“The Philippine economy has not developed despite rising foreign investments because domestic economic policy has been biased for foreign investors at the expense of long-run national development.” – Ibon Foundation
Part 1 | Railroading charter change
By JANESS ANN J. ELLAO
MANILA — Lawmakers who are railroading the amendment of the 1987 Constitution are claiming that it is for the benefit of the Filipino people. But members of progressive groups think otherwise.
A Sunstar report quoted Cagayan de Oro 2nd District Rep. Rufus Rodriguez as saying that lifting prohibitions on foreign ownership could boost foreign direct investments in the country, which is lagging behind its neighboring countries in Asia.
In a forum held on March 20, Jose Enrique Africa, executive director of independent think tank Ibon Foundation, said while it is true that neighboring countries have bigger foreign direct investments, it does not follow that they are more open to foreign intervention.
Kabataan Partylist Rep. Terry Ridon warned that once the economic restrictions in the 1987 Constitution have been lifted, there would be no more agrarian reform programs and more urban poor communities would be demolished to give way to infrastructure projects. He added that even schools and banks are threatened with the possibility of foreign-owned institutions being established in the country.
“At its core, jobs and livelihood of the Filipino people would be affected. It would not, in any way, increase their income, not even by a centavo,” Ridon said.
The 1987 Constitution stipulates that it may be amended through three processes: constituent assembly, constitutional convention and People’s Initiative. Ridon, however, said lawyers pushing for charter change are contemplating a fourth option: amending the Constitution by legislation.
“(Lawmakers in favor of charter change) argue that this would fall under the process of a constituent assembly. But, legal luminaries say, passing a law is different from amending the charter,” Ridon said, “It would have to undergo a different process.”
House Joint Resolution No. 1 seeks to amend economic provisions of the 1987 Constitution by inserting a qualification “unless otherwise provided by law” after the provisions restricting foreign ownership in the sections regarding natural resources, land ownership, public utilities, education and mass media.
In an interview with Bulatlat.com, Bayan Muna Rep. Neri Colmenares said lawmakers could change the Constitution ten times a day but unless the roots of the country’s socio-economic problems are addressed, there would be no genuine development benefiting the Filipino masses.
Globalization and the Philippine economy
Africa clarified that he is not totally against foreign investments, but these should benefit the people. He noted however that the implementation of the policies of liberalization, deregulation, and privatization under globalization has badly affected the Philippine economy.
Since the 1980s, Africa said, there has been a rise in foreign investments. Ibon Foundation, in its report to the House Committee on Constitutional Amendments, said that, “despite lamentations that the country is a regional laggard, foreign direct investments (FDI) have increased by every possible measure. Annual FDI inflows increased fifteen-fold and the cumulative stock twenty-fold between 1981 and 2013. Inflows have tripled as a percentage of gross domestic product (GDP) and doubled as a percentage of gross fixed capital formation.”
But, Africa said, despite the continuing rise in foreign direct investments, government’s own data show that there has been a rise in the country’s unemployment rate and forced migration, as well as chronic poverty and severe inequality.
Unemployment, for one, was 10.3 percent in 1980 and 10.5 percent in 2012, Africa said.
Africa said globalization has led to declines in the manufacturing and agricultural sectors.
“Nearly half of all foreign investments have gone to manufacturing yet the manufacturing sector’s share in the GDP and total employment was as small as it was in the 1950s, or over half a century ago. Gross fixed capital formation has declined from being equivalent to one-fourth of GDP in the early 1980s to less than a fifth today. The economy is still disproportionately dependent on foreign capital which accounted for nearly half of total approved investments since the 2000s,” the Ibon Foundation paper read.
Africa said that problems regarding agrarian reform would worsen. Multinational agricultural companies would not produce food for local consumption because they will plant cash crops for export. Such condition, he added, happened in many countries in South America and in Africa.
Plundering of natural resources and repressing of manufacturing wage could also worsen once foreign-owned companies are allowed to own land, businesses, among others, said Africa.
Ibon Foundation added that these data show that, “there is nothing to indicate that rising FDI and greater globalization policies have created a strong domestic economy that creates jobs and expands domestic capital on a sustainable basis. The Philippine economy has not developed despite rising foreign investments because domestic economic policy has been biased for foreign investors at the expense of long-run national development.”
Global trend on protectionism not globalization
Colmenares said foreign-imposed policies have long been used in the country and it never improved the lives of many poor Filipinos. Food security, for one, would be threatened as foreign companies, once they have full ownership of land, would invest on dollar-earning crops instead of staple food.
“We see no relationship between development and foreign investments,” Colmenares said, adding that Filipinos are poor because of the absence of genuine agrarian reform and national industrialization.
Colmenares said these claims about the supposed benefits of charter change are mere “anecdotal” and that even lawmakers pushing for it could not present a study that could prove that the projected rise in foreign direct investments would improve the lives of the people. Their argument, he added, is reduced to mere observations from neighboring countries that purportedly developed due after opening up their economy to foreign investments.
Is it really the entry of foreign investments that enabled these countries to develop? What if there were other measures that spurred their development such as land reform, eradication of corruption, or national industrialization? What if foreign direct investments increased because they were already developed?” he added.
Citing the experiences of China, Taiwan and Japan, Colmenares said, they implemented national industrialization before allowing foreign investors in.
Citing the World Investment Report of the United Nations Conference on Trade and Development, Ibon Foundation said, “Global regulatory changes are less and less towards liberalization/promotion and more and more towards regulations/restrictions.”
“The Centre for Economic Policy Research (CEPR) similarly observes rising protectionism. Its 12th Global Trade Alert (GTA) Report on Protectionism monitored thousands of protectionist measures implemented since November 2008, especially by the US, European Union (EU), Germany, Russia, China, India, Indonesia and Vietnam,” the Ibon report read.
Africa noted that from 2000 to 2010, there has been an increase in protectionist policies from six percent to 23 percent. He said that these include about 2,141 protectionist measures that countries such as United States, Germany, Russia, India, European countries, among others.
Africa added that 1,396 out of 2,141 or about 65 percent of these protectionist policies were implemented by advanced G20 member countries.
Ibon Foundation report added: “The Philippines can do no less and should take careful heed of a trend which can only intensify as the world economic crisis drags on.”
“It would all the more deplete the country’s natural resources at the expense of the Filipino people,” Colmenares said.
“With charter change, what happened in Marinduque could happen to the entire country,” he added. The Marcopper mining disaster in the island of Marinduque on Mar. 24, 1996 remains as one of the worst mining disasters, which killed the once pristine waters of the Boac River.
Colmenares added that once essential social services are privatized and opened up to foreign ownership, “profit would be the main motive and public service would just be an afterthought.”