I was following the Facebook page Behind Asia. Right now, I have to get into the arguments. It's not going to be easy to deal with a Facebook page that has at least 217K followers. I'm going to say that my purpose isn't to win the debate, but to spread the facts. I might just be a nobody, but that doesn't mean I should shut up and do nothing. I have my limited freedom of speech, which I can and should use. I'm going to go into Behind Asia's and try to refute some of its ridiculous ideals. I wouldn't take too much time refuting them all, but those I feel like need to be refuted, as soon as possible.
Claim: 60-40 isn't an issue, and economic charter change is the "easy solution"
The political elite is pushing aggressively for Economic Charter Change (Cha-Cha). The central argument is that the 1987 Constitution’s restrictive 60/40 foreign ownership rules are the primary reason the Philippines lags behind our neighbors in Foreign Direct Investment (FDI).
As an economic theory, it sounds great. But look at the actual data. It is a massive political deflection. 📜🛑
Foreign tech giants and manufacturing conglomerates are not bypassing the Philippines simply because they can't own 100% of the land. They are bypassing us because our operational economics are fundamentally broken.
You can rewrite the Constitution tomorrow and allow 100% foreign ownership of utilities and land, but no sane global manufacturer is going to build a hyper-advanced semiconductor fab or an automotive plant in a country that has the highest industrial electricity rates in Asia.
They won't invest billions of dollars when the logistical cost of moving a cargo container from the port to the factory is strangled by traffic and red tape. They won't set up shop when local government units constantly extort permits and delay construction for years.
Changing the Constitution is the easy, lazy political answer. It allows politicians to look like they are fixing the economy without ever having to actually confront the local monopolies, lower the power rates, or destroy the bureaucratic syndicates that are actually keeping us poor.
Are we fixing the engine, or just repainting a broken car?
This is a fundamentally flawed argument. I would like to address this problem. Behind Asia is addressing some valid issues, but they're ignoring some real issues. They say that even if the Philippines were to rewrite the constitution tomorrow to allow 100% foreign ownership of land and utilities (I wonder if Behind Asia understands the difference between share ownership and land ownership), that it's the same issue. If we're just going to talk about electricity rates, we need to look at the negative list for the Philippines vs. Vietnam.
Now, just to cite this clause for Beyond Asia, assuming that they, as a Facebook page, could actually read it!
Up to 40% Foreign Equity
- Procurement of infrastructure projects in accordance with Section 23.4.2.1(b), (c), and (e) of the Implementing Rules and Regulations (IRR) of RA. 9184
- Exploration, development, and utilization of natural resources
- Ownership of private lands, except for a natural-born citizen who has lost his Philippine citizenship and has the legal capacity to enter into a contract under Philippine laws.
- Operation of public utilities
- Educational institutions other than those established by religious groups and mission boards, for foreign diplomatic personnel and their dependents and other foreign temporary residents, or for short-term high-level skills development that do not form part of the formal education system as defined in Section 20 of Batas Pambansa (BP) No. 232 (1982)
- Culture, production, milling, processing, trading except retailing, of rice and corn and acquiring, by barter, purchase or otherwise, rice and corn and the by-products thereof, subject to a period of divestment.
- Contracts for the supply of materials, goods, and commodities to Government-Owned and Controlled Corporation (GOCC), company, agency or municipal corporation
- Operation of deep-sea commercial fishing vessels
- Ownership of condominium units
- Private radio communications network
Has Behind Asia used their common sense? If you think about it, the 60-40 rule is overpriced rent. Can you really expect anyone to want to rent a space if they have to split up 60% of the net income? They had worked so hard to keep the whole establishment afloat. They paid rent, salaries for everyone involved, all accounts payable, interest, etc. However, it wouldn't make sense that, as the landowner, I would say to them, "Look, I own the land, therefore I'm entitled to more than just rent, I must have 60% of the net profit!" Certainly, that's a red flag that would cause the business to say, "That's it! We're leaving! No more contract renewal." I even smell a lawsuit from a distance, which could be extortion. But that's the problem with the 60-40, as it legalizes extortion to a certain extent.
If public utilities are under the 40%, the real question becomes, "How will we attract more FDIs who invest in electricity if they can only keep 40% of their profits?" This is again the classic case of mistaking revenues for profits. Based on the ASEAN Briefing written in 2023, which needs ot be changed as soon as possible:
What are the implementing rules and regulations?
100 percent foreign ownership of select public services
Starting April 1, 2023, select sectors such as railways, airports, expressways, and telecommunications are now open to 100 percent foreign ownership. Previously, these sectors were limited to 40 percent foreign ownership.
Restrictions on public utilities
The following public utilities have foreign ownership limited to 40 percent:
- Electricity distribution;
- Electricity transmission;
- Seaports;
- Water pipeline distribution and sewerage; and
- Public utility vehicles.
These systems are deemed vital and would have a debilitating impact on national security if they were incapacitated or destroyed.
Too few electricity providers vs. 7,641 islands is staggering. We just need to look at the supply-demand principles. If the supply is low (too few power plants) and the demand is high, then the costs of electricity would be higher. If there were more electrical plants, the demand would be lower, which in turn would cause the costs to be lower. I wonder if Behind Asia even looked at the supply/demand chain as the reason for higher electricity costs.
This becomes even funnier when Behind Asia wrote this:
The political elite are aggressively pushing for "Economic Cha-Cha." Their viral talking point is simple: If we amend the 1987 Constitution to allow 100% foreign ownership of corporations and land, massive tech factories will instantly flood the Philippines and make us rich.
But foreign investors are already laughing at the premise. This is the Deregulation Decoy.
If you speak to the heads of foreign chambers of commerce, they will tell you exactly why they choose Vietnam over Manila. It has absolutely nothing to do with the Constitution. It is because Philippine electricity costs 300% more, our internet is unstable, and it requires 15 different bribes just to get a local building permit.
Opening up 100% land ownership without fixing the power grid will not attract high-tech semiconductor factories. It will simply allow multi-billion dollar foreign real estate cartels to legally outbid local Filipino farmers for prime agricultural land, converting our remaining food supply into luxury resorts and export-processing zones that we no longer own.
The reality is that it's easy to say, "Ownership isn't the issue." Again, I'm not dismissing the problem of 15 different bribes just to get a permit. Again, 100% ownership isn't always about land ownership, it's all about share ownership. I wonder if Behind Asia realized that the bigger problem isn't the lack of land ownership for foreigners but the corporate share ownership. Bribery is a problem caused by the Filipino First Policy, which unfortunately festered to affect even Filipino-owned businesses by having bad quality services, such as the high cost of electricity and unstable Internet.
Does Behind Asia think that any decent electrical distributor or telecommunications service would want to look for an oligarch to partner with? If so, they have become a part of the problem by believing that. Also, for an analysis, the mall allows the tenant to own 100% of their business in the mall space. The tenant doesn't care about owning the space at the mall (or any commercial building, for that matter). The tenant cares more about how much profit they will get.
Claim: We need zero corruption to have better FDI inflows
The Philippines is being mathematically left behind in the industrialization race. Why? Because foreign corporate capital requires three things: cheap electricity, zero corruption, and ease of doing business. The Philippines has the highest power rates in the region and a deeply bureaucratic, heavily protectionist Constitution (the 60/40 rule). Until the physical cost of operating a factory drops, the billions in foreign capital will continue to fly right past Manila and land directly in Jakarta and Ho Chi Minh.
Sure, corruption is a problem. However, having corrupt officials is a symptom. It's just like if there's a software error, you can expect the software to be corrupted. One can always say, "You people keep blaming the 1987 Constitution; it's the corrupt officials that are the problem." Well, the constitution doesn't endorse corruption directly. What such people fail to see is that if the constitution lacks the mechanism to avoid it, it's just like if there's an incompatibility in the software, you can expect the software to be buggy. In 2026, that's why it has become important to do software updates if there's ever an error. It was like how the CrowdStrike problem in 2024 was all about the software, not the user.
If Behind Asia is talking about corruption and Indonesia, here's a bit of trivia. Any visit to Transparency International would reveal these scores:
- The Philippines' score: 32/100. It's ranked at 120/182. (bad performer)
- Indonesia's score: 34/100. It's ranked at 109/182. (bad performer, only slightly better than the Philippines)
- Vietnam's score: 41/100. It's ranked at 81/182. (still a bad performer, but miles above the Philippines and Indonesia)
Chapter XIV. The National Economy and Social Welfare
Article 33
The economy shall be organized as a common endeavour based upon the principles of the family system.
Sectors of production which are important for the country and affect the life of the people shall be under the powers of the State.
The land, the waters and the natural resources within shall be under the powers of the State and shall be used to the greatest benefit of the people.
The organisation of the national economy shall be conducted on the basis of economic democracy upholding the principles of togetherness, efficiency with justice, continuity, environmental perspective, self-sufficiency, and keeping a balance in the progress and unity of the national economy.
Further provisions relating to the implementation of this article shall be regulated by law.
Article 34
Impoverished persons and abandoned children shall be taken care of by the State.
The State shall develop a system of social security for all of the people and shall empower the inadequate and underprivileged in society in accordance with human dignity.
The State shall have the obligation to provide sufficient medical and public service facilities.
Further provisions in relation to the implementation of this Article shall be regulated by law.
Have you read anything that Indonesia has hardened its protectionist policies? None! Protectionist policies like tariffs should be passed through legislation instead. The move to even amend Article XII of the 1987 Constitution of the Philippines is to pull away the protectionist measures from the constitution to legislation. Sure, it might feel "chaotic", but if people realized that these restrictions aren't "sacred Scripture", the lawmakers can make necessary adjustments, such as "Remove 60-40 on all these sectors. However, we must make it difficult for anybody to steal information from the Philippines."
Basically, corruption is a problem that will never disappear. If corporations would wait until that country has zero corruption then it becomes an opportunity loss.
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