Cha-cha or Die (Part 1)

The Cha-cha is a dance of steady footwork, and confident movement, within a three full-step chasse. The quick, precise, and bold steps are needed in the Cuban dance, and more relevantly, the 1987 Philippine Constitution’s amendment. For if the dance means to court confidently, charter change courts foreign confidence in the Philippines, leading to sustainable development into the 21st Century.

We must Cha-cha, for a svelte, nimble appearance, and a welcoming, reassuring smile for foreign investors. Our current Constitution paints us as overweight, and still enthralled with dancing the slow “Pasa Doble”: 61 open-ended Constitutional provisions still need to be defined “as may be provided by law” (leaving room for Judiciary intervention and interference); scaring away foreign investors.

We must Cha-cha or else die by atrophy, remaining Asia’s wallflower in attracting Foreign Direct Investments, as US and EU look for better returns for their monies from other welcoming partners.

Constitutional change, like the three-step dance, requires timely, forward-looking modifications. And as the law serves the people (not vice-versa), changes should lead to a framework that, in this article’s sense, promotes an economy that maximizes our core competencies, positioning the country positively in this Pacific century during this Global Economic Storm.

“Lumang Tugtugin”

Take the current 1987 constitution, which replaced the 1973 Constitution promulgated during Ferdinand Marcos’ regime. It modernized the 1935 Constitution originally created for the Philippine Commonwealth, while our White Nannies “prepared” us for independence. Marcos’ chokehold on power eventually led to the People Power revolution, and the current 1987 Constitution.

The 1987 Constitution looked largely to redress prevalent issues that the 1973 Constitution, by way of commission or omission, overlooked. Things like government forms eliminating term limits, Nuclear power, and land and natural resource patrimony.

However, like the 1973 Constitution, it has become dated by current local and international Socio-Economic phenomena: globalization, technology, and a new world order have rendered many provisions obsolescent, limiting our economic potential and advancement - which our core competencies have eminently tooled us for - during this current global economic turmoil.

There is no time in a neo-polar world order. It’s time to reinvent some nimble, attractive steps in the Cha-cha, now.

Cha-cha step #1: Mineral Mambo

Article XII, Section 2 states that “all…natural resources shall not be alienated,” and their “exploration, development and utilization…shall be under the full control and supervision of the State.” This further limits the involvement of foreign partners, to corporations provided that 70% capital is Filipino-owned.

While a 100% foreign stake in our natural resources smacks of colonial exploitation, allowing, say, 49% (instead of the maximum 30% for communication, natural resources, power and transportation) would enable more natural resource exploration and extraction. The world’s 5th most mineralized country, we have an estimated US$840 billion (B) of untapped mineral reserves. Increased foreign participation would unfetter dormant economic potentials. A patrimony that protects the national interest differs from a sentimentality that protects personal interests. The question remains: why 30%, max?

Vietnam allows 100% foreign capital investors into virtually any industry, provided it does not impinge on “national defense;” “historical and cultural relics;” “fine traditions and customs;” and “the environment and ecology.”

Geographically, our mineralized land is estimated at 9 million (M) hectares, of which only 420,000HA (4.6%) are tapped. The industry contributes some US$2B of exports to the economy. Related investments, of which the Chamber of Mines of the Philippines expects US$1.55B in 2008, contribute more. If foreign exploration partnerships enable another 420,000HA (only 9.6% capacity utilization) development, that’s another potential US$2B in exports, and US$1.55B in investments.

Globalization and the Global Economic Order’s pronounced interdependence have removed traditional barriers to the movement of monies – in terms of resource. We must adapt, in the Darwinian ethos, because the fittest – and quickest – survive; the rest perish.

Cha-cha step #2: Real Estate Two-step

Current provisions state that foreign corporations “may not hold such alienable lands of the public domain except by lease,” limited to 1,000HA, for 25 years, plus another 25-year renewal limit (Article XII, Section 3).

The subprime-ravaged US and UK should make land here - affordable, warm, and friendly - an obvious choice; but owning residential land, regardless of attractiveness, is immaterial if work lies 7,000 miles away. Foreign land ownership is again “win-win,” enticing not just retirees, but active workers – and companies – wholesale. And should a GM or Boeing erect plants and buildings here (in rural areas or Special Zones), consequently relocating their personnel, who gains?

Take the Philippine BPO industry, expected to bring US$11B and 1M jobs by 2010. It can grow more if foreign investors can own real-estate, whether for corporate or residential use.

The next article outlines the need for other modified provisions in the present Constitution, which will help us assert our presence in this Pacific century.