Filipino first policy

Recently, I’ve received a number of letters from our readers calling for a national policy that would prioritize Filipinos and Philippine-made products and services in all aspects of the economy.

We actually have a Filipino First policy enshrined in the 1987 Constitution which provides that in the grant of rights, privileges and concessions covering the national economy and patrimony, the state shall give preference to qualified Filipinos.

The Filipino First policy was first introduced by nationalist president Carlos P. Garcia, which was implemented from 1957 to 1961 to favor Philippine economic interests over American interests. It was dismantled by former president Diosdado Macapagal but later inserted in the 1987 Constitution.

In the landmark case of Manila Prince Hotel vs. GSIS decided Feb. 3, 1997, the Supreme Court pointed out that Sec. 10 of Art XII of the Constitution which provides for a Filipino First Policy is a “mandatory, positive command which is complete in itself and which needs no further guidelines or implementing laws or rules for its enforcement.”

“From its very words, the provision does not require any legislation to put it in operation. It is per se judicially enforceable,” the court emphasized.

Art XII of the 1987 Constitution on the National Economy and Patrimony, in particular Section 1 paragraph 2 likewise provides that while “the state shall promote industrialization and full employment… through industries that make full and efficient use of human and natural resources and which are competitive in both domestic and foreign markets,” the state shall “protect Filipino enterprises against unfair foreign competition and trade practices.”

The SC in the same case noted that the patrimony of the nation that should be conserved and developed refers not only to the country’s rich natural resources but also to the cultural heritage of the race and our intelligence in arts, sciences and letters.

“Therefore, we should develop not only our lands, forests, mines and other natural resources but also the mental ability or faculty of our people,” it said.

The SC also explained that the term “qualified Filipinos” simply means that preference shall be given to those citizens who can make a viable contribution to the common good, because of credible competence and efficiency.

“It certainly does not mandate the pampering and preferential treatment to Filipino citizens or organizations that are incompetent or inefficient, since such an indiscriminate preference would be counterproductive and inimical to the common good. In the granting of economic rights, privileges and concessions, when a choice has to be made between a qualified foreigner and a qualified Filipino, the latter shall be chosen over the former,” it stressed.

It added that while it is not the intention of the court to impede and diminish, much less undermine, the influx of foreign investments, it sanctions the preference for Filipinos whenever such preference is ordained by the Constitution. “Protection of foreign investments, while laudible, is merely a policy. It cannot override the demands of nationalism,” the high tribunal held.

We now have a Tatak Pinoy (Proudly Filipino) law under Republic Act 11981 which not only aims to promote and establish high-value and sophisticated goods and services that will be competitive in both the global and domestic market, but also seeks to improve the country’s export performance which has been lagging compared to its neighbors in the region. It also mandates that government prioritize domestic products in its procurement.

In terms of complexity of its products, the Atlas Economic Complexity report for 2021 ranked the Philippines 33rd globally in the complexity index and fourth in Southeast Asia, ahead of Vietnam and Indonesia. However, since the report was released, the Department of Trade and Industry has noted that Indonesia and Vietnam have made significant strides in diversifying into more complex product categories.

According to the DTI, while the Philippines between 2006 and 2021 ventured into 30 new export products, contributing $41 to the gross domestic product per capita, Vietnam has ventured into 41 new products that boosted its GDP per capita by almost $1,500.

The Philippines’ export volume of $74 billion also pales in comparison to Indonesia’s $231 billion, Thailand’s $266 billion, and Vietnam’s $355 billion.

What’s worse is that the trade balance of goods of the Philippines, which is the value of exported goods minus the value of imported goods, has consistently registered a negative value which signifies a trade deficit, meaning we import more than we export.

From 2013 to 2023, the trade imbalance has grown from negative $9.8 billion in 2013 to negative $66.94 billion in 2022 and minus $61 billion last year.

Meanwhile, according to Macrotrends, for the period 1981 to 2023, there have been sporadic instances of positive trade balances for the Philippines. These were in the years 1985 ($0.42 billion), 1986 ($0.81 billion), 2000 ($1.28 billion), 2006 ($2.09 billion), and 2007 ($3.72 billion).

This, of course, doesn’t mean that our exports are increasing. A trade surplus can be a sign of a healthy economy but it depends on the situation. Like for instance, a trade surplus can occur during an economic downturn if imports fall faster than exports. Also, a trade surplus doesn’t tell the whole story about an economy’s health since other factors like inflation, unemployment and production also have to be considered.

Our government has adopted a policy favoring more foreign investments. But this should not be understood to mean that we should also be importing more foreign made goods when there are ones that are available locally. Prioritizing domestic products, industries and services and protecting local industries from unfair trade practices creates more jobs and opportunities for Filipinos, increasing economy activity and the value of the peso, reducing interest rates and levels of inflation in the process.

For comments, email at [email protected].