Now is the time to amend the ‘restrictive’ economic provisions in the Constitution

The country’s economy has been badly hit by the COVID-19 pandemic and the country has suffered heavily in economic terms.

Economic provisions take center stage again. Now is the time to focus on the constitutional issues that will speed up the economic recovery and to make way for important long term economic reforms.

I am elated to find that the work on the revision of the restrictive economic provisions in the Constitution has found its way back in the government’s current agenda.

The House Committee on Constitutional Amendments is currently undertaking proposals to finalize its recommendations. Advisedly, the committee is dealing with proposals only to amend the economic provisions.

I received an invitation to appear before the committee to summarize my thoughts on the issue. Below represents elements of what I plan to say.

To lay foundation for improved growth. The restrictive economic provisions on foreign capital that are imbedded in the Constitution of the country have long been blamed for impeding the country’s attractiveness to foreign direct investments.

The spectacular economic growth of our neighbors in East and Southeast Asia have been made more impressive by the role that foreign investments have played.

Our government, through the years, has made efforts to improve our policies toward foreign investments. We have succeeded moderately in this regard. The presence of restrictive provisions in our basic law creates a false advertisement about us.

Such provisions could lead to long-drawn out legal issues that are tied up with constitutionality. When they arose, as they have done in the past, the case only helped to generate poor publicity for us before foreign investors.

Our leaders need to improve the foundation for national economic growth in this respect. For decades now, policy-makers working along this front have had little success in overcoming special interest opposition to these revisions.

Yet time and time again, these provisions have proved to be critical in hampering our ability to bring in more foreign direct investments.

The crisis that we currently face in fighting the economic challenges of the COVID-19 pandemic should enable our leaders to push this time for the passage of this all-important reform that our country needs.

How to reform the constitutional provisions. If we were starting fresh in drafting a Constitution, the best way to deal with economic matters is to class economic issues with all other types of problems requiring the passage of laws and regulations.

This was how most of our neighbors dealt with all issues pertaining to foreign capital. Simple legislation issues. That’s how it became easy for them to pass laws suited to their needs and objectives.

But our Constitution already has elaborate provisions that define the specific policies. To rewrite the provisions or to eliminate them is likely to invite a never-ending and cumbersome debate.

The text of the proposed joint resolution for the amendment of the economic provisions is, fortunately, relatively simple and promises to be conducive to speedy resolution.

By inserting the clause, unless otherwise provided by law, to the specific provisions to be amended, the current text of the provisions is kept intact. I find this procedure prudent and practical.

This avoids the need to debate the details of wordings of the revisions in the provisions. Thus, the issue of amending the constitutional provisions is very much shortened and streamlined. The vote on the amendments to be made becomes simpler.

At a later time, when the task of amendment of the Constitution had been completed, Congress then could take up each of these provisions as simple matters of legislation. That is when full debates on specifics, to meet the needs of changing times or to correct past mistakes in economic policy, could be handled by the peoples’ representatives.

Benefits in amending the economic provisions. The presence of specific constitutional impediments to foreign investors in the country started in 1935 when our independence Constitution was crafted.

These provisions – namely, those on foreign investments in land, in public utilities, and the exploitation of natural resources – have been kept intact even as the nation’s political Constitution have been changed twice and revised a number of times.

The 1987 Constitution even added more restrictions, those dealing with education and media and advertising companies. The “original sin” in our investment laws has been with us for more than eight decades!

It would be important to list down the potential benefits of amending the restrictive economic provisions in the Constitution. I see them as an accelerator of the economic recovery initially.

In the longer run, I see the cleansing of the Constitution from these restrictions as giving full powers for our nation’s elected leaders to clear the way for improved economic legislation of reforms involving national investment needs.

It would surely help to assure that we can get a larger volume of foreign investments to move into our shores beyond the levels we have not seen in our national experience. The recently passed CREATE law that streamlines investment incentives and the corporate income tax would bolster investment inflows.

Among the benefits for our nation, if we achieve in pushing amendments, and if we succeed further to put in place complementary and wise economic policies to follow, are likely the following outcomes: (1) A sustained and a higher level of per capita GDP growth. (2)Higher level of employment for Filipino workers in their own country.(3) Improved overall level of productivity for the Filipino worker because on average the worker is boosted up  by higher capital accumulation in the workplace. (4) Better nutrition of our worker’s children and capability to support their schooling. (5) Enhanced capacity of workers to finance family housing and other needs. (6) An improved capacity for the state, through an upgrade of its finances, to undertake programs to ameliorate the conditions of those in poverty. And, (7) In short, a rising standard of living for all Filipinos.

For archives of previous Crossroads essays, go to: https://www.philstar.com/authors/1336383/gerardo-p-sicat. Visit this site for more information, feedback and commentary: http://econ.upd.edu.ph/gpsicat/