MANILA, Philippines – Former President Fidel Ramos called for changes in the Philippine Constitution to allow more foreign investments to flow in.
At the Arangkada Philippines Forum on Tuesday, February 25, Ramos talked about the inaccuracy of some of the provisions of the 1987 Constitution such as the one on foreign ownership.
The Philippines limits foreign ownership of land and public utilities, among others, to 40%, while Filipino investors take in the remaining 60%.
“Historically, Filipinos have opposed constitutional change. But my dear friends, we have to amend the 1987 Philippine Constitution to be more in sync with the development we’re trying to achieve,” said Ramos.
However, changing the charter is not the Aquino administration’s priority.
“It’s a constitutional provision that has to be changed. The question is will there be charter change under the current President or not. That still remains to be seen because according to the President that’s not one of his priorities right now,” said House Deputy Speaker Lorenzo Tañada III, who was also guest speaker at the forum.
Charter change has been backed by Senate President Juan Ponce Enrile and House Speaker Feliciano Belmonte. The two even went to Malacañang to convince President Benigno Aquino III on the merits of lifting the 40% foreign ownership cap.
But Aquino shot down their proposal. He said it was not his priority and he was “not so sure it’s the right route to take.”
He said the Philippines has enjoyed strong economic growth even without charter change.
“The Americans have a saying: Don’t fix what ain’t broke,” he said.
SC ruling
Concerns were also raised over a Supreme Court ruling putting a cap on foreign ownership of both voting and non-voting shares of local companies.
Some sectors believe the ruling does not help the country’s efforts to attract foreign investments.
According to Eduardo Francisco, president of BDO Capital Investment, a new Securities and Exchange Commission (SEC) memorandum on the issue would come out soon.
“It looks like there’s going to be a new draft coming out. It’s not perfect but it will address these issues so it will address the concern of foreign investors doing business here,” he said.
The SEC earlier said it might release final rules to comply with the SC decision on foreign ownership by June.
FDI inflows
The limitations have affected foreign direct investment (FDI) inflows, said some officials. According to the Bangko Sentral ng Pilipinas, net FDI inflows amounted to $1.2 billion as of end-November 2012, up by a measly 1.1% from the same period of 2011.
Former Finance Secretary Roberto de Ocampo said, “one billion dollars is not something to breast-beat about. Figure is dwarfed by Indonesia’s $18 billion.”
There has been a growing call from investors for government to ease the foreign ownership law.
“We need more foreign investment. Congress passed the Renewable Energy Act but the Department of Energy imposed foreign ownership restrictions. If you’re trying to build a power plant why does the foreign contractor have to get 60% Filipino partner?” said Ray Cunningham, first vice president for Business Development at Aboitiz Power Corp.
“We want to do everything we can to allow foreign investment of expertise. The investment clause in the Constitution impedes the development of investment in the country,” he added.
Donald Felbaum, managing director of OPTEL Ltd., echoed Cunningham’s sentiment. “We’re handicapped by the 60-40 foreign equity rule,” he said.
Foreign investors particularly from Japan and Korea are still looking at the Philippines though because of the performance of the economy, said De Ocampo.
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Source: Aya Lowe and Rappler, 27 February 2013
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