Double Standard: No to 100% FDI Shares Ownership, Yes to Foreign Intervention (WHENEVER CONVENIENT ONLY)

I refuse to comment too much on former president Atty. Rodrigo R. Duterte's arrest. It's better to let due process take place. However, I would like to address the contradiction. Many times, I hear people think that 100% FDI equals violation of sovereignty. People say that I'm an idiot for going against the Filipino First Policy, that I'm selling the Philippines to (insert foreigner), or they act like as if China is the only source of FDI. That's why I wrote a blog entry that open FDI isn't equal to China. What's ironic is that people who say, "100% FDI means giving up sovereignty!" may also be supporting Duterte's arrest in the ICC. Instead of focusing on Duterte's arrest, I would like to think about the irony of practicing Filipino First Policy while wanting the Philippines to return to the International Criminal Court (ICC). 

This is a meme I found over on Facebook. Whoever made this meme highlighted the supreme hypocrisy. One could talk about upholding Filipino First Policy, Pinoy Pride Economics (I wrote about its socio-economic cost), and talk all day why the Philippines must have the 60-40 policy. However, a lot of people who are against economic liberalization, are supporting the ICC, which is a foreign court in the Netherlands. The Netherlands has a corruption score of 78/100 and ranks 9 out of 180 countries in Transparency International. Meanwhile, the Philippines ranks 114/180 with a score of 33/100. Does that mean that the 1987 Constitution of the Philippines, unamended, is still "perfect the way it is"?" Afterwards, some people who claim it use the saving throw that "Blah! You're a moron who couldn't detect sarcasm!" Congratulations on making me angry but that doesn't change the fact, that the 1987 Constitution of the Philippines, is as obsolete as Windows 2.0!

Senatorial candidate Teodoro A. Casiño dares to say this. Isn't it ironic that Casiño attacks economic liberalization at one point, then supports the ICC (from a country that greatly benefits from parliamentary and FDI) to intervene with Philippine state affairs. Foreign intervention is sometimes necessary. Such was the case when Francisco Juan "Paco" G. Larrañaga was wrongfully convicted over a crime that he couldn't have done--because he was in Quezon City on July 16, 1997. Did Casiño bother to do any research on the Netherlands? If Casiño did, he should know that the Netherlands happens to be a parliamentary country and greatly benefits from FDI. Did Casiño purposely ignore that information? Maybe, maybe not.

1. Foreign Investment Policy 

1.1        What is the national policy with regard to the review of foreign investments (including transactions) on national security and public order grounds?   

The Netherlands remains one of the world’s most attractive destinations for Foreign Direct Investments (“FDI”).  It offers foreign investors a stable political climate, a developed economy, a highly qualified labour force, transparent tax guidance and an excellent communications infrastructure.  Foreign investments are welcomed across industries, including in the extensively privatised utilities sector.  Investors are actively supported by the Netherlands Foreign Investment Agency (“NFIA”).

At the same time, the Netherlands is intensifying its review of FDI inflows.  This is mainly caused by the strong rise of Chinese investments in the Netherlands and Europe in general over the past decade.  The COVID-19 pandemic has added urgency: in April 2020, the government announced the introduction of general FDI screening, which has resulted in the entry into force of the Vivo Act (Wet veiligheidstoets investeringen, fusies en overnames) introducing screening for all acquisitions and investments in sectors that are considered vital for national security and public policy on 1 June 2023 (“Vifo Act”).

In general, Parliament has shown a bit more hostility to foreign investment in sensitive sectors than the government.

1.2        Are there any particular strategic considerations that the State will apply during foreign investment reviews? Is there any law or guidance in place that explains the concept of national security and public order? 

Acquisitions and attempts at acquisitions in the recent past have shown that, even though the Netherlands is in general very welcoming to FDI, acquisitions of companies that are considered crown jewels of the Dutch economy may meet political resistance.

There is no specific guidance in place that explains the concept of national security and public order.  National security is defined in the Vifo Act with reference to the concept of national security under the Treaty on the European Union and the concept of public security and essential interest of its security under the Treaty on the Functioning of the European Union.  In particular, it concerns the continuity of critical processes, maintaining the integrity and information of critical or strategic importance for the Netherlands, and preventing unwanted strategic dependence on other countries.

The Dutch Investment Review Agency (Bureau Toetsing Investeringen, the “BTI”) has informally stressed that even in case of states with a different geopolitical agenda, it will not necessarily seek to block investments: it will try to craft remedies to allow as many investments as possible.  However, the BTI will be particularly careful in case the targeted business is a crucial building block in a particular Dutch industrial eco-structure.

1.3        Are there any current proposals to change the foreign investment review policy or the current laws? 

The Dutch Minister of Defence has published a bill regarding the resilience of the Dutch defence technological and industrial sector.  The bill will introduce a sector-specific test, which will also entail ex ante screening, to complement the Vifo Act.  The scope of the current version of the bill encompasses target companies active with specific military items and target companies that are substantial suppliers to the Dutch defence forces.  The bill was open for consultation until 1 September 2024.

In February 2024, a motion was passed in Dutch Parliament, designating the vegetable and seed improvement sector as a sensitive technology under the Vifo Act, as protecting these companies is of vital importance for national security.  As it was passed unanimously, we expect the government to co-operate with this motion.

However, Casiño dares to write this one about FDI:

Without definite limits on foreign ownership and with no preference for Filipino citizens and corporations, the Constitutional provisions on the national economy and patrimony would become a tabula rasa. It would now be up to the Federal Assembly to determine policies on foreign equity sharing and just about anything there is about the economy and our natural resources. This, of course, creates an entirely new window for corporate lobbying, putting small, underfunded Filipino citizens and corporations at a great disadvantage.

Worse, by totally removing the State’s role in developing an industrialized, self-reliant economy, in implementing agrarian reform, in promoting and protecting Filipino enterprises and producers, and in reserving our natural resources for Filipinos, Duterte’s Cha-Cha will leave small enterprises, workers and farmers having to fend for themselves from the onslaught of even more globalization.    

These amendments are the culmination of 3 decades of “economic reforms” toward a totally free market, neoliberal economy. Combined with the existing policies of economic liberalization, deregulation and privatization, the amendments remove the last impediments to the total domination, control and plunder of our economy and natural resources by foreign corporations and banks. 

Even funnier, Casiño insisted that the rule of 60-40 must be upheld, like a greedy landlord who wants 60% ownership of the tenant renting in his place:

There is no need to amend the Constitution to change the rule that limits foreigners to own no more than 40% of businesses in the Philippines, Makabayan senatorial bet Teddy Casiño said during the Rappler Senatorial Debate Saturday, April 13. 

“It’s important to maintain the 60-40 rule because, even if there is a constitutional requirement for that now, some corporations still find a way around it,” Casiño said in a mix of English and Filipino. 

“They are the ones who dominate, they are the ones who benefit. For me, what’s more important is the implementation of the Filipino First rule,” he added.

Why insist on the Filipino First Policy and then rejoice over ICC intervention? If we read about ICC intervention, it's supposed to be a court of last resort. In short, no Filipino politician should ever be brought to the ICC unless all measures fail:

Salient Features of the Rome Statute

The Court will act only as a court of last resort. This means that the Court acts only in exceptional cases, where a country has failed to bring justice because it is unwilling or unable to investigate and prosecute those who have the highest responsibility for the most serious crimes of concern to the international community. 

Why are people who insist on Filipino First Policy, now handing over the previous president to the ICC? Isn't it ironic? Shouldn't the Filipino courts try Duterte (or any politician with alleged charges) for that matter? There are times Filipino First can be applied, such as the rule of law. For example, if a foreigner breaks the law in the Philippines, shouldn't the Philippines be the first to try the foreigner before the foreigner's country? However, we've decided to take Filipino First Policy to Carlos P. Garcia's utter extreme. Garcia's Filipino First Policy, unfortunately, caused the Philippines to fail.

THE “FILPINO FIRST” POLICY

The ”Filipino First” policy of this administration re­ceived a resounding popular indorsement in the last election. Politically we became independent since 1946, but econom­ically we are still semi-colonial. This is especially true in our foreign trade. This policy is therefore designed to regain economic independence. It is a national effort to the end that Filipinos obtain major and dominant participa­tion in their own national economy. This we will achieve with malice towards none and with fairness to all. We will accomplish this with full understanding of our inter­national obligations towards our friends of the Free World. We will carry this out within the framework of our special relations with the United States to whose citizens we granted until 1974, by Constitutional provision, equal rights as Filipinos in the exploitation of our natural resources and public utilities, and to whom we also granted trading parity rights under the Laurel-Langley Agreement. Under this policy we will welcome friendly and understanding foreign capital willing to collaborate with us in the exploitation of our vast natural resources preferably on joint venture basis.

It is my hope that legislations under this orientation will be enacted this year.

What happened to Filipino First Policy then?  Has the Filipino First Policy become selective?  If one must follow Filipino First Policy and 60-40 rule consistently, I propose that 60% of the judges should be Filipino, and only 40% of the judges should belong to the ICC! Why is that they demand Filipino First Policy in the name Pinoy Pride? Why do such people say that Filipinos must become the major and dominant participant of the economy? However, the rule that the ICC should be the "court of last resort" may not have been followed. 

Let me leave this post with a thought. Why should the Philippines close its doors to more FDI out of fear of "foreigners taking over" (and Atty. Hilario G. Davide Jr. even claimed the Philippines may become a colony of foreign investors) while letting ICC intervene? Whether we like to admit it or not, the Philippines may need outside help. The ICC is described as a court of last resort for member countries. Why welcome intervention from the foreign community such as the EU or the USA? However, such people wouldn't want to let investors from EU or the USA invest without having to split 60-40? Why rejoice when the EU intervened in behalf of so-and-so--all the while one may demand an investor from the EU to bend to the 60-40 rule? Why rejoice when Human Rights Watch (HRW) intervenes while one may insist an investor from New York, bend to the 60-40 rule? That should be contradictory.

In fact, an EU ambassador even said that the Philippines must ease foreign ownership restrictions, 10 years ago!

MANILA, Philippines – Easing restrictions on foreign ownership would help spur the development of Renewable Energy (RE) in the Philippines, said European Union Ambassador to the Philippines Guy Ledoux.

“That would be a good measure to further attract EU investments, including in renewable energy,” he said at the recently concluded bilateral meeting between EU and the Philippines on Energy.

The easing of the 60-40 rule, which prevents foreign firms from owning more than 40% of a firms in the country as written in the Constitution, is an issue that has been constantly raised by foreign groups.

One high level example of this is UK Trade envoy to the Philippines George Freeman who, last year, said that “you need certainty of ownership and be able to convince financiers that the project is secured for the long term. To promote that, we need to revisit the 60-40 rule.

Whether we want to admit it or not, FDI isn't a violation of sovereignty. The Philippines is no different than any country that joins any organization. A country is expected to follow the rules of any international treaty. If I'm not wrong, any trade agreement means both sides may want to make demands from each other. The Philippines must abide by the rules with its trading partners, such as the EU. Seriously, what's the use of rejoicing that the EU intervenes on behalf of a Filipino's plight while ignoring the EU's call for the Philippines to ease certain economic restrictions? The EU may soon get badmouthed if its delegates criticize the Philippines' unreasonable economic restrictions. The same EU delegates who may look into the plight of Filipinos (presumably because of trade relations) may soon get blacklisted, for criticizing the Filipino First Policy.

It's really the rule of convenience if you ask me. Foreign intervention whenever convenient, hence the post title! It's no different than citing the late Lee Kuan Yew (who died in 2015) while ignoring the rest of his economic advice (read here). Foreign intervention should be there when necessary. Foreign investment restrictions should be moved out of the Philippine Constitution, and should only be in legislation. After all, some sectors may still be deemed "critical". However, we need to look into the supply and demand problem. FDI without the silly 60-40 share ownership rule is no longer an option--it's a necessity for the Filipino economy. It's because we need more employment and not all Filipinos are business-minded. 

An even funnier thought is that many ICC members come from countries that benefited from FDI. So why should people want the Philippines to rejoin the ICC, but not become as economically free as the other ICC member countries?!