Change of heart on charter change?
DEMAND AND SUPPLY - Boo Chanco (The Philippine Star) - January 23, 2019 - 12:00am

Late last week, President Duterte hinted at a possible change of heart on charter change or cha cha. In a forum on the Bangsamoro Organic Law in Cotabato City, the President said people are so used to directly voting for key national officials, suggesting that a full blown cha cha may be too ambitious.

The President said we may just go for a few amendments that have to do with some economic provisions seen by investors as too restrictive. It may be premature to say that the President has finally seen the light, but we can hope that he did.

The proposed changes to the Constitution brought forward by both the House and a presidential commission are too controversial and too divisive at this time. The shift to a federal form of government may also not be timely given the obvious inability of local officials in most regions to run their own LGUs now. What more local autonomous governments?

Even the President recently instructed the DSWD not to allow LGUs to administer disaster relief goods out of fear that LGU distribution will likely be mismanaged. 

A unicameral parliamentary form with a strong President like in the French model may be worth trying. But breaking up the country into autonomous federal regions looks like a formula for disaster. Outside of Metro Manila, Calabarzon, Cebu and Central Luzon, all other regions do not even have the economic means to fund their operations. They will still be largely dependent on central government like today, so why change? 

We have seen in the implementation of the expanded Local Government Code that LGUs failed to handle the devolved services. As a result, delivery of health services and agriculture extension services, among others, suffered.

We cannot go on a massive experiment in government at this time when we are having a hard time just trying to catch up with our regional peers in  economic development.

President Duterte is thinking right if we can conclude that he just wants to concentrate on the doable things in the short term. On top of that list is expanding our ability to attract and keep foreign direct investments or FDIs. We need to do this because we cannot on our own raise the capital and bring in the technology we need to catch up. 

It is amazing how a Communist country like Vietnam, devastated by two decades of war, has become more confident and effective in attracting FDIs. Their economic growth rate has made us eat their dust.

The economic provisions of our current constitution perpetuate the control of our country’s elites on our economy in the guise of economic nationalism. Things will be better for everyone if our economic elites were challenged by world class competition in areas like telecoms and utilities like power generation and distribution.

The Foundation for Economic Freedom had been fighting for this change in our policy mindsets for years. In a position paper last year, FEF pointed out that “the Philippines is  hampered by many economic  policies enshrined  in the Constitution that serve as binding  constraints.  

“These provisions are restrictive, protectionist, and anti-competitive, which hamper inclusive growth and economic development. These economic provisions need  to  be  amended  to provide the flexibility that will enable the Philippines to properly compete, adapt, and prosper in a changing and dynamic global economy.”

There had been proposals to just amend the economic provisions of the Constitution in this and past Congresses by former speaker Sonny Belmonte, Senators Ralph Recto and Richard Gordon. These proposals, rather than the self serving resolution of the current House, which also wants to remove term limits, should be considered.

Just amending the  economic  provisions as suggested by President Duterte last week should be  guided  by  three principal  reasons:  

1)  Ensure  free  competition  and  dismantle monopolies and disempower oligarchs at the same time.

2) Promote market efficiency based on the competency of producers and the enhancement of consumer welfare.

3) Enhance international competitiveness by meeting trade agreement obligations and increasing foreign direct investments. 

Former finance secretary Gary Teves, working with a FEF study group, said that “amending the economic provisions of the Constitution, particularly to maximize efficiency gains, free the state from elite capture, and correct corruptive effects.” 

Teves also said “removing the restrictive economic provisions in the 1987 Constitution to bring relief to Filipino consumers and address hunger, lack of jobs, and poverty.”

Other than manufacturing industries, Teves thinks that removing restrictive constitutional provisions will “also accelerate agricultural development by allowing new capital and  technology to improve the sector… More  FDIs  in agriculture  will  create  jobs  in  the  countryside, improve productivity, lower food prices, and bring down poverty incidence.  

“When the restrictive economic provisions are removed, foreign investors can participate in infrastructure projects which will increase competition and result in more public welfare benefits such as freed up government resources going to other priorities like education and health. It will also avert  over-reliance on foreign loans and help maintain our fiscal deficit at a manageable level of not more than three percent of GDP.”

Of course, there are enough people out there who think along the flawed economic policies of previous regimes that only worsened our country’s economic problems. Our rent-seeking economic elite and the far left communists are agreed in keeping policies that have only kept a good number of our people poor.

But there are also enough Filipinos who have gone abroad to work or even simply travel who have seen how  other countries have progressed by adopting more progressive concepts in economic development. Besides, old protectionist policies have only made us lose ground to regional competitors. There is no reason to think the some old policies will do better now.

Hopefully, the President has indeed seen the light and isn’t just joking. This simpler cha cha can be passed by Congress in time for ratification during  the May mid-term election. This could be the light at the end of the tunnel we are hoping for.

Boo Chanco’s e-mail address is Follow him on Twitter @boochanco

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