(Following is the transcript of the segment "Analysis by Winnie Monsod" which aired on News on Q on April 27, 2009. Prof. Winnie Monsod is the resident analyst of News on Q, which airs weeknights at 9:30 p.m. on Q Channel 11.)

Every Philippine President after Cory Aquino has either spearheaded or has been behind attempts to change the Constitution, and frankly, although their motives seem to be of the highest, if one goes beneath the surface - and not very deeply at that - one finds that the motivation is really self-interest.

The latest attempt goes under the guise of promoting economic growth and development, of generating jobs and reducing poverty.

And so, there is this move to amend the so-called economic provisions of the Constitution, which restrict foreign ownership and/or control of certain economic activities.

Their argument goes like this: the restrictions on foreign ownership are anti-growth and anti-poor.

Why? Because they have closed the door on foreign direct investment or FDI.

Have those economic restrictions, really closed the door, imposed a binding constraint, stifled, foreign investments in the Philippines?

Let's look at land ownership. Has the prohibition on foreign ownership of land become an immovable object? Well, when one can lease land for up to seventy five years, let's face it, land ownership becomes immaterial.



China is the biggest single recipient of foreign direct investment, accounting for over 34% of total FDI, and it allows no foreign ownership of land.

But, it has industrial and exporting processing zones like we do where very long term leases can be had. No problem.

As to the prohibition on foreign control of certain industries, like public utilities, or media, or advertising, etc., let's just take one example - PLDT. Giant telecommunications. It is controlled by First Pacific, an Indonesian multinational - just because Manny Pangilinan is a Filipino doesn't change that fact.

So, the question is: How did a public utility, a telecommunications company, get to be controlled by foreigners?

Simple: a very liberal interpretation of what constitutes "total capital." And in any case, it is not unusual for companies to be controlled even when ownership is limited to 40% or even 20% of common stock.

Bottom line here is that those economic restrictions in the Constitution haven't really closed the door to foreign investment. The door has been open, complete with incentives. The fact that FDI has not come in is another matter.

Let us not blame the Constitution for that. Let us instead find out, from empirical research, what it is that attracts FDI to a country.

Investors list down the most important factors influencing their decisions to invest in a country: what are they?

1. Adequate infrastructure

2. Skill levels (or human capital)

3. Quality of the general regulatory framework

4. Clear rules of the game, meaning no uncertainty, everybody knows what the rules are

5. Fiscal determination, meaning to say that the government is not going to get into fiscal crisis that will reduce the value of foreign investments.

OK, look at that checklist. Of the 5, we can lay claim to only 2: skill levels and fiscal determination and that may be temporary.

Certainly our infrastructure is woefully inadequate, our rules of the game are constantly changing, and the quality of our general regulatory framework is - well, judge for yourself - SEC, ERC, etc.

You think that is too harsh a verdict? Just look at where the Philippines is as far as the Corruption Perception Index of the Transparency International is concerned, or for that matter, the Global Competitiveness Index, and you will find the Philippines at basement levels, certainly below average.

In other words, if we really want to attract Foreign Direct Investment, touching the Constitution is like barking up the wrong tree.

And in any case, let us never make the mistake that FDI is automatically going to result in greater growth, more employment, and poverty reduction. It actually depends on the quality or the kind of FDI that comes in.

So many studies show that as much as 25% to 45% of FDI projects have deleterious effects on national income and economic growth.

Finally, how will the Constitution be amended? The proponents have the answer too: by Constituent Assembly to save money and time. Congress constitutes itself into such an assembly, then the provisions will be lifted. Easy as pie.

Of course, Congress, not having a track record for fulfilling its commitments, there is already widespread suspicion that the lifting of restrictions on foreign ownership is just an excuse, the thin edge of the wedge, and once the Constituent Assembly is formed, well all the other amendments, like parliamentary form of government, lifting of term limits, etc., etc. will also be taken up.