Like It Is

Embrace the world

/ 05:06 AM August 29, 2019

In 1986, the world didn’t exist; we were a parochial lot, and nationalism dominated. And there was fear — fear that foreigners would take it all away and deprive us of our livelihood.

Well, that’s not the way it’s worked out. The world has assimilated, trade barriers have been torn down (except what this idiot Trump is doing to destabilize the world order and create a recession we seem destined to dive into), manufacturing has moved to where it’s best to do it. Consumers can buy the best deal — regardless of where it came from.


Globalization is a proven success for the people that most matter, you and I. You now get the best products at the cheapest price, and you get well-paying jobs with foreign companies thrown in as a bonus.

So why would you still keep rules that belong in the history books? The 1987 Constitution was based on a document that was written in 1936, designed to protect Filipinos from the big, nasty foreigners who’d take it all away from Filipinos. We have suffered because of it.


Our neighbors had no such fears. They welcomed foreigners — and have grown at rates multiples of the Philippines. It’s time to change all that, and it can be done. The Constitution put equity limits on public utilities, including the absurd 100-percent Filipino ownership of media. But “public utility” was never defined.

Time it was. It must be done sensibly, recognizing the new, global world we live in, and the urgent needs of the Filipino in areas that could grow far more dramatically if foreigners could participate and such areas could be opened up to them, simply by defining what really is a public utility.

There are proposals in Congress to amend the 82-year-old Public Service Act to address the country’s restrictive policy on foreign direct investment and eventually provide more jobs and ensure reasonable rates of services that wider competition will bring. Under Article 12, Section 11 of the 1987 Constitution, public utilities must be solely operated by firms that are 60-percent owned by Filipinos. But “public utilities” was not defined.

The proposed bill in the 18th Congress would now do so, and define public utilities as being only electric power distribution and transmission, and water pipeline distribution and sewerage pipeline systems. This means that once enacted, the measure would pave the way for the entry of greater levels of foreign investments into other areas where they’re currently restricted, such as telecommunications and transportation, where wider participation is needed.

Also included in the bills filed in the previous Congress is the updating of the system of penalties and violations against erring public utilities, where the existing law imposes a fine of only P200 per day. Obviously, this doesn’t deter anyone from anything. One can but hope a new law will apply an appropriate fine, AND tie it to inflation, so 82 years from now, it will still be a deterrent.

The evidence is overwhelming. Countries that have liberal investment laws have succeeded better than those that don’t. A World Economic Forum article titled “The story of Viet Nam’s economic miracle” noted that, “Today, Viet Nam is one of the stars of the emerging markets universe. Its economic growth of 6-7 percent rivals China, and its exports are worth as much as the total value of its [gross domestic product]. Anything from Nike sportswear to Samsung smartphones are manufactured in this Asean nation.” Citing a report published by analysts from the World Bank and think tank Brookings, the growth was attributed to three main factors: “First, it has embraced trade liberalization with gusto. Second, it has complemented external liberalization with domestic reforms through deregulation and lowering the cost of doing business. Finally, Viet Nam has invested heavily in human and physical capital, predominantly through public investments.”

The report added that “In 1986, the country created its first Law on Foreign Investment, enabling foreign companies to enter Viet Nam. Since then, law firm Baker & McKenzie said in a 2016 report, the law has been revised a number of times, mainly to adopt a more pro-investor approach while aiming to reduce administrative bureaucracy and better facilitate foreign investment into Viet Nam.”


The Philippines has talked about the same things, but is yet to do something more concrete.

A clear definition of public utilities will result in greater competition, which should result in better quality services. What is Congress waiting for?

Email: [email protected]

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TAGS: 1987 Constitution, foreign direct investments, Globalization, Like It Is, Peter Wallace
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