Easing of foreign ownership restrictions to break ‘vicious cycle’ of oligopolies —Salceda
By TED CORDERO, GMA News
Published June 11, 2021 2:51pm
Albay Representative Joey Salceda said Friday that easing foreign ownership restrictions in the 1987 Constitution will open the country for more foreign direct investments (FDIs) which will force local large enterprises to invest more and be competitive.
Salceda, an economist, is one of the key proponents of the Resolution of Both Houses No. 2, which seeks to amend the economic provisions of the Constitution.
The measure has been adopted by the House of Representatives on third and final reading on June 1.
RBH No. 2 is seeking to insert the phrase "unless otherwise provided by law" to the constitutional provisions on national economy and patrimony; education, science and technology, arts, culture, and sports; and on general provisions to give Congress flexibility to enact laws that would free up the economy to foreign investors.
Salceda said the measure will open the economy to more FDIs, noting that the Philippines is among the most restrictive to FDIs across various sectors.
“FDI restrictions also resulted in the presence of oligopolies, making the Philippines the most oligopolistic in the region,” the lawmaker said, citing data from the World Economic Forum.
Salceda said this is the case since the market is dominated by a small group of large conglomerates.
“Oligopolies further reduce the investment appetite. Operating as monopolies and oligopolies, the corporate conglomerates find it convenient to restrict production - and investment - below the competitive level,” he said.
“Also, their willingness to invest is inhibited by their concentrated ownership structure, and their uncertainties about the stability and duration of government favoritism,” he added.
To break the “vicious cycle” of undisturbed oligopolies, easing restrictions on FDIs will force local conglomerates to be “reasonably competitive” and “invest more” in the country.
“We are not really after the money, we are after the technology and knowledge transfer which foreign investments can provide,” Salceda said.
Citing data from the World Bank and Department of Finance estimates, the lawmaker said the Philippines’ share of FDIs in Southeast Asia declined from 5.1% in 1996 to 4.4% in 2019 due to restrictive and protectionist provisions in the Constitution.
Salceda said if the Philippines opens its doors further to foreign investors through easing of foreign ownership restrictions, the country can dramatically grow the same way as Vietnam when its gross domestic product grew five times from $6.472 billion in 1990 to $31.173 billion in 2000 when it passed its Foreign Investment law in 1987.
This is also favorable for the country as it moves to recover from a pandemic-induced recession.
The Makabayan bloc earlier said that the measure would not address the pandemic's adverse effects on the lives of Filipinos.
Other lawmakers also feared that this would only pave the way for the introduction of political amendments in the present Constitution such as term extension for some elected officials or lifting their term limits.
But Speaker Lord Allan Velasco has insisted that the intention is purely to help the Philippines rise from the pandemic and to make the country fully-competitive with Asian neighbors.—AOL, GMA News
https://www.gmanetwork.com/news/news/nation/791146/easing-of-foreign-ownership-restrictions-to-break-vicious-cycle-of-oligopolies-salceda/story/
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