Finance Secretary Carlos G. Dominguez III
MANILA – Finance Secretary Carlos Dominguez III has urged lawmakers to remove restrictive economic provisions in the Constitution to help in the recovery of the domestic economy partly by opening it to foreign investors.
In his remarks during the meeting of the House of Representatives’ Committee on Constitutional Amendments on Tuesday, Dominguez declined to give his side on the proposed changes in the Constitution but highlighted the need to “act on something that is doable” and “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.
Among the priority measures he cited include the proposed Corporate Recovery and Tax Incentives for Enterprises Act (CREATE), the amendments to the Public Service Act, the Retail Trade Liberalization Act, and the Foreign Investments law.
Citing latest World Bank (WB) data, Dominguez said the Philippines is the seventh among the 10 Association of Southeast Asian Nations (Asean) member states in terms of average foreign investments inflows to gross output from 2015-2019.
The Philippines is perceived by the international community as the most restrictive among the Asean countries based on the latest Foreign Direct Investment Regulatory Restrictiveness Index by the Organisation for Economic Co-operation and Development (OECD).
These findings, he said, can be traced to the restrictive policies that need to be changed to entice more foreign investors to place their funds in the country and make it more competitive.
“It is never a good idea to tie down our economy to a fixed set of policies. In a world that is constantly innovating, it is always better to have an adaptable economic policy regime,” he added.
Dominguez said the country “should have the flexibility to be able to adjust and maximize economic opportunities as, and whenever, necessary.”
“State policies that should be in the Constitution should be limited to fundamental policies universally accepted and unalterable in character,” he said.
Dominguez said “restricting economic activity is an outdated nationalistic concept, overtaken by technological developments,” thus, “maintaining preferential treatment for Filipino citizens in certain areas of concern no longer serves any imperative purpose.”
Citing as an example, he said limitations on foreign investments on public utilities “forced us to depend on undercapitalized Filipino businesses”, making the country’s logistics system one of the weakest in the region.
“The inefficiency of public utilities has forced Filipinos to pay more for necessities and has stymied the growth of small businesses,” Dominguez said.
He added “liberalizing the participation of foreign risk capital in this area by encouraging experienced and strategic investors to expand services would improve the delivery of our public utilities in our country.”
While he proposes the easing of foreign investments policies, Dominguez said “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 added. (PNA)
