The biggest lie about Cha-cha

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Pro-charter change (Cha-cha) legislators and advocates are so desperately trying to stir up a groundswell of public support that they’ve taken to 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.

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It’s a false and flawed formula that’s been debunked in numerous surveys and studies by renowned global institutions.

What matters most to foreign investors isn’t majority ownership but a host of other factors.

According to the United Nations Conference on Trade and Development (UNCTAD)’s World Investment Prospects Survey for 2013-2015, for instance, transnational corporations are more concerned about a country’s corporate tax regime and process of regional integration that would facilitate access to regional markets.

Another recent study on FDI inflows to Asean member-states revealed that foreign investors are attracted by a country’s high manufacturing output since that would indicate the presence of quality capital and labor that can support production.

The same study also showed that a country’s consumer income is crucial to enticing would-be investors. Why? Because when consumer income increases, there’s a higher market demand as the number of customers increase. From the economic point of view, a higher consumer income means a growing economy where investors would be able to make the most of their investment in the country.

Truth is, foreign investors are deterred, not by our so-called “restrictive” ownership laws, but by our low per capita income and high labor, logistics and electricity costs, aggravated by excessive red tape and government regulation, flip-flopping rules and policies, and widespread corruption.

We also need not look far to disprove the myths being peddled by Cha-cha proponents.

China, for example, which PNoy cited as having similarly restrictive and tightly-regulated ownership laws, had an annual average FDI inflow of US$129-billion for the past 10 years.

On the other hand, the Philippines – which already allowed 100 percent foreign ownership of most business activities more than 13 years ago – only had an average yearly FDI of P1.5-billion since 2000.

The way we see it, the only foreign investors really interested in lifting the foreign ownership limits are those involved in the “extractive” industry, who are all probably salivating at the prospect of exploiting (and profiting from) our country’s oil, gas, mineral and other natural resources.

Trying to blunt public resistance to Cha-cha, however, House lawmakers claim the proposed amendments would not automatically remove ownership limits laid down by the Constitution since it merely involves the insertion of the phrase “unless provided by law,” which means Congress would still have to pass laws to lift the restrictions.

These pro-Cha-cha legislators must be taking us for fools.

Not only would the proposed “insertions” deprive Filipinos of their right to participate, decide and vote on any changes to the country’s charter, it would also reduce the fundamental law of the land into an ordinary piece of legislation that is amendable at the whim and caprice of a few legislators.

Perhaps what’s more alarming is that the insertions would leave the crucial decision of what industries to open to full foreign ownership solely in the hands of Congress. That, of course, means monopolizing millions of dollars in potential “lobby money” from special interest groups.

Why are we not surprised?

“Coco-lisap” menace
There’s a coconut insect infestation known as “coco-lisap” that’s plaguing the Southern Tagalog region. Already, more than 500,000 coconut trees have been destroyed by this pest. The speed with which the infestation has spread led many folks to believe that government was in its usual “clueless” state.

Agriculture Secretary Proceso Alcala assured us, however, that government wasn’t the problem.

In an interview in our radio show, “Karambola sa DWIZ (882AM),” Alcala disclosed that the coco-lisap epidemic actually started in Tanauan, Batangas, apparently from a mutated strain of the pest originating from Indonesia.

Early on, he directed Philippine Coconut Authority (PCA) field personnel to start disinfecting plantations as a precautionary measure but some farmers and lot owners refused to let them enter. So they’ve now asked Interior and Local Government Secretary Mar Roxas to let law enforcement officials intervene.

In addition, Alcala has started setting up checkpoints as far as Bicol so that coconut farmers in the region would not share the same fate of their counterparts in Calabarzon. He has also been sending out “quick-response teams” to isolated areas where there are reported infestations.

As Alcala puts it, “we just want to act fast to get rid of the problem.”

Given the coconut industry’s importance to our economy, we are relieved to hear that the

Agriculture Secretary is on top of the situation.

Let’s hope Alcala can get rid of the more dangerous “pests” in the agriculture sector—the smugglers of farm products like rice, pork, chicken, onion, etc.

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9 Comments

  1. I don’t believe this article. Its not about owning a land, its about 100% ownership of your own business which you invest. Would you invest in a business with only 40% for the investor and 60% for a filipino partner? Unlike Singapore, foreigners can own 100% of their business without owning the land, the success of Singapore should be a blue print for Cha-cha for PH to create more and more jobs and more competition for the oligrachs who controls mostly of the market. With more foreign businesses in PH, OFW’s will finally come home to PH to be with their families and will finally stop PH from importing overseas workers and laborers.

  2. Its not about owning a land, its about 100% ownership of your own business which you invest. Would you invest in a business with only 40% for the investor and 60% for a filipino partner? Unlike Singapore, foreigners can own 100% of their business without owning the land, the success of Singapore should be a blue print for Cha-cha for PH to create more and more jobs and more competition for the oligrachs who controlling mostly of the market. With more foreign businesses in PH, OFW’s will finally come home to PH to be with their families and will finally stop PH from importing overseas workers and laborers.

  3. I don’t believe this article. Its not about owning a land, its about 100% ownership of your own business which you invest. Would you invest in a business with only 40% for the investor and 60% for a filipino partner? Unlike Singapore, foreigners can own 100% of their business without owning the land, the success of Singapore should be a blue print for Cha-cha for PH to create more and more jobs. And PH should not limit business only in manila but encourage to invest on other provinces to flourish and stop people from migrating to Cebu or Manila looking for jobs.

  4. 21 of 33 sectors in Philippines are under strict 60/40 equity and no foreign equity provisions 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.

    http://iab.worldbank.org/Data/Explore%20Economies/Philippines

    It means most of sectors are still subject to 60/40 and no foreign equity.

    High tax rate is caused by over spending of government and protectionism which restricts the tax base.

    China doesn´t allow land ownership on its locals and foreigners but allows 100 percent foreign business ownership.

    Power rate is very expensive in Philippines coz of limited numbers of power plants which produce smaller capacity of power output due to limited numbers of investors and businessmen(most of them are Pinoy Oligarchs), all thanks to 60/40 equity in publc utilities which stay away foreign investors who are under Energy sector and supposed to build more power plants. Remember more supply, lesser price.

    Red tape and corruption are issues for every developing country. Indonesia, Vietnam and Myanmar are more corrupt than Philippines but each of them has more FDIs..

  5. This is a false one as in China, nobody can own a land by themselves or freehold ownership in other words. In the Philippines, foreigners want 100% equity ownership legally because Filipino business partners cannot be trusted in committing commitments.

  6. Vincent Blas on

    The only lie here is the ARTICLE ITSELF

    The lifting of the 40% restrictions applies to the restriction of foreigners owning COMPANIES not LAND. Foreign investors are unable to come in, even if they wanted to, simply because once they invest in the country, they CAN’T OWN THEIR OWN BUSINESS. They instead need to look for a local partner to provide 60% of the required capital for the business. So who has that kind of money? The Oligarchs of course, so is it any wonder why the gap between the rich and poor in this country is widening into a great chasm?

    Unlike the Philippines, China ALLOWS foreign businesses to be foreign-owned. Yes, they can’t own land, but in China, NOBODY owns land, even their own citizens. They can only enter into lease-hold agreements, which results in a fair competitive environment, where their local companies have to compete with foreign entities in equal terms.

    They key point here is BUSSINESS OWNERSHIP, foreigners will invest in the country provided that we respect their RIGHT TO PROPERTY, it is NOT ABOUT LAND

    • agree with you sir, the author may have mistaken took the congress initiative on foreign business ownership. hayyys. its been so long that we need to change our constitution to adapt to the changes in this world

  7. apolonio reyes on

    In a Newsweek article decades ago, there was a European country where protestors placard shows “LESS TAX MORE JOBS” and reading your article, I believe this since MORE MONEY will be in the hands of the consumers and they can BUY MORE and the government will collect more hidden taxes.
    Let us begin by increasing the salaries of government employees, the biggest employer in our country, from the president down to the lowly janitors. This will give them more purchasing power, more hidden taxes to collect for the BIR and maybe less CORRUPTION as people with more money to spend is less inclined to be corrupt. Di ba ho , Sir Dodo ?

  8. You may be right in what you say but also giving foreigners the right to own the whole company is what should happen. Filipinos are allowed to own 100% in my country so its only fair we are allowed to own 100% in your country. Just like for the individual we should be allowed to own property in this country as you filipinos are in my country. It seems you want your cake & to eat your cake.