Background: Charter Change, known locally as "Cha-Cha," refers to the process of amending the Constitution of the Philippines. The Constitution was drafted in 1987 to underpin the nation’s transition to democracy, and serves as the fundamental law of the land. There have been several attempts to revise the country’s highest document, with its proponents citing the need to adapt to evolving societal needs, political considerations, and to advance economic development.
Current Situation: Advocates for Charter Change argue that certain provisions of the Constitution may need to be updated to better address contemporary challenges, promote economic growth, and enhance governance efficiency. At present, the Philippines has a relatively high labour surplus owing to its consistently high birth rate but suffers from widespread underemployment. These issues have been exacerbated alongside a general economic slowdown beset by pandemic-related economic woes and global shocks. Advocates of Charter Change emphasize that revisions will attract more foreign investment and boost the country's economic competitiveness, while also encouraging higher rates of labour participation.
Challenges and controversies: The prospect of Charter Change has faced widespread opposition from a coalition of political figures and civil society entities. These critics have charged that current economic and social issues are separate issues that do not arise from the constitution. They have similarly highlighted the potential misuse of Charter Change for political gain, citing that proponents may be able to modify term lengths and limits of lawmakers, and to modify institutional provisions that safeguard democratic rights and social equity.
What do businesses and investors need to know about the proposed changes: Currently, the proliferated conversation surrounding the changes revolves around domestic political reforms. Proposed changes in a Charter Change can encompass a wide range of areas, including but not limited to:
Economic Provisions: Pro-change lawmakers have indicated that charter change may usher in amendments that ease restrictions on foreign ownership of businesses and land to encourage more foreign direct investment, including easing the 60-40 ownership rule. At present, the 1987 Constitution stipulates that only Filipino citizens are permitted to own land in the country, whereas foreign ownership of Philippine-based businesses are restricted to a maximum 40% ownership stake.
Political Reforms: Lawmakers have expressed a desire to utilize Charter Change to revise to the structure of the government, including adjustments to the form of government (e.g., fulfilling a longstanding ambition to shift to a federal system), and changes to term limits and electoral systems. A switch to a federalist system may alter national economic policies as it will empower local government units with significantly larger decision-making powers. Similarly, under the auspices of a federal system, the dynamics of political power in the country will gradually shift away from Manila, leading to greater involvement provincial and municipal stakeholders in policymaking.
Human Rights and Citizenship: Amendments that address issues related to human rights, citizenship, civil liberties, and democratic vitality. At present, the Philippine Commission on Human Rights (CHR) has been advocating for the promulgation of a charter to further its mandate as set out by the 1987 constitution. Given the country’s authoritarian past and encounters with democratic backsliding, the CHR has stated that constitutional amendments may provide the organization an additional legal instrument that clarifies its mandate and guarantees its impartiality, fiscal autonomy, and investigative scope.
Process and Length: The process of Charter Change involves a series of steps and a variety of methods. One of these methods – a Constitutional Convention – have been singled out as the preferred choice of pro-change lawmakers. On 14 March 2023, the Philippine House of Representatives overwhelmingly voted to pass a bill that outlines the provisions of the constitutional convention. Under the bill, the convention calls for over 300 members from Congressional districts and municipal governments to serve terms beginning in November 2023 to June 2024. It has since remained in the Philippine Senate for final approval. On September 2023, House Speaker Martin Romualdez reiterated the government’s desire to proceeding with the changes, specifically citing the need to relax restrictive economic provisions to attract more foreign direct investment as an effort to spur domestic growth and compete with regional peers. However, as of current writing, there have been no legislative updates that shed more light on the specifics of these changes.
Conclusion: The outcome of the constitutional convention will have profound implications on the Philippines’ political structures, economy, and society. As the nation currently navigates the process of reform, it is a good reminder to our partners that the Philippines remains a lucrative destination for investment opportunities. Economic recovery in the country has been promising with figures from the World Bank illustrating growth from 5.6 per cent to 7.6 per cent from 2021 to 2022. Whereas high birth rates have enabled the Philippines to possess above-average employment rates alongside decreasing unemployment that has been consistently moving in a converse direction.
Thank you for the contribution from Tim Siao.