Focus on the economics

By: Edgar O. Chua

27 January 2018 – Early this week, the Makati Business Club, the Management Association of the Philippines, and the Financial Executives Institute of the Philippines issued a joint statement regarding the proposed amendments to the 1987 Constitution. The three groups stressed that any constitutional amendments should be, at this time, focused on addressing the restrictive economic provisions by including the phrase “unless otherwise provided by law” in some sections of Articles XII (national economy and patrimony), XIV (education, science and technology, arts, culture and sports), and XVI (general provisions).

The move to include the phrase in the proposed amendments does not automatically lift existing restrictions to the full liberalization of all sectors. What it does is give Congress and the President the ability to refine our economic policies to become more dynamic through the enactment of specific laws, and following proper rounds of stakeholder consultations.

This proposal will enable our country to better adjust and adapt to the ever-changing environment brought about by technology and globalization. Note that our close neighbors, such as Vietnam, continue to define and redefine their investment strategies, enabling them to attract quality foreign investments to flow into priority sectors and preferred locations. As a result, the annual foreign direct investments in the Philippines represents only 8 percent of the total FDIs in the Asean region, or just over $8 billion compared to Singapore’s FDI inflow of $53.9 billion and Vietnam’s $12.6 billion.

With the President’s 0+10 socioeconomic agenda, we are presented with a unique opportunity to significantly address the problems of poverty and unemployment.  The administration recognizes the wisdom of relaxing foreign ownership limitations on some key sectors that stand to benefit from the entry of foreign players in the market. In addition, there is a clear directive and strong resolve from the top on improving the business environment, reducing the cost of doing business in the Philippines, and driving business innovation. Thus, we need to focus on the economics and set aside political elements for now.

In the past several weeks, the nation has been hearing the opposing views between the Senate and the House of Representatives on the issue of a constitutional convention (Con-con) versus a constituent assembly (Con-ass) as the preferred mode in amending the Charter preparatory to the shift to federalism. But the public is left in the dark about what is being discussed in the first place, except for the term “federalism”! The details and implications of federalism are not at all clear, including the form, the states that will be formed, the time it will take to shift, and the cost of the shift, among others.

On whether the House and the Senate are to be treated separately or as one should a Con-ass be pursued, the three business groups offered the view that it would be more democratic for the two chambers to vote separately, as has been done on all legislation and according to the intent of the framers of the 1987 Constitution. And IF there is really overwhelming public interest in federalism, that the process would be best placed in the hands of a Con-con instead of our current elected officials, who are already quite busy focusing on legislation that will improve the economic conditions in our country.

A Con-con will offer a more diverse, independent and prospective approach to the process as the members of this body would be elected for the specific task of revising the Charter. The cost would be much higher, but this is the expected price of properly challenging the framework of any constitution. It cannot be done haphazardly.

We end the week on a more positive note. Thirteen months after the Consultative Committee (ConCom) was established under Executive Order No. 10, the President has appointed 19 of its 25 members and has named former chief justice Reynato Puno as its chair. This is a welcome development, and I look forward to a more thoughtful and engaging national discussion in the next six months.

Edgar O. Chua chairs the Makati Business Club.

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Posted on 27 January 2018 under Business Matters section of The Philippine Daily Inquirer

Tags: business, constitution, economy, edgar o chua, federalism, philippines, politics