Cha-Cha Proponents: Clinging to an Obsolete Ideology

By IBON Foundation

As administration allies push for amendments of economic provisions in the Constitution, research group IBON Foundation says that the resolution seeking to allow corporations to own land and land-based resources in the Philippines are based on an outmoded ideology which believes that liberalizing the economy to greater foreign investment will lead to development.

IBON has long criticized economic liberalization and government economic managers that are dogmatically clinging to this outdated belief. “Investment policy” was even dropped from the World Trade Organization (WTO) agenda because unrestrained investment liberalization is unacceptable to many underdeveloped country governments.

The last two decades have seen an unparalleled opening-up of the Philippine economy and in the face of a global economic crisis, its destructive impact on people’s livelihood is undeniable. The 1990s have seen record increases in trade and investment yet the supposed gains like a strengthening of the economy have not materialized. The Philippines is facing its worst jobs crisis in its history while foreign investors have repatriated more capital than they ever brought in. Government continues to grant fiscal incentives to foreign investors, which have amounted to lost revenues of Ph96.65 billion annually from 1999 to 2003.

It is clear that the problem is not the restrictions on the role of foreigners in the economy. Every country that has achieved any kind of economic development has controlled foreign investment. South Korea, Taiwan and Malaysia strictly controlled foreign investment for decades since the 1950s. China has strict regulations until today and is still selective in liberalizing. The US, UK, France, Germany, Japan and other advanced countries only relaxed restrictions when their big capitalist monopolies were entrenched. These countries are pushing investment liberalization now only because they are powerful enough to dominate underdeveloped economies and overwhelm weak domestic businesses.

Changing the charter’s economic provisions to further open up the country to foreign investment and capital will further weaken the Philippine economy. It will worsen joblessness, undermine long-term growth, and strip the country of our natural resources as foreign corporations and local counterparts continue plundering the country’s mineral, forestry and marine resources. Opening up land to foreign ownership will drive land prices up and displace our small peasant farmers. Land inequities, land monopolies and rural unemployment will worsen.

Proponents of Cha-cha are those who stand to gain the most: foreign investors and domestic big business. The US has the biggest stakes with some US$4.5 billion worth of investments in the country. Meanwhile, the beleaguered Arroyo administration is using Cha-cha that benefits US corporate monopoly interests to maintain US support for its illegitimate rule.

The Philippines can benefit from foreign investment but only if this is let in on terms of mutual benefit. If the government has not had the political will to assert the nationalist economic provisions as they are, then removing them completely will only worsen the already intolerable economic situation.