Charter change: Why Beijing Would Love It

The push to amend the Constitution is underway.  The focus is on watering down and eventually nullifying the so-called nationalist provisions of the charter, which, proponents claim, constitute the central obstacle to sustained growth.  The pro-charter change lobby in Congress derives its inspiration from economists such as Gerry Sicat, who, as head of the National Economic Development Authority (NEDA) during the Marcos dictatorship, presided over one of the most disastrous periods in Philippine economic history, and Bernie Villegas, the free market ideologue who is the toast of the foreign business community.

Dynamic Economies Ban Foreign Ownership

A central contention in the sponsorship speeches of proponents of charter change is that the most dynamic countries in Asia do not have restrictive provisions in their constitutions.  The countries they mention prominently are China, Vietnam, and Indonesia.

The proponents are right that China has been one of the world’s most dynamic economies over the last few decades, growing by some 10 per cent a year.  Foreign investment has come to over 3 per cent of GDP, compared to 1.25 per cent for the Philippines.  They are dead wrong, however, when they claim that China does not have a constitutional ban on foreign ownership of land and resources. Article 10 of the Constitution of the People’s Republic of China explicitly bans not only foreign ownership but also private property:  “Land in the cities is owned by the state. Land in the rural and suburban areas is owned by collectives except for those portions which belong to the state in accordance with the law; house sites and private plots of cropland and hilly land are also owned by collectives. The state may in the public interest take over land for its use in accordance with the law. No organization or individual may appropriate, buy, sell or lease land, or unlawfully transfer land in other ways. All organizations and individuals who use land must make rational use of the land.”

Vietnam has been one of Southeast Asia’s most dynamic economies over the last 15 years, with the economy growing by over 7 per cent a year.  Foreign investment has played a significant part, coming to over 2 per cent of GDP.  Yet land cannot be owned either by individuals or by entities, whether they are Vietnamese or foreign.  Articles 17 and 18 of the Constitution of the Socialist Republic of Vietnam explicitly prohibit private or foreign ownership of property.  These articles explicitly state that land is owned by the people of Vietnam as a whole and that the State administers the land for the people. In its exercise of the people’s ownership rights by these constitutional provisions, the State allocatesor leases a piece of land to individuals, households or enterprises to use in accordance with the Land Law and its implementing regulations.

Indonesia has also been seen as one of the most dynamic economies of Southeast Asia. In recent years, the GDP has grown by over 6 per cent.  Foreign investment has played a crucial part, coming to over 2 per cent of GDP.  Article 33, section 3, of the Indonesian constitution states: “The land, waters and natural wealth contained within them are controlled by the State and shall be utilized to increase the prosperity of the People.”

The implementing law of Article 33, section 3 is Law Number 5 of 1960, also referred to as UUPA (Basic Agrarian Law Act).  As a prominent adviser to foreign corporations warns its clients, “the UUPA is viewed by Indonesian legal scholars as an expression and execution of the aspirations articulated in Article 33/3 of the Indonesian constitution. As such, it is therefore impossible under the UUPA for foreign individuals or foreign legal entities to legally own or use land in Indonesia.”

The point of this laborious exegesis is to underline that constitutional provisions banning or restricting foreign ownership have not been a hindrance to the massive flow of foreign investment into Asia’s most dynamic economies.  This means that if foreign investment has not come into the Philippines in similar volumes, the problem must lie somewhere else, not in the nationalist provisions of our Constitution.  Watering down the constitution’s nationalist provisions is barking up the wrong tree.

Agricultural Land as the Big Prize

What the constitutional change proponents want most of all to do is to do away with the ban on foreign ownership of land.  They say that this need not be cause for concern since what foreign investors are mainly interested in is commercial and industrial real estate, which is a small fraction of the country’s total land area.

The problem with this argument is twofold.  First, if it is factory or commercial space investors are interested in, there is really little difference between owning and leasing, and leasing, in fact, is preferable for many enterprises who want to have the flexibility to transfer their operations to other sites or leave the country if business conditions are no longer profitable.

But the bigger problem with their argument is that it is simply not true that foreign investors are not interested in agricultural land. According to a 2010 World Bank report, the Philippines was the second top destination country in the Asia-Pacific for large-scale land acquisition, with investors eyeing some 3.1 million hectares of lands. The previous administration of Gloria Macapagal Arroyo, in fact, signed a total of 18 agri-business agreements land to Chinese corporations, with a total of 1.24-million hectares committed for export crop production for China alone.  These controversial deals have been frozen by the Aquino administration owing to their being unconstitutional, but they would certainly be revived if the nationality restriction on land is lifted.  You can be sure that Beijing is closely monitoring our congressional proceedings since the lifting of our constitutional restrictions would benefit its state-owned and controlled agro-corporations.

The countryside today is in a state of high tension, as land reform progresses.  In addition to the central problem of landlord resistance to land redistribution, there is that of conflicting land claims owing to the fact that an updated cadastral survey still has to completed to replace the 1913 survey, as President Aquino pointed out in his State of the Nation address last month. Foreign corporations descending on the country to snap up land would add another destabilizing element to this volatile mix and possibly make it spin out of control.  Now, even if one were to favor amending the constitution to allow foreigners to own land, would it not be the dictate of prudence be to postpone debate on this proposal till a future date, when things are more settled and the cadastral survey is completed?

Foreign Control of Public Utilities

Aside from the land ownership issue, the proponents of reform would want to eliminate the 60-40 per cent rule, that is that Filipinos must own at least 60 per cent of the stocks in mining, energy, utility, and media companies.  The current rule has kept control of many of these sectors in Filipino hands.   In many cases, however, foreign investors have been able to translate minority control into effective control. This is the case, for instance, with Meralco, where Manny Pangilinan serves as a front man for the Indonesian Salim Group.  This is also the case with electricity transmission, where the state-owned State Grid of China Corporation obtained a minority 40% stake in the National Grid Corporation of the Philippines (NGCP) that it bought in 2009 after the government decided to break apart the National Transmission Corporation.

The dangers of foreign investors abusing their position was illustrated in recent months by Meralco’s well publicized colluding with some of its power suppliers to jack up the price of electricity and pass it on to consumers.  As for the State Grid Corporation of China, Interior and Local Government Secretary Mar Roxas underlined the national security implications of a foreign state-owned firm controlling electricity transmission:  “Will there be a black out or not? Will there be a rolling [black out] or will there be insufficient supply? Who will have brownouts? Who will be sacrificed? It will be more comfortable if Filipinos will handle those decisions.”

Can one imagine how much more quickly and easily Indonesian and Chinese interests can grab control of our strategic industries if we allow 100 per cent foreign ownership?

Marginalizing Small and Medium Enterprises

The sector that will be most disadvantaged will be our small and medium enterprises, which comprise 99.6 percent of registered businesses in the country, employ around 3.9 million, but account only for 35.7 percent of the country’s total value-added. Already barely surviving, this sector will be further marginalized if large foreign capital is freed from constitutional restrictions.

Proponents of charter change say small businesses will benefit as suppliers of transnational corporations coming into the country and, in the first interpellation earlier this week, they cited the Thai car industry as an example.  In fact, Thailand proves our point about the detrimental effects of unrestricted foreign investment, since the big Japanese car assemblers that went into Thailand brought their component suppliers with them from Japan to Thailand or to nearby Southeast Asian countries from which they imported components into Thailand at radically reduce tariff rates!  The foreign-dominated Thai automobile sector has not spawned locally owned suppliers worth noting.

Instead of seeking charter change, members of Congress should be crafting a Competition Law that would regulate, prohibit, and curb the abusive behavior of monopolies, oligopolies, and conglomerates to safeguard and promote the welfare of small and medium industries.  Indeed, even if one were to be in favor of scrapping the nationalist provisions, would it not be prudent to first enact and subject a Competition Law to a reality test and postpone the debate on charter change to a later date?

The Real Barriers to Economic Advance

In a 2013 survey of the priorities of 11 big business associations, only the Joint Foreign Chambers of Commerce listed charter change as a priority–and even they added the caveat that allowing foreigners to own land might promote rampant speculation.  The other associations placed, ahead of amending the economic provisions of the Constitution, such concerns as the following: building infrastructure, bringing down the costs of electricity, eliminating red tape, and reducing corruption.

Indeed, one perusing the foreign business press would find few prioritizing elimination of the nationalist provisions.  Like local business groups, the top problems have to do with infrastructure, high power costs, red tape and corruption.

Likewise, the country’s economic managers, who should know the real score about the economy, do not prioritize charter change.  NEDA chief Arsenio Balisacan, Jr.  recently said of the push for amending the economic provisions: “We need not be distracted.

For me, I would rather push for these things that I believe, and are based on the experiences of other countries and our country of the past three decades.”

Balisacan is right.  Charter change is a panacea.  Infrastructural backwardness and the other problems he and most business groups cite are among the real barriers to sustained development.  But both proponents and opponents of amending the constitution miss the central problem, and that is massive and poverty.  Without effective demand from such large part of the population, economic growth cannot be sustained.  Without a prosperous domestic market that will buy their goods, foreign investors will not be attracted to the country.  Which is why rather than distracting the country with the illusion of a magic bullet for development, the proponents of charter change should be pushing measures to radically reduce inequality and poverty like agrarian reform, security of tenure for labor, and ending tax evasion by the rich and powerful.

*Inquirer.net columnist Walden Bello is a representative of Akbayan in the House of Representatives.  He can be contacted at waldenbello@yahoo.com.

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Weakened presidency

To be sure our people would never again experience the horrors and torments of authoritarian rule, the 1987 Constitution fortified the legislature, empowered the judiciary, institutionalized people power, and weakened the presidency.

Constitutional authoritarianism. Ferdinand Marcos did not set aside the 1935 Constitution when he declared martial law and made himself dictator. Quite the contrary, he used its provisions to proclaim what he termed as “constitutional authoritarianism,” which is as much an oxymoron as a “constitutional coup d’etat.”

Marcos argued that under that Constitution, “in case of invasion, insurrection, or rebellion, or imminent danger thereof, when the public safety requires it, [the president] may … place the Philippines, or any part thereof, under martial law.”

That provision was short, bare and vague enough to allow Marcos to abolish Congress, subdue the Supreme Court, close the newspapers and radio-TV networks critical of him, and take absolute control of the military and the police.

To prevent another Marcos, the 1987 Constitution imposed several limitations on the martial law powers of the president, such as: (1) it allowed only two grounds—invasion or rebellion (and deleted insurrection and “imminent danger thereof”);

(2) the duration shall not exceed 60 days, after which it is automatically lifted; (3) within 48 hours after the proclamation of martial law, the president shall report his action to Congress, which must convene within 24 hours; (4) once convened, Congress may, by majority vote of all its members, voting jointly, revoke the proclamation, or by the same vote and manner, extend the proclamation for a period determined by Congress; (5) the action of the president and Congress shall be reviewed by the Supreme Court upon petition by any citizen; and (6) the Court must decide the challenge within 30 days from its filing.

Inspired by Ninoy. With such severe limitations, “constitutional authoritarianism” is no longer possible; the only way to impose dictatorship is to abolish or suspend the Constitution via a naked coup d’etat.

My limited space prevents me from discussing many other severe restrictions on the president’s powers. Suffice it to say now that:

• The limits on the power of augmentation (which P-Noy calls Disbursement Acceleration Program or DAP), especially the prohibition on cross-border transfers, was inspired by P-Noy’s father, the martyred former senator Benigno Aquino Jr., who wanted to bar Marcos (prior martial law) from transferring executive appropriations to Congress to augment the allowances and other benefits of legislators during election seasons.

• These severe restrictions on presidential prerogatives were used by P-Noy’s mother, President Corazon Aquino, in her campaign for the ratification of the 1987 Constitution, which our euphoric people overwhelmingly ratified.

Ways to regain strength. The weakening of the presidency by the 1987 Constitution led all post-Edsa 1 chief executives—Fidel V. Ramos, Joseph Ejercito Estrada, Gloria Macapagal-Arroyo and Benigno S. Aquino III—to find new ways to persuade Congress and the Supreme Court to support their programs.

On the legislative front, the weakened presidents formed grand coalitions, sometimes by using the various versions of the outlawed Priority Development Assistance Fund (PDAF) and now the DAP, which, though not declared unconstitutional, was nonetheless constitutionally canalized by the Supreme Court.

Legislative coalitions became fashionable because the old two-party system was outpaced by the multiparty scheme and the confusing

party-list (a feature of parliamentary governments which our framers included in our presidential system as an “experiment”) instituted in the new Constitution.

The coalitions, particularly in the House of Representatives, are really alliances of convenience for new presidents to push their legislative agenda, and for the legislators to secure benefits for their constituents. For indeed, our people judge their legislators not so much for their law-making prowess as for their ability to dole milk and honey.

Unlike the old two-party system, these coalitions are fragile; they break up every election season, only to be reborn and to cuddle up to a new president who spreads more political grease than the last. Sadly, patronage and personalities have replaced principles and platforms as the weapons of political supremacy.

Conscious of the enormous powers conferred by the 1987 Constitution on the judiciary, every new president lusts to control the Supreme Court, through (1) the power of appointment, which the Charter also restricted by allowing the president to select only from a list of at least three nominees prepared by the Judicial and Bar Council (which is chaired by the chief justice); (2) the power to initiate the judicial budget (which Congress cannot increase); and (3) the stick of impeachment wielded by a cooperative Congress.

Finally, every president must cope with public opinion energized by TV-radio networks, newspapers, and social media. Truly, the 1987 Constitution often frustrates well-meaning chief executives from moving the country speedily forward.

But I believe this is the democratic path our people have chosen. Constitutionality, accountability, transparency and collegiality, our officials must learn to live and work with to attain freedom and food, justice and jobs, peace and progress, democracy and development, liberty and prosperity.

* * *

Comments to chiefjusticepanganiban@hotmail.com

source:  Philippine Daily Inquirer by Artemio Panganiban

SC: Our SALNs no secret

Yes, we disclose our income reports. You’ll see on Monday.

That, in effect, is the Supreme Court’s answer to President Benigno Aquino III, who demanded in a television interview on Friday that the justices, in the spirit of transparency, should disclose their wealth.

Supreme Court spokesperson Theodore Te on Saturday said the justices observed transparency and gave copies of their statements of assets, liabilities and net worth (SALN) to those who met the requirements.

To prove it, Te said in a statement, the court would release a list of people who had been given copies of the justices’ financial disclosures on Monday.

“Contrary to what has been reported, the Supreme Court justices have not only been complying with the requirements on the SALN, but have made these available upon compliance with the reasonable administrative requirements imposed by the court,” Te said.

Among those who have gotten copies of the justices’ SALN are journalists and civil society groups, he said.

How to get copies

Te did not say, however, whether the justices would send copies of their financial disclosures to Malacañang or publish them in newspapers of general circulation.

But any Filipino citizen who want to see the justices’ financial statements for justifiable reasons can go to the Supreme Court and file a request by filling out a standard form and submitting a photocopy of a government-issued identification card.

With any luck, the request will reach a session of the full court, which, if satisfied, will grant it.

As simple as that.

There are guidelines for obtaining copies of the justices’ financial disclosures and Te said that the point of mentioning them and the experience of journalists who have been given copies of the SALN is that “there is no lack of transparency on the Supreme Court’s part.”

In the third part of his interview with TV5 on Friday, President Aquino said the Constitution requires the Supreme Court justices to file SALN, and offered to find the provision for the Supremes.

It was another dig at the Supreme Court, which angered the President when it struck down on July 1 his economic stimulus plan, the Disbursement Acceleration Program (DAP), which he claimed had helped so many poor people.

BIR request denied

Mr. Aquino’s transparency demand stemmed from the Supreme Court’s denying on June 17 a request of the Bureau of Internal Revenue (BIR) for copies of the financial of the justices from 2003 to 2012.

BIR Commissioner Kim Henares said the request was part of her commission’s investigation into the activities of someone in the judiciary known only as Ma’am Arlene who reportedly fixed wealthy clients’ cases.

Henares said that by denying her request, the Supreme Court justices were “creating an exception for themselves.”

The Supreme Court said its rejection of Henares’ request “must be contextualized, based on the reasons she has given in her request.”

“Please note that the Supreme Court has never said they are exempt from the SALN requirement nor that they are creating a new rule for themselves. That members of the media and civil society, including law students, have been able to obtain copies of various SALNs of the justices is proof enough that the [Supreme Court] justices are not hiding anything,” Te said at the time in response to Henares’ complaint.

Henares filed her request on Dec. 9, 2013, but it was unnotarized and missing page 2 of the standard request form, where the requesting party is required to write the reason for the request.

The application also did not include the required photocopy of a government-issued identification card.

Henares refiled the application on Feb. 10, 2014, this time notarizing it and clearly stating the intent of her request: “For tax investigation purposes pursuant to Section 5(B) of the National Internal Revenue Code of 1997 and in relation to the Ma’am Arlene controversy in the judiciary.”

Both requests also contained a disclosure that the BIR “may have pending cases with some of the divisions of the Court of Appeals,” which is under the Supreme Court.

Henares appealed the court’s June 17 denial of her request. The court has yet to take up the appeal.

Submit to Ombudsman

Backing President Aquino, Sen. Aquilino “Koko” Pimentel III on Saturday proposed that the Supremes submit copies of their SALN to the Ombudsman for transparency’s sake.

That way, Pimentel said, the public could access the justices’ financial disclosures.

He also proposed that the Senate Secretariat transmit the senators’ SALN to the Ombudsman for the same reason.

“Let the Ombudsman be the default custodian of the SALNs. If the law isn’t clear where you will give a copy of the SALN, then you should reproduce the SALN as filed, and give it to the Ombudsman,” Pimentel said in a telephone interview. “My understanding of the law is you don’t keep it to yourself.”

Meanwhile, judiciary employees will continue silently protesting the President’s continuing attacks on the judiciary on Monday.

“We were hoping that the situation would sober up, but it seems he (President Aquino) won’t,” said Jojo Guerrero, president of the Judiciary Employees Association of the Philippines (Judea).

“There is a rule that you cannot just get copies of the SALNs without a purpose… Why is he targetting the justices?” he said.  With a report from TJ Burgonio

source:  Philippine Daily Inquirer