Carpio hits 'lack of understanding' amid Cha-cha push to relax foreign ownership

Retired Supreme Court Senior Associate Justice Antonio Carpio on Monday said there seems to be a lack understanding among national leaders on the laws on foreign ownership in the Philippines amid the push to relax economic restrictions in the 1987 Constitution.

During the continuation of the Senate Subcommittee on Constitutional Amendments and Revision of Codes hearing on Resolution of Both Houses 6, Carpio noted that the Philippines has one of the most liberal foreign investment laws in the ASEAN and in Asia.

Even without amending the Charter, Carpio said the Philippines has passed several laws to open the economy to 100% foreign ownership, particularly the recently-amended Public Services Act, Retail Trade Liberalization Act.

"There appears to be a lack of understanding by our national leaders of the extent of foreign ownership under the law of businesses in our country," Carpio told the subcommittee.

He specifically mentioned President Ferdinand "Bongbong" Marcos Jr.'s interview with GMA Integrated News where the President initially expressed openness to the idea of amending the economic provisions of the Charter except for critical sectors.

"Power generation has always been open to 100 percent foreign ownership for the longest time...In an interview, President [Ferdinand] Marcos Jr. declared that he wants to open the economy to foreign investments and I quote, 'except in critical areas such as power generation,'" Carpio said.

"Our generation from coal, oil and gas plants has been opened to 100 percent foreign ownership for the longest time. The Supreme Court has also allowed 100 percent foreign ownership of power generation from dams or hydro power plants," he added.

Carpio also said the Department of Justice (DOJ) and the Department of Energy (DOE) under the Marcos administration have recently allowed 100% ownership of power generation from solar and wind through a "mere implementing guideline."

'False reasons'

He also criticized the individuals behind the current people's initiative, whom he said are blaming the restrictive economic provisions of the constitution for the economic situation of the Philippines.

"The proponents of the present people's initiative blame the restrictive economic provisions of the constitution for the low foreign direct investments, the high unemployment, and the slow economic growth of our country. These are all false reasons," Carpio said.

"We have to address the real causes. The real cause is not the Constitution. Nobody cares. The President has been going abroad and has been saying, 'I have secured almost P500 billion in foreign investment' and not one of those foreigners who plan to invest here required an amendment to our Constitution," he emphasized.

For Carpio, the real causes for the low foreign direct investments in the Philippines are the high cost of power, bureaucracy, and the infrastructure.

The retired justice pointed out that the Philippines has the highest power rate in ASEAN region and second to the highest power rate in Asia next to Japan.

"In manufacturing, energy accounts for at least 30 percent of your cost and if you locate your plant here in the Philippines, you cannot compete with your competitor in Vietnam because they have lower power rates. They will never come here in the Philippines," he said.

Comparing the bureaucratic process in other countries, Carpio said foreign investors would need to get permits from the barangay, mayor, national agencies, and specialized regulatory bodies in the Philippines. In China and in Vietnam, he said, foreign investors would only need to go to one office to secure the necessary documents.

Carpio also explained that foreign investors are not concerned about land ownership in the countries that they will invest in.

"You don't have to spend that much to use the land. You only need a 25-year lease and you don't want more than a 25-year lease because in 25 years, the labor situation might change. The labor in the Philippines could be more expensive than the next country. So, they don't want to buy land actually, [especially] foreign investors who are engaged in manufacturing," he said.

Concern

Senators Grace Poe and Senate Deputy Minority Leader Risa Hontiveros similarly expressed their concern over the proposals to relax foreign ownership in the 1987 Constitution.

Poe argued that the Philippines had been open to foreign investments and there were even recent efforts to liberalize the economy without risking the country's national security.

Hontiveros, for her part, pointed out that the Public Services Act allowed future Congresses to "give away" even critical utilities to state-owned foreign companies.

At the same hearing, two members of the 1986 Constitutional Commission warned against amending the economic provisions of the Charter.

Lawyer Rene Sarmiento and Dr. Bernardo Villegas raised their concerns during the Senate subcommittee hearing on the measure seeking to lift the 40% restriction on foreign ownership in advertising, education, and public utilities.

Sarmiento said revising Articles 12, 14, and 16 of the 1987 Constitution might set a "prairie fire" on other amendments to political and judicial provisions of the charter.

"Revising the economic provisions will be a spark that can start up a prairie fire of succeeding amendments concerning political, judicial, social justice and human rights provision...[It] can start up a prairie fire of more amendments in the future," Sarmiento warned.

For him, revising the economic provisions "will not be the midas touch that will unlock the economic prospects and promise of the Philippines."

"Much has been written and much has been said in and out of the Senate that what are needed to charm foreign investors to our country are timely and significant alternatives both legislative and executive initiatives to address a politicized bureaucracy, decline in the Philippine score in the Rule of Law Index, dismal level of reading comprehension of pupils that places the Philippines among the poorest in learning in East Asia and the Pacific, expensive electricity, slow internet, not enough seaports serving ships and others," he said.

He added that it is equally important to unlock the human potential and possibilities of Filipinos by further fleshing out the 26 social justice and human rights provisions of the charter so the country's economy can soar high.

For his part, Villegas said there is no need to amend the constitution, especially on the provisions on media, advertising, education, and ownership "at this stage of our development."

"If we open media, advertising, education, they will be literally chicken feed. They are not capital intensive and they will not impact on poverty as infrastructure, manufacturing, people, or IT have been. So it's clear that it is not time to have an amendment of the Constitution," Villegas said.

Villegas raised the need to prioritize "dehumanizing" poverty, agricultural productivity, food security, and improving the Gross National Product.

Further, he also said there are things that have been made possible already by the Public Services Act-- a law recently amended which effectively allowed 100% foreign ownership of public services such as telecommunications, railways, airlines, and logistical facilities as public services.

"I don't think we need to change at the moment. In the future, I may agree that probably, we should completely open all the rest but they are not critical. Therefore, I do not think that we need the [charter change] today," he said.

The Resolution of Both Houses 6  is still under deliberation by the Senate. The House of Representatives, for its part, has vowed to adopt the Senate version as soon as it is approved. —KBK/RSJ, GMA Integrated News