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Creative measures for tough times

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A couple of weeks ago, I opined that any constitutional review should be done only after the May 2022 elections, which are just about 15 months away. This is on the premise that the timing of such an initiative will always be politically suspect if done on or before a presidential election year. So, the argument was not against the need for charter change, but more on when to do it.

But, after hearing recent reports on the state of the Philippine economy, on how a more contagious — and possibly deadlier — variant of the COVID-19 has been spreading worldwide, and on the ballooning government debt, I am now acknowledging the urgency of revising the 1987 Constitution’s “economic” provisions.

We need foreign money, now more than ever. Economic recovery is far from reach. Desperate times call for desperate measures. All economies worldwide are in trouble, resulting in stiff competition for foreign capital. But we are unlikely to get the volume of foreign direct investments (FDIs) we require unless we finally allow 100% foreign ownership of businesses.

This is my only motivation for now supporting charter change. However, this support is on the condition that only “economic” provisions will be revised; that Filipino businesses will continue to be protected; that any amendment must be approved by both the Senate and the House voting separately; and, that any amendment must be ratified through a plebiscite to be held also during the May 2022 national and local elections.

The House leadership says charter change aims to allow Congress to pass bills that can “free up the economy to foreign investors.” I believe, however, that we should go beyond simply empowering Congress to do that. Otherwise, we might just find ourselves amending the charter now but still getting bogged down in the future by the need for several enabling laws from Congress.

By clearly stating in the Constitution that full foreign ownership of investments can be allowed — or by simply removing the provisions that restrict foreign investments — and considering meantime the proposal of the Finance department for long-term 99-year leases on land by foreigners rather than allowing foreign ownership, then maybe we can move quickly on urgently needed changes to the charter’s economic provisions.

We have a full-year in 2021 to focus on specific provisions to amend and to debate all their pros and cons. The substance can be settled eventually, but we first need to agree on the mode or process for change. This, to me, is the more important consideration now. Lawmakers should immediately agree on how they can best expedite constitutional changes.

I had lunch recently with former Finance Secretary Margarito Teves to talk about this. I have always known Gary, as well as his late father Herminio “Meniong” Teves, to be straight-shooters. I also reckoned Gary has authority to speak on the matter considering that he was an elected delegate to the 1971 Constitutional Convention. He was also a three-term congressman, a former president of the Land Bank of the Philippines, and was Finance Secretary in 2005-2010.

Having been part of the group that tackled changes to the 1935 Constitution, having been in Congress for three terms, having tackled land ownership and agrarian reform issues while at Land Bank, and having been Finance Secretary when the country had to deal with the 2007-2008 Financial Crisis as well as the destruction brought about in 2009 by typhoons Ondoy and Pepeng, and being the economist that he is, it is not surprising that Gary is in favor of charter change.

He notes that the Philippines is the only country in ASEAN where restrictions in foreign ownership are embodied in the Constitution; that we are also the most restrictive country in ASEAN as measured by the OECD FDI Regulatory Restrictiveness Index; and, that we were 6th out of seven countries — beating only Cambodia — in terms of FDIs in 2019, based on the UNCTAD World Investment Report.

By removing foreign equity restrictions in the Constitution, he said, we will “send a positive signal to investors and improve the country’s investment climate.” And this, he said, can result in more FDIs, “generate jobs, and provide a more sustainable economic growth.” The Philippines’ competitiveness ranking might also go up, he added.

The target, he said, is to delete provisions in the 1987 Constitution that “restrict or limit foreign equity participation in the use of land and natural resources; operation of public utilities, educational institutions, mass media and advertising; and allow subsequent Congresses, through ordinary legislation, the power to regulate, limit, or even restore the restrictions in the future due to changing circumstances and/or conditions.”

Deleting these specific provisions, and ratifying the amendments by May 2022, will immediately open the country to more FDIs by next year. Foreign investors will need not wait for enabling laws to open up certain industries to their investments. Deletion will be a quick response to the economy’s emergency situation. Land issues can also be set aside, meantime, considering the proposal for long-term 99-year leases rather than foreign ownership.

Instead of Congress becoming a constituent assembly, or convening a constitutional convention to amend the Constitution, Gary proposes that both the House of Representatives and the Senate start by approving a joint resolution that will focus solely on removing restrictive economic provisions in the 1987 Constitution.

Then, the Senate President and the Speaker of the House of Representatives recommend to the President to convene the Legislative Executive Development Advisory Council (LEDAC) to discuss and agree on the substance and the process of the change initiative. LEDAC can also set the timetable for the process, to ensure that proposed amendments are ratified by May 2022.

It will be a piece-meal effort, not like what we did in 1971 and in 1986 in overhauling the 1935 and 1973 constitutions wholesale. The need of the times is not for a complete revision or the drafting of a “new” constitution, but rather a “revision” of the existing basic law to allow for greater flexibility in managing the troubled economy particularly during the pandemic. Why rewrite the entire 100-page book when we need to edit only one page?

Whether Gary’s proposal is actually feasible, legally, is another question altogether. However, the process starts with the Executive and the Legislative convening the LEDAC and coming together to agree on what specifically needs to be revised and how to do it quickly. The approach is unprecedented, so legal minds should chime in on it. If the process will require an additional amendment on the “process” or modes of revising the charter, then this can be part of the initiative as well.

In the US, constitutional amendments may be proposed and sent to the states for ratification by either the US Congress, whenever a two-thirds majority in both the Senate and the House of Representatives deem it necessary; or a national convention, called by Congress for this purpose. To date, this convention option has never been used.

An amendment must be also ratified by three-fourths of the states by either the legislatures of three-fourths of the states or state ratifying conventions in three-fourths of the states. To date, only one amendment has been ratified through the state convention method. All others were ratified through votes of state legislatures.

This is a process that we can consider, if our laws will allow it. The House and the Senate can propose specific amendments to certain provisions of the Constitution, vote on them separately, and then submit them for ratification through a national plebiscite. No need for a constituent assembly or a constitutional convention with elected delegates. If the present constitution will not allow this, then we can precondition the approval of the “economic” amendments to the plebiscite’s requisite approval of the amendment “process.” We can put both proposals to a vote at the same time.

The US Constitution has been amended 27 times since 1789. There have been 33 proposed amendments to it, with 27 passed so far. The US Constitution has never been rewritten or redrafted in whole, but only amended in parts in the last 232 years. The Philippines, on the other hand, has had three constitutions since 1935 or the last 86 years. We don’t need a new Constitution. We just have to revise the present one to make it more attuned to desperate times.

 

Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council

matort@yahoo.com

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