Leaders of various political groups and power blocs crossed party lines in the House of Representatives on Tuesday to back Speaker Lord Allan Velasco’s resolution giving Congress the flexibility to amend the restrictive economic provisions in the 1987 Constitution in order to attract more foreign investments.
“There is a strong and united consensus among political leaders in the House to back Speaker Velasco’s initiative towards liberalizing the economic provisions in the Constitution,” Deputy Speaker and Bagong Henerasyon Rep. Bernadette Herrera said after emerging from a hybrid meeting called by Velasco on the proposed Charter amendments.
Also physically present at the meeting were Deputy Speakers Mikee Romero (1-PACMAN Party-list), Kristine Singson Meehan (Ilocos Sur, 2nd District) and Wes Gatchalian (Valenzuela City, 1st District); and Reps. Mark Enverga (Quezon, 1st District), Kit Belmonte (Quezon City, 6th District), Francisco Benitez (Negros Occidental, 3rd District), and Alfredo Garbin Jr. (Ako Bicol Party-list).
The lawmakers present via teleconferencing were Deputy Speakers Doy
Leachon (Oriental Mindoro, 1st District), Roberto Puno (Antipolo City, 1st District), Munir Arbison (Sulu, 2nd District) and Eric Martinez (Valenzuela City, 2nd District); Majority Leader Ferdinand Martin Romualdez (Leyte, 1st District); Minority Leader Joseph Stephen Paduano (Abang Lingkod Party-list); and Reps. Mikey Arroyo (Pampanga, 2nd District), Isidro Ungab (Davao City, 3rd District), Robert Ace Barbers (Surigao del Norte, 2nd District), Michael John Duavit (Rizal, 1st District), Joet Garcia (Bataan, 2nd District), Rommel Angara (Aurora), Franz Alvarez (Palawan, 1st District), Eileen Ermita-Buhain (Batangas, 1st District), Sharon Garin (AAMBIS-OWA) and Stella Quimbo (Marikina City, 2nd District).
The lawmakers represent major political parties and blocs in the House, namely, PDP-Laban, Nacionalist People’s Coalition, Nacionalista Party, National Unity Party, Lakas-NUCD, Hugpong ng Pagbabago, Liberal Party, and Party-list Coalition Foundation Inc.
The meeting took place a day before the House Committee on Constitutional Amendments, chaired by Garbin, resumes its hearing on Resolution of Both Houses No. 2 (RBH 2), which Velasco filed at the start of the 18th Congress in July 2019.
RBH 2 specifically aims to amend certain economic provisions of the almost 34-year-old Charter, particularly Articles XII (National Patrimony and Economy), XIV (Education, Science, Technology, Arts, Culture and Sports) and XVI (General Provisions).
The measure seeks to insert the phrase “unless otherwise provided by law” to several sections of the Constitution, which restrict foreign ownership of land, natural resources, public utilities, educational institutions, media and advertising.
It provides that by a vote of three-fourths of all its members, the Senate and the House of Representatives voting separately could propose amendments to the economic provisions of the basic law of the land.
Garbin said that the proposed amendments will be limited to the economic provisions in light of the damaging effects of the COVID-19 pandemic to the Philippine economy.
He said the slight change in the Constitution’s language will help “improve the investment climate and generate much-needed investments and jobs to offset the devastating economic impact of the pandemic.”
According to Singson-Meehan, the pandemic highlighted the country’s limited inflow of funds because of the economic restrictions stated within the Constitution.
Singson-Meehan noted that among Asian countries, the Philippines had the lowest foreign direct investments in 2020.
“The pandemic hit economies around the world, but we were among those whose economy suffered greatly as we struggled with inflow of funds,” she pointed out.
“We still have a long journey ahead of us in terms of recovering from the pandemic, as such there is an urgent need to address this restrictive provisions in the Constitution now.”
FDIs are job-generating investments that impact the domestic economy.
More FDIs mean more job opportunities for Filipinos.
The country’s FDI inflows have been on a decline since 2019. FDIs from January to November 2019 amounted to US$6.4 billion, 30 percent lower than the US$9.2 billion recorded in the same period in 2018.
According to the Philippine Statistics Authority, total foreign investments approved in the third quarter of 2020 amounted to only P31 billion, which is 83 percent lower than in the same period in 2019.
Article XII, Section 11 of the 1987 Constitution states that no franchise of a public utility shall be granted except to citizens of the Philippines, or at least 60 percent of capital is owned by Filipinos.
Deputy Speaker and Cagayan de Oro City 2nd District Representative Rufus Rodriguez said that Congress will introduce a specific line to liberalize this economic provision.
“We are going to add the phrase ‘unless otherwise provided by law’.
That’s it. We are not taking away the restrictions; those will still be there,”explained the former chair of the Committee on Constitutional Amendments.
This amendment, he added, will have to go through a plebiscite, and “if voted upon by the public, it will be up to the next congressional leadership to introduce the specific laws to open public utility ownership to foreign entities.”
An opposition lawmaker, however, said that there is no need to tamper with the nationalistic economic provisions of the Constitution because even foreign investors who will benefit from such amendments are not even asking for the lifting of so-called “restrictive provisions” in the Charter.
At the same time, Albay Rep. Edcel Lagman said the House of Representatives and the Senate can not merely jointly pass a measure inserting the phrase “unless otherwise provided by law” in such provisions of the Constitution.
Resolution of Both Houses 2 that proposes amendments to the economic provisions of the Constitution authorizes the Congress to make amendments by legislation, he said.
“This is in violation of the limited amendatory procedure prescribed in Article XVII of the 1987 Constitution,” Lagman added.
Lagman issued the statement as the House committee on constitutional amendments, chaired by Ako-Bicol Rep. Alfredo Garbin, Jr. will begin today its deliberations o the Constitution’s economic provisions as he maintained that the committee will limit itself economically to Cha-Cha.
“Proof of that is the fact that there is only one item on the agenda: Speaker Lord Allan Velasco’s Resolution of Both Houses 2, which seeks to add the phrase ‘unless otherwise provided by law’ in the Charter’s restrictive economic provisions,” Garbin said.
“That will give Congress the power to alter the restrictions to attract foreign investments when the country’s economic situation requires it,” he said.
In compliance with the Speaker’s instruction, Garbin said his committee will not tackle nor entertain any political amendment proposal.
“We want to endorse the resolution and the change it proposes as soon as possible. That will be another move that will prove the doubters wrong,” he added.
Invited to tomorrow’s virtual hearing starting at 10 in the morning are two former National Economic and Development Authority chiefs, Gerardo Sicat and Ernesto Pernia, Dr. Raul Fabella of UP School of Economics, Jose Enrique Africa of Ibon Foundation, and Calixto Chikiamco and Gary Olivar of Foundation for Economic Reform. Speaker Velasco has assured the public that discussions on economic Cha-cha “will be transparent and fair.”
He said his resolution “seeks to liberalize the restrictive economic provisions in the Constitution that prevent us from becoming fully competitive with our Asian neighbors.”
“We are proposing to amend Sections 2, 3, 7, 10 and 11 of Article XII (National Patrimony and Economy), Section 4 of Article XIV (Education, Science and Technology, Arts, Culture and Sports) and Section 11 of Article XVI (General Provisions) to add the phrase ‘unless otherwise provided by law.’ The addition of this phrase will allow Congress to enact laws to free up the economy to foreign investors, or maintain the status quo,” he said.
But according to Lagman, “the omnibus and boundless phrase 'unless”©otherwise provided by law' is an infirm proposal because it vests on the Congress real power to amend the Constitution as a lawmaking body instead of a Constituent Assembly, Constitutional Convention or People’s Initiative.”
“Any proposed alienation of the nationality provisions in the Constitution on restricted foreign capital investment in sensitive industries as well as in land acquisition and ban on media ownership, among others, must be specific and complete for the consideration of a Constituent Assembly or Constitutional Convention, and the eventual ratification by the people who must be clearly informed of the parameters of the proposed amendments,” Lagman added in a statement.
“It should not be left to the Congress as a legislature to exercise blanket authority to subsequently fill in the blanks or provide the details of the amendments to the economic provisions.”
He also said the lifting of the nationalistic provisions is not needed because even the prospective foreign investors do not clamor for the removal of the so-called “restrictive” provisions.
“Various studies, including those of the United Nations Conference on Trade and Development, the Organization for Economic Cooperation and Development and the World Bank, show that the following factors principally determine the entry of foreign direct investments (FDIs): (1) ease of doing business, (2) adequacy and quality of infrastructure, (3) predictability of government policies, (4) government stability, (5) cost of power, (6) internet speed, (7) incidence of corruption, (8) transparency in public procurement, and (9) labor skills and wages.”
Lagman added: “Removal or liberalization of the citizenship requirements in the Constitution is not one of the principal determinants for encouraging foreign investments.”
Assistant Majority Leader and Quezon City Rep. Alfred Vargas welcomed the chamber's move to revive its deliberations on economic Cha-cha, stressing that foreign investments will be needed to sustain the country’s pandemic recovery efforts.
“We need to address the provisions that restrict foreign investment in our country. The bottomline is, close to 11 million Filipinos have lost their jobs. We have limited resources, and we cannot continue to rely on foreign debt to tide us over. Foreign investments will be crucial in our recovery,” Vargas said.
Vargas, chair of the House social services committee, said the country stands to benefit from easing restrictions that limit the participation of foreign investors, especially as FDIs have been proven to be more resilient to economic uncertainties and financial crises.
FDIs would be instrumental in jumpstarting massive job-generating sectors such as manufacturing, infrastructure development, and agriculture, and would spur countryside growth, said Vargas.
He added that more FDIs would result in key technology and knowledge transfer, besides contributing to human capital development through employee training.
Profits generated by FDIs would also be another source of revenue through corporate taxes, he also said.
The solon, however, urged the government to also address other areas that hamper foreign investments.
“Removing the restrictive economic provisions is only one aspect. There are various other areas that need improvement if we are to become a preferred destination for foreign investment,” said Vargas.
He said that the country should continue improving in the ease of doing business by streamlining procedures in starting a business, eliminating red tape and corruption, bringing down the cost of electricity and improving connectivity, and rectifying regulatory inconsistencies.
He lauded the administration for making significant strides in addressing these issues, noting that the Philippines jumped to 95th place from 124th in the previous year in the World Bank’s 2020 Ease of Doing Business Report.
Meanwhile, former Speaker Pantaleon Alvarez on Tuesday said that Charter change will not solve the devastating impacts of the Covid-19 pandemic.
Alvarez said the the Cha-cha movers should rethink its decision to tinker with the 1987 Constitution.
"Charter change proponents say Cha-cha will be a solution to the country’s economic problems, but I think it should be studied carefully because for me, I don’t see any solution in amending the Constitution," Alvarez, who used to be a Charter Change proponent, said in an interview.
He said Charter change — even if its a review of the Constitution's economic provisions — is "ill-timed" as the country is still dealing with the pandemic.
This, apart from the fact that election season is up on 2022.
“I am really thinking of it considering the time left. Remember, October this year will be the last day for filing of the certificates of candidacy and then after that, congressmen, local government units will be very busy. They will start campaigning for the elections and so to me, the timing is not good,” said Alvarez.
He also advised the Charter change proponents "to study the timing" of reviewing the so-called economic provisions of the Constitution. "We are in the middle of a pandemic. I think we have to focus on that problem instead of Charter Change," he said.
Alvarez admitted that he was then pushing for Charter Change to effect a federal form of government — as what President Duterte has been espousing.