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Stunted National Progress linked to Constitutional Barriers at AIM Policy Center Conference



Stunted National Progress linked to Constitutional Barriers at AIM Policy Center Conference

On August 29, 2005, KAS Partner the Asian Institute of Management (AIM) Policy Center held the conference “Revisiting the Economic Provisions of the Constitution” at the Manila Peninsula to discuss the constitution’s prohibitive economic aspects and reforms to increase overall Philippine competitiveness.

“The economic provisions of the Constitution are the barriers that make us into a high-cost economy thereby burdening the country with loss of competitive capacity,” Dr. Gerardo P. Sicat, professor emeritus of the University of the Philippines’ School of Economics, argued in his speech entitled “Reform of the Economic Provisions of the Constitution: Why National Progress is at Stake” .

Dr. Sicat explained that although much of today’s discussion on Constitutional change is geared towards reforming political institutions, many have overlooked the economic provisions that need to be changed. “Our crisis of the present is an economic crisis, and the right course of action in any constitutional reform would be to face the nature of the beast—to amend the constitutional barriers that prohibit attaining greater economic progress.”

According to Dr. Sicat, three main provisions in the Constitution inhibit the nation’s ability to progress. “The first provision concerns the prohibition of foreigners to own land. The second is the exclusion of foreigners from the exploitation of the country’s natural resources. The third refers to the limitation placed on foreign capital in the public utilities sector.” These are related to raising foreign direct investments and alleviating infrastructure problems without further incurring debt.

He pointed out that “economic liberalization in terms of industry, finance, banking, and international trade depends on an acceleration of certain types of services that could only be enlarged with a much larger participation of foreign direct capital in the economy. Infrastructure investment is one such requirement.”

Dr. Sicat also discussed the impact of these prohibitive economic provisions on land, natural resources, public utilities, citizenship, and media, and gave the rationale behind the need to reduce barriers to foreign ownership in the Philippines.

Towards the end of his presentation, he focused on the benefits of correcting the economic provisions of the Constitution as opposed to instigating political reforms stating that “these political changes will require the use of more government resources. Hence, the government will be more strained to provide more tax money.”

He stressed that behavioral changes resulting from the revision of these economic provisions will decrease the need to finance national development. “All the changes in the economic provisions of the constitution will only contribute to greater efficiency in the use of economic resources to the growth of capital formation and investment in the country. The impact of additional foreign capital put in the economy would be to transfer most of the functions of providing support for credit and investment promotion from government institutions to the marketplace, including the global marketplace.”

Dr. Sicat reiterated that these proposed amendments were to provide the nation with greater flexibility in dealing with issues of economic development and strategy, all of which are to be undertaken through ordinary legislative processes. “Let the leaders of the country of the moment decide the true path of our economic future, and let not inflexible orders from dead leaders tell us, the living, what to do with our future,” he declared.

Among those who shared their insights regarding this issue were Hon. Klaus-Jürgen Hedrich, Member of the German Parliament; Hon. Ma. Lourdes Fernando, Mayor of the City of Marikina; Dr. Roberto F. De Ocampo, president of AIM; Dr. Federico Macaranas, executive director of the AIM Policy Center; Atty. Ricardo J. Romulo, member of the 1986 Constitutional Commission and 1999 Preparatory Commission on Constitutional Reform; and Mr. Simon Paterno, president of the Management Association of the Philippines.

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