The government, through its economic agencies, is supporting moves in Congress to amend the Constitution, arguing that changes must be made to attract much-needed foreign investments to the Philippines.

Amending the 1987 Constitution, said Finance Undersecretary and Chief Economist Domini S. Velasquez at a recent hearing at the House of Representatives, could help the government draw in foreign investments in the face of shifting trade relations and rising protectionism in the global economy.

Judith V. Gonda, assistant DEPDev director, noted there are provisions in the Charter impeding foreign investments, particularly “those that restrict foreign ownership, management, and control of certain enterprises and activities,” thus, contributing to low foreign capital inflows and the scarcity of major global enterprises in the country.

Foreign ownership in key industries is currently limited by the Constitution to 40 percent, with the majority ownership in Filipino hands. Lifting the cap could go a long way to making the country desirable to foreign investors and stream in capital from overseas, said Philippine Stock Exchange legal counsel Katarina Gabrielle V. Cosalan. 

“Eliminating or lessening by law the barriers to foreign capital can indeed attract more direct foreign investment into the country,” she said, underscoring that “openness to foreign ownership is a key criterion” used by investors in rating market quality.

The debate surrounding Charter change (Cha-cha) has, on one side, advocates like the government’s economic team arguing that effecting amendments is imperative to attracting foreign capital and boosting economic development in the country. 

Then there are the critics warning that opening the country’s doors wide to foreign investments could pave the way for the eventual surrender of our patrimony, thus warranting a hard, balanced, objective examination of potential benefits versus inherent risks, particularly for local enterprises.

The perceived advantages of Charter change are compelling indeed, especially within the current global context. Proponents point out that lifting restrictive ownership rules would unleash a significant wave of foreign direct investments (FDI), which the Philippines chronically lags behind its Southeast Asian neighbors in attracting. 

This capital infusion is not merely about money; it translates to jobs creation, advanced technology transfers, and enhanced managerial expertise.

Furthermore, in an era of geopolitical realignments and protectionist trends, constitutional flexibility could allow the Philippines to swiftly adapt trade and investment policies to secure its place in resilient supply chains, turning global uncertainty into a strategic opportunity.

However, the cons of such a monumental shift are deeply rooted in legitimate fears of economic disempowerment. The primary concern is that unfettered foreign access could endanger local investors and small-to-medium enterprises (SMEs).

Without the protective cushion of ownership mandates, cash-rich multinationals could easily outcompete or acquire domestic players, leading not to diversification but to a new form of domination, that is, by foreign capital. 

Strategic industries like utilities, land ownership, natural resource development, and mass media involve profound national security and cultural implications. Surrendering control here could compromise the country’s ability to steer its own economic destiny.

Critics also contend that the problem may not be the restrictions themselves but other, more pressing barriers to investment: bureaucratic red tape, inconsistent regulatory enforcement, infrastructure gaps, and perceived political instability.  

Amending the fundamental law, they argue, is a complex solution to problems that could be addressed through simpler legislative reforms and improved governance.

A blanket removal of all caps could indeed lead to the marginalization of domestic capital.  

However, a strategic, sectoral approach — carefully identifying industries where foreign capital would be truly additive rather than predatory — could work. The security of local investors depends not on perpetual protection but on creating an ecosystem where they can thrive through innovation and efficiency.  

Exposure to global competition can be a catalyst for this, but only if there is a robust state-supported framework for human capital development, access to credit for SMEs, and strong antitrust laws to prevent monopolistic practices by any player, foreign or domestic. 

No doubt, amending the Constitution to attract foreign investment is a high-stakes gambit. Its potential pros — economic dynamism, jobs growth, and technological advancement — are vital for a country grappling with underdevelopment. 

Yet, its cons — the risk of economic colonization, the erosion of local entrepreneurial space, and the neglect of deeper systemic reforms — are too grave to ignore.  

And the other major issue that the government and its economic team must address is the staggering corruption exposed through the flood control projects mess which could very well be a major reason for a reduction in the appetite of foreign investors in investing in the country.

Addressing members of the European Chamber of Commerce in the Philippines on Thursday, Securities and Exchange Commission Chairman Francis Lim pointed to “corruption” as currently the biggest headwind for investors, and integrity in both public service and private enterprise as the “most valuable currency” in restoring market confidence.

Just as he had started his term by mobilizing the whole of government to secure foreign investments, President Marcos must now marshal his administration to weed out corruption first before backing moves to amend the Constitution. 

He must try his darnedest to restore the confidence investors were starting to show for the country before the floodgates of corruption were opened, sweeping away whatever trust foreign investors had in the market.