FINANCE Secretary Carlos G. Dominguez III is backing the opening of the economy to foreign investors “to its widest extent” except for land ownership.

During the House Hearing on Resolution of Both Houses 2 on Tuesday, Dominguez said the restrictive economic provisions in the 1987 Constitution account for why the Philippines has “received vastly less” foreign direct investments than its neighbors in the Association of Southeast Asian Nations (Asean).

“The international community perceives us as the most restrictive economy in the Asean, so once they take a look at that, maybe they won’t even take a second look at us,” Dominguez said.

The finance chief lamented that the country’s Asean neighbors, such as Vietnam and Indonesia, have already made moves to ease foreign investment restrictions.

“The dramatic overhaul in Indonesia’s investment policies will leave us the only country in the Asean still maintaining inordinate restrictions on foreign investment participation in economic growth. This does not bode well for our competitiveness in the coming years,” he said.

Dominguez said he fully supports easing the foreign investment restrictions on public utilities, ban on exploitation of natural resources, ban on ownership of education institutions, ban on ownership of media and advertising, as well as the prohibition on the practice of foreign professionals in the country.

“The ban on the foreign ownership of land, however, should remain since this evokes strong emotional reactions. The rest of the investment liberalization strategies should accomplish enough to enable our rapid economic recovery,”  he said.

While the finance chief “doubts” that Congress can push through with easing the foreign ownership restriction on land, Dominguez said he is amenable to Congress passing legislation where the 60-40 foreign ownership rule would remain, but land leasing to foreigners should be opened to at least 99 years—longer than the current setup allowing foreigners to lease land for 25 years, renewable for another 25 years.

Article XII, Section 7, of the 1987 Constitution states that: “Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations or associations qualified to acquire or hold lands of the public domain.”

Only Filipino citizens and corporations with at least 60 percent of the capital owned by Filipinos are allowed to acquire or hold lands of the public domain.

‘Doable’ bills

Dominguez also urged legislators to also focus on pending “doable” economic priority bills, such as the Corporate Recovery and Tax Incentives for Enterprises bill, as well as the proposed amendments to the Public Service Act, Retail Trade Liberalization Act, and the Foreign Investments Act.

These measures, he said, can help restart the country’s economy.

“What is most important is to undertake what is immediately achievable. It is preferable, of course, to achieve the liberalization reforms in one blow. But if there are things that we can do to open up the economy through administrative measures, we must implement them. If there are areas that we can liberalize by amending our existing laws, then let’s do that,” he said.

Ledac track

To facilitate the process of the constitutional amendments in Congress, an economist on Tuesday recommended to Congress and the Executive to convene the Legislative-Executive Development Advisory Council (Ledac).

At the hearing of the House Committee on Constitutional Amendments, former Finance Secretary Gary Teves of the Foundation for Economic Freedom said both Speaker Lord Allan Velasco and Senate President Vicente Sotto III shall recommend to President Duterte the convening of Ledac as soon as possible to discuss the Charter-change proposals.

“[This is] to discuss and agree on the substance and process of procedure in amending the economic provisions of the 1987 Constitution,” Teves said.

“In that meeting, we proposed the Ledac to agree on the timetable and continuously monitor this initiative. Preferably, the President shall convene Ledac every two to three weeks for this purpose to help ensure meeting the deadline in time for its approval by Congress and a subquest ratification to coincide with the 2022 national elections,” he added.

The Ledac was created by virtue of RA 7640 as a consultative and advisory body to the President, who chairs the Neda Board on certain programs and policies essential to the realization of the goals of the national economy.

Teves also recommended that both Houses adopt House Resolution of Both Houses 2 to remove what are deemed restrictive economic provisions of the Constitution.

“The Philippines needs a significant policy shift towards foreign direct investments as the Philippines is the most restrictive country in Asean,” he said.

The Department of Trade and Industry (DTI), also on Tuesday, welcomed efforts to remove the economic restrictions in the Constitution, saying this will help unleash the economic potential of the Philippines, the second  fastest-growing economy in Southeast Asia.

At the continuation of the public hearing of the House Committee on Constitutional Amendments on Resolution of Both Houses (RBH) 2, Trade Secretary Ramon Lopez said removing the economic barriers will lure more foreign investors into the country.

“Our economy has been recognized as the second fastest-growing economy in Southeast Asia until the year 2019, right before the pandemic struck, with average growth of 6 percent for 14 consecutive quarters. We also know that such growth rates could even be higher if we were able to remove basic restrictions, such as the foreign ownership of businesses in certain sectors stipulated in the Constitution,” Lopez said.

“We therefore welcome the efforts—whether through a Charter change or the enactment of laws—in removing these economic restrictions and any barriers that limit foreign participation in investments and economic activities,” the Cabinet official said.

Prior to the pandemic, Lopez said the department already had 90 investment leads, or serious investors that had decided to set shop in the Philippines.

However, this number was only half of the investors the country could have attracted if the economy were less restrictive, he pointed out.

Though members of the government economic team did not immediately provide projections of the foreign direct investment (FDI) that could result from lifting the restrictive economic provisions of the Constitution, House Ways and Means Chairman and Albay 2nd District Rep. Joey Salceda shared figures he had computed after consulting economists and experts.

His estimates show that RBH 2 could lead to an additional average annual FDI of P330 billion ($6.8 billion) and generate 6.6 million jobs over a 10-year period.

A report by the 38th Global Investment Trends Monitor recently revealed that FDI flows into the Philippines for 2020 amounted to $6.4 billion.

Velasco’s RBH 2 seeks to add the phrase “unless otherwise provided by law” to certain economic provisions of the 34-year-old Charter, which restrict foreign ownership of land, natural resources, public utilities, educational institutions, media and advertising.

Such proposal would allow Congress to pass enabling laws easing restrictions on foreign ownership in order to boost foreign investments, which is critical to the country’s economic recovery.

RBH 2 provides that by a vote of three-fourths of all its members, the Senate and the House of Representatives voting separately could propose amendments to Articles 12, 14 and 16 of the Constitution.

This content was originally published here.