Aquino recently reiterated his No-Go to Charter Change again. Aquino cited China as a reason why there is no need for foreign investors to own land. Noynoy said that the empirical evidence shows that foreign investors aren’t allowed to own land in China.
Land Ownership: Misunderstanding Socialism
Noynoy is correct that foreign investors can’t own land in China. But Aquino also left something out. Noynoy did not mention the other empirical evidence – that Chinese citizens aren’t also allowed to own land in China.
China is a socialist country – and ergo all property is a property of the state. By not allowing foreign investors and citizens alike – China treats citizens and foreign investors equally.
The Philippines isn’t a socialist country (yet). Unlike Chinese citizens, Filipino citizens are allowed to own land – foreigners aren’t. Was Noynoy inciting that Filipino citizens shouldn’t be allowed to own land too? You will need charter change for that Noy.
What Noynoy didn’t mention is that China has Wholly Foreign Owned Enterprises (WFOE)
The Wholly Foreign Owned Enterprise (WFOE or WOFE) is a Limited liability company wholly owned by the foreign investor(s). In China, WFOEs were originally conceived for encouraged manufacturing activities that were either export orientated or introduced advanced technology. However, after China’s entried into the WTO, these conditions were gradually abolished and the WFOE is increasingly being used for service providers such as a variety of consulting and management services, software development and trading as well. With that, any enterprise in China which is 100% owned by a foreign company or companies can be called as WFOE.
Does the Philippines have Wholly Foreign Owned Enterprise – WFOEs? Hell No there ain’t!
Fully Foreign Owned Philippine-Registered Corporations
All corporations operating in the Philippines are registered by the Securities and Exchange Commission or SEC. At present, foreign investors are not allowed to register with the SEC (and proceed to do business) unless they have a Filipino joint venture partner who will own 60% of the “to-be-registered” corporation.
Foreign ownership of land isn’t the only thing that needs to be changed. There’s also the matter of allowing 100% foreign ownership of domestically registered corporations- which is an entire separate banana from land ownership.
A corporation registered in the Philippines may be fully foreign owned – and it need not necessarily own land.
Such a foreign majority owned corporation may lease property without the need for a Filipino joint venture partner.
Such a foreign majority owned corporation will be treated EQUALLY as a Filipino owned or Filipino majority owned corporation.
Such a foreign majority owned corporation will compete in the delivery of services to the Filipino consumers.
Such a foreign majority owned corporation will compete against the Filipino owned or Filipino majority owned corporations, in the delivery of value to those. They will participate in providing services in education, health, telecomm, energy, transportation, real estate development, entertainment, public utilities.
There will be no preference for a Filipino provider rather there should be a preference for what works, for what delivers value.
“Other” Items Also Affected by Charter No-change
Aquino said that the other items most cited by the local chambers of commerce are
1 – Inefficient bureacuracy
2 – Peace and Order
3 – Infrastructure
Therefore, according to Aquino charter change is not needed.
Noynoy is seriously mistaken because:
1 – The bureaucracy
Part of the inefficiency of the bureacracy deals with enforcing the economic restrictions. Implementing rules and regulations to enforce the restrictions add to the bureacratic maze. People are needed to enforce the restrictive regulations – thus bloating the cost of government. The passage of the anti-dummy laws, the FINL also contribute to the maze of restrictive laws that are built upon the restrictive constitutional restrictions.
2- Peace and order
When people have jobs that provide them a decent quality of life there will be peace and order.
When people are barely making a living, when people are just on the brink of survival and are reduced to their primal animal instincts – peace and order will take the backseat.
Take for instance, Davao City. The ruse is that Davao improved because of the city’s tough peace and order stance. That’s a brazen lie.
Note that Davao’s Kim Jong Il was on a peace and order rampage during his first term after enjoying a landslide. Despite the onslaught of motorcycle riding gunmen – Davao, prior to 1992 had a measly economy.
Davao improved economically AFTER its investment incentives program. Investors who put money in the “preferred investment areas” were given local tax holidays; local permit fees/clearance fees/registration fees were waived; registration processes were streamlined – they were served by a one stop action center and didn’t have to go to city hall to process their registrations.
The result of Davao’s “economic liberalization” was a resounding success – jobs were generated, more people now had income – and within three years, Davao had become Asiaweek’s “most liveable city in the Philippines”.
Peace and order takes place when people have economic opportunities. Not the other way around.
3 – Infrastructure
Infrastructure development in the Philippines is limited to Filipino businesses only. Foreign participation in companies that undertake public infrastructure project is limited to 25% ownership.
Why should foreign participation in public projects be restricted to Filipinos only? Are they afraid that the foreigners will plant bombs in the facilities? Or that the foreigners will have blueprints of the facilities which will be used later on for by an armed foreign invader? Come on now – all those plans and what not are easily available and can be had for the right price.
What Tremendous Economic Gains is Noynoy Smoking About
The goal of GDP growth is to generate jobs and reduce poverty – not to keep the joblessness stagnant, expand underemployment and hunger. On all counts – the Aquino regime – and its Charter-No Change corporatist agenda has failed miserably.
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