Foes offer loopholes vs Charter change

What items in the Constitution repel foreign investors and thus stunt economic growth?

• National Economy and Patrimony (Article XII):

Section 2 limits all mining to Filipino citizens or, in joint ventures, to corporations at least 60-percent owned by Filipinos.

Sec. 7 limits ownership of residential, commercial or industrial lands only to Filipinos.

Sec. 11 limits the operation of public utilities – ports, transportation, or power plants – to Filipinos or corporations 60-percent owned by them.

Sec. 14 limits the practice of all professions to Filipinos.

• Education, Science and Technology, Arts, Culture, Sports (Art. XIV):

Sec. 4-(2) limits ownership of all schools, including those for higher or specialized learning, to Filipinos or to corporations 60-percent owned by them. Control or administration is solely by Filipinos.

• General Provisions (Art. XVI):

Sec. 11-(1) limits ownership and management of mass media to Filipino individuals or corporations.

Sec. 11-(2) limits the advertising industry to Filipinos or to corporations 70-percent owned by them.

Economics Prof. Gonzalo Jurado says restricting mining and utilities, media and advertising to locals has starved the sectors of cash to expand. Consequently they cannot hire more Filipinos or acquire new technology. A member of the Consultative Commission on Constitutional Amendments, Jurado scoffs at the phrase "at least 60-percent owned". With low average incomes, the Filipino savings rate is a meager 18 percent of GDP, only half the 35 percent necessary to invest in business.

Hardly any Filipino can store enough money to venture into modern shipping or electrification that can improve life in the archipelago and spur trade. The only capital going into such fields are too small they can only act as canteen operators. The cinema and recording industries are dying not only from the onslaught of film or music piracy, but also from thirst for capital. And yet foreigners are banned from Philippine mass media on the xenophobia that they would control Filipino culture. Ironically, though, a Filipino cable-TV viewer can opt for pure foreign content just by channel surfing.

Law Dean Andres Bautista adds that limiting to Filipinos all practice of professions and ownership of tertiary schools stunts intellectual growth. He says a Filipino can pass a New York board exam and be able to practice there, but no foreigner – although a cum laude graduate from a Philippine university – may even take a qualifying exam to practice any trade. This tends to deter foreigners from setting up factories for hi-tech parts. By contrast, Malaysia and Singapore have attracted aerospace firms to invest. A member of the Charter Change Advocacy Commission, Bautista also wonders why foreigners are barred from buying land for factories. "If they decide to leave, they can’t take the land with them anyway," he says.

Jurado and Bautista propose the lifting of the many restrictions to foreign investments, if only to promote employment and wipe out poverty. Such new capital can go into manufacturing, transportation, telecoms or water supply. Under the Build-Operate-Transfer Law, foreigners can construct ports, railroads and highways.

Citing figures from investment-friendly Thailand and Malaysia, Jurado says opening up RP would boost GDP from the present 5-6 percent to 8-9 percent per year. Given that momentum, GDP can double in eight years. Per capita income, even if RP’s population growth rate stays high at 2.34 percent, can double in 12 years to $2,200 from the present $1,100. Such figures can overturn the present 11-percent unemployment and 25-percent underemployment rate. Poverty can be licked yet.

Opponents of Charter change agree with Jurado and Bautista’s aims and figures. Still they resist lifting restrictions on foreign investors, claiming that Filipinos can always devise loopholes anyway.

They may be right. In power generation, for one, the Electric Power Industry Reform Act has provided ways for foreigners to skirt the 60:40 ownership rule. Too, Supreme Court Justice Antonio Carpio in a dissenting opinion has pointed out how the Mining Act violates the Constitution by slapping foreigners only with taxes but not imposing revenue sharing. When Carpio’s colleagues upheld the Act, however, an Australian mining giant announced that it had been operating all this time in RP through a wholly owned subsidiary with Filipino fronts.

In many cases, foreigners have married Filipino dummies in order to acquire real estate. Years ago a Japanese used a Filipino wife to set up an industrial warehouse in residential Fairview, Quezon City, but was stopped by alert neighbors who invoked the Land Use Act, not the defiled Charter. A handful of foreigners are running businesses reserved only for Filipinos, such as waterworks, in the guise of consultancies. Two radio-television networks are preparing to sell shares to foreigners under a novel scheme, thought up by regulators no less, in which they first deposit the stocks in shell companies.

By seeking relief in loopholes, opponents of change only promote Constitutional breaches instead of compliance. This may be a trap. For, Sec. 22 of National Economy and Patrimony also states: "Acts which circumvent or negate any of the provisions in this Article shall be considered inimical to the national interest and subject to criminal and civil sanctions, as may be provided by law." There may yet be a day of reckoning for them.

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