House okays amendment to Charter’s 60-40 equity rule
By Jason B. Neola
The plan to remove the 60-40 equity rule on foreign ownership of businesses in the country is now nearing realization after the House of Representatives approved the bill on third and final reading last June 1, this year, and the same was transmitted to the Senate on the next day, a Bicolano House leader said on Tuesday, June 29.
The constitutional provision on the 60-40 equity rule is intended to help regulate foreign ownership of vital businesses in the country.
The Foreign Investment Act of 1991 or R.A. 7042 amended by R.A. 8179) states that at least 60 percent of businesses should be owned by a Filipino citizen, while the remaining 40 percent can be owned by foreigners.
Ako Bikol Partylist Rep. Alfredo Garbin Jr., who chairs the House Committee on Constitutional Amendments, said the rule was among the restrictive provisions in the 1987 Philippine Constitution that needs to be amended and revised.
The amendment on the equity rule was among the legislative undertakings conducted in relation to the resolution of both Houses that should be acted upon the same with other economic provisions contained in the 1987 Philippine Constitution particularly on Articles II, XIV, and XVI.
The proposed constitutional amendments got an overwhelming affirmative votes of 251 from the members of the House of Representatives. “The ball is in the Senate now, let us pray for the immediate economic recovery of our nation,” said Garbin.
Regarded as a historic first under the 18th Congress under the leadership of Speaker Lord Allan Velasco, the proposed changes in the economic provisions of the 1987 Constitution are perceived to bring economic development in the Philippines, he said.
In a press briefing with newsmen on June 29, Garbin said that although the constitutional amendments are not yet approved since they are still in the Senate for further scrutiny and deliberation, the good news is that now we can see the opportunity to realize the changes we want to do with, which the congressional leaderships in the past had failed.
He said: “We can only conclude in the Congress but it is the Filipino people who will approve or reject these amendments in a plebiscite, and I am glad to inform you that we are nearing to that situation.”
Garbin said the primordial goal of the charter change is to spur the country’s economic growth by amending the restrictive economic provisions in the 1987 Philippine Constitution “so that our country can attract and welcome direct foreign investors.”
The House leader, who spearheaded the economic amendments, mentioned a number of Asia’s top economies like Singapore, Thailand, Malaysia, and Indonesia that do not impose economic restrictions and to where foreign investors can easily enter and put their investments.
“These foreign investors [in other nations] contribute in the economic developments of the countries where they were allowed to put up their businesses by paying huge amount of money as taxes to the local and national governments aside from the employment opportunities that the foreign investors’ businesses create,” he said.
The Philippines, Garbin said, is a country of scarce capital but abundant labor force as manifested by the number of OFWs. “That is why the idea of eliminating the equity rule on owning a business in our country has bigger chances to effectively work,” he said.
Dominance over Filipino people
On issues that the Philippine economy might be dominated by foreign investors, Garbin said that the House did not forget to put safety nets on every amendment it has proposed. He said the House has inserted the phrase “unless otherwise provided by law” in every proposal that it wished to amend.
He explained that by using such phrase, Congress has been given the flexibility to enact legislations that will answer the needs of time.
It does not mean that the foreign investors will be allowed an outright 100 percent ownership of the industry as it is up to Congress to decide whether what equity rule should be adopted in a specific industry. “Could it be 60-40 in favor of the foreign direct investment, or 70-30 or 80-20 or even 100 percent or even retain the restriction, depending on the findings of the Congress, Garbin said.
“So, if you talk about the safety, it means the safety is legislation, the process in which we make decisions to protect the national sovereignty and security. Let us not be burden by the notion that aliens will dominate us by way of foreign direct investments, where in fact, so many OFWs are being dominated/maltreated in foreign countries,” he said.
“The truth is, we are being dominated by Filipino-Chinese businessmen here in our country, let us count all the major industries here in our country and we will realize that most of their owners, more or less 70 percent , are Tsinoy,” he said.
Garbin concluded his statement by saying that “as long as we observe citizenship requirement in running for public office (only Filipinos can be elected to all public offices), and that the exercises of three government powers such as the police power, the power of taxation, and the power of eminent domain are there, then still, we, Filipinos remain to be the one who will govern this country.