Foreign investors’ letter proves Monsod wrong

One Voice, an elitist front to demonize Charter changes of little folk, keeps screeching the claim of its head Christian Monsod:

Restrictive economic provisos in the 1987 Constitution do not bother foreign investors. What they do care about, surveys say, are infrastructure, human capital, consistency of policies and regulations, peace and order.

What surveys, Monsod does not specify. But never mind. If his claim were a person, it would slip on a piece of paper and fall flat on its face. That paper is a letter to Economic Planning Sec. Romy Neri, sent July 24, by the Joint Foreign Chambers of Commerce and Industry of the Philippines. In it, the umbrella of foreign firms urged the government to liberalize the entry of new investments – by executive, legislative and constitutional action.

The JFC consists of the American, Canadian, European, Australia-New Zealand, Japanese and Korean chambers, and Philippine Association of Multinational Companies’ Regional Headquarters. It said there has been no major effort for freer economy since the Retail Trade Liberalization Act of 2000. Too, that the 7th Regular Foreign Investment Negative List, soon to be promulgated by executive order, contains few changes. It remarked: "We recognize there are proposals currently being considered to remove from the Constitution restrictions on foreign equity investment in education, land, media, natural resources and utilities, and in the future to set policy regarding such investment through legislation. These reforms we support."

So there. Foreigners do fret over hostile constitutional riders that bar them from operating schools, industrial land, natural resources and media; practicing specialized professions; and exceeding 40 percent in utilities or 30 in advertising. They prove Monsod wrong.

And why should Filipinos in turn mind foreigners? Because, given our national savings rate of only 18 percent, we don’t have enough capital going around to set up businesses, and consequently employ our people and wipe out their hunger. We need to let investors in; imposing old-style protectionism benefits only the irresponsible elite.

It’s a vicious cycle. We say foreign investors need infrastructure like telecoms, roads, ports; we don’t have the cash for it; yet we keep out those who can build such facilities. We promote our human capital, but are able to place them only in call centers for their English, not for hi-tech skills. Content with backward schools, we don’t have higher learning because we forbid outsiders from sharing knowledge by running colleges or specialist practice. We have no peace and order because a third of our people is poor, a tenth is jobless, and a fourth is underpaid from lack of investments.

Our economic policies and laws are contradictory precisely because of the restrictive provisos. Monsod himself hails the inconsistencies. There’s this SEC ruling that loosens the meaning of the 40-percent foreign limit in telecoms, but only for PLDT. There’s this law that redefines electric utility to mean only "wires", thus allowing aliens to own 100 percent of generators, and that law’s main beneficiary is Monsod’s principal, the family that keeps power rates high to the injury of the poor. There’s a scheme called "global depository receipt" by which media networks sell to foreigners despite the constitutional ban. Monsod promotes all this as "liberal interpretations" and "creative finance". Congressmen took him to mean "loopholes" that vested interests can exploit. And so he cries that they and I missed his point.

The worst example of constitutional "flexibility" that Monsod extols is the 1995 Mining Act. The Supreme Court in 1998 had declared it wrong for letting foreigners into mineral exploitation despite a clear limit to only 40-percent partnership or technical-financial assistance. Six years later the Court reversed itself, but not without a scathing dissent by Justice Antonio Carpio, circulating in studious legal groups. Carpio insists the law is still unconstitutional, not for the reasons cited in 1998, but because the State fails to collect the right profit cuts from foreigners. If only for that, the Mining Act can be declared unconstitutional once again by a convinced Court. Monsod’s liberal, creative interpretations of the Charter would prove to be the very source of unstable policy and regulation.

Monsod stresses in his letter: "It is not necessary to remove or amend the economic provisions to address reasonable requirements of investors... Outright removal of these provisions might lead to further marginalization of the poorer sectors of our society, social unrest, and a wider permanent political chasm."

That line goes against the advocacies of Vicente Paterno and Rene Azurin, two of the staunchest economic liberationists in the Consultative Commission, but now with One Voice. The two must rethink their stay in the anti-liberalization group.

Nationalists too must review their collaboration with One Voice. One of Monsod’s favorite provisions consigns Filipinos to cottage enterprises, never to genuine industry based on metal and machine. Written by Monsod himself, it confines industrialization to agriculture and agrarian reform, and effectively prohibits Filipinos from making railways, bullet trains, ships or cars like neighbor-states.

That proviso – Article XII (National Economy and Patrimony), Section 1, 2nd paragraph – states: "The State shall promote industrialization and full employment based on sound agricultural development and agrarian reform through industries that make full and efficient use of human and natural resources, and which are competitive in both domestic and foreign markets."

In his book Hunger, Corruption and Betrayal in the Philippines, nationalist economist Alejandro Lichauco laments that the proviso deems unconstitutional any industrialization based on steel and machines that have made tigers out of neighboring economies. And what kind of industries can Filipinos engage in under the constitutional rider? "Apparently, industries like furniture and carpentry, rice milling, making fertilizer out of animal waste, tree-planting, all forms of handicraft, food canning and the like," Lichauco writes. "No engineering or machine tool and metal industry because such industries have no connection whatsoever with agriculture and agrarian reform." No jobs and stable incomes too, we may add, and that is why we are poor and already have social unrest.

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