Remove the 60/40 equity limitations against foreign investments

House Speaker, Feliciano Belmonte (left) and Senate President, Juan Ponce Enrile (right). Credits to the Philippine Daily Inquirer.

Originally posted at http://josephonperspectives.wordpress.com/2012/07/18/remove-the-6040-equity-limitations-against-foreign-investments/

At this point, talk about constitutional amendments on certain provisions especially the economic ones of the 1987 Constitution has resurfaced once again as Juan Ponce Enrile suggested to amend the 25-year old constitution in order for the Philippines to compete militarily and economically, supported by the leadership of the House of Representatives lead by Feliciano Belmonte.

However, it never gained approval from the President, Noynoy Aquino when he said that “if ain’t broke, don’t fix it” in which he referred to the economic provisions of the constitution especially the 60/40 equity restrictions against foreign individuals or corporations where any prospective foreign individuals or corporations who wishes to invest in our country needs to find Filipino individuals or corporations to tap the 60% of equity shares asked by foreign individuals or corporations in order to operate their businesses in our country as stated in the Article XII, Section 10 of the 1987 constitution.

This is not the first time in the 25-year lifespan of the 1987 constitution where the proposals for amendments or even revisions in our constitution have been put on the table. Way back in 1997 when Fidel Ramos’ term as president was coming to fulfillment and when he felt that his economic reforms were not enough, he proposed for the revision of the 1987 constitution through the third method of amending the constitution which was the People’s Initiative where amending the constitution needed 12% of the total registered electorate in order to push through. However, in September 1997, he suffered a setback when the Supreme Court decided to grant the appeal of his political opponent, Miriam Defensor Santiago on the basis that there was no statutory law on People’s Initiative to give that constitutional provision teeth (even until now) and also the People’s Initiative option of amending the constitution doesn’t apply for revising the constitution as what Fidel Ramos asked.

In 1999, after Joseph Estrada took over the Presidency from Fidel Ramos after the ill-fated initiative for the revision of the 1987 constitution, Estrada created a Preparatory Commission on Constitutional Reforms (PCCR) to study the possible amendments to the 1987 constitution and the recommendations of that commission was later approved by Estrada which recommended constitutional amendments such as the scrapping of the 60/40 equity restrictions against foreign investments, allowing foreigners to own land in our country, and allowing foreign investments in the media sector. Later, this commission was renamed into a Constitutional Correction for Development or CONCORD. However, the CONCORD was faced with protests from different sectors in our society who felt that the 1987 constitution should not be amended, especially Manila Archbishop, Jaime Cardinal Sin and former President Corazon Aquino, the President when the 1987 Constitution was ratified. Later, Joseph Estrada dropped CONCORD as he felt that he could not gain a traction from these two influential persons in our country that time.

After Joseph Estrada’s ouster in 2001, Gloria Macapagal Arroyo succeeded him on the historic EDSA II Revolution on 20 January 2001. The entire Presidency of Arroyo from 2001 to 2010 was marred by severe political and economic instability due to lack of popular support in her installation as president in 2001 and she was nearly ousted many times in separate occasions during her entire span of her presidency. Her election for a full term in 2004 was marred due to  allegations of electoral fraud which made most of her far-reaching economic and political reform proposals unachievable during her entire term from 2004 to 2010 which included revisions of the 1987 constitution from presidential to parliamentary system, from unitary to federal form of government, and from protectionist to free market economic system.

Right now, the both chambers of the Congress have agreed on necessity of amending the restrictive economic provisions of the 1987 constitution which seems to be the most restrictive not just in Asia but also in the entire world as the economic policies of our country like the foreign investment laws are stipulated in our constitution like the 60/40 equity restrictions. Those 60/40 equity restrictions covers almost all economic sectors in our country especially the sectors that really need 100% FDI participation like mining, oil and gas extraction, agriculture, forestry, public utilities, transportation, education, construction and many others as these sectors have for many years deteriorated. Their services to the people and its technologies are getting outdated each year due to lack of foreign capital flowing into our economy as a result of the restrictive economic provisions stipulated in our constitution.

The 1987 constitution also restricts foreign individuals or corporations from investing or setting-up an advertising firms to 30% and also prohibits foreigners entirely of investing in media sector on which I believe it contributes to the deterioration of the Philippine media for the last half century as there is no much competition in producing movies, shows, and news in our media industry and being monopolized by the few rich local moguls who profiteered with no foreign competition policy of the 1987 constitution at the expense of the Filipino audience.

The restrictive economic provisions of our 1987 constitution are contributing to further and complex problem that our country plunging right now that is the severe unemployment and underemployment due to lack of competition in our job market as foreign investors are being driven out in our domestic economy and the local investors cannot provide the necessity of our growing labor force due to lack of capital and technology as foreign investors are reluctant to have a large-scale partnership with any local companies due to the notorious corruption in the Philippine business sector.

Those who were luckily educated were driven out of the country and forced to seek lucrative jobs abroad to earn money to support their remaining families here in our country at the expense of emotional troubles to their remaining children in a long-run which contributed to a further socio-economic problems among the Overseas Filipino Workers’ families where their remaining wife/husband in our country tend to dump their husband/wife who was working abroad or their remaining children tend to engage strange activities during their adolescence especially where some of them got married early of their ages or committed juvenile crimes due to the absence of one or two of their parents when they grew up.

If we, Filipinos wanted to have a real economic, political and social prosperity just just for today but also forever in our lives, let us support the initiate of Juan Ponce Enrile and Feliciano Belmonte of amending the restrictive economic provisions of our 1987 constitution.

REMOVE 60/40 EQUITY RESTRICTIONS! OPEN ALL ECONOMIC SECTORS TO 100% FOREIGN INVESTMENT!