Notwithstanding the protectionist provisions of the 1987 Philippine Constitution, majority of lawmakers approved on second reading House Bill No. 78 which allows full foreign ownership of public service sector, including transportation, communication and power.
Deputy Speaker Sharon Garin of Aambis-Owa party-list, principal sponsor of the measure, said, “This legislative reform will significantly contribute to increasing competition, as well as protecting the public interest.”
What competition? What public interest?
When the Mining Act of 1995 which liberalized the mining industry was enacted into law, its proponents promised an influx of foreign investments which would then result in economic development. Twenty-five years later, what actually happened was destruction of livelihood of indigenous peoples and farmers, not to mention irreparable damage to the environment.
In 2018, the taxes coming from mining companies accounted for only 12 percent of the total mineral exports. The industry contributes less than one percent to the country’s gross domestic product.
Even as foreign direct investments (FDIs) reached $9.8 billion in 2018, job generation remains slow. IBON Foundation estimates that unemployment rate is 10 percent, or equivalent to 4.7 million jobless Filipinos. Moreover, FDI is equivalent to 2.96 percent of the country’s gross domestic product (GDP).
It is absurd why the Philippine government further opens up the economy while other nations are implementing more measures to protect their own industries. There is a shift away from open trade as the global economic crisis deepens. The U.S. and China trade war manifests protectionism from both sides.
The European Union is doing the same. The new trade commissioner said he would tighten investment screening mechanisms so as to block foreign takeovers of European companies if the targeted companies are of strategic importance or the purchase is facilitated by unfair subsidies or state money.
Our legislators, meanwhile, think it is best to put a tag price on our basic and essential public services and allow foreign corporations to profit immensely. In the first place, government should be providing these basic services to the Filipino people.
Garin also argues, without any supporting evidence, that more competition would result in lower prices and improved quality of basic services. Privatization of water services best illustrates that competition could also mean higher prices and still poor services.
FDI, if not linked to the local economy, will not lead to development. Full repatriation of profits by foreign firms and tax incentives given to them without real technology transfer are not beneficial to the Filipino people.