Thursday, December 01, 2005

Charter Change, Nationalism and Economic Survival
Rep. Wigberto E. Tañada, 4th District Quezon Province

What we Filipinos should know: The former Ramos and Estrada regimes attempted but failed, and now the current Arroyo regime wants, to rework the 1987 Constitution for selfish personal reasons and for further submitting our national economy and patrimony to foreign domination.

Lest we forget, let us reread and think about what the former Congressman Wigberto E. Tanada wrote about such attempts during Estrada's time.

What luck for rulers that men do not think" - Adolf Hitler

"In all institutions from which the cold wind of open criticism is excluded, an innocent corruption begins to grow like a mushroom - for example, in senates and learned societies." - Friedrich Nietzsche, 1844-1900

“Nations whose NATIONALISM is destroyed are subject to ruin.” - Colonel Muhammar Qaddafi, 1942-, Libyan Political and Military Leader

"Upang maitindig natin ang bantayog ng ating lipunan, kailangang radikal nating baguhin hindi lamang ang ating mga institusyon kundi maging ang ating pag-iisip at pamumuhay. Kailangan ang rebolusyon, hindi lamang sa panlabas, kundi lalo na sa panloob!" --Apolinario Mabini, La Revolucion Filipina (1898)

Charter Change, Nationalism and Economic Survival
Rep. Wigberto E. Tañada, 4th District Quezon Province

Let me be among the first to applaud President Joseph Estrada's pledge to defend democracy to the death in his Second State of the Nation Address. But let me also be among the first to rue the unwavering, inopportune, misguided focus of his administration on Charter Change.

I would have wanted to hear a pronounced policy shift towards attacking economic problems at their roots rather than building economic recovery on the rewriting of the Philippine Constitution. But of the two-thirds focus of the President's speech on economic issues, it is disturbing that the route of charter change remains the government's preferred way of fighting its declared war on poverty.

On this score, allow me to reiterate my stand on the following points.One, surveys conducted by professional research institutions indicate that there is no strong clamor at all from the people to amend the Constitution now. In fact, according to the Social Weather Station, the number of those opposed to amending the constitution even rose from 77 percent in March to 86 percent in June this year.

Two, this is not the right time to push for amendments, as this will enmesh the country in a climate of political ferment and polarization that such an issue inevitably provokes.

Three, the problem that stands in the way of economic rehabilitation is not, as the President puts it, the "obsolete" provisions of the Constitution which hinder the nation's "global competitiveness." The problem stems from a continuing policy regime that has led to, what I term, the hollowing out of the economy and the falling apart of Philippine industry and agriculture.

The crisis in industry and employment
A closer look at the present-day crisis in industry and employment provides us insights on the real state of the nation, whose resolution lies not in tinkering with the Charter but in confronting head-on the causes of the crisis in economic directions. Beyond the President's rosy reports on our macro economic indicators of low inflation, falling interest rates and rising international reserves, we should realize that the problems of unemployment and under employment remain very much with us.

Statistics from the National Census and Statistics Office and the Department of Labor and Employment indicate that the unemployed in January this year totaled 2.8 million, while the underemployment rate reached 22.1 percent, covering over 6.3 million Filipino workers. More than half of the underemployed - 3.4 million in all - worked for less than 40 hours a week, some just a few hours in a week. Asia-wide, the Philippine unemployment rate of 9 percent of the labor force is second only to strife-torn Indonesia.

The dismal statistics on unemployment and underemployment are a reflection of an equally serious problem: Philippine industry and agriculture are stagnating and even shrinking. The economy is hollowing out, meaning its agro-industrial base is disintegrating.

This is clearly manifested in the rising number of company closures and layoffs. In 1998, there were 155,198 workers in 3,072 companies laid off compared to 62,724 laid-off workers from 1,155 companies for 1997. Just barely three months ago, the newspapers carried lengthy stories on the decision of a dozen or so multinational companies to phase out their existing production in another Asian country and shifting their Philippine operations to an import-and-distribute business. In other words, the MNCs are treating the Philippines, with a population of 75 million, as a good market for their products but not a good place to put their productive investments.

But is there an economy in the world that thrives solely on consumption? Does the army of unemployed have the purchasing power to participate in the market when they have no decent jobs and income? Of course, we have the remittances of our overseas Filipino workers and the foreign borrowings by our economic technocrats. But for how long can these remittances and foreign borrowings sustain an economy dependent solely on the service sector and importations?

The crisis in economic directions
Clearly, our economy while afloat after the storm of the Asian financial crisis needs less, not more of the same economic policies of the past. But sadly, what we are hearing are prescriptions for more accelerated liberalization, deregulation and privatization of the economy. These policies, which have been in place since the mid-1980s, have transformed the Philippine economy into an appendage of the global economy.

Because of trade liberalization, the ill-prepared local industry and agriculture have withered under the heat of global competition, some under fair but others under grossly unfair terms of competition. The first to suffer was the textile industry, followed by the shoe industry, the manufacturing industry, the steel industry, the chemical industry, the wire industry, the cement industry and so on. In the case of agriculture, right after the ratification of the World Trade Organization (WTO) and long before the El Niño and La Niña phenomena, the Philippines became a major agricultural importer of rice, corn, meat, cereal preparations, sugar, vegetable oil, wine, fruits and so on. Today, with the foreign dumping of poultry and fishery products, our poultry and fishery industries are also about to collapse.

And yet, some of our economic planners and technocrats still have the temerity to suggest that we need more liberalization, deregulation and privatization as the solutions to the crisis, totally oblivious to the fact that the hollowing out of the economy and the unprecedented crisis in unemployment are a direct consequence of these policies.

They even commit intellectual dishonesty when they say, again and again, that the root causes of the crisis is the economic protectionism of the past. But when did we have protectionism as an economic policy? Was it not in the 1950s, or four decades ago? Did we not abandon the policy in the early 1960s when the Macapagal administration adopted the program of decontrol and invited the IMF and the World Bank as part of the economic team of this country?

The IMF and World Bank never left us since then. In the 1980s, we witnessed the wholesale lifting of protection extended to local industry and agriculture through the series of World Bank-assisted structural adjustment programs. In the 1990s, the Ramos administration, recklessly accelerated the dismantling of whatever tariff and non-tariff protection we have to the extent that the IMF even declared the Philippines as one of the world's freest economies.

One of the beneficiaries of the Ramos liberalization program was speculative capital, which created an artificial bubble in the economy, causing a surge in the stock market and the value of the real estate. When the bubble burst in 1997, this speculative capital also disappeared while the nation was left holding an empty financial bug. Clearly, we need to change economic policy directions to reverse the continuing slide of the economy and engineer a sustainable and job-full recovery.

The attacks on the Constitution
Yet, instead of addressing this problem head-on, what do we have today? The present administration is foisting upon our people economic recipes that precipitated the crisis in the first place. And worse, this administration is also clamoring for changes in the Constitution, specifically for the removal of the nationalist constitutional provisions.

Although the foreign investors, including those who relocated their industrial plants in other neighboring countries, never mentioned the present constitution as a disincentive to making business in the country, the pro Cha-Cha proponents are claiming that the fundamental law is flawed. Accordingly, they say that the nationalist provisions of the Constitution such as restricting land ownership to Filipinos is a major disincentive driving foreign investors away from our shores. And yet a little research will show that countries that do not allow foreign ownership of land such as China, Singapore and Vietnam appear to be much more successful in generating foreign investments.

As it is, the Philippine policy on foreign investor access to land is liberal enough. Consider this - the Philippines has a long-term lease law covering 75 years, enough to cover three generations of an investor family! In addition, the Philippine Constitution allows foreigners to exploit our natural resources through joint ventures and service contract arrangements. In contrast, China limits its land lease period to 50 years and has restrictive rules on the exploitation of its natural resources by foreigners. Still, China has managed to attract foreign investments at a rate unmatched by any Asian country.

In short, there is no causal relationship between the land ownership policy of a host country and the rate of foreign investments flowing into the country. For the same reason, the further liberalization of our trading and investment policies is no guarantee that more investments will come in, or that new industries will be set up, or that jobs-a-plenty will be created.

In fact, the accelerated tariff liberalization under the Common Effective Preferential Trade (CEPT) agreement among the ASEAN countries concluded in Hanoi in February this year is already being seen by local manufacturers and agricultural producers as a sign that they have only two to three years to live. The only survivors are likely to be the electronics and automotive parts firms, which are largely engaged in intra-trading with their sister companies in the other ASEAN countries.

The proposals to eliminate the nationalist provisions of the Constitution and to intensify economic liberalization are, to my mind, not only anti-Filipino and anti-poor, they also avoid the real problems of the nation under the realities of global competition.

The need for more, not less, economic nationalism
The first real problem that the pro-Cha-Cha and pro-liberalization proponents should focus on is the infrastructure problem in the economy. The sad state of our infrastructure and the high costs of using them are driving investors, both local and foreign, away. If the delivery vans of a factory can only make one or two trips a day compared to 5 to 10 trips in another country, then there is no reason why an investor-manufacturer will choose the Philippines.

Thanks to Mr. Ramos, we now enjoy uninterrupted power service; unfortunately, he also bequeathed to us a power industry whose cost is the highest in Asia, next only to Japan. The other BOT projects of President Ramos such as the skyway project are turning out to be likewise very expensive. What the government needs to do is address more decisively the infrastructure bottlenecks to make the cost of doing business cheaper.

The second real problem is institutional. Our bureaucracy, judiciary, educational system, law enforcement, local governance and other institutions are by and large neither developmental in orientation nor business friendly in tradition. All the incentive programs for investment promotion become meaningless if these institutions are not working, or if the rules are bent or manipulated to favor a few.
We do need to launch an honest-to-goodness program of institutional reforms, including asset reform.

The third real problem of the economy is strategy. Under globalization, we are at war, whether we like it or not, against the rest of the world insofar as the production and trading of goods is concerned. Our market will be the victim of dumping by surplus producers of the world, which is already taking place.
But I give credit to this administration for prioritizing agriculture, food security and rural development in its development plan. I hope to clearly see the implementation of these priority programs in the 1998 to 2004 medium term economic development plan.

Yet we also have to go beyond agriculture and have a clear strategy on market niching. We need a new industrial strategy that will enable us to fight back with better chances in both our domestic and export markets.

Finally, we need to get our act together and we need to get our vision solid as a nation. For this, we need a sense of economic nationalism, a sense of what we as a nation, united, can be capable of and can aspire to be. In short, in these difficult and trying times, we need more, not less, economic nationalism.

Revising the Charter is bad economics
This is the whole point of the matter. In the race with the rest of the world market to the coming millennium, we cannot afford to lose sight of the nationalist purpose that should define the course of our economic vision and economic strategy. It would do good for this administration to take this purpose to heart if it seriously wants to address the real causes and problems that hinder national economic recovery.

Yes, I agree whole-heartedly with the President of the Republic, the war on poverty is good economics. But the ploy to revise the economic provisions of the Charter is bad economics. Because in the guise of introducing change, the net effect, if not stopped at its tracks, would be to dismantle the pro-Filipino, pro-poor and pro-reform provisions that constitute the economic pillars of the fundamental law of our land and which exist to protect the national interest and the future of the next Filipino generations.

In sum, let me posit, any avowal to defend the Constitution and constitutional rights must likewise extend to the economic provisions of the Charter. The strength of the Constitution lies also in the sturdy pillar of economic nationalism. Whittle this down, assault its core, and the nation falls.

Let me further state. The problem is not the Constitution but the people who enforce it. There is no urgent need at the present time for any proposed amendment that cannot be remedied through legislative action, or effective law enforcement, or the fair and speedy delivery of justice.

As a final note, in its headlong rush to amend the Charter, it would do well for the administration to remember, "If it ain't broke, don't fix it."


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