News article from by Ryan Ponce Pacpaco

The Charter change issue has been revived by Senate President Juan Ponce Enrile and House Speaker Sonny Belmonte. But this time the Charter change that they were proposing focused only on re-strategizing the restrictive economic provisions of the 1987 Constitution, and not dealing with the other aspects. According to Belmonte, if the country wants an investment-led growth, it must reform the Constitution, so to get rid off the deficiencies of the existing FDIs policies, which imposes the 60-40 Filipino-Foreign rule ownership.

The Iron and Steel Industry has been revived by the Bureau of Custom (BOC) in the 2012 Investment Priority Plan (IPP) because of its attractiveness to foreign investors. Good news for the said industry (especially now that its major consumer, Construction, was projected to boom) and the local economy. However, the plans may not go well.  Many projects may end up falling short of their target growth and employment generation. Or worse, investors may pull-out their investment from the industry as what happened in Ford Philippines in Laguna because of high cost of doing business. The aforesaid case is related to the Iron and Steel Industry, with its skyrocketing utility cost. But more than that, the 60-40 Filipino-Foreign rule ownership exacerbated their problem. In that note, there is maybe a need for reforming FDIs policies.

The Philippines recorded a sluggish Net FDIs growth from 1990-2009, 0.6%-1.9%, second to the lowest among ASEAN-6.[1] A study showed that fiscal policy (e.g. tax incentives) were proven inadequate to boost FDIs. In fact, those efforts by the government just increased transaction costs as some policies were redundant, which means, these investments would have been carried out even without the incentives.

Therefore, the growth and development of the Iron and Steel Industry can be guaranteed and speed up by first amending the restrictive economic policies in our Constitution. By doing so, the country can create a good investment climate necessary.

[1] Arangkada Philippines. “Low Foreidn Direct Investment Flows,” (accessed July 20, 2012)

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