Camarines Sur Rep. LRay Villafuerte welcomed this week’s approval at the committee level by the House of Representatives of the fresh initiative to hold an election for delegates to a proposed Constitutional Convention (Con-Con) to amend the 1987 Charter, as he appealed to President Marcos to reconsider his position on constitutional reform in order to sustain high economic growth on his watch by way of greater foreign direct investment (FDI) inflows.
Villafuerte, a lead proponent of a measure—House Bill (HB) 4926—endorsing Charter change via the Con-Con route, issued this statement after the House committee on constitutional amendments approved by a 16-3 vote with one abstention a still unnumbered Resolution of Both Houses (RBH) seeking the election of delegates to study and propose reforms to the 1987 Constitution.
“We are hoping that the committee vote for our Con-Con proposal would clear the way to its swift plenary approval by the House.”
This committee chaired by Cagayan de Oro City Rep. Rufus Rodriguez voted for the bill last Monday after holding several regular meetings and public hearings in various parts of the country on pending proposals to amend the Constitution either by a duly-elected Con-Con or by the Congress convening itself into a Constituent Assembly (Con-Ass).
“We are hoping that the committee vote for our Con-Con proposal would clear the way to its swift plenary approval by the House,” Villafuerte said. “It is our hope, too, that with this panel vote, President Marcos would reconsider his position on Charter change.”
Villafuerte recalled that during the recent grand opening of the New Terminal Building of the Clark International Airport in Pampanga, President Marcos said that “we will do everything” to nurture strong partnerships between his Administration and potential investors.
“Given that the 60-40 ownership cap in our Constitution is apparently one deal-breaker that has turned off foreign investors despite the investment-grade ratings of the Philippines for over a decade now,” said Villafuerte, “we believe that giving priority to Charter change to take out this restrictive economic provision is one of the must-do’s that the President could consider to foster stronger partnerships with prospective investors leading to greater FDI (foreign direct investment) inflows.”
That the 60-40 ownership cap has apparently been a damper on foreign investor appetite is borne out, he said, by official data pointing to continued weak FDI inflows despite our country’s investment-grade ratings and status as one Asia’s economic over-achievers,” he said.
Citing Bangko Sentral ng Pilipinas (BSP) data, Villafuerte noted that FDI inflows retreated by over 13% over the January-November 2022 period to $8.43 billion from $9.74 billion in the same period in 2021.
He said even President Marcos’ economic managers apparently see no significant reversal of this FDI downtrend in the near future as they had reportedly slashed their FDI target for 2023 to $11 billion from the original $12.5 billion.
In a TV interview before the House committee vote last Monday, Villafuerte had pointed out that despite a troika of business-friendly laws signed during the previous administration, FDI inflows have not been as large as those streaming to our Southeast Asian neighbors because our inward-looking Constitution prohibits foreigners from taking full control of Philippine corporations and owning lands needed for their local businesses.
Hence, he said, a Con-Con comprising duly elected delegates is the more feasible route, in lieu of the Con-Ass option, as he asserted on TV that the House would go ahead on this latest Charter Change initiative even if the President claimed recently that amending our Constitution is not one of his Administration’s priorities.
Villafuerte said the House is targeting to make a final decision on this matter before the year is over, “and maybe we can have a plebiscite by the first quarter of next year.”
“Now, if we can’t have a plebiscite to approve the would-be proposed constitutional amendments by the first quarter next year, I think we have to wait another five years, which means the next President, to keep Charter Change rolling. That’s the sad reality,” he said.
Villafuerte pointed out that the best time for Charter Change to happen is right now at the start of the Marcos presidency when such an initiative wouldn’t raise doubts about a possible hidden agenda to extend terms of incumbent elective officials.
HB 4926 calls for the election of Con-Con delegates at one representative per legislative district. There are currently 243 congressional districts in the country.
“If you will look at it, a main source of poverty in the Philippines is our low agricultural output. There’s a lot of land in the country that is idle. We need foreign capital and foreign technology (to harness such idle lands,” said Villafuerte. “So in order to have more foreign capital flowing into the country, we should allow ownership as part of the menu for investors.”
For Villafuerte, the incessant challenge of price spikes in foodstuff and other farm goods is rooted in a structural problem. “The purpose of agrarian reform was really to help our farmers. We supported that but, let’s admit it that it was a failure in the sense that when we gave lands to our farmers, there was no capital available for them to make their farms truly productive.”
“The result was low agricultural output. So what’s the solution? We need foreign technology, we need foreign capital. And if you will look at all the countries that have really progressed, these are those that have allowed foreign ownership. If you’re a foreigner who wants to invest in agriculture and other sectors, the basic thing here is you want ownership,” he said.
When asked whether constitutional change is really necessary, given that the 18th Congress wrote in the past Administration a trio of laws meant to attract foreign investors, Villafuerte noted that he was among the authors of these three laws, “but basically, it all boils down to the ownership structure. Basic sectors in our country limit foreign ownership to up to 40% … of public utilities, media, education, natural resources development, among others.”
And if you will analyze other countries like South Korea, China and Japan, they had progressed rapidly because of manufacturing. “Even FDIs in countries like Vietnam, most of the investments are in manufacturing.”
The three laws mentioned in the TV public affairs program are Republic Act (RA) 11647, RA 11595 and RA 11659 that reformed, respectively, these laws on foreign investments, retail trade and public services.
Because of the 60-40 ownership cap in our Constitution, he said these three new laws stopped short of allowing foreign capitalists to take full control of domestic businesses. “We already made the changes in these three laws, but there remains the constitutional restrictions on foreign ownership that we need to address through Charter Change.”
Villafuerte said that if an investor wants to manufacture a certain product, for instance, one basic point is that this person would want land ownership.
He noted that two factors that dampen investor appetite in the Philippines are our high electricity rates and slow Internet speeds. But because of the huge investments needed to rev up our energy and telecommunications sectors, “we need foreign capital to develop these industries. For one thing, we have one of the slowest average Internet speeds in the world, but we need foreign capital to address that,” by way of a much better broadband infrastructure.
“We need ports, we need airports, we need telecommunications infrastructure. So why don’t we allow greater foreign capital and technology into these sectors that are crucial to rapid and sustainable growth and development?” he stressed. “Other countries are doing that … first world economies are allowing foreign ownership.”
Although acknowledging that the Con-Ass option appears to be the easier and faster approach to Charter change, Villafuerte said this is likely to go nowhere if pursued, because of the expected opposition from senators over the sticky issue that had doomed past initiatives to amend the Constitution, which is the fierce debate on whether the Senate and the House would have to vote jointly or separately on proposed amendments.
“The priority right now is a Constitutional Convention. Why? Because palagay ko ‘di papayag ang Senado (sa Con-Ass) because balik na naman tayo dun sa issue na do we vote separately or jointly,” he said.
HB 4926 calls for the election of Con-Con delegates at one representative per legislative district. There are currently 243 congressional districts in the country.
