The Foundation for Economic Freedom (FEF), a nonstock, nonprofit organization, is urging Congress to remove the outdated economic provisions in the 1987 Constitution that “stifle” economic growth and deter foreign investment.
While commendable liberalization laws have been enacted in the previous administration, such as the Amendments to the Public Service Act, the Foreign Investment Act, and the Retail Trade Liberalization Act, FEF said the country still lags behind its ASEAN neighbors in foreign direct investment inflows.
“We, the Foundation for Economic Freedom, have always been at the forefront in calling for changes to the 1987 Constitution to remove the restrictive economic provisions that have, for decades, served as binding constraints to economic growth and development,” FEF said in a statement.
The group said data as of 2022 indicates that Indonesia, Vietnam, Malaysia, and Thailand have surpassed the Philippines in attracting foreign direct investment.
FEF said that the existing economic constitutional restrictions limit investments that the country needs to develop its creative industries.
“We believe that the removal of restrictive economic provisions sends a clear and compelling message to foreign investors, signaling a warm welcome to investment and business operations in the Philippines,” it added.
“It is crucial to emphasize that the Philippines is open to foreign investments, especially as one of the last countries where restrictions on foreign ownership are embedded in the Constitution,” FEF said.
“The restrictions in the 1987 Constitution serve as constraints to developing areas of the economy where the Philippines has great promise such as mass media and renewable energy,” It added.
“Likewise, while investments in solar and wind energy have been liberalized, there is still a lot of uncertainty for foreign investors because of the 60/40 rule in investments in natural resources and ownership of land,” FEF said.
“These are just some instances that make it difficult to make changes in policy, as economic conditions change, because of the restrictions embedded in the Constitution,” it added.
FEF said Congress can impose the appropriate restrictions, conditions for ownership, or safety nets based on the needs of the country to sustain economic and social development through legislation.
“The removal of economic restrictions from the Philippine Constitution will provide policymakers with greater flexibility to respond effectively to changing global and domestic economic conditions and the evolving needs of the economy,” it added.
“We understand that removing the foreign ownership restrictions in the Constitution is necessary but not sufficient to attract more foreign investors. Other conditions such as a rule of law, good infrastructure, and ease of doing business, among others, must be present to compete with other countries in attracting foreign investment,” it added.
FEF, however, said that constitutional amendments should be limited exclusively to economic provisions.
“This focused approach reduces the risk of political controversy and division, ensuring the swift passage of crucial amendments to the economic provisions of the Constitution,” FEF said.
“Even as we support the call to amend the Constitution to entice foreign investments, we also urge Congress to remove the remaining restrictions in the legislation, such as the prohibition of foreign investment in the rice and corn sector embodied in Republic Act No. 3018 and Presidential Decree No. 194,” it added.