Congress pushes Charter change

Belmonte, Enrile to Aquino: Lets do it

By Cathy C. Yamsuan
Philippine Daily Inquirer
12:40 am | Friday, July 20th, 2012 589 52

Senate President Juan Ponce Enrile

Senate President Juan Ponce Enrile is ready to engage President Benigno Aquino in a drinking spree if only to convince the Chief Executive that the time for Charter change has come. Enrile is evasive about details of economic provisions needing improvement or clarification that he and Speaker Feliciano Belmonte Jr. want to discuss with the President. Its up to me, Enrile repeatedly told reporters asking about the provisions at the Kapihan sa Senado forum on Thursday. However, the two leaders of Congress are apparently gearing for a bloody battle once Mr. Aquino is done with his State of the Nation Address on Monday. I do not pretend I can convince (him), Enrile said about meeting the President to discuss Charter change and its urgency. I will have a smoke with him. If need be, I will also have a drink with him, he added. The President is known as a heavy smoker but does not drink, unlike his two predecessors, Gloria Macapagal-Arroyo and Joseph Estrada. Enrile dismissed speculations that the President would be hesitant to give his nod to Charter change since it is one of the concrete legacies left by his mother, the late President Corazon Aquino. I dont pretend to read the minds of anyone. I present my case, I argue my case and I will try to make the other side understand and accept my case, said Enrile, who earned accolades for his role as presiding officer in the impeachment trial of ousted Chief Justice Renato Corona. 60-40 ratio There is, however, one particular provision that Enrile has trained his guns on: The 60-40 ratio that limits foreign ownership of certain businesses like public utilities. He said the plan was not to alter the ratio or control of assets in the Philippines. It is wrong to interpret that we will change the 60-40 (ratio). We are supporting the 60-40 rule but do not put it in the Constitution Let it be delegated to Congress so it can have flexibility to maintain or relax (the ratio) if there is a need for it, Enrile said. Article XII of the Constitution provides that Congress shall, upon recommendation of the economic and planning agency, when the national interest dictates, reserve to citizens of the Philippines or to

corporations or associations at least sixty per centum of whose capital is owned by such citizens, or such higher percentage as Congress may prescribe, certain areas of investments. It says Congress shall enact measures that will encourage the formation and operation of enterprises whose capital is wholly owned by Filipinos. In the grant of rights, privileges and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos, it says. The State, meanwhile, shall regulate and exercise authority over foreign investments within its national jurisdiction and in accordance with its national goals and priorities, the Constitution says. Opposition to Charter change Enrile said Congress would provide solutions to address issues where the 60-40 ratio is apparently an impediment. In certain areas of the economy, Congress would relax it. Congress in its wisdom may do so without abandoning the protection of Filipino interests. Its up to Congress to address it. Theres no danger there, he said. The Senate President lamented that some sectors were opposing the idea of Charter change even before the issue was properly studied. (The Charter change we plan) will not take long. If we really face this issue and grab it by the horns, it does not require too much time and blah-blah-blah, he told reporters. Enrile explained that those opposing Charter change were still in the dark over how Congress leaders would do it. Modified assembly He said the plan was to constitute Congress into a modified constituent assembly where the two chambers would separately debate and vote on proposed amendments in the form of resolutions. The Senate President said a constituent assembly involved less public funds because the current membership of the Senate and the House of Representatives would comprise it. By contrast, a constitutional commission, similar to that formed in the 1970s, would require an election of delegates, Enrile said. It was Senator Franklin Drilon who raised the possibility of convening Congress into a bicameral constituent assembly to effect Charter changes. Senator Miriam Defensor-Santiago, chairperson of the committee on constitutional amendments, was among the first to raise a howl over the proposal. Lobby groups Santiago was at it again on Thursday, warning that transforming Congress into a constituent assembly would raise suspicion among the people that legislators might be serving certain agenda under pressure from vested interests and other lobby groups. Certain politicians boast that even if the nation calls for a constitutional convention with elected delegates, the local politicians would be able to control who the delegates will be. That is hubris, unjustifiable pride of authority, Santiago said in a speech delivered at an event of the Girl Scouts of the Philippines Thursday morning. Limited to economy Enrile was quick to assuage Santiagos fears, saying he and Belmonte had agreed that they would not accommodate resolutions that have nothing to do with the economy. (Charter change) resolutions that will be filed in the House are supposed to be limited to (economic provisions). If someone attempts to sneak in something else, that resolution will not be passed. The same principle applies in the Senate, he said. Charter change critics are worried specifically about attempts to do away with the political provision that imposes term limits on all elected officials. The political (aspect of the Constitution) is OK, although I would agree with suggestions of a federalized government. Just so we can see which parts of the Philippines would develop first, Enrile said. Meeting at Enrile home

Enrile said Belmonte even brought along House Majority Leader Neptali Gonzales II to his residence last week when they talked about approaching the President about Charter change. The Senate leader said the Speaker promised he would reach out to the President and find out if (Mr. Aquino) would be receptive and available for discussion of our proposal to reexamine the economic provisions of the Constitution. Enrile said he and Belmonte had not set a specific time frame for the plan to discuss Charter change in Malacaang. But the Speaker said he would advise me when the President has already set up a schedule to talk to us, he added. Enrile expressed confidence that fellow senators who are equally patriotic as anyone else want our countrymen to have a better life, for the country to progress and to provide jobs for jobless people.

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In defense of Charter change

By Bernardo M. Villegas
Philippine Daily Inquirer
10:09 pm | Friday, August 10th, 2012 Share on facebook_likeShare 16

I am giving my full support to the move in both chambers of Congress to amend the economic provisions in the 1987 Constitution that unreasonably restrict foreign equity investments in large-scale, capitalintensive industries in the Philippines. Especially to be targeted are public utilities, mining, the media, education and real estate. If changing circumstances should warrant limiting foreign investments in these sectors, it should be done by legislation. Having the restrictions enshrined in the Constitution can handicap the Philippines in competing for foreign direct investments (FDI) in the Asian region, now considered the global economic engine. One does not have to be a super-optimist to predict that the last three years of President Aquinos term will see an average annual growth of at least 7 percent, serving as a foundation of and gauge for the next administration. That is the good news. The bad news is that maintaining the growth at that pace for another 6 to 12 years so that we can finally reduce poverty incidence to less than 10 percent (from the present 26 percent) will not be possible with internal savings alone. Take the case of China. It already has the highest savings rate in Asia of 50 percent of GDP. Despite abundant domestic savings, China still had to attract close to $100 billion of FDI annually to power its average growth of 10 to 12 percent for more than two decadesthe only way it could redeem some 400 million Chinese from dehumanizing poverty. Vietnam is another case. It has succeeded in attracting $7 to $10 billion of FDI annually over the last five to seven years. And Indonesias average annual FDI has exceeded $10 billion. Even with some corrections for accounting errors, Philippine FDI has not exceeded $2 billion annually. There is no way we can sustain a 7-percent GDP growth for the next 20 years, much less a 10-percent growth that can speed up the reduction of poverty, without our attracting at least a $10-billion FDI level annually. That is where Speaker Feliciano Belmonte and Senate President Juan Ponce Enrile are absolutely right. We will never attract those much larger amounts of FDI unless we remove from our Constitution the many restrictions against foreign equity investments in such vital sectors of our economy as the media, education, public utilities, mining, and real estate. Removing the constitutional restrictions will give way to more enlightened legislation that can still protect the common good against the wrong kind of foreign investments.

For example, removing the absolute prohibition against the foreign ownership of land will enable Congress to legislate that only land on which a foreigner builds his home or his business can be owned by foreigners. This will be the answer to the alarmist concern of some militant forces that the Chinese will buy the whole Philippines. In fact, the recent executive order on responsible mining is another example of enlightened policymaking. It mandates Congress to legislate on the conditions for the grant of new mining concessions. What the two leaders in Congress want is to remove from the Constitution what is properly a legislative task. If there are to be restrictions to some forms of foreign direct investments, let them be through legislation (which can be changed when circumstances evolve), rather than through the Constitution. I never agreed with my fellow drafters of the Constitution in 1986 to transform the Charter into one longwinded and verbose piece of legislation. In fact, I tried to remind them (to no avail) that the United Kingdom does not even have a written constitution but has had a long history of very enlightened legislation. What really gets my goat is hearing some of our leaders saying that even without changing the Constitution, foreigners will find many creative ways of going around the restrictions (including marrying Filipinos!). What they fail to realize is that these creative ways are precisely the reasons why the Philippines is always at the bottom in the ranking of Ease of Doing Business. We are constantly pilloried by foreigners for corruption, red tape and bureaucracy, and inefficient infrastructurethe three top reasons they cite in explaining why they do not come to the Philippines. I can trace all these three to the constitutional restrictions that force foreigners to hire very expensive lawyers, bribe government officials, suffer months, if not years, of going from one office to another if they want to do things legally, look for the right patrons, etc. I completely disagree with the President that constitutional restrictions to foreign equity investments do not matter. Removing them will matter a lot in our fight against corruption, red tape and bureaucracy, and inefficient infrastructure. As I have written in other articles, we can more speedily improve our toll ways, water systems, airports, electric utilities, and telecommunications facilities if we remove the 40-percent limit to foreign equity. Dr. Bernardo M. Villegas is senior vice president of the University of Asia and the Pacific. His e-mail address is bernardo.villegas@uap.asia.

http://opinion.inquirer.net/34447/in-defense-of-charter-change

The fallacies of Charter change

Published on 21 July 2012 Hits: 1,111 Written by ATTY. DODO DULAY 0 4 0 207

President Aquino ought to quash all attempts by his party mates and allies to rewrite the Constitution once and for all. The country needs Charter change (Cha-cha) like a hole in the head. Cha-cha proponents, however, are trying to drum up public support for this unpopular measure by resurrecting the old fallacy that the only way for the country to achieve its economic goals is to amend our basic charter. True, the present Constitution has some flaws, the result of the knee-jerk reaction to the perceived excesses of the Marcos era. But amending it will not guarantee our economic growth or reverse our nations fortunes. Perhaps the best evidence that constitutional changes have had little impact on economic growthand commensurately, on our peoples quality of lifeis the 1987 constitution itself. Since its ratification, the Philippine economy has nonetheless declined compared to that of our Asean neighbors. Today, our economy is just a notch ahead of Vietnam. Another fallacy being foisted by Cha-cha promoters is that the present Constitution restricts foreign ownership of local industries or otherwise prohibits foreigners from owning a majority stake in domestic companies. The truth is foreigners have been allowed up to 100 percent ownership of domestic (i.e. Philippine) companies under Republic Act 7042 or the Foreign Investment Act since 1991. Moreover, the limit on foreign ownership of insurance, financing and securities underwriting companies was raised from 40 percent to 60 percent in the 1990s. In 2000, the Retail Trade Liberalization Act of 2000 (RA 8762) allowed 100 percent foreign ownership of retail companies capitalized at $2.5 million or more while foreign banks were granted up to 100 percent ownership of local commercial or thrift banks under R.A. 8791, or the General Banking Law. The only permanent restrictions on majority ownership of domestic companies by foreigners are those imposed by the Constitution on socalled restricted industries such as public utilities, educational institutions, mass media and advertising companies; the exploration, development, and utilization of natural and marine resources; the practice of licensed professions; and the ownership of private lands.

Which brings us to the other fallacy advanced by pro-Cha-cha campaigners: that allowing foreigners to own land and to have majority ownership in these restricted industries will bring in more foreign investments leading to more jobs and higher incomes for Filipino workers. Its a hypothesis that has already been disproved by our Asean neighbor, Indonesia, for instance. Like the Philippines, Indonesia has prohibited foreigners from owning land. Foreigners are only allowed to buy apartments and office spaces in buildings that have strata titlewhich is the equivalent of our condominium buildingsjust as we do. And like the foreigners here, aliens in Indonesia who want to hold land enter into long-term leases (or hak kapai) for as long as 70 years. Indonesia has also placed the same or similar foreign ownership restrictions and limits on certain sectors. For example, foreigners cannot have majority equity in forestry, logging, mass media, public transportation, public utilities, nuclear plants, medical services and gambling, among others. And not unlike the Philippines, Indonesia is likewise plagued by corruption, an inefficient government bureaucracy and inadequate infrastructure. Yet, Indonesia has the highest foreign direct investments (FDI) in the entire Asean region with a whopping $19.3 billion in total net inflows last year. The Philippines $1.2 billion FDI doesnt even come close. Moreover, the bulk of the FDI in Indonesia didnt flow into the so-called restricted industries but in traditional sectors like manufacturing, warehouses, food crops and plantations, trade and commerce, construction and financial intermediation and services. So why did Indonesia attract more foreign investments than we did? Its simply because the lower cost of doing business in Indonesia makes it more profitableand therefore, more attractivefor foreign investors. For starters, commercial and industrial electricity users in Indonesia pay only an average of 11 US cents per kilowatt/hour (KwH) as against our 18.1

cents per KwH. Gas prices are 50 percent cheaper than Manila. And an Indonesians average wage is only about one-third of that of China and among the lowest in Asia. What is also attractive to foreign investors is the growth of Indonesias domestic consumer market thats being fueled by a robust and rising middle class. With its economy growing at a fast pace and interest rates at a record low, foreign companies are moving in to satisfy new demand for home furnishings, foreign foods, travel items and other consumer goods. The Indonesian experience only proves that amending and liberalizing the so-called restrictive provisions in our constitution is not the key to luring in foreign capitalists. The fundamental problem discouraging foreign investments in the countrythe high cost of doing businesscan be ade quately addressed with enough political will using the vast powers of the presidency and executive-led legislation and policy agendas.
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