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Highlights of the Forum on Amending the Economic Provisions of the Constitution

The forum held last March 8, 2017 at Speaker Belmonte  Hall, Southwing Annex, House of Representatives aimed to raise awareness and disseminate information on proposals for constitutional reform.  This activity was organized by the Office of the Speaker, Congressional Policy and Budget Research Department (CPBRD) in partnership with the Foundation for Economic Freedom,  Democracy Watch, PDP LABAN Federalism Institute, and Albert del Rosario Foundation.

In his message, House Speaker Pantaleon Alvarez stressed the need to restructure the present State which has failed in providing peace, prosperity and development to the people.  He said that there should be clear provisions for sharing of resources and delineation of responsibilities to make the state responsive to the needs of Filipinos.  He added that the restrictive economic provisions of the Constitution limited, if not excluded, foreign investments in key areas, thereby stunting the economy and prejudicing job creation.  The Speaker concluded by encouraging the participants to join him in looking for ways to resolve the pressing aforementioned matters. 

CPBRD Director General Romulo Emmanuel Miral Jr. explained that there had been six round table discussions on the federalism issue.  He said that there is a need to study the features of the Constitution especially those that are protectionist in nature and which tend to limit to Filipinos the development of our natural resources and operation of public utilities.  

In his introduction of the Federalism and Constitutional Reform Dialogue Series, PDP Laban Federalism Institute Executive Director Jonathan Malaya communicated their goal of filling in the research deficit on federalism by seeking consensus and support from the public in a manner that is evidenced-based and problem-driven.  He acknowledged that there is no one-size-fits-all model of federalism.  However, he believed there are three important questions to answer: (1) How much power should be dispersed? (2) Are the local governments prepared for this newfound authority for the betterment of the people? and (3) How do we maintain the balance between national direction and local autonomy?

He affirmed that federalism must enhance local autonomy, bring peace to Mindanao and rebel-infested barangays and countryside, and provide a better climate for economic development.  He made it clear that federalism is not a stand-alone reform, nor a panacea, and therefore has to include a package of reforms—in the political party system, electoral system, government bureaucracy, and the economic provisions of the Constitution. 

The Forum’s main speaker, Mr. Gary Teves, focused his presentation on the need to change the economic provisions of the Constitution to legalize economic freedom to achieve faster and more sustainable growth.  He also pointed out the disadvantages of a restrictive economy.  Apart from identifying specific sections of the Constitution that needed amendments, he likewise recommended: (1) deleting provisions where laws are already in place, such as the creation of the Bangko Sentral ng Pilipinas, and the National Economic and Development Authority; (2) deleting provisions that do not promote healthy competition; (3) altering some language for inclusivity; and (4)  inserting the phrase “unless otherwise subsequently provided by law” that would provide Congress the flexibility on matters of taxation, practice of professions, etc.  He argued that the Constitution should enable the country to adjust to changing times. 

Dr. Bernardo Villegas, a member of the 1986 Constitutional Commission, fully agreed with the amendments to the Constitution proposed by Mr. Gary Teves, that certain economic restrictions in the Constitution should be removed and better left to Congress to legislate. He stressed that the 1987 Constitution was an anti-Marcos document, meant to negate or repeal the Marcos legacy. He also said that the Commission was an alliance of leftists and nationalists. Thus, the economic restrictions in the Constitution were meant to protect the country and its nationals from being overtaken by foreign investors. He cited Vietnam as an example of a country which is Communist but does not have the restrictions the Philippines has and which allows foreign land ownership.

For this change in policy, the Filipino people must be convinced that removing the restrictions in the Constitution will bring positive changes in the business environment.  He also advocated prioritizing equitable distribution of income and wealth and not simply economic growth.

Atty. Anthony Abad, CEO of Trade Advisors, agreed with the presentation and emphasized the rationale of removing the economic restrictions and enabling Congress to act on these. He pointed out that the bottom line of a good constitution is inclusion and shared prosperity - how to make people participate in nation development and be part of the development process. Federalism is the logical design for the Philippines because of its geographical structure, diversity and large population. In addition, a parliamentary system was suggested because of its power-sharing attribute for a more participatory government.

He pointed out that it is illogical to have economic restrictions in the Constitution.  The   Constitution is an organic charter that designs a country and defines power sharing, addressing diversity and long term aspirations of the people, among others, and must be adaptable to the changing time.

Dr. Alvin Ang, Director of Ateneo Center for Economic Research and Development, likewise agreed with the presentation and added that many of the major issues should be addressed by Congress.  He focused his discussion on the Philippines and foreign investments where, in spite the investment grade the Philippines received as well as the good economic environment, Vietnam and Indonesia continue to outpace the country in terms of entry of FDIs.  Even in stock markets and other investments, opportunities to expand capital are limited to Filipinos only.  As a result, the distribution of knowledge, technology and skills is also constrained.  He cautioned, however, that removing the restrictive provisions of the Constitution is not enough to promote inclusivity.  The quality of both public and private institutions also needs to be ensured.  This quality should also translate into governance capacity.  Ang gave as an example the fact that even with the constitutional restrictions, foreigners were able to own business.  He indicated that laws should be available to address these governance issues as he recommended the review of the laws and removal of those that are no longer relevant to the economic realities.

One of the questions raised is on the timetable for the economic amendments of the Constitution.  In response, Representative Gloria Macapagal-Arroyo of the 2nd District of Pampanga informed the body that the House of Representatives has already passed a Resolution at the committee level to constitute a Constituent Assembly awaiting Senate action. Mr. Malaya also informed the body that the counterpart resolution is still pending at the Senate Committee on Constitutional Amendments.  He further volunteered information that the timetable being followed to amend all provisions will be finished by 2019 and will involve plebiscite on that same year.

Prof. Edmund Tayao asked about the direct relationship between economic reforms and political reforms which are fundamental in shifting systems from unitary to federal and from presidential to semi-presidential.  According to Mr. Teves, there is no evidence of a causal relationship, that one system will produce a particular level of prosperity or growth.  But there is a relationship that is not necessarily causal, and that there are countries which adopted this form of system that resulted in economic prosperity and inclusive growth.  Amending the economic provisions of the Constitution and allowing legislation to take place gives the flexibility to adjust to a condition that will allow greater tendency for economic progress.

Representative Dakila Carlo Cua of the Lone District of Quirino raised the question on the design of tax collections under a federal system of government and the powers of different levels of government as far as tax collections are concerned.  In response, Mr. Teves said that questions on tax and assignment of roles across levels of governments require study of other countries’ experiences.   When it comes to taxes, there should be clear guidelines on what should be kept by the federal government and what should be handled by the state government. 

Considering that federalism is about assigning different functions to different levels of government having various levels of competencies, a question was raised on how the rules and execution be delegated across each government level if those provisions were to be removed from the Constitution. It was acknowledged that at this time, the presentations were done in broad strokes.  Details on how each specific power and function will be assigned across level of government would require study of different countries’ experiences.  Currently however, governors and mayors can create and implement ordinance(s) applicable to their province to allow investors to come in.  A province can also be allowed to choose which provinces they are comfortable to work with toward achieving synergistic initiatives.

Policy coherence was also raised as an issue in federalism.  Considering that within the existing structure, policy inconsistencies have hampered implementation, the panel was asked if they have mechanisms to recommend to ensure consistency with the Constitution, within the sector and across sectors.  According to Mr. Malaya, ensuring policy coherence is within the agenda.  Models for coordinative mechanisms will be studied as soon as the study group is done on the possible structures that could be applicable to the Philippines, and that public forums will be organized as well on this topic.


Federalism and Constitutional Reform Dialogue Series

  Forum on Amending the Economic Provisions of the Constitution

Belmonte Hall, South Wing Annex
House of Representatives, Batasan Hills, Quezon City
08 March 2017, Wednesday
1:00 PM - 4:00 PM

   P R O G R A M M E



Welcome Remarks
  Director-General, Congressional Policy and Budget Research Department
Opening Remarks
  Speaker, House of Representatives
Introduction of the Federalism and Constitutional Reform Dialogue Series
Mr. Jonathan E. Malaya
Executive Director, PDP Laban Federalism Institute
Mr. Gary Teves
Fellow, Foundation for Economic Freedom
   Dr. Bernardo Villegas
   Member, 1986 Constitutional Commission,
   Professor University of Asia And Pacific
   Atty. Anthony Abad
   CEO, TradeAdvisors
   Dr. Alvin Ang
   Director, Ateneo Center for Economic Research and Development
3:00-3:50 OPEN FORUM
Closing Remarks
  Mr. Calixto V. Chikiamco 
  President, Foundation for Economic Freedom
Atty. Katrina Clemente-Lua
Executive Director, Stratbase ADR Institute



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