Marcos urged to harness economic reforms’ potential instead of ‘Cha-cha’ push

President Ferdinand R. Marcos, Jr.’s allies in Congress are again pushing for “Cha-cha,” which is typically revived by lawmakers every year. — PHILIPPINE STAR/KRIZ JOHN ROSALES

By Kyle Aristophere T. Atienza, Reporter

PHILIPPINE President Ferdinand R. Marcos, Jr. should work on food security, boost the quality of education and healthcare while improving governance to attract foreign investments instead of pushing for changes to the 1987 Constitution, which is a distraction, economists and legal experts said.

The Philippines already made amendments to its Commonwealth-era Public Service Act (PSA), limiting the definition of public utilities to allow full foreign ownership in key domestic sectors, Bernardo M. Villegas, one of the framers of the 1987 Constitution and professor emeritus at University of Asia and the Pacific, said in an e-mail.

“The amendment of the Public Service Act has already opened the most vital sectors in infrastructure (airports, railways, subways, tollways) to 100% foreign ownership,” he said, adding that full foreign ownership is also now allowed in the renewable energy sector.

The new PSA, signed by then-President Rodrigo R. Duterte in March 2022, also allows full foreign ownership in telecommunications and domestic shipping.

Mr. Villegas, who had supported moves to amend the Constitution before the passage of the amended PSA, noted that the remaining sectors not allowed for full foreign ownership such as education, media and advertising, are “not vital to high economic growth today.” 

The Philippines continues to limit land ownership to Filipino citizens and corporations that are at least 60% Filipino-owned as enshrined in the Constitution.

But Mr. Villegas said foreign investors who are considering large-scale agribusiness investments “do not need to own land.”

“They can lease the land long term as in the nucleus estate model of palm oil in Malaysia and Indonesia.”

Mr. Marcos’ allies in Congress are again pushing for Charter change (Cha-cha), which is typically revived by lawmakers every year.

The Philippine leader last month said efforts were underway to revisit the economic provisions of the 1987 Constitution and domestic laws as his administration seeks to make the country “an investment-friendly place.”

On Monday, Senate President Juan Miguel F. Zubiri said Mr. Marcos had asked the upper chamber to lead the review of the Constitution’s economic aspects, noting that the President views a supposed people’s initiative pushing for Cha-cha, which has been tainted with vote-buying allegations as “too divisive.”

“In this way, we can preserve our bicameral nature of legislation,” said Mr. Zubiri, who was previously cool on Cha-cha proposals.

The Senate president on Monday filed Resolution of Both Houses 6 proposing amendments to Articles 12, 14 and 16 of the charter.

Christian S. Monsod, who was also among the Charter’s framers, noted that the Philippine Development Plan for 2023 to 2028 didn’t even cite the need to amend the Charter to achieve the country’s economic goals and that Mr. Marcos has been able to secure investment pledges  — now worth over P700 billion — in his foreign trips without the condition from investors that the country needs to amend the Charter’s economic provisions.

Mr. Monsod, reacting to remarks that the Constitution “remains a hindrance” to FDIs, said the Charter never barred full foreign ownership in the manufacturing sector and noted that the domestic sector has not been a target of foreign investors due to issues not related to the constitution.

“Manufacturing companies in the country can be 100% foreign owned, so why didn’t they come?” he told ABS-CBN News Channel on Monday, citing investment concerns such as lack of public infrastructure.

Aside from the amended PSA, Mr. Monsod also cited a 2001 Electric Power Industry Reform law, which allows foreign ownership in electric generation, and a mining law that allows full foreign ownership in partnership with the government.

“Vietnam has already surpassed us in terms of manufacturing and agriculture, while Thailand has been reaping the benefits of its strong tourism campaign,” Emy Ruth S. Gianan, who teaches economics at the Polytechnic University of the Philippines, said in a Facebook Messenger chat, noting that ownership aspect is no longer the issue.

“There are already remedies made through legislation to open our economy for increased foreign investments. The PSA is a testament to that. Why are they not coming then?” she said.

“Not because of our ownership laws, but a confluence of various factors: for one, we need to upskill our labor force to effectively compete with our neighbors. Our supposed advantage as a strong English speaker is gradually overcome by tech-related skills and other specializations.”

‘VERY CONTROVERSIAL PROCESS’Mr. Bernardo said going through a “very controversial process” of Cha-cha will just distract the country from addressing pressing economic and development issues.

“To attract more FDI (foreign direct investments), we have to focus on removing red tape, inability to enforce right-of-way in construction projects, corruption especially at the lower levels of the Public Works department and among local government officials — issues which have nothing to do with ownership,” he said.

“The most urgent tasks facing the President are food security, the quality of public education and health services and improving governance.”

For the January-to-October period last year, FDI net inflows declined by 17.5% to $6.533 billion, central bank data showed.

Leonardo A. Lanzona, an economics professor at the Ateneo de Manila University, said the Constitution allows for varied legislative reforms that can boost foreign investments “while keeping its commitment to protecting the country’s interest.”

He cited the Retail Trade Liberalization Act, which allowed increased foreign participation in the domestic retail sector by lowering the minimum paid-up capital requirements for foreign retail enterprises.

“This move of changing the economic provisions of the Constitution is just another decoy for tampering with its political provisions,” he said.

Lawmakers including House Speaker Ferdinand Martin G. Romualdez, a cousin to Mr. Marcos, have been pitching Cha-cha as a way to boost FDI inflows into the Philippines, which slumped to the lowest level in over three years in September 2023.

“I propose that we think of amending the Constitution, which I admit is very imperfect, once our gross domestic product starts to grow at 8-10% and our poverty incidence is at a single-digit level (from its present 21%), which is the highest in East Asia,” Mr. Bernardo said.

Meanwhile, GlobalSource Partners Country Analyst Diwa C. Guinigundo said that simply amending the Constitution will not be able to address the country’s economic and political issues.

“True, as claimed by some legislators, it is within the prerogative of established democracies to change their fundamental laws to sustain their relevance to the changing times,” he said in a brief dated Jan. 15. “The issue in the Philippines is whether a constitutional amendment could address what sets back its politics and the economy.”

Mr. Guinigundo noted proposals to amend the form of government from presidential to parliamentary stands to benefit officials who are trying to avoid a national election.

“Running for parliamentary seats and gaining the support of majority of the members of parliament are easier routes to becoming head of the government than mounting a national election to win the presidency,” he added.

There have also been calls to amend the Constitution to extend term limits of incumbent elected officials.

“This is mostly frowned upon based on public reactions in the press and social media. Among others, this could be used to incentivize members of Congress who would sit as a constituent assembly to amend the Constitution based on some preconceived notion of Charter change,” Mr. Guinigundo added. — with Luisa Maria Jacinta C. Jocson