02/23/2021 | Press release | Distributed by Public on 02/22/2021 21:50
SOURCE: Press and Public Affairs Bureau
SALCEDA: OVERDEPENDENCE ON CONSUMPTION-DRIVEN ECONOMY UNDERSCORES NEED TO ATTRACT FOREIGN INVESTMENTS VIA CONSTITUTIONAL REFORMS
23 February 2021 11:19:42 AM
The country needs to open its doors to foreign investments by amending the restrictive economic provisions of the Constitution, as the COVID-19 pandemic exposed the vulnerabilities of a consumption-driven economy.
This was stressed by House Ways and Means Chair Joey Salceda, who, in his sponsorship speech of Resolution of Both Houses Number 2 (RBH 2), made the economic case for adopting proposals to amend the restrictive economic provisions of the 34-year-old Charter.
According to Salceda, an economist, 'we see the trouble we have created by relying on domestic consumption, instead of investment, as the main driver of the economy.'
'When people lose their income, as in COVID-19, we are hit harder because our economy is consumption-driven, and not built on investments that last,' explained the Albay representative.
In pushing for opening up the economy, Salceda lamented that in 2019, 'the OECD (Organisation for Economic Cooperation and Development) FDI (foreign direct investments) restrictiveness index shows that the Philippines is among the world's most restrictive countries to FDI. The same index shows that we are the worst in ASEAN.'
'To be the worst in ASEAN, an international success story in lifting millions of people out of poverty, is shameful. In fact, we are so restrictive that we are the tightest in the region across almost every key sector, except manufacturing,' he added.
Salceda revealed that the OECD lists 10 barriers to FDI, three of which can be addressed by amending the economic provisions of the 1987 Constitution: foreign ownership restrictions in the law; stipulations on management, such as regulations that nationals or residents must form a majority of the board of directors; and nationality-based restrictions on operations.
'All of them are present to some degree in this country. We are trying to solve each of them. But our ability to solve three of the most important of these barriers is extremely limited because the Constitution binds us to these barriers,' Salceda explained.
'In other words,' said Salceda, 'we built our own walls against foreign direct investments.'
The veteran legislator pointed out that amending the Constitution is the first step to opening the economy to FDI.
'I am under no illusion that RBH 2 is a magic wand for all of our problems. But it is a necessary beginning. The overwhelming evidence is that we made a mistake to hardcode our fears and paranoia into our Constitution,' Salceda said.#