MANILA — As the Arroyo administration starts off its public information campaign on Charter change (Cha-cha), independent think-tank Ibon says the proposed changes to the 1987 Constitution, which remove the charters economic sovereignty provisions among others, will not bring about promised economic development.
The proposed revisions shall allow foreign-owned corporations to invest in exploitation, development and utilization of the countrys natural resources, the advertising industry and mass media enterprises.
The argument against foreign ownership restrictions is that they stop the free flow of foreign investments in the country, thus retard economic development. Supporters of Cha-cha argue that the influx of foreign investments bring in much needed jobs, capital, technology and foreign exchange for the country.
As of 2004, there was a cumulative $17.3 billion in BSP-registered foreign equity investments, of which 41% was in manufacturing. Over 90% of the investments came after 1980, with the largest increases and biggest amounts during the 1990s.
Despite the increases, however, unemployment has still increased during the past decade to record highs. This is because, although foreign investments do create jobs, countless more jobs are lost due to closures, layoffs and bankruptcies of domestic enterprises due to competition from transnational corporations (TNCs).
Also, the substantial amount of investments in manufacturing has not resulted in meaningful capital accumulation and technological development. TNCs and their subcontractors here mainly engage in assembly and packaging for re-export while taking advantage of tax breaks and incentives and cheap and unorganized labor.
The millions of dollars brought in by investors are similarly canceled out by the capital outflow of profit remittances, earnings, dividends, commission fees and royalties which are repatriated by the TNCs. Foreign investors also source large amounts of their capital requirements from local borrowings, crowding out smaller domestic businesses.
Foreign investment does have a role in the initial stages of the development of a country like the Philippines if this is allowed into the country on terms only beneficial to the people. But the desired development goals of a modern, productive and job-generating economy cannot be reached through a wholesale abdication to the profit-seeking interests of foreign capital. (Ibon)
