The Manila Times

Zombie ideas ate the already empty brains of congressmen


YOU can’t blame ordinary Filipinos from venting out with a mix of incredulity and exasperation at their disgust with a move by lawmakers for Charter change (Cha-cha).

What has eaten the brains of the members of the House of Representatives, already underwhelming in the first place? Instead of undertaking in-depth excursions and serious studies into the realm of good policies, like supporting education and health, they keep embracing zombie ideas, bad and supposedly dead policy proposals that keep ambling along and getting another life.

Currently, the chamber is resurrecting Cha-cha from the catacombs of failed and abhorrent propositions, based on the grand hoax that eliminating the very little equity and patrimonial provisions in the Constitution would work wonders for investment attraction and generation.

In a literal March of folly, a resolution calling for a hybrid mode of changing the Constitution has passed overwhelmingly in plenary, with some robotic or vague invocation of economic tigerhood as the stated rationale. Never mind that all proposals for Cha-cha, from the time of Mr. Ramos to the time of Mr. Duterte, have unanimously elicited public disapproval and scorn. In the public’s mind, behind every Charter change proposal is a dark plot to mangle the Constitution for an insidious power grab, the ruling clique wanting to stay in power for life. Indeed, the preoccupation of our own House of Representatives with Cha-cha would eminently qualify as a world-class folly, a possible addendum to the foibles narrated in Barbara Tuchman’s The March of Folly.

So fossilized are the minds of the current proponents of constitutional amendments — this naturally happens when already small minds are devoured by zombie ideas — that even the script has not changed from the time of Mr. Ramos: Purge the equity and patrimony provisions in the 1987 Constitution to speed up the flow of foreign investments as that will roll out the welcome mat for investors.

Aim for economic tigerhood. Gain the exalted status of a middle-income economy. All empty assumptions, of course. But then again, what are zombie ideas if not some ICU-hosted balloons are often punctured by realities and brought down to earth by newspaper headlines.

Foreign direct investment (FDI) down by 23 percent last year, screamed the news. In 2021, FDI was $11.98 billion. It was $9.2 billion last year. While the headlines may have little bearing on the closed minds of the members of Congress, it nonetheless provided a timely reminder of one universal truth, applicable here and elsewhere. Those countries attract foreign investments not by prostituting their laws and Constitutions to pass measures that gut equity and patrimony provisions. Or measures that say “the country is fully and unequivocally open” to investments or to business. It never works that way. You simply can’t legislate the substantial flow of foreign investments into a country.

Was not the drop of FDI in 2022 a stark reminder that a country can’t legislate the flow on a decent scale at the very least?

In late 2021, Mr. Duterte signed the Retail Trade Liberalization Act which liberalized retail trade in the country. On March 2, 2022, he signed the Foreign Investment Act, which aimed to fast-track movement of foreign investments into the country. At about this time also last year, the biggest of the trinity of liberalization laws was signed, Republic Act (RA) 11659. This law amended the Commonwealth era Public Service Act, or Commonwealth Act 14. RA 11659 ended the long protection given to public utility corporations by allowing 100-percent foreign ownership in these public utilities.

Among the sectors exempted from the sweeping liberalization provisions under RA 11659 are electricity transmission and distribution, water distribution and generation, seaports and public utility vehicles. The rest of the sectors can now be 100 owned by foreign interests.

Yet, 2022 saw a drop in the flow of FDI into the country. All the legislation done to attract foreign investments was useless, “wa epek.”

In the great reconfiguration of the global supply chain, foreign companies relocating from China and moving into other host countries have been locating their assembly and manufacturing sites to India, Vietnam, Thailand, Malaysia and Bangladesh. The second options are Indonesia and Cambodia.

Where is the Philippines in this reconfiguration? Skipped, missed and bypassed.

This is the country that is willing to prostitute its laws and Constitution just to get a decent share of FDI flows and where “GDP” (gross domestic product) and “FDI” are the forever rallying cry of the government, not broadly shared prosperity.

What are foreign investors looking for when making their investment decisions or when scouting for assembly/manufacturing sites? On these, talks of US Treasury Secretary Janet Yellen before finance ministers of the G7 (Group of Seven) and G20 (Group of 20) nations are instructive.

Yellen said three things are important to investors: good governance and stable rules, skilled work force and culture of innovation.

She added that a cut in the corporate income tax — also a signature act of the Duterte administration — is not necessarily an important factor in generating investments.

Tax cuts were dismissed by Yellen as a “race to the bottom” and totally ineffective in boosting the economic and investment growth of nations.

So, what will a Cha-cha and the proposed dismantling of the few remaining equity and patrimony provisions in our Constitution serve? I will borrow from the song “War.” What is Cha-cha good for? Absolutely nothing. Listen to me.

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The Manila Times