House committee on ways and means chair Joey Salceda said the global coronavirus pandemic has exposed the vulnerability of the country’s overdependence on its consumption-driven economy.
In his sponsorship speech for proposed ‘economic Charter Change’ under Resolution of Both Houses Number 2, Salceda, a seasoned economist bared the trouble created “by relying on domestic consumption, instead of investment, as the main driver of the economy,” as he emphasized tneeds to open the doors to foreign investments by amending the restrictive economic provisions of the 1987 Constitution.
“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,” Salceda explained.
Salceda noted a 2019 study by the Organisation for Economic Cooperation and Development, in which, foreign direct investments (FDI) restrictiveness index revealed that the Philippines is among “the world’s most restrictive countries to FDI.
“The same index shows that we are the worst in ASEAN,” he added.
Salceda stressed that “to be the worst in ASEAN—an international success story in lifting millions of people out of poverty, is shameful.”
He explained that the Philippines is the strictest in ASEAN “across almost every key sector, except manufacturing.”
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 stressed.
For Salceda, the country has built its own walls against FDIs through its current system, amending the Constitution is the first step to opening the economy to foreign investors.
“The overwhelming evidence is that we made a mistake to hardcode our fears and paranoia into our Constitution,” he added. (CMC)