PNoy: There’s nothing wrong with change

Recently, the Makati Business Club (MBC) and the Philippine Chamber of Commerce and Industry (PCCI), two of the biggest and most influential aggrupation of businessmen in the country, urged our government (both executive and legislative) to put their acts together and address the pressing issues brought about by the imminent integration of the ASEAN region by the end of 2015.  Among others, inadequacies in utilities (like water and power) and infrastructures (like roads, airports, seaports, etc.), as well as, the restrictive foreign investment provisions in our constitution were raised.

Supposedly, if timely addressed, these will help us in sustaining our present economic growth and propel us towards attaining inclusive growth through more job opportunities.These are job opportunities that can only be created by encouraging fresh investments (whether local or foreign).

Realistically, however, local investments could hardly put a dent on our unemployment woes.  Their (locals) capitals have already been placed and possibly exhausted.  Thus, there is an apparent need for foreign direct investments or FDIs.  However, probably riding on the tag that our economy is one of the fastest growing in Asia, our government leaders are in the belief that what we’ve so far done are all appropriate and will bring us to our dreamed target.  That there is absolutely nothing to change.

Truth be told, the size of our economy is one of this region’s tiniest.  So that, it follows that our base figure, year after year, is too small.  Therefore, increases in percentage points maybe high but the absolute amounts are just too little.   Hence, when weighed against that of other ASEAN countries, ours will surely pale in comparison. Going deeper, it will clearly show that we are undercapitalized and are technologically inept.The root of the problem-the apparent lack of incentives for foreign investments.  Despite these realities, however, our government has remained adamant in giving additional incentives to prospective foreign investors because, allegedly, of  some nationalistic fervor. 

This mindset is confirmed by President Benigno S.C. Aquino III (PNoy) himself in one of  the general assemblies of the Joint Alumni Clubs (Alumni of US schools) at The Peninsula Manila in Makati City over a year ago.  In answering a question on business groups’ venerable plea to ease constitutional restrictions on foreign ownership in certain industries, PNoy emphatically said, it had "a nationalistic trait in me.”   True enough, our constitution limits foreign ownership to 40% in some undertakings.  Most of these undertakings usually involve natural resources and public utilities.  These restrictions are clearly manifested in the Foreign Investments Negative List. This is a list of all business activities where foreigners are either restricted or banned.  

This pronouncement simply confirms that our policies toward FDIs will remain the same.  While we may brag about what we have attained right now having the same old policies or constitutional restrictions, it cannot be denied that other countries that are already better than us will continue to give more.  Worst for us, some emerging economies (like Myanmar and Cambodia) that are also wanting in it (FDI) will surely offer better and tantalizing incentives.

Candidly, if PNoy is adamant in not giving in to MBC’s and PCCI’s proposals and the foreign business group’s demands for removal of some restrictions (like the negative list), he must consider other changes.  Probably, this can come in terms of ownership of real properties (such as, land for a manufacturing plant and residence).  With this incentive, it doesn’t mean though that there shall be no restrictions.  While we should allow them (foreigners, whether personal or juridical) to own real properties, its use and sizes shall be regulated.

Indeed, there seemingly is an undying interest in our country. Unfortunately, however, what we are trying to offer are sadly those that they don’t need.  What is important now is for all the players (PNoy and our lawmakers) to consider amending certain laws to keep abreast with the fast-changing environment brought about by the irreversible journey to globalization.   Afterall, there is nothing wrong with change, if it is for the better.

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