Fitch Solutions Country Risk and Industry Research, a unit of Fitch Group, is expecting long-term economic growth for the Philippines and an influx of foreign direct investments once the 1987 Constitution is amended.
The House of Representatives has already approved on final reading the creation of a body to propose amendments to the 1987 Constitution and lawmakers’ most immediate focus is to ease restrictions on foreign direct investment.
A total of 301 out of 314 lawmakers voted in favor for the charter change but the Senate has not yet acted on the initiative.
“While it is still early days in the process, any pro-business changes to the Philippines’ business environment would pose upside risks to our long-term growth forecast for the Philippines and in particular to investment,” Fitch Solutions said in a report Thursday.
It said the potential removal of restrictions on FDI could see overall investment pick up over the coming years.
“Historically, fixed capital formation accounted for an average of about 23 percent of GDP [2005-2022], and changes to legislation could see this ratio rise by several percentage points over the longer term,” Fitch Solutions said.
Fitch Solutions said the investment environment in the Philippines for foreigners has historically been challenging due to restrictive rules.
It cited as an example the 60-40 equity rule which states that only 40 percent of the business can be owned by a foreign investor.
These challenges are further reflected in the Organization forEconomic Cooperation and Development’s (OECD) foreign direct investment regulatory restrictiveness index which showed Philippines being ranked as the third-most restrictive out of the 84 countries in 2020.
Since the previous administration under President Duterte, the country has introduced an array of economic reforms to encourage FDI, which rose to about an estimated 3.0 percent of GDP in 2021.
The Marcos administration has also been proactive in wooing investments to the country and this, alongside the creation of a sovereign wealth fund, will also help to boost domestic investment, Fitch said.
“We expect the administration to continue to enact pro-investment reforms over the coming quarters, especially as the President has reaffirmed his ambitious plans to make the Philippines a prime destination for foreign investors,” Fitch Solutions said.
At a hearing of the Senate committee on constitutional amendments and revision of codes held in Baguio City, Davao del Norte Rep. Pantaleon Alvarez said government expenses could be kept down if a constitutional convention to amend the Constitution is held at the same time as the barangay and the 2025 midterm elections. (See full story online at manilastandard.net)
Alvarez said in case a convention is used to amend the charter, the plebiscite for the public to ratify the changes can be held during the midterm elections in March 2025.
According to computations from the National Economic and Development Authority, a plebiscite timed with the 2025 midterm elections would cost P837 million, as against P28.5 billion if it is held separately, Alvarez said.
On the other hand, if a constituent assembly will be chosen as the mode to amend the Constitution, and if the plebiscite is held along with barangay elections, the cost will come to only P46 million.
Held separately, the plebiscite would cost P13.9 billion.
Voting 301-6-1, the House of Representatives on Monday approved on third and final reading a resolution calling for a constitutional convention (con-con) that would propose amendments to the economic provisions of the 1987 Charter to create more jobs and generate income to support the pro-poor programs of the government.
Speaker Martin Romualdez, a principal author of the Resolution of Both Houses 6, lawmakers aim to limit the Charter rewriting initiative to the “restrictive” economic provisions of the basic law “in the hope that the changes would pave the way for the country to attract more foreign investments.”
“We need additional investments that would create more job and income opportunities for our people. We need increased capital to sustain our economic growth momentum,” he said.
Meanwhile, the Commission on Elections said it is ready if the election of delegates for the proposed constitutional convention coincides with the village and youth polls on Oct. 30.
But Comelec chairperson George Garcia noted the poll body would need an additional P3.8 billion for the printing of more ballots and bigger honoraria for electoral board members.
“We are prepared. We are ready provided that there should be a law calling for the elections of the delegates for the constitutional convention by April so we will be able to print the 67 million ballots by May and June,” he told the ANC news channel.