Efforts to amend the Constitution are proceeding at a determined pace after President Ferdinand Marcos Jr. made clear the objective and the preferred steps to realize it, with the Senate leading the charge.

Several personalities invited to the public hearings on the Senate’s Resolution of Both Houses 6 or RBH 6 and the House of Representatives’ RBH 7 attested to the slew of reforms that have eased the restrictions on ownership.

Eminent economists and magistrates pointed to the tweaking of the Public Retail Trade Act, the Public Service Law, and the Foreign Investment Act to remove the hurdles to foreign ownership in the most crucial sectors.

Thus, they claimed that amending the provisions in the Constitution had become moot.

Under the proposals of both chambers, the phrase “unless otherwise provided by law” will be attached to the provisions covering ownership limits in public utilities, basic education, and the advertising industry, freeing up these sectors for the much-sought foreign money.

According to a study by the Congressional Policy and Budget Research Department, regulatory barriers exist that will require Charter change or Cha-cha.

CPBD’s study underlined that, even before the pandemic, the Philippines had been transitioning through various reforms from a highly restrictive and complicated investment regime to a more open foreign direct investment strategy.

It mentioned the changes in the three measures as crucial reforms and added the Foreign Bank Liberalization Act of 1994.

Despite growing FDI inflows because of the reforms, the Philippines continues to lag behind its neighbors in the region when it comes to foreign capital.

World Bank data reveals that the country ranked sixth out of 10 ASEAN economies in total FDI inflows and last among the five biggest ASEAN economies — Indonesia, Malaysia, the Philippines, Singapore, and Thailand — in cumulative FDI inflows from 2010 to 2020.

The cumulative FDI net inflows in the Philippines reached $58.6 billion between 2010 and 2019, while Vietnam attracted $112.1 billion and Indonesia received $154.5 billion over the same period.

The study suggests that despite being in the same region and sharing similar economic opportunities, the Philippines has not experienced a comparable level of FDI as its neighbors.

Certain sectors have a poor record of FDI inflows.

For instance, the education sector attracted 0.1 percent, indicating limited foreign interest in this area. 

The mining and quarrying sectors performed slightly better yet only represented 1.2 percent of the total FDI.

Similarly, professional, scientific, and technical activities, as well as the electricity, gas, steam, and air conditioning supply sectors, each received 2.2 percent and 2.3 percent of the total FDI inflows, respectively.

The study also bared that ASEAN-5 countries comprised of the founders — the Philippines, Malaysia, Indonesia, Singapore and Brunei Darussalam — had made huge strides in reducing regulatory restrictiveness over the last decade, except for Indonesia, based on the FDI Regulatory Restrictiveness Index of the Organization for Economic Cooperation and Development which captures the extent of countries’ regulatory restrictions on foreign direct investment using a set of specific restriction measures.

Despite the moves toward liberalization, according to the OECD, the Philippines remains the most restrictive in terms of FDI regulation not only among the ASEAN-5 but also worldwide.

In 2020, the Philippines ranked third out of the 83 countries in being a difficult market to put in foreign capital. Over the years, the Philippines has consistently ranked poorly relative to its peers in the FDI regulatory restrictiveness index. 

(To be continued)