Cha-cha purely for sake of investment 'bodes well' for growth — Fitch unit
MANILA, Philippines — Amending the 1987 Constitution purely for the sake of opening up the economy to more investments would bode well for the Philippines’ long-term growth prospects, a unit of the Fitch Group said.
In a commentary sent to journalists Thursday, Fitch Solutions said any pro-business changes “would pose upside risks to our long-term growth forecast” for the economy.
Specifically, Fitch Solutions said fixed capital formation, which historically accounts for an average of about 23% of GDP, could see its share of the economy rise ”by several percentage points” over the longer-term if the protectionist provisions of the charter would be amended.
At the same time, average real GDP growth could clock in at 6.6% in the next decade if the economy would open up more to foreign investors, the Fitch unit added.
“The potential removal of restrictions on FDI could see overall investment pick up over the coming years,” Fitch Solutions said.
For years, the broader public have grown opposed to any effort to tinker with the Constitution over suspicions that the seating government is out to perpetuate itself in power. Meanwhile, some experts have argued that opening up the economy at this point would not make sense as the rest of the world are enforcing investment controls and protectionist measures.
There were attempts in the previous administration to amend the charter as part of former President Rodrigo Duterte’s campaign promise of a shift to a federal form of government. But this was later abandoned due to lack of public trust, as well as failure of the Lower House and the Senate to agree on the mode of amending the 1987 Constitution.
While President Ferdinand Marcos Jr. has said that charter change is not a priority of his administration, an overwhelming 301 House of Representatives lawmakers last Monday voted to pass on final reading a resolution calling for a constitutional convention to rewrite the charter’s economic provisions.
READ: House flexes supermajority power to approve con-con resolution on final reading
“We expect the administration to continue to enact pro-investment reforms over the coming quarters, especially as the president has reaffirmed his ambitions plans to make the Philippines a prime destination for foreign investors,” Fitch Solutions said.
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