The Philippine ‘Economic Miracle’ will come after Charter Change

Good news: the robust, fast-growing Philippine economy is really on the radar of international investors and business groups. In recent weeks, more foreign and local bankers, economic analysts and journalists have been contacting me for interviews about the economic and political prospects of the Philippines.

Two highly educated risk analysts from Britain and Singapore interviewed me on how I analyze not only the Philippines’ macroeconomic prospects but also the political situation. They said that foreign investors prefer a place perceived to have stability and predictability. They also asked how local businesspeople — from the conglomerates to the SMEs — are faring and what their morale is like.

Here are some of the thoughts and analyses I shared:

Charter change, especially the economic provisions, will boost economic growth. I told the foreign analysts that the first tax reform law pushed by President Rody Duterte isn’t the real big news yet. It is good news, because the tax reform law will ensure the government’s financial capacity to fund its social programs and new infrastructure projects. However, more good news is coming with Charter change.

Wait until the politically astute and bold President Duterte can somehow cobble together a coalition of mostly noisy, egoistical and often selfish congressmen and senators to drastically reform the 1987 constitution via Charter change — this dramatic shift could propel the Philippines to become a real “economic miracle,” with possibly even double-digit growth similar to China and Vietnam in recent decades. Charter change of restrictive economic provisions can spur huge inflows of foreign direct investments needed to revive Philippine manufacturing, boost tourism, agriculture, export industries, and create millions of new jobs.

Why? I told them that many international businesspeople from the West and Asia told me that the present 1987 Philippine Constitution’s restrictive economic provisions on foreign investments, which limits foreigners to only 40 percent ownership of companies, has been a huge stumbling block to foreign direct investments (FDIs) in the past decades. All the favorable socio-economic reforms by past presidents such as former economics professor ex-President Gloria Macapagal Arroyo, which won the Philippines many international credit ratings upgrades, were wasted.

Of what use are headline-making international credit rating upgrades if investors are not coming in, expect for speculative “hot money” investments in our stock market?

Even in 2014, then President Noynoy Aquino’s political allies, led by then Speaker Feliciano “Sonny” Belmonte Jr. and even then Senate President Juan Ponce Enrile, were ready to amend the constitution’s economic provisions, but President Aquino didn’t support such reforms.

In 2014, Congress started deliberations on House Resolution No. 1 filed by no less than Speaker Belmonte himself, which sought to amend the economic provisions of the 1987 Constitution.

In stark contrast to our seemingly “communistic” economic provisions, our more welcoming ASEAN neighbors and economic competitors Thailand, Singapore, Malaysia, Indonesia, and even latecomers Myanmar and Cambodia, have successfully wooed so much more foreign direct investments from the 1980s and 1990s up to now. The world’s most anti-foreign investor countries like North Korea and Cuba languished.

Ironically, more liberalized foreign investment policies and other pro-investor incentives have bolstered the manufacturing sector of ostensibly “socialist” countries like China and Vietnam, built up their world-class tourism facilities and boosted their other capital-intensive industries, thus helping make them among Asia’s fastest-growing economies.

Years ago, former President Fidel Ramos had already publicly supported clamors for modernizing the economic provisions of the 1987 Constitution.

Let us add our support to the longtime clamor of big businesses and business chambers to  liberalize our foreign investment rules to make them at par with those of our ASEAN and Asian neighbors.

We do not need to debate and reinvent the wheel, just beseech retired Supreme Court Chief Justice Reynato Puno and the other members of the consultative committee that they research and compare the successful, liberal foreign investment rules of our most progressive ASEAN and Asian competitors. In this instance, I dare say it is okay and not illegal to copy and paste what other Asian neighbors have to offer foreign investors.

The second tax-reform bill will benefit the economy. The two sets of bold tax reform bills of President Duterte are quite courageous but important reforms to strengthen the sustainability of fast Philippine economic growth beyond fancy speeches and eloquent PowerPoint presentations.

I told foreign analysts and journalists that taxes are universally unpopular; thus, most selfish politicians refuse to approve new taxes, but the maverick Duterte and his economic managers, led by Finance Secretary Sonny Dominguez, Budget Secretary Prof. Ben Diokno and Trade Secretary Mon Lopez are determined to push the second tax reform bill beneficial to the economy. 

The economy has a bullish future thanks to President Duterte’s action-oriented leadership style. Philippine Veterans Bank chairman Dr. Roberto “Bobby” de Ocampo said the Philippine economy has a bullish future due to our “action-oriented and implementation leader.” One example he cited was the Clark airport expansion project. It was bidded out successfully just before Christmas 2017, won by Megawide to construct bigger terminal facilities of the Clark International Airport to three times its existing capacity in two years.

Del Rosario said he’s amazed that it took Duterte to finally do this. He revealed that decades ago he was head of a committee tasked by the government to study options on expanding Metro Manila’s international airport capacity, and years ago, his committee had already recommended expanding Clark, but not much happened in the succeeding decades!

I told foreign analysts, journalists and investors to fasten their seatbelts and get ready to invest now in the Philippine economy, because soon we’ll witness the fastest, phenomenal growth ever.  

Duterte is the “Charles de Gaulle of Asia.” I describe President Duterte as the “Charles de Gaulle of Asia” because of his adroit diplomacy, making the Philippines an ally and trading partner of all the world’s big powers and a foe to none.  Our Philippine economy is immensely benefitting from Duterte’s pragmatic, almost Machiavellian dexterity in geopolitics. He is finally fulfilling the Philippine constitution’s provision on us pursuing a true, mature, independent foreign policy subservient to no world power.

Not only has Duterte normalized our diplomatic and economic relations with the world’s second biggest economic superpower, China, and the world’s largest country, energy-rich Russia, he has also befriended our traditional ally, the US, under his personal friend, President Donald Trump, as well as Japan, South Korea, and even India.

Last year, Prime Minister Narendra Modi became the first Indian prime minister to visit the Philippines in over 36 years! Duterte has also just made a trip to India. Both China and India alone represent a mind-boggling potential export market of over 2.5 billion people.

Chinese Ambassador Zhao Jianhua told me: “President Duterte is an outstanding leader who always talks about the paramount interests and development needs of the Filipino nation, whenever we discuss diplomacy or other issues. He is highly respected all over Asia.”

Swedish Ambassador Harald Fries told me: “President Duterte is a good statesman in our meeting, he is good at diplomacy.”

* * *

Thanks for your feedback! Email willsoonflourish@gmail.com or wilsonleeflores@yahoo.com. Follow @wilsonleeflores on Instagram, Twitter, Facebook, and read my blog, wilsonleeflores.com.