The United States is pressing for charter change to allow foreign companies to build majority stakes in companies that are currently barred by the 1987 Philippine Constitution, America’s top envoy in Manila said here last Thursday.
US Ambassador to the Philippines Harry K. Thomas Jr. disclosed that Philippine Finance Secretary Cesar Purisima will meet with US Trade Representative Ron Kirk in Washington next month to discuss the Philippines’ desire to join the Trans-Pacific Partnership (TPP), an Asia-Pacific trade organization that could vastly expand Philippine markets.
President Aquino sought US support for joining the TPP during his US visit last year. “Envisioned as a platform for economic integration across the region, the TPP countries would be in a best place to become the region’s leading hub for trade, investment and growth,” he told the Council for Foreign Relations in New York.
The TPP aims to eliminate tariffs among participating countries – Australia, Brunei, Chile, New Zealand, Peru, Singapore, Vietnam and the US – by 2015.
“The head of the USTR, Ambassador Kirk, pledged to have his team come out to the Philippines 4 times a year. They’ve already been there 3 times,” Thomas said, “Secretary Purisima will come here in September and sit down with Ambassador Kirk and his staff to go chapter and verse for everything the Philippines needs to do to establish a trade and framework agreement and eventually be part of the Trans-Pacific Partnership.”
“They have to change laws, issue executive orders and frankly, introduce amendments to the Constitution,” Thomas declared at a forum on Philippine-US relations organized by the Washington-based Asia Society last Thursday.
“Our priorities in the Philippines are basically the same as the priorities of the Philippine government,” he assured.
He equated the inability of foreign companies to gain a majority stake in the Philippines to the other ills that fuel widespread poverty – corruption and the rule of law. “For the Philippines, we have known what the constraints to economic growth have been…why the Philippines is 9th of 11 countries (in the Southeast Asian region) in foreign direct investments,” Thomas said.
“We are very pleased to see the Chief Justice of the Supreme Court and also the Speaker of the House now open to changing parts of the Constitution on the economic side,” he added.
Before flying to New York to visit his mother, the US envoy also met with Senate President Juan Ponce Enrile who called for debates to amend economic provisions of the Constitution that restrict foreign ownership of local industries.
Thomas’ assertion on the need for charter change is shared by some of the country’s top economists. Dr. Bernardo Villegas, who was one of the framers of the 1987 Constitution, argued the Philippine economy can not grow at a pace sufficient to reduce the poverty level from today’s 30 percent to 10 percent or less without large foreign investments.
He cited China which attracted over $100 billion in foreign direct investments (FDIs) last year. The Philippines generated less than $2 billion over the same period, lagging behind neighboring Indonesia and Vietnam which attracted $10 billion and $7 billion, respectively
FDIs amounted to $714 million in the first 5 months of 2011, up 15 percent from a year ago, according to the Bangko Sentral ng Pilipinas (BSP). Market fluctuations and a general sense of uncertainty spawned by America’s first-ever credit downgrade and concerns in Europe are reportedly driving money managers to emerging markets in Asia.
Total US FDIs reached nearly $6 billion just as the home mortgage crisis and economic recession was taking its grip on America in 2009. Much of that money went to the manufacturing sector in the Philippines, US statistics show.
Thomas admitted the US also has a significant stake in seeing a more economically robust Philippines. “The Philippines is the 8th largest country for US lead product exports, the 12th largest for food and beverage. It’s the only country that takes all American beef and that leads to a lot of American jobs,” he pointed out.
“At the same time we’re working to send more agricultural exports to the US, especially value-added processed food,” Thomas said as he recited a litany of Philippine products like aircraft parts and electronic goods that make their way to the American market.
The Philippines enjoyed about a $600 million surplus from nearly $15 billion in PH-US trade in 2010, according to USTR statistics.
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