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FEF proposes relaxing foreign ownership restrictions in Constitution

The Foundation for Economic Freedom, Inc. (FEF) is proposing amending the Constitution’s economic provisions to allow 100% foreign ownership of land, utilities, educational institutions, and mass media.


“We believe that the removal of restrictive economic provisions sends a clear and compelling message to foreign investors, signaling a warm welcome to investment and business operations in the Philippines,” the FEF said in a statement on Thursday.


“The restrictions in the 1987 Constitution serve as constraints to developing areas of the economy where the Philippines has great promise such as mass media and renewable energy. The existing constitutional restrictions limit investments that we need to develop our creative industries,” it added.


The FEF proposed to amend the following sections of the Constitution to allow 100% foreign ownership: Section 2, Article XII (National Patrimony and Economy); Section 3, Article XII (National Economy and Patrimony); Section 7, Article XII (National Patrimony and Economy); Section 10, Article XII (National Patrimony and Economy); Section 11, Article XII (National Patrimony and Economy); Section 4, Article XIV (Education, Science and Technology, Arts, Culture, and Sports); and Section 11, Article XVI (General Provisions).


The FEF also proposed the following amendments to the Filipino First provisions of the Constitution:


Section 19, Article II (Declaration of Principles and State Policies): From “The State shall develop a self-reliant and independent national economy effectively controlled by Filipinos” to “The State shall develop a self-reliant and independent national economy for the benefit of all Filipinos.”


Section 10, Article XII (National Economy and Patrimony): From “…In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos…” to “…in the grants of rights privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified investors.”


Removing such restrictions in the Constitution could help policymakers respond more effectively to both global and domestic economic changes, the FEF said.

Congress may still install safety nets within the constitution to ensure economic and social development, it added.


“We strongly emphasize that constitutional amendments should be limited exclusively to economic provisions. This focused approach reduces the risk of political controversy and division, ensuring the swift passage of crucial amendments to the economic provisions of the Constitution,” the FEF said.


However, the FEF noted that amending the constitution alone won’t sufficiently attract foreign investors as the government still needs to improve on upholding the rule of law, improving infrastructure, and ensuring ease of doing business.


Policy analyst and lawyer Michael Henry L. Yusingco said allowing 100% foreign ownership is not expected to boost foreign direct investments (FDI) significantly.

“But if we also fix our power issues, labor productivity issues, and transportation issues, then the amendment of the economic provisions can lead to a boost in FDI specifically in the sectors concerned like education, mass media and power generation,” he said via messenger.


“To boost our FDI, we also need to solve basic problems like power costs, labor costs and other costs of doing business,” he added.


Meanwhile, University of the Philippines-Los Baños Economics Senior Lecturer Enrico P. Villanueva said there is a risk politicians will take advantage of the amendment process to advance their interests.


“Government should focus its energies and resources instead on making the domestic business climate attractive. Costs of doing business should be lower (energy, transport, fees, bureaucracy, etc.), he said in a social media message.


Mr. Villanueva noted that the definition of public services was eased under the Duterte administration to attract foreign investors, but FDI did not increase significantly.


Mr. Yusingco also cited the Retail Trade Liberalization Act and the New Public Service Act as instances of the government seeking to remove obstacles to foreign ownership.


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