Amendments of the Economic Provisions of the Constitution Melito Salazar, Jr.

President, Management Association of the Philippines In June 19, 2013, the Philippine Business Groups and the Joint Foreign Chambers of Commerce, of which MAP is associated with, wrote Benigno Simeon Aguino III a letter. One section of which I quote, We strongly urge your Administration to consider amending the economic provisions in the 1987 Constitution which restrict greater private sectort participation. Pending such Constitutional amendments we suggest an initial and immediate course of action: to revise the Foreign Investment Negative List by reducing the list of industries where foreign participation is limited. Today, we repeat that qualm. We also reiterate the many reasons for this. Filipino economists in the Foundation for Economic Freedom have asserted and I quote, We believe that the country cannot experience inclusive growth, reduce poverty, and combat joblessness except by removing those restriction on the from the fundamental law of the land and allowing Congress to liberalize these provision as may be needed. We believe that liberalizing the economic provisions of the Constitution is part of daang matuwid as it would attract the right kind of foreign investors into our country and would eliminate the incentive of foreign businessmen to evade those restrictions by corrupting our institutions. Dr. Priscilla Tacujan in the Journal of Political Risks Vol. 1 No. 1, May 2013 writes, Despite the improvement in the Philippine investment climate, the Philippine Constitution (1987) still has an antiquated article that supports laws restricting foreign ownership of property to 40% (Article XII), with minor adjustments and deviations by subsequent legislation. Removing the clause, and improving access and protections of foreign-owned business, would lead to a quantum leap in FDI and Philippine economic growth. Small changes to legislation are not enough. The Constitution needs to be changed in order to fully welcome foreign investors to the Philippines. Remove the 60-40% equity limitations; remove control and management exclusively by Filipinos in companies with foreign equity; expand the role of foreign investors in the exploration, development, and utilization of natural resources; allow foreign ownership of industrial lands; liberalize media by allowing foreign investment in media; liberalize the practice of profession by allowing foreigners to practice their profession in accordance with the principle of reciprocity; liberalize investments in educational institutions by allowing foreign investment in tertiary education; among others. Filipino economists argue that the constitutional limit on foreign ownership of companies that provide public utilities like airports, seaports, telecommunications, transportation, and infrastructure should be lifted in order to foster competition and improve performance. They also argue that public utilities should be opened to

foreign companies who have the technology and science to develop and build efficient transport facilities and infrastructure projects. These foreign companies need to be incentivized to compete, develop, and operate such projects by way of good investment returns and profits. The economic provisions of the Constitution will continue to enable an inefficient rentseeking, monopolistic economy that benefits only a few entrenched interests rather than those who need new jobs from broad economic growth. Let me end with the view that no amount of legislation or Executive Orders from the Office of the President will compare with the amendment of the provisions of the Constitution since such moves - official legislation, executive orders, and so on, may still be questioned in the Supreme Court and decided by the Supreme Court in the light of the existing provisions of the Constitution. It is time to amend the economic provisions in the Constitution; it is time to provide jobs for the Filipino People.