A recent publication by state think tank Philippine Institute for Development Studies (PIDS) argued that economic charter change could unlock the services sector’s immense potential in driving economic growth.
The study titled “Insights into Economic Charter Change and the Case for Services Reform”, authored by PIDS senior research fellow Ramonette Serafica, underscored the need for adaptable policies and government structures.
These include designing regulations that keep pace with the evolving global economy and changing consumer preferences. “By adopting adaptable policies and institutions, governments and stakeholders can capitalize on emerging trends, foster innovation, and enhance competitiveness,” she said.
Serafica noted the growing importance of the service sector. In 2020, it was the primary recipient of investment activity globally, accounting for 72 percent of total foreign direct investments (FDI).
The growth rate of services also continued to outperform that of manufacturing in both trade and investments in several countries in East Asia and the Pacific.
“This suggests that investors are recognizing the potential and opportunities in service-oriented industries leading to higher FDI inflows compared to traditional manufacturing industries,” she said.
One key area for reform identified by the PIDS study is the legislative franchise requirement. This requirement, rooted in colonial-era laws, necessitates a special government permit and imposes ownership limitations for businesses, particularly in telecommunications and information and communication technology (ICT) sectors, the study said.
This system increases business costs, creates unfair advantages and duplicates regulatory functions, it said.
She said the legislative franchise requirement is not common in other countries’ constitutions. The same may not be necessary, as an independent regulatory authority could make licensing decisions. Eliminating the legislative franchise requirement would streamline the process, reduce barriers and improve the overall business climate, the author said.
The study also called for revising the complete nationalization of mass media as stipulated in the 1987 Constitution. Only Filipino citizens or corporations with full Filipino ownership can participate in the industry. The PIDS study finds no justification for this restriction, arguing that it hinders growth and innovation in the media sector.
“The Constitution emphasizes a balanced flow of information, and respects freedom of speech and the press, but it does not provide a clear rationale for full nationalization of the mass media sector,” Serafica said.