I cannot understand on why our president, Noynoy Aquino prefers to limit instead of opening more economic sectors for 100% foreign equity ownership or foreign participation in our white and blue-collar jobs just to protect the interests of his benefactors during the campaign period who happened to control more than half of our economy from real foreign competition in job generation and developing our infrastructure.
Our president did not realize that the draconian and idiotic 60/40 equity-sharing in favor to a Filipino individual or corporation over a foreign individual or corporation on extracting natural resources, setting-up domestic-based businesses, education; 30% foreign equity ownership limit in advertising; and zero foreign investment in media sector have contributed economic dislocation of our country as foreign investors have a difficulty of finding a Filipino individual or business which have enough capital to tap 40% at most in a investment project or the worst, using a local dummy to act as a whole owner of a business which in reality (many case) a foreign individual is the one who invested a business with 100% from his pocket.
Due to the draconian and idiotic 60/40 equity-sharing in favor to a Filipino individual or corporation over a foreign individual or corporation has been stipulated in our constitution for more than 75 years, the Philippines has been left behind with the rest of East Asia in terms of gaining massive foreign direct investments that would have generated massive jobs for millions of Filipinos at home but instead, our workers especially those with higher educational attainment prefers to seek high-paying jobs abroad due to lack of high-paying jobs here in the Philippines, leaving their respective families behind that have created another social problem of family dislocation. The remittances of our OFWs cannot guarantee long-term economic stability as the money they remit to their families here in the Philippines tends to spend for consumption not for investment like starting a small business for example as our laws does not guarantee a better environment for starting a business.
Due to lack of foreign competition in our domestic economy thanks to the constitutional prohibition of 100% FDI in most of our economic sectors, businesses owned with landlord origins does not have a motivation to improve their services to their consumers and increase the wage of their workers which results to general suffering of our people especially the lower class who cannot afford to go abroad for high-paying jobs. Lack of foreign competition has motivate elite oligarch-owned businesses of controlling not just the market share of our domestic market but also the politics through their relatives holding the electiv positions in the government that makes any reform to break the grip of elite oligarch-owned businesses difficult.
President Noynoy Aquino has expanded the list of investment areas and economic activities that prohibit or limit the participation of foreign investors under the 9th Regular Foreign Investment Negative List. The list enumerates the industries and business activities that are open to Filipino businessmen, and defines the extent of participation of foreign investors in areas allowed by specific laws and the Constitution.
Aquino signed Executive Order No. 98 on 29 October, Executive Secretary Paquito Ochoa Jr. said on Friday. The order, which also expands investment opportunities reserved for Filipinos, replaces E.O. 858 that started to take effect in February 2010.
EO No. 98 takes effect 15 days after its publication in a newspaper of general circulation.
“There are investments areas or activities which foreign ownership limitations imposed by law were not included in EO 858. Those changes are now reflected in the ‘List A’ of the new presidential directive,” Ochoa said.
Ochoa said among E.O. 98’s amendments to E.O. 858 are:
- The foreign ownership and foreign practice limitations imposed under the Real Estate Service Act of the Philippines (Republic Act 9646); (allow foreign professionals to participate)
- The Philippine Respiratory Act (R.A. 10024); (allow foreign professionals to participate)
- The Philippine Psychology Act (R.A. 10029) (allow foreign professionals to participate) and
- The Lending Company Regulation Act of 2007 (R.A. 9474) (allow foreign professionals to participate)
Except for R.A. 9474, which allows foreign ownership of up to 49 percent in lending companies, the three other laws limit the practice of non-Filipinos in the areas of real estate and health care such as respiratory therapy and psychology, unless there is a reciprocity arrangement prescribed by a law.
List A of EO No. 98 specifies the areas of economic activity where foreign ownership is prohibited or limited by the Constitution or laws, among them:
- mass media (scrap the ban against foreign investments in media and allow 100% FDI)
- practice of all professions, cooperatives (scrap the 60/40 equity restrictions through a constitutional amendment and allow 100% FDI)
- private security agencies (scrap the 60/40 equity restrictions through a constitutional amendment and allow 100% FDI)
- small-scale mining (scrap the 60/40 equity restrictions through a constitutional amendment and allow 100% FDI)
- private radio communications network, private recruitment for local or overseas employment (scrap the 60/40 equity restrictions through a constitutional amendment and allow 100% FDI)
- advertising (scrap the 70/30 equity restrictions through a constitutional amendment and allow 100% FDI)
- ownership of private lands, (allow indefinite long-term lease in agricultural lands for foreigners; allow fee-hold ownership of land in residential and commercial lands for foreigners)
- lending companies, (scrap the 60/40 equity restrictions through a constitutional amendment and allow 100% FDI)
- financing companies and investment houses regulated by the Securities and Exchange Commission (scrap the 60/40 equity restrictions through a constitutional amendment and allow 100% FDI)
List B contains economic activities regulated by law such as:
- small- and medium-scale domestic enterprises (scrap the 60/40 equity restrictions through a constitutional amendment and allow 100% FDI)
- defense-related industry (i.e., manufacture of firearms, etc.) (scrap the 60/40 equity restrictions through a constitutional amendment and allow 100% FDI) and
- businesses that have implications on public health and morals (i.e., gambling, sauna, massage clinics, etc.) (scrap the 60/40 equity restrictions through a constitutional amendment and allow 100% FDI)
List A may be amended any time to reflect changes brought about by new laws, according to Ochoa. (scrap the Foreign Investment Negative List)
List B may be amended not more than once every two years upon the recommendation of the departments concerned and endorsed by the National Economic and Development Authority, or upon NEDA’s own initiative and recommendation, approved by the President and promulgated by a presidential proclamation. (scrap the Foreign Investment Negative List)
“For now, List B stays while the changes to the negative list covers only List A,” Ochoa said.
Under the Foreign Investments Act of 1991 (R.A. 7042), foreign investors are allowed to own 100-percent equity in businesses excluded from the negative list. (amend the 1987 constitution to scrap any references of 60/40 forced equity sharing in favor to a Filipino individual or business against foreigners; replace the 60/40 with equal protection between the Filipino and foreign investors; then, revise the Foreign Investments Acts of 1991)
The bold sentences with parenthesis are my recommendations for total foreign investment and professionals participation.