RBH 01: The Economic Charter Change By the Education & Research Core | June 2015
What is the RBH 01, dubbed Economic Charter Change about?
Resolution of Both Houses 01 is an initiative to propose amendments to the 1987 Philippine Constitution, particularly on economic provisions in key articles within the Constitution. Through the word of media, the resolution has been dubbed the Economic Charter Change or Cha Cha. As stated in the resolution, the rationale of the initiative is to lift “...restrictive provisions in the Philippine Constitution which hamper the flow of foreign capital investments…”, providing the country with an opportunity to gain more investments and, purportedly, to greater realize inclusive growth. (Belmonte, 2015) Specifically, RBH 01 seeks to amend key sections in Articles XII and XVI of the Constitution, adding the condition “UNLESS OTHERWISE PROVIDED BY LAW” to sections that restrict companies with foreign capital beyond the specified ratio to invest in the country:
Article XII (National Patrimony and Economy)
Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens, UNLESS OTHERWISE PROVIDED BY LAW. Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law. In cases of water rights for irrigation, water supply fisheries, or industrial uses other than the development of water power, beneficial use may be the measure and limit of the grant.
Section 3. Lands of the public domain are classified into agricultural, forest or timber, mineral lands and national parks. Agricultural lands of the public domain may be further classified by law according to the uses to which they may be devoted. Alienable lands of the public domain shall be limited to agricultural lands. Private corporations or associations may not hold such alienable lands of the public domain except by lease, for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and not to exceed one thousand hectares in area, UNLESS OTHERWISE PROVIDED BY LAW. Citizens of the Philippines may lease not more than five hundred hectares, or acquire not more than twelve hectares thereof, by purchase, homestead, or grant.
Section 10. The Congress shall, upon recommendation of the economic and planning agency, when the national interest dictates, reserve to citizens of the Philippines or to corporations or associations at least sixty per centum of whose capital is owned by such citizens, or such higher percentage as Congress may prescribe, certain areas of investments, UNLESS OTHERWISE PROVIDED BY LAW. The Congress shall enact measures that will encourage the formation and operation of enterprises whose capital is wholly owned by Filipinos.
Section 11. No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines, at least sixty per centum of whose capital is owned by such citizens, UNLESS OTHERWISE PROVIDED BY THE LAW; nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period than fifty years. Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the common good so requires. The State shall encourage equity participation in public utilities by the general public. The participation of foreign investors in the governing body of any public utility enterprise shall be limited to their proportionate share in its capital, and all the executive and managing officers of such corporation or association must be citizens of the Philippines. *Underlined statement to be removed in said amendment.
Article XVI (General Provisions)
Section 11, No. 1. The ownership and management of mass media shall be limited to citizens of the Philippines, or to corporations, cooperatives or associations, wholly-owned and managed by such citizens, UNLESS OTHERWISE PROVIDED BY LAW.
Section 11. No 2. Only Filipino citizens or corporations or associations at least seventy per centum of the capital of which is owned by such citizens shall be allowed to engage in the advertising industry, UNLESS OTHERWISE PROVIDED BY LAW.
The participation of foreign investors in the governing body of entities in such industry shall be limited to their proportionate share in the capital thereof, and all the executive and managing officers of such entities must be citizens of the Philippines. *Underlined statement to be removed in said amendment.
Implications on Future Economic Policy
By RBH 01, sections in the Constitution that require 60 per centum company ownership by Filipino citizens to invest in natural resources and public utilities, including agricultural land leases and industries like mass media and advertising, may be bypassed if legislation converse to it will be made by Congress. This will potentially open easier avenues for foreign capital investment in the country.
Arguments For RBH 01:
More Attractive for Foreign Investment: “At present foreigners are limited to 40-percent ownership of corporations operating in certain sectors. Businessmen feel that foreigners will not invest large amounts in businesses if they will not have control over these enterprises,” (Rodriguez, 2015)
More Opportunities for the Filipinos: Filipinos will benefit from expanded foreign business and investments in terms of services and employment opportunities (Umali, 2015)
More Economic Growth - Removing the clause, and improving access and protections of foreign-owned business, would lead to a quantum leap in foreign direct investment and Philippine economic growth. (Tacujan, 2013)
Greater Flexibility in Lawmaking - While a constitution embodies the fundamental law of the land and lays down principles and general guidelines, economic policy must be more specific, changeable, and consist of programs that cater to the changing needs and challenges of market fluctuations. (Tacujan, 2013)
Arguments Against RBH 01:
Procedure is Unconstitutional- “The power to propose amendments or to revise the Constitution is known as the constituent power of Congress. In a bicameral legislature, it belongs to both of its Houses. It cannot be exercised unilaterally by one House alone. The constituent power is granted to both Houses as institutions.” (Puno, 2015)
Will Undermine other Constitutional Provisions - “...it will open new loopholes in the 1987 Constitution that would allow the haphazard revision of economic provisions. Second, the catch-all amendment pushed by the House Speaker will inevitably lead to the bastardization of constitutional standards and limits.” (Ridon, 2015)
Negative Effect on Local Industry - Filipinos now and the future generation will not be able to afford a land of their own and inherit a bankrupt economy...it only leads to the destruction of our local businesses.” (Colmenares, 2015)
Deleting of Pro-Filipino Provisions - “They deleted the provision under Art. XIV, Sec. 4 requiring Congress ‘to increase Filipino equity participation in all educational institutions,... the power of Congress to require ‘higher percentage’ of Filipino ownership in Philippine businesses or corporations...the mandatory constitutional requirement under Sec. 11, Art. XII that ‘all executive and managing officers’ of public utilities and franchises must be held by Filipino citizens.” (Colmenares, 2015)