Foundation for Economic Freedom, Inc.

BOARD OF ADVISERS:

Gerardo Sicat

Cesar A. Virata

BOARD OF TRUSTEES:

Roberto De Ocampo Chairman Romeo Bernardo Vice-Chairman Calixto Chikiamco President Ernest Leung Treasurer Atty. Ricardo Balatbat III Corporate Secretary Thomas Allen Art Corpuz Felipe Medalla Vaughn Montes Gary Olivar Simon Paterno Gloria Tan-Climaco Francis Valera Atty. Ricardo Balatbat III Executive Director

105 Philippine Social Science Center (PSSC) Commonwealth Ave., Diliman, Quezon City

Telefax: (632) 4532375 (Main Office) Tel No.: (632) 8939602 (Accounting)

Website: www.fef.org.ph Email: fefphilippines@gmail.com / fef@fef.org.ph

FEF STATEMENT ON THE BELMONTE BILL TO AMEND THE CONSTITUTION

PROMOTE INCLUSIVE GROWTH AND STRENGTHEN NATIONAL SECURITY BY

PASSING THE BELMONTE BILL ON CHARTER CHANGE

The Belmonte Bill on amending the Constitution, by inserting the phrase “unless otherwise provided by

law” in the economic provisions in the Constitution limiting foreign ownership in certain areas of the

economy, will promote inclusive growth and strengthen national security.

It will provide the “key” to opening up areas of the economy to more foreign investments, thereby

providing more competition, facilitating technology transfer, generating jobs, and improving consumer choice.

Presently, our current growth has not led to more jobs and reduced poverty. Economic growth has been

primarily consumption-driven, not investment-driven. Through the restrictive limits set in our Constitution,

we are signaling to foreign investors that they are not welcome, especially in critical areas like the establish-

ment and operation of public utilities. Our current level of Foreign Direct Investments (FDI) remains the

lowest among the ASEAN 5, namely Vietnam, Malaysia, Indonesia, Thailand, and the Philippines.

Enabling Congress to open up areas of the economy now currently prohibited by the Constitution will also

strengthen national security:

1. By increasing FDIs, the country will increase the economic interest of our friends and allies in the

international community to maintain our territorial integrity and to uphold freedom of

navigation in the West Philippine Sea.

2. Well-capitalized foreign companies can help modernize and provide competition in strategic

sectors of the economy like seaports, airports, telecommunications, shipping, and air transport.

The modernization of these strategic areas of the economy is vital for our national security.

3. If well-capitalized world-class companies are allowed to own and operate public utilities like

airports, seaports, shipping, and telecommunications beyond the present limit of 40% set by the

by the Constitution, the quality and quantity of bidders for PPP (Public-Private Partnerships) will

dramatically improve. This can only auger well for PPP Projects particularly in strategic

infrastructure.

4. Well-capitalized foreign companies from countries that have an Anti-Foreign Corrupt Practices

105 Philippine Social Science Center (PSSC) Commonwealth Ave., Diliman, Quezon City

Telefax: (632) 4532375 (Main Office) Tel No.: (632) 8939602 (Accounting)

Website: www.fef.org.ph Email: fefphilippines@gmail.com / fef@fef.org.ph

Foundation for Economic Freedom, Inc.

Act will be encouraged to invest in the Philippines, thereby improving the climate for transparency, morality, and good

governance in doing business in the Philippines. Currently, the present Constitution encourages “adverse selection,” which

means that only foreign companies which are willing to circumvent the rules on foreign ownership invest in the

Philippines. It is a well-known fact that foreign companies already own and control media companies, telecoms, and power

distribution companies, despite the Constitutional limitation on foreign ownership. Overall, the liberalization of foreign

ownership restrictions will reduce the corruption of our institutions and advance Daang Matuwid.

5. The Philippines needs to join the Trans-Pacific Partnership, a free trade association of nations led by the United States. It is

the main foundation of the US’s rebalancing toward Asia. Other ASEAN Nations like Vietnam and Malaysia have joined.

However, membership requires that foreign investors receive equal treatment with local investors. Therefore, the country

has to remove the foreign ownership restrictions in the Constitution to attain full membership. Not joining the TPP would

put the Philippines at a competitive disadvantage vis a vis other member nations for access to markets like Japan, Australia,

and the United States. Foreign investors will shun the Philippines in favor of member countries with easier access to the

developed markets of the US, Japan and other member countries. Foreign companies will not put up factories here and

generate jobs if their goods are not able to get preferential access to the United States and other TPP member countries.

Not joining this US-led initiative would also be a strategic slap against our main ally at a time when the country is looking for

strategic cooperation and assistance in its territorial dispute against China.

Moreover, joining the TPP would enable the Philippines to diversify its markets outside of China, which is threatening to

retaliate against Philippine goods for the Philippine government filing a legal case in UNCLOS over territorial disputes in the

West Philippine Sea.

The Comprehensive Agreement on the Bangsamoro has a greater chance of succeeding in building peace and prosperity in

Mindanao if foreign investments are allowed to invest in the Bangsamoro region without the limitations on foreign ownership in the

Constitution. Building internal peace and prosperity is needed if we are to confront external threats to our national sovereignty and

territorial integrity.

Any concerns that other parties may have in the liberalization of foreign ownership restrictions in the Constitution can be fully

debated and addressed when the corresponding legislation is introduced in Congress after the Constitutional amendment to include

the phrase “unless provided by law” is passed.

We call on Congress to promote inclusive growth, reduce poverty, generate jobs, improve consumer welfare, enhance

competition, modernize our strategic infrastructure, and strengthen our national security in an all-around way by passing the

Belmonte bill to amend the Constitution.

For more information, please check our website: www.fef.org.ph, or contact the following: Ethel Briones, Program Officer - ebbriones@fef.ors.ph /+63 2 453 2375 Ranna Pintor, Program Officer - rannapintor@yahoo.com / +63 2 453 2375