New opportunities

With the stink still lingering at the Senate, you can understand why President Aquino (according to close aides) can’t trust lawmakers to amend the Constitution. 

After serving as congressman and then senator, P-Noy knows many lawmakers too well, I was told, to trust them to limit themselves to economic provisions in case he supports Charter change. 

For Cha-cha proponents, it’s progress enough that P-Noy has formed a team to study the amendments and mode of change suggested by leaders of Congress. But I was told that the distrust is still there: P-Noy believes that once the process gets underway, he can no longer stop lawmakers from attempting to include political provisions and inserting self-serving amendments.

This can be divisive and distracting to the nation, when so many other things still need to be done.

The last time P-Noy thumbed down Cha-cha, after he addressed an anti-corruption meeting at the World Economic Forum in Switzerland, the reason he cited was that the nation’s basic law must not be amended simply to meet foreign interests – meaning the suggestions of foreign investors.

He made the statement shortly after a large delegation of top-level American businessmen visited Manila to assess investment prospects.

But what if foreign interests, if addressed, will benefit Philippine interests?

Economic Cha-cha, however, has been pitched to P-Noy too many times, and the answer is still no, no, no, so perhaps alternatives for attracting more job-generating investments can instead be proposed.

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We may have positive economic figures, but we’re starting from a low base, and we’re way behind several of our neighbors in attracting foreign direct investment (FDI).

Those rosy economic figures owe much to the remittances of our workers overseas, who left the country for lack of decent employment opportunities.

Today a window of opportunity is opening up for the country. One factor is the goodwill in the business community generated by P-Noy himself and his focus on reforms to reduce corruption, although the problem remains deeply rooted. So far, however, the goodwill has been slow in translating into solid, long-term investment.

A second factor is external: FDI is plunging in China as labor and other production costs jump, and investors are looking for new places in Asia to do business. Vietnam is also losing its luster as an investment destination.

The rising business costs in China are making it easier, for example, for large Japanese and Korean manufacturing companies, which are adversely affected by their countries’ territorial disputes with Beijing, to decide to reduce their operations in the world’s second largest economy and relocate to other Asian countries.

How do we persuade them that the Philippines is a good investment destination?

Our skilled, English-proficient, friendly and cheerful workforce is a major plus. For Koreans, the balmy weather and largely pollution-free countryside are added incentives. Living is easy in this tropical country, and life can truly be fun.

Now for the negatives: P-Noy often talks about leveling the playing field, but investors tell me they are getting mixed signals in this area. The list of business activities closed to foreign investors appears to be lengthening instead of the other way around, and certain categories, such as public utilities, can use definition refinement.

Enactment of the anti-trust law will help, but this looks iffy in this final session week before the 15th Congress goes on a long election break.

Some investors have told me that they aren’t overly deterred by the 40 percent foreign ownership limit imposed under the Constitution, as long as one knows how to pick the proper local partner.

They also aren’t overly deterred by the constitutional prohibition on land ownership by foreigners. Long-term land leases can be approved in certain industries, as communist China and Vietnam have done. Or else certain areas can be declared as special manufacturing zones where land lease arrangements can be approved, without resorting to Cha-cha.

Among the deterrents cited by foreign investors are the weakness of the rule of law, perceived corruption in the judiciary, and the unpredictable regulatory environment. An expat once told me that Philippine laws are “malleable” – a scary thought for prospective investors.

P-Noy has limited control over these areas, but he can invest political capital in getting the concerned supervising authorities to support his reform agenda.

A major investment deterrent, as P-Noy surely already knows, is the failure to enforce contracts. After too many cases of aborted or botched deals entered into by foreign companies, a number of which were not even reported in the media, the Aquino administration will have to find a convincing way of reassuring people that the Philippines is a safe destination for investments.

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Reassurance can take time, given the instances when optimism over a reform-minded Philippine leader ended in disappointment.

Cha-cha can actually send a strong, swift message of commitment to change the way we do business in the Philippines.

Even if the president of the republic has no direct participation in Charter change, public perceptions that the chief executive used congressional allies to amend the Constitution for personal or partisan purposes doomed every Cha-cha initiative since the Ramos administration.

P-Noy is in a unique position to support Cha-cha, since he has given the impression that he can’t wait for his presidency to be over. I’ve been told that within close circles he is starting to exude the arrogance of power, but this doesn’t mean he’ll want to linger beyond his single, six-year term.

He can actually dance the Cha-cha without making people suspect a hidden, personal agenda.

Having repeatedly thumbed down Cha-cha, he should come up with alternatives. We need more investments. We need more jobs. We need to seize emerging opportunities.