The Foundation for Economic Freedom (FEF) has expressed its support for proposals in Congress to amend the restrictive economic provisions of the Constitution, as an economic charter reform will end the uncertainty on economic policy direction.
“We firmly believe that Resolution of Both Houses (RBH) 7 and its counterpart RBH6 in the Senate will provide certainty to the country’s economic policy direction by giving our legislators the flexibility to create legislation that is responsive to global and domestic economic realities, for the benefit of the Filipino people,” the FEF said in a statement.
RBH 7 contains the House version of the proposed economic amendments. The House has approved its version on third and final reading. RBH 6 is the Senate version.
“The uncertainty in our economic policy framework stems from the contradiction between the restrictive provisions in our Constitution and the attempts to mitigate them through legislation. The uncertainty lies in the fact that enacted legislation, that went through rigorous debate and deliberation by both houses of Congress, can be rendered moot through a Supreme Court challenge on the grounds of constitutionality,” the FEF said.
It cited the recent amendments to the Public Service Act as an example. The constitutionality of the law has been challenged before the Supreme Court.
“Existing and potential investors in the telecommunication and transportation sector must await the resolution on these challenges to be certain of the actual policy of the Philippines.
If the Supreme Court decides to rule that this law is unconstitutional, this will greatly damage the image of the Philippines with foreign investors,” the FEF said.
It said adding the phrase “unless otherwise provided by law” in the Constitution’s economic provisions, as proposed in RBHs 6 and 7, “will render this constitutional challenge moot.”
The group also cited a World Bank statement that the Philippines “is the most concentrated economy in Asia, i.e. monopolies and duopolies dominate the economy.”
“Giving flexibility to Congress to change the rules will improve contestability in a market dominated by existing monopolies and duopolies. This means that actual competition or even the threat of competition from foreign players will lead local players to improve the quality of, and access to, their goods and services if they know that new entrants from abroad can be facilitated by Congress,” FEF said.
It added: “We believe that removing the restrictions is a necessary condition since we have to open the door first for investors to be able to come in. For foreign businesses to benefit from better institutions and processes, they must enter the country first. How does one even experience all of the other enabling factors if one is barred from the get-go?”.
“There is a need to signal that the Philippines is open to FDI and demonstrate a ‘credible commitment’ to this economic framework. Removing these anti-FDI provisions in the Constitution will signal our openness to foreign investment,” added the group, chaired by former finance secretary Roberto de Ocampo.
