Remove the economic restrictions

Everyone that matters recognizes the reality of today’s world and that opening up the economy to a level playing field can only benefit the people. Only the myopic, protectionist members of the Left refuse to see it despite the undeniable proof everywhere that open societies perform better. My suggestion for them is that they should migrate to North Korea. I’m sure they’d be very welcome. I challenge them to name even one communist country that has succeeded.

China remains politically tightly controlled (more so with Xi Jinping as dictator for life), but it went from poverty to wealth by opening its borders and its economic sectors to all who wanted to do business. Its GDP per capita in 1980 was a paltry $193 (the Philippines’ was $685). China opened up to foreign investments and now boasts of a GDP per capita of $6,807, or a 3,427-percent increase from the 1980 level. The figure is two and a half times bigger than the Philippines’ GDP per capita of $2,765. The country didn’t open up as fully as

necessary, and didn’t even do so until Fidel Ramos came into power.

Here are a few points to ponder on the need to open up the economy by amending the Constitution.

In 1935, there was rudimentary AM radio, negligible commercial air travel, cars that could reach 100 kilometers per hour if they struggled hard enough. TV was unheard of. The only household appliances were a simple refrigerator and toaster.

There were no cell phones 15 years ago; today, we can’t leave the house without one. Imagine if the Constitution had banned mobile communications in the name of protecting national security. Today, I can turn on the TV and CNN is right there in my living room. It doesn’t need a transmitter here, or even an office, so why not let it have one if it wants? It’s already here, influencing.

Technology has removed borders. Satellite communications, fiber optic cables, digital technology were all unheard of in 1935 and a rarity in 1987. They are a part of our lives today, so we may as well let the foreigners in as they’re already in. Here’s a fact: Much of the 1987 Constitution was written in 1935.

The dream of many Filipinos is to gain foreign education to add to what they’ve learned here. They dream of going to Harvard, but the cost is prohibitive. Why not bring Harvard here? What it will have to charge will, alone, be enough to make it no threat to local colleges. Anyway, do we want to protect colleges or open up opportunities for students? Foreign colleges can bring research and new technologies to the Philippines, too, an area where we have been particularly weak. Indonesia passed a law (it does not need constitutional change) to allow foreign ownership of educational establishments. We must open up, too.

Maybe a 75-year lease on land seems enough, but would you want to only lease the land for your house? No, you’d want to own it. Well, foreigners don’t think in some strange foreign way; they want to own, too. Filipinos can, and do, own land in America and almost everywhere else (you’ve no doubt got a relative who does), so why not here, at the very least on a reciprocal basis?  But that’s not the point. The point is that if we want to achieve more rapid growth, allowing foreigners to own land, at least for their own house or factory, will help achieve it. As it is now, that inability to own land is seen as a major deterrent to attracting investment. For “own use” would be fair enough. The Agrarian Reform Law has destroyed the ability to own agricultural land, so farmers are under no “threat.” And if limited to own use for house or factory, the amount of land taken would be infinitesimal. And they can’t take the land with them when they leave. The land remains Philippine property.

Then there’s the most important one: public utilities. At present, foreigners can only own up to 40 percent of a public utility (a tollway, a port, etc.). That does not attract a world-class corporation as it generally won’t take a minority position. It has the operational experience and expertise, and the technical know-how, and will want to do it its way. A majority Filipino partner may not agree. So it doesn’t come.

Allowing full ownership will allow us to expand more rapidly with more projects brought into play quicker. That’s more money, more jobs, more services for Filipinos. It would also send a strong message to investors in other sectors that the Philippines is an open economy that welcomes foreign investment in all areas. It creates a broadening effect. Over 85 percent of businessmen we surveyed want the economy fully opened up by constitutional change. Most in Congress also see the wisdom of bringing in greater levels of investment and integrating the Philippines more into the world economy.

Read my previous columns: www.wallacebusinessforum.com. E-mail: [email protected]