Viewpoint of a foreign journalist

Last Oct. 31, Philip Bowring, a Hong Kong based journalist wrote a piece about the Philippines in the Wall Street Journal.  In my opinion, it is important that we also learn about comments and observations of foreigners who are conversant with our country. We are often too self-centered and it may be useful to understand a foreigner’s perspective.

I first met him in Davos at the World Economic Forum in the late 90s. Philip has covered Southeast Asia for years and is fully conversant with the challenges and opportunities of our country. I consider him painfully frank and objective. He has often been quite tough on us.

He cites the recent Moody’s upgrade and the signing of the peace pact with the Moro Islamic Liberation Front as positive news for the Aquino administration. “Mr. Aquino has taken bold steps to root out corruption and improve standards of governance….”Bowring then proceeds to list the strong performance of the President related to the Corona impeachment; his support for the RH bill versus the Catholic Church; the face off with China over the Scarborough Shoal; as well as placing the fiscal deficit under control. 

Mr. Bowring has been unusually kind to Mr. Aquino. His favorable comments validate what I perceive is the President’s very positive image abroad.

The balance of his article compels us to consider his views carefully. “The problem with Manila is that its institutions are weak, and are susceptible to manipulation by the President and other powerful politicians. To judge the sustainability of current reforms in the Philippines, then, one must look at what is happening in the wider political arena, and at whether Mr. Aquino has a vision for improving the democratic system.  The evidence to date is not encouraging.”

The issue on “political dynasties” is particularly relevant in today’s context. He identifies five relatives of Aquino, Arroyo and Estrada who are running for office in the forthcoming elections.  “Dynasties are the result of two main factors: the non-existence of organized, nationwide political parties”. The second reason is the fact that senators are elected on a nationwide basis which favors familiar names.

Clearly, a decision on the anti-dynasty bill passed should be resolved as dictated by the Constitution. But the possibility of seeing legislation in this regard does not seem to be possible in the next few years despite two such bills pending in the Senate. Unfortunately, both the Senate and the House tend to move at glacial speed when it affects their political self-interest.

He then discusses potential change from a bicameral to a parliamentary form of government.  “Whatever the idea, the combination of a two chamber legislature and the Senate’s composition makes very slow progress in putting them into action. This stymies attempts to amend the constitution which is particularly problematic since restrictions on foreign ownership are written into the document and need to be changed.”

Supreme court: Foreign ownership

It is my understanding that the President does not believe that charter change is priority at this time. Personally, I would endorse changes now if it would pertain to economic provisions only. The recent Supreme Court decision on foreign ownership (PLDT case) and the more recent guidelines issued by the SEC (in compliance with the court’s directive) may necessitate revisiting the urgency of constitutional change. The draft SEC guidelines point out that the foreign ownership limit is applicable in each class of shares the company may have and not just the total number of voting or non-voting shares. It would also prohibit the practice of issuing shares that have voting rights but pay less in terms of dividends compared to normal shares.  Clearly these rules would discourage foreign investment. 

Under these guidelines, I understand 4 companies have already breached the ceiling with their respective foreign ownership as follows: PLDT 56.3 percent; Globe Telecom Inc., 65.2 percent; Manila Water Co Inc., 53.3 percent; and Ayala Land Inc., 40.3 percent.

Moreover, the same draft regulations would place foreign ownership in 11 other companies in excess of 30 percent, putting them in danger of breaching the foreign ownership ceiling.

Manuel V. Pangilinan commented that PLDT and several other major companies in industries covered by the rule would be affected.  He further cautioned that foreign investors may leave the country in favor of other Southeast Asian markets which are more favorably disposed to foreign investment.   

I strongly believe that this “foreign ownership” issue must be resolved as soon as possible and it requires economic statesmanship rather than a legalistic approach. The business community is eager to learn how the executive branch of government will resolve this issue which will have serious consequences for the economy.

Mr. Bowring concludes, “In this legislative situation, pushing through any major change in the political structure cannot happen without strong presidential leadership. Thus far, Mr. Aquino has yet to show any interest in these big political issues. While that may be understandable given immediate priorities such as rooting out graft, constitutional change may be essential if his reforms are to stick…..Mr. Aquino needs to start enunciating a plan to safeguard the gains of his presidency and the Philippines’ rise to international esteem.”