1 (RBH-1), through its second reading. This advances the charter change measure one step farther in the legislative process than it has ever reached before, and improves the chances – if only very slightly – that the constitutional amendment will become a reality.
RBH-1, which was co-authored by Speaker Feliciano Belmonte Jr. and Sen. Ralph Recto, seeks to enable the removal of constitutional restrictions on foreign ownership of Philippine businesses and property mainly through the insertion of the phrase “unless provided by law” into the relevant provisions of the Constitution.
Business groups, economic analysts, and an embarrassingly large number of potential foreign partners in both the government and private sectors regularly cite restrictions on foreign investment as the biggest obstacle to economic progress in the Philippines. Support for the measure is widespread among Filipino businesses, even with the full knowledge that liberalizing investment will increase competition in many industries – including, we must note, the print and broadcast media.
Approaching liberalization in the way RBH-1 proposes is the most sensible alternative; it does not actually lift existing restrictions, but simply authorizes their modification by ordinary laws that can be more easily amended to suit changing circumstances in the future. Liberalization can proceed at a manageable pace, giving Filipino businesses and consumers time to adjust.
Reality, unfortunately, dampens any optimism that Congress will prioritize good sense over political maneuvering and pass the measure on its all-important third reading. The passage of RBH-1 on its second reading without a single objection, not even from the left-leaning party-list groups who are traditionally strongly opposed to liberalization, might be a hint of the sort of grandstanding we can expect to see from cha-cha advocates and opponents when the third reading takes place (no schedule has been set for it yet). In this week’s session, the representatives in attendance seemed to be saving their energy for the show that will take place in front of the full House and extensive media coverage.
And there are definite risks to liberalization that must be acknowledged. The benefits will not be uniform; foreign investment will create new businesses and jobs, but some other businesses and jobs will be lost. Ordinary Filipinos may feel other adverse effects, such as fluctuating consumer prices. A more liberal investment environment also creates new opportunities for corruption and abuse.
The solution to all those risks is simply proper governance and management, but the fact that government has too often shown a less than comprehensive grasp of those concepts should not be a deterrent. Institutional performance needs to improve whether there are increased foreign investments or not, but it will improve faster if it is rewarded with increasing investments.
President Aquino’s presidency has achieved very little. The only solid accomplishments are in education, where the classroom shortage has apparently been solved and, the laudable implementation of the K-to-12 basic education system for the past five years has been bringing us closer to the global standard. But advancing the “economic cha-cha” measure to at least the point where the required plebiscite can be conducted could easily become another Aquino regime accomplishment. We suggest that the President and his allies and opponents alike not let the opportunity escape.
But don’t let foreign ownership lead to more poverty
A great fear of a large part of our population is that making the Philippines more open to foreign investors will only make the Filipino poor poorer, while the rich continue to be richer.
One of the most worrisome aspects of allowing non-Filipinos to become sole owners of real estate is that it might make owning homes even more prohibitive than it is now for the 50% of our population who are poor and only barely non-poor.
As in Singapore, a government program to make every family a homeowner must be launched here, properly funded and managed.