The Most Important Economic Reforms are Political Reforms

“Reform the political system, not the economic provisions.”  This is the position of the Coalition for Citizens’ Constitution (C4CC) regarding the proposed amendments of the economic provisions of the 1987 Constitution.  The proposed constitutional changes are based on the argument that these supposedly restrictive provisions of the constitution impede the entry of foreign direct investments into the country, resulting to inability of our economy to generate much needed jobs.  But who should we expect to protect Filipino enterprises from the intense global competition, when we know that the global playing field is uneven? 

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Reform the political system, not the economic provisions.”  This is the position of the Coalition for Citizens’ Constitution (C4CC) regarding the proposed amendments of the economic provisions of the 1987 Constitution. 

The proposed constitutional changes are based on the argument that these supposedly restrictive provisions of the constitution impede the entry of foreign direct investments into the country resulting to inability of our economy to generate much needed jobs. These provisions, it is argued, limits the flexibility of the government in responding to the changes in the global economic environment, adversely affecting the capacity of the country to achieve faster economic growth.

We in C4CC believe that our economy should still be founded on the basic principle articulated in Article II Section 19 of the 1987 Constitution which provides that “the State shall develop a self-reliant and independent national economy effectively controlled by Filipinos”. With this, it is necessary that the state must “.. protect Filipino enterprises against unfair foreign competition and trade practices.” Who should we expect to protect Filipino enterprises from the intense competition of global economy especially when we know that the global playing field is uneven?

Land has often been the flashpoint for conflict in the Philippines, and the proposition that foreigners will be allowed to own land when millions of Filipinos cannot, given the still incomplete land reform and the increasing settlement problems in urban centers, makes this issue potentially the most contentious of all the proposed constitutional revisions.

We oppose opening our lands to foreign ownership. The proposed amendments apparently allow foreign ownership only of residential, commercial and industrial lands.  However, this would certainly open the gates wider to indiscriminate conversion of agricultural lands by landowners who would want to cash in on these amendments. Foreign ownership of residential lands would also further jack up prices of land in the cities and town centers, adversely affecting the urban poor’s campaign for safe, decent and affordable human settlements

We also highly doubt whether foreign investments will come into the country as a result of the changes in the economic provisions of the constitution. The Philippines is already one of the most open economies in the world. Compared to many of our trade and investment-restrictive neighbors, movement in liberalizing foreign investment in the Philippines has been marked, consistent, and applauded by the international business press. Yet this approval has not translated into significantly higher levels of foreign investments.

In fact, for the nationalists, it is not anymore just a question of preventing the removal of nationalist constitutional provisions. It is what should be done in a situation where these provisions are being rendered inutile through a mix of legislative measures, executive issuance and judicial interpretations of the provisions of the constitution.

We believe that, more than the said restrictions in our constitution, foreign investors generally point to political factors – corruption, unstable regulatory and policy environment, peace and order problems – as the main investment disincentives. The correct question to ask is how to change the current conditions so that these more substantive concerns of potential foreign investors are addressed. To our mind, the very structure of our industries, society and politics are the real barriers to the entry of foreign investment – not the economic provisions of the constitution.

How do we reduce corruption when it is almost built into the core of our political system? How do we have a predictable and effective regulatory system when unpredictability is the source of corrupt deal making? In the end, how do we get a government capable of attracting foreign investment under conditions where the national interest is properly protected?

The most important economic reforms are political reforms.

Finally, we wish to reiterate that charter change is better done through a constitutional convention, not through a constituent assembly. It would be wiser to consider the outcome of the peace process with the MILF in the timing of any constitutional change.