Ibon Foundation pointed out that increasing FDIs have actually been accompanied by increasing unemployment, increasing labor export, falling real wages, shrinking domestic manufacturing and more volatile growth.
by INA ALLECO R. SILVERIO
Despite his denial that he supports moves to amend the 1987 Philippine Constitution, President Benigno Aquino III is hard-pressed to prove that he is against charter change. A lawmaker has even said that Aquino’s own party is at the forefront of efforts to do it.
Bayan Muna Rep. Teddy Casiño recently revealed that since its formation, the party that Aquino leads is leading efforts to selling the Philippines to foreign interests particularly the United States. Casiño was referring to the Liberal Party which now holds majority seats in the House of Representatives.
Casiño made his charge in the wake of reports from the New York-based think tank Global Source that the latest initiatives to amend the charter has a “fair chance” of succeeding this time around despite lack of support from Aquino.
In an October 3 commentary written by Filipino economists Romeo Bernardo and Margarita Gonzales, Global Source noted that while Aquino is not championing charter change, he is not standing in the way of Congress as it continues proceedings leading to charter amendment.
The US think tank is pushing for the removal of foreign equity limits on economic activity in the 1987 Constitution, which includes the following: operation and management of public utilities (40 percent), exploitation of natural resources (40 percent), educational institutions (40 percent), advertising agencies (30 percent) and private land ownership (40 percent if a Philippine corporation). No foreign equity is allowed in media ownership.
“While there has been wide recognition, especially in business circles, that easing such restrictions will help improve the investment climate, earlier attempts have been stymied by fears that charter change or ‘cha-cha’ would be used to lengthen term limits, including that of the President,” the report said.
Casiño said it is not surprising that Aquino is not taking action against charter change. The lawmaker said the Liberal Party, to which the president belongs, is doing all the work to push for charter change. According to Casiño, the Liberal Party has a long and infamous history of selling the Philippines and its resources to foreign business entities, primarily those from the US.
“Historically speaking the Liberal Party, under President Manuel Roxas, was at the forefront of selling our country to the US by first amending the Philippine Constitution and then railroading the so-called Philippine Trade Act or the Bell Trade Act of 1946. This Act established a monopoly of the principal Philippine products that favours American interests. US businessmen can import products into the Philippines free of duty, quotas and price ceilings, whereas Philippine exports to the US are subject to quota restrictions. Americans are also given the same privileges with regard to property, business, and industry as those enjoyed by Filipinos, while the same privileges are denied to Filipinos in the US. This is also the same with what the current Liberal Party along with the Senate president and foreign businessmen are pushing through Cha-cha to the detriment of our economy and people,” he said.
Casiño said if Aquino is not for charter change, then he should rein in his party mates who appear to be ignoring him on the matter.
“If charter change pushes through, he might be seen as a weak leader who is being ignored by the Liberal party bigwigs. There are continuous and coordinated moves for this to happen as evidenced by the continuing hearings and consultations, ” he said.
Not the method but the purpose
The Makabayan Coalition is even more direct in its criticism of congressional efforts to form bicameral constituent assembly by both houses of Congress. The alliance of progressive party-lists said the plan for a bicameral assembly is “a form of short-circuiting democracy to shut down any remaining sovereign protection in the Constitution.”
Makabayan Coalition spokesperson Liza Maza said the proponents of charter change will always find means to legally argue their case, but their arguments, she said, should not be limited to the method of amending the charter and focus on the basics.
“Before we debate on how to do it, we should ask first: is it necessary? And what is the ulterior motive? For whom and for what?” she said. Maza directly criticized the assertion of Senator Franklin Drilon who said that it is not necessary that the Senate and the House of Representatives hold a joint session for the purpose of considering proposed amendments to the Constitution.” He claims that the only requirement of Article XVII, Section 1 is that the proposal be approved by three-fourths of all congress’ members.
“Of course, the Constitution should always reflect the sovereign will of the people, hence the three-fourths requirement. Yet even that number could be a cabal against the people, especially if you remove the 60-40 limit and open up our country to foreign plunder such as in agriculture, mining, oil and gas exploration, power, and basic services and utilities,” Maza said.
She noted that “the proposed amendments would address “certain economic provisions”; “But who’s to stop them from tweaking other provisions, for instance, those that state the ban on foreign troops and nuclear weapons? That would be prostitution worse than what US ambassador Harry Thomas alleged recently,” she said.
According to Maza, charter change proponents are short-circuiting democracy to remove all remaining sovereign protection in the Constitution.
“This could start a political conflagration that both houses could not extinguish,” she said.
A “modified form” of a constituent assembly is being proposed. Instead of the Congress sitting in joint session, the method proposed by Senator Drilon is that each House take cognizance of and deliberate on each and every proposed amendment filed in their respective chambers.
Each proposed amendment filed will be referred to a particular committee, or to a committee of the whole, which then conducts public hearings, prepares the committee report, submits it to the floor for debates, deliberations and amendments, and then submits it to a vote on second reading. On third reading, the bill is submitted to a vote; the required number of affirmative votes is three-fourths of all the members of each chamber.
Should there be differences in the versions, then a bicameral committee is formed to come up with a reconciled version, after which the same is submitted to a vote again by each chamber. It is considered passed if it garners a three fourths vote of all its members.
“We in Makabayan disagree that the procedure ensures that the Constitution is not opened wide for a major rewriting. Even if specific amendments can only be introduced one at a time, they could be major amendments,” Maza said. “The check and balance between the two Chambers may be preserved but deliberations may not be that transparent. The latest budget hearings largely excluded people’s participation and lacked transparency. We get budget cuts on education and health even if Congress kept to its bicameral nature.”
In the meantime, Gabriela Women’s Party Representative Luz Ilagan said the 15th Congress is poised to go down in history as “the most unpatriotic, committing the blunder of facilitating the total sellout of our resources and patrimony.”
The House of Representatives Committee on Constitutional Amendments today, October 11 resumed hearings on House Concurrent Resolution 10 which calls for Congress to constitute itself into a constituent assembly to propose amendments to economic provisions of the 1987 Constitution.
“Let us not be fooled. Even as proponents claim that they are pushing solely for amendments in the Constitution’s economic provisions, there are no guarantees that political provisions including those that refer to term limits, territories or the presence of foreign troops will not be tampered with. Besides, removing the protectionist economic provisions in the Constitution is just as perilous,” Ilagan said.
Ilagan said that it’s criminal to allow the economy to be more vulnerable to to the plunder of US corporations and foreign multinationals.
“As it is, we have already allowed the wholesale repatriation of profits and extensive destruction of our resources, without reaping any of the promised benefits. These are lessons that foreign directed mining and oil operations and explorations should have taught us for decades. The foreign investments that charter change hopes to attract will not bring in the promised employment and economic growth. I urge my colleagues to focus instead on measures that will strengthen the domestic economy and channel much needed support to agriculture and local industries,” she said.
The Gabriela solon stressed the dangers that charter change poses especially for Filipino women and their families. “The influx of foreign investments has resulted to further poverty. This is the reason why women have launched the women’s strike, a series of actions culminating in a big women’s protest on October 28.”
Gabriela’s second representative Emmi De Jesus, in the meantime, laid down a challenge to Aquino to take action against the moves of Congress to amend the charter.
“The problems of poverty and injustice that plague the Philippine society are not caused by provisions of the Constitution. Even with economic restrictions in the Philippine Constitution, globalization has already devastated the Philippine economy. “The development of a sovereign country does not depend on foreign aid and laws that cater to the needs of foreign interests, but in the government’s full support of its human resources, a strong nationalized industrialization program, and responsible use of the nation’s natural resources. These and a leadership with strong political will make a truly developed nation,” she said.
Flawed fixation of foreign investments
Research group IBON Foundation said that lawmakers have learned nothing from developments in the economy gauging from the push to lessen restrictions to foreign investments. The group said charter change proponents are pushing for an economic strategy that has clearly failed to develop the economy.
“Foreign direct investment (FDI) has already been pouring into the Philippines over the last decades but with little to show in terms of overall economic development. This is because the fixation on attracting foreign investment at all costs has led to foregoing any long-term gains for the domestic economy. The Ramos, Estrada and Arroyo administrations have given liberal privileges and generous incentives to FDIs over the last two decades. The net result is that foreign investors have been able to make their profits but the supposed gains for the economy and the people, in terms of jobs, poverty reduction, industrialization and an advanced economy have not materialized, ” it said.
The think-thank pointed out that increasing FDIs have actually been accompanied by increasing unemployment, increasing labor export, falling real wages, shrinking domestic manufacturing and more volatile growth. According to IBON data, The share of manufacturing in the economy has been steadily falling and, at 22.2 percent of gross domestic product (GDP) and 8.3 percent of employment in 2010, is already as small as in the 1950s or over half a century ago. There have also not been any real increases in domestic capital formation or in government revenues which have increasingly relied on regressive taxes on personal consumption.
The cumulative stock of FDI has increased twenty-seven-fold from US$914 million in 1980 to US$24.9 billion in 2010, increasing as a percentage of GDP from 2.8 percent to 13.2 percent over that same period. Annual inward FDI flows, in turn, increased from US$114 million in 1980 to US$1.71 billion in 2010. As a percentage of gross fixed capital formation, these flows rose from 1.3 percent in 1980 to a peak of 17.7 percent in 2006 before dropping to 8.3 percent in 2009 and further to 5.8 percent in 2010.
Up or down, none of these FDI figures IBON said pointed toward an improved economy.
“Foreign investments should supposedly help in building a strong productive economic base. However there is nothing to indicate that FDIs have contributed to creating a strong domestic economy able to create jobs on a sustainable basis. While jobs in export processing zones or special economic zones have been increasing, these have not been able to offset job losses and stunted the economy’s industrial development,” it explained. “Changing the charter out of a fixation to attract foreign investment fails to learn lessons from the past and is going to be a step backward for Philippine development.”
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Foreign equity limits in the Philippines, enshrined as “Filipino first” clause in the constitution, need to be evaluated in terms of how it affects employment possibilities. For example, if a foreign electronics manufacturer is discouraged because it is not allowed to own the land where the factory is located, then, in my opinion, this obstacle must be removed. However, if a foreign business interest would like to own land for agricultural development, it is likely that allowing this would lead to displacement of small landholders.
Besides employment possibilities, foreign equity limits should be evaluated in terms of its effect on the price and availability of commodities. In general, robust competition leads to more realistic price structures and better services. Telecoms, airlines, schools, hotels, housing developments, energy providers, shipping, etc. need not be dominated by local elites who benefit from “nationalistic” policies that dampen competition which could bring better prices and services.
An honest, transparent debate is needed, as far as foreign equity limits is concerned. Personally, I don’t mind 100% foreign ownership, so long as it doesn’t negatively affect small farmers and fisher folks, it doesn’t usher in further environmental degradation, it doesn’t foster monopolies that lead to higher prices and lousy services, and it doesn’t result in more joblessness. Then again, since Philippine politics is dominated by plutocrats and oligarchs, it’s doubtful that changes in the constitution, in terms of foreign equity limits, would make much economic sense.
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