Piecemeal Charter change seen to create jobs


AS Charter change continues to face stiff opposition and stir fears of term extensions for elected officials, House leaders see amending a number of existing laws to spur economic growth and generate jobs, especially in the countryside.

Rep. Romero Quimbo of Marikina , chairman of the House Committee on Ways and Means, noted that there are at least eight existing laws which could be amended while Charter change is yet to gain ground.

These are: the Foreign Investment Act, Condominium Law, Retail Trade Act, Rice and Corn Trade Act, Financing Company Act, Foreign Bank Real Estate Foreclosure, Investment Houses Law and FLAG Act.

Quimbo cited that the Foreign Investment Act can be amended to lower minimum paid-in capital for foreign equity, reducing foreign investment employment requirement, removing discrimination against foreign investors for Board of Investment incentives and removing divestiture requirement for foreign investors.

The Condominium Law, on the other hand, can be changed by broadening the definition of condominium to allow foreign ownership of the capital stock of horizontal condominiums industrial estates, tourism estates, and retirement villages, while the Public Service Act can be amended to define public utility and distinguish between ownership and operation.

Other amendments that can be done to existing laws include: reducing the threshold for foreign investment in the retail sector to the level in the Foreign Investments Act and to remove other restrictions in the law (under the Retail Trade Act), removing requirement from foreign-owned business company engaged in covered trading activity to divest 60 percent of equity to Filipinos (under Rice and Corn Trade Act), allowing 100-percent foreign investment (under Financing Company Act), allowing foreign banks to bid and take possession of land without transfer of title (under Foreign Bank Real Estate Foreclosure), allowing 100-percent foreign investment (under Investment Houses Law) and removing the 15 percent preference for Filipinos and Americans in awarding contracts for construction or repair of public works (under FLAG Act).

“It is really the laws that expanded the list of industries limiting foreign capital, not the Constitution. While Charter change remains at bay, there are a number of baby steps that we can take by changing a number of laws involving foreign companies to spur economic growth,” Quimbo said in an interview.

Under the Constitution, foreigners are only allowed to own 40 percent of businesses in the country, with 60 percent belonging to Filipinos.

House Deputy Majority Leader Sherwin Tugna of Citizens Battle Against Corruption agreed with Quimbo, saying that increased foreign capital in the country would surely create jobs.

Tugna then cited the case of American company Johnson and Johnson—a multinational medical devices, pharmaceutical and consumer packaged goods manufacturer—which used to manufacture in the Philippines but eventually left the country in early 2002 because of restrictions on land ownership.

“They used to have a manufacturing and distribution facility in Makati and in Laguna. They really invested a lot, and as a result, employed a lot of people. But when the time came that their lease contract on the land they rented expired, the Filipino owner of the land decided to charge them higher rates—something they found unreasonable,” Tugna, a lawyer, said in a separate talk.

As a result, Tugna lamented that the company moved to the Philippines ’ neighbor, Thailand.

“They found it hard to do business here because they cannot own the land and the amount [for lease]was too much for them. You can just imagine how many people lost their job when they pulled out. For Makati alone, they would have around 1,500 to 2,000 employees. And that is only a satellite office,” Tugna pointed out.

“Their move exemplifies how a foreign entity is not willing to take so much risk in putting their money here because of constraints in owning land and limiting their engagement to certain sectors,” Tugna added.

Tugna was referring to the Constitutional provision which prevents foreigners from owning public utilities such as media, advertising, water company and telecommunications, among others.

Tugna, however, clarified that the country needs greater foreign capital but not total foreign control of utilities.

For one, foreign car manufacturers can instantly generate jobs, considering that a single Toyota car has at least about 3,500 spare parts which are presently manufactured outside the country.

“When they [foreigners]come here [with increased capital because of amendments], it won’t be just BPO. They will manufacture milk, baby products, spare parts of vehicles, products for the consumption of the Filipinos and can also be exported to other countries,” Tugna said.

“With greater ownership, they will have more capital, and more capacity to employ more people. But that doesn’t mean that we should give them ownership. We can’t allow them to buy us out,” Tugna added.


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