By Virgilio L. Leyretana, Sr.
On January 01, 2024 the U.S. Department of States’ Investment Climate Statement, published the following disincentives for foreign investment in the Philippines:
Poor infrastructure, high power costs, slow broadband connections, regulatory inconsistencies,
a cumbersome bureaucracy and corruption remain disincentives to investment, the Philippines complex, slow, redundant, and sometimes corrupt judicial system inhibits the timely and fair resolution of commercial disputes, traffic in major cities and congestion in the ports remain barriers to doing business.
The PSA maintains foreign ownership restrictions on six “public utilities”: distribution of electricity; transmission of electricity; water and waste water pipeline distribution systems,
including sewerage; petroleum and petroleum products pipeline transmission systems; seaports; and public utility vehicles.
As it appears, the foregoing restrictions to attracting foreign investments to the Philippines are not entirely and absolutely bound by the Constitution.
A cursory perusal of the “Quisumbing Torres Handbook on Easing of Investments” show that, even without amending the Constitution, the foregoing investment barriers can be relaxed by legislative action.
In fact, the Congress of the Philippines has done this already by enacting the following laws, to wit:
In 2020, Congress enacted R.A.11469 and R.A.11494 otherwise known as Bayanihan Act One and Two to stimulate and revitalize the economy after the havoc wrought by the Covid-10 pandemic.
To augment the Bayanihan Acts, the government also instituted a policy of liberalizing the economy to attract foreign direct investment into the country, while establishing certain safeguards to protect national security through the following landmark laws, to wit:
R.A. No.11569, “An Act Amending Commonwealth Act No.146, Otherwise known the Public Service Act, was amended ( PSA Amendatory Law).
R.A. No. 11647, An Act Promoting Foreign Investments, Amending Thereby R.A. 7042, Otherwise known as the “Foreign Investments Act of 1991 as Amended, and for Other Purposes (“FIA Amendatory Law”).
The Amendments to the Foreign Investment Act ( FIA) eliminated restrictions on foreign ownership of exports enterprises and opened up most areas except those subject to the nationality requirements outlined in the Constitution and the Philippines Foreign Investment Negative List (FINL).
R.A.11595, “An Act Amended Republic Act 8762 Otherwise known as the “Retail Trade Liberalization Act of Act 2000, by lowering the Required Paid-up Capital for Foreign Retail Enterprises, and For Other Purposes” (RTLA Amendatory Law”) and its Implementing Rules and Regulations (IRR).
The Retail Trade Liberation Act (RTLA) reduced the per store investment requirement for foreign-owned retail trade business from $830,000 to $200,000 and the quantity of locally manufactured products foreign-owned stores stores are required to carry.
R.A. 11534, An Act Reforming the Corporate Income Tax and Incentives Systems Amending for the Purpose Sections 20, 22, 25, 27, 28, 29, 34, 40, 57, 109, 116, 204 and 290 of the National Internal Revenue Code of 1997 as Amended and Creating Therein New Title XIII, and for Other Purposes.” (CREATE Law).
In addition, the 2021 Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act reduced the corporate income tax rate from 300 percent to twenty 25 percent for large firms, and 20 percent for small firms. The rate for large firms will be gradually lowered to 20 percent by 2025. CREATE also mandated fiscal incentives to be performance-based and time-bound and granted more authority to the Bureau of Internal Revenue (BIR), which narrowed eligibility for Value Added Tax (VAT) exemptions
From the context of the laws aforecited, it is perceptible that these evolved out of the ideas culled from consultations between and among members of Congress.
Subliminally, it implies that, consultation is an indispensable medium. The more minds are consulted the better, as more ideas could crystallize and the wider the choices for the most viable options.
In view of all the foregoing, is it still necessary to amend, if not revise the Constitution despite the passage of RA 11647, An Act Promoting Foreign Investments, Amending R.A.7042, otherwise known as the Foreign Investments of 1991, has liberalized the economy in order to attract foreign investments into the country?
Amending the Constitution an obligatory imperative that cannot wait any longer? Is there a demand from the people on their volition? Is the proposal not tantamount to a redundancy during this most extraordinary crucial times?
Moreover, is it not a non sequitur or a misplaced expediency to propose amendment or revision of the Constitution at this juncture of our history, when the Philippines is saddled by demands for good governance and facing increasing complexities of security challenges from internal conflicts, climate change, environmental degradation, natural disasters, terrorism and maritime threats plaguing the country such as illegal fishing, piracy, smuggling, human trafficking, marine pollution, and territorial incursions?
Furthermore, is the amendment or revision the 1987 Constitution an urgency while the country is reportedly confronted by critical socio-economic and political problems e.g. corruption, poverty, high unemployment and under-employment, high cost of food items and prime commodities, decadent agriculture and costly farm input; high cost of electricity and poor service; exorbitant and poor access to health care; high cost and shortage of potable water supply; destructive fishing; poor education; drug and substance abuse; air pollution; water pollution; environmental degradation; climate crisis, and natural disasters among others?
Could it be logical that before advocating for amendment or revision of the 1987 Constitution, the decision-makers should endeavor to undertake an expanded, in-depth and exhaustive consultation with all branches, departments and offices of the government?
The foregoing questions whetting public curiosity and triggers a litany of questions begging for answers.
