Do you think one's constitution is a big hindrance to economic growth?

[aioc]

Our 1987 Constitution revised our 1945 Constitution after the Philippine government ended Marcos's dictatorial rule in 1986, but since then, we have never achieved the economic growth we hoped for over 4 generations, and we still lag economically.

There have been many attempts to revise the 1987 Constitution, but strong opposition always wins because opponents fear current politicians will change provisions that would extend their terms and allow a dynasty.

One of the provisions in the 1987 Constitution that the business sectors want to change is foreign and land ownership; if you are a foreigner who wants to set up a business here, you need a local business partner, and you can only own 40% of the business, and no foreigner is allowed to own land.

This is the reason why foreigners are having second thoughts or are hesitant to do business here because of these restrictions,

Do you think these provisions in a constitution are a big deterrent to economic growth, and do you have similar provisions in your country's constitution?

[Juse14]

Of course, the Constitution will be very problematic, especially in the investment climate in your country, if the restrictive rules still remain unchanged.
From your explanation alone is actually enough to know the essence of this problem, so I think the government in your country does need to evaluate the law to be more friendly to outside businesspeople.
Just imagine that 60% is in the hands of the natives, they will surely find it very difficult to move and expand their business in your country.

Such as more friendly rules, requiring partners, friendly taxes and also employment that must be dominated by local labor, this will increase the growth of employment as well as economic turnover in your country.

[coin-investor]

Just imagine that 60% is in the hands of the natives, they will surely find it very difficult to move and expand their business in your country.

That's the reality here in our country: a foreigner with $10 million to invest will need to find partners with investment capacity who can match his investment and fill the 60%. With only a handful of millionaires here, he has few options; he cannot find a partner that he desires because of a lack of funds.

Some dubious foreigner will resort to creating dummies for his business, and when caught, corrupt officials will make him their cash cow so he can keep running a business that benefits locals.

[Bluedrem]

When the policy makers of a country decide on various policies in the public interest, leaving aside personal interests, then the prosperity of that country can be desired. But currently, in different countries of the world, policy makers formulate various policies considering their personal interests, where the common people face economic destruction instead of enjoying benefits, whereas it was supposed to be that the policy decisions would work in the public interest of that country.
As you said, even if various things are changed in your country, this is what happens, that is, the people are still not able to achieve economic prosperity. But no matter how many changes are made to the rules, if there is no mention of the prosperity of the common people, it is of no use.

[MArsland]

With restrictions like this, any country is bound to get obstacles in economic growth. Because it will be very inflexible when you want to attract foreign investors into the country. I agree that the 1987 Philippine Constitution should be revised but before that the structure of the government should be overhauled. This problem will be solved if the root is properly repaired. When power continues to be maintained by means of the dynastic system, until any development for the economic sector that prospers the people will not be realized. Political power, business networks and bureaucracy reinforce each other so that they will always have a way to stay rich, until it gets to the point where public anger is the final peak. This can lead to chaos or some kind of coup. The Philippines needs a Power Change.

[stompix]

One of the provisions in the 1987 Constitution that the business sectors want to change is foreign and land ownership; if you are a foreigner who wants to set up a business here, you need a local business partner, and you can only own 40% of the business, and no foreigner is allowed to own land.

Still way better than in South Africa, you should look up Broad-Based Black Economic Empowerment Act 53 of 2003
designed "to help" black people or rather to actually punish white people, managed to turn the entire country into a shithole!
Or the Preferential Procurement Policy Framework Act 5 of 2000, in which basically as you're a black-owned company, you can offer the government twice as expensive goods the government will buy from you rather than from a non conformant white lead company  

As long as you have economic growth (wiki gives me over 5% over the last years) it's still good, the problems will arise once you hit 1-2% and your per capita GDP is still at the bottom, then one might start thinking about radically changing laws, and I think everyone is scared of changing that, thinking it will trigger a buyout from Chinese investors.
So, you want investors, or you want half of your land to be owned by foreigners? Cause they come in the same package!

When the policy makers of a country decide on various policies in the public interest, leaving aside personal interests, then the prosperity of that country can be desired. But currently, in different countries of the world, policy makers formulate various policies considering their personal interests, where the common people face economic destruction instead of enjoying benefits, whereas it was supposed to be that the policy decisions would work in the public interest of that country.

What a load of useless garbage!

[Hamza2424]

Do you think these provisions in a constitution are a big deterrent to economic growth, and do you have similar provisions in your country's constitution?

This law can be a huge problem for foreign investors, but still, I think it is for the best of your people, not just yours. There are many other countries like this. Even Saudi Arabia was like this, but their 2030 vision changed this rule. So under MISA, you don't require any partner. You can buy and start your own business as you want.

This has opened several opportunities for foreigners there. People have started their own small businesses and are bringing their cultural products there, as food and other items can have huge demand there, not just from their nationals, but people living there from your own country can love to buy all these things. In my view, Saudi Arabia is an untouched market in this way, but finding the reason for a gap like this is important. Otherwise, you will find it out the hard way.

Anyway, I was saying rules like this can be bad for investors, but at least the local partners get to show the world how trusted they can be, and they are not all the same. There are still many foreign investors there. Maybe as a citizen, you can approach a few who have money and want to expand. It is an opportunity. Maybe the laziness of the nationals is the reason why the economy is going down even having this option, but I read the foreign have a way around this as well. There are also other rules that PSA has regulated.

[Churchillvv]

That is not a hindrance to economic growth but however it limits numbers of foreign investment in the country, sometimes the people who made this laws did out of necessity and previous problems that arose as a result of foreign investments, they are not foolish nor do they desire the stagnation of the economy but however what lead to this could be that foreign investors often end up gaining much control over the economy or the market than the indigenous people hence that could be a Neo-colonial approach which the government are totally avoiding but the populous do not understand that, I believe they are protecting the national interest than just desperate for economic growth. You need to learn this about sovereign nations, if they do the opposite you might not have a say in your country as foreigners with higher financial capability will over take the government of the day and the ownership of the national treasures.

[abhiseshakana]

When my Vietnamese and Philippines buyer come to Indonesia, they often showed their amazed how Indonesia has become so advanced and developed so rapidly (compared) to their countries. Base on their thingking I assume what OP write are a  concrete example of how constitutional law can limit economic flexibility.

So i think those constitusional protectionism triggers some serious obstacle, the main problem with minority share holder, investor has less corporate control which mean more control risk for their capital and technology they have. Even there are another impact, but the significant one are loosing the regional competition strating from lagged behind in attracting FDI flows and and many capital flight from Phillipines to other countries which offers far more liberal ownership regulations.

[robelneo]

Base on their thingking I assume what OP write are a  concrete example of how constitutional law can limit economic flexibility.

As someone also living in that country, so many of these provisions are obsolete; there were, and there still are, calls for major revisions, but politics always gets in the way.

The ruling party wants to revise it; the opposition doesn't. But when the opposition reaches the highest office and forms the administration, they change their minds and want to revise it, and the once-ruling party also changes its mind from wanting to change it to opposing it.

All political parties think that whoever is the ruling party will revise the constitution to serve their interest; the country is being ruined by politicians' greed to stay in power.

[mu_enrico]

I think the rule is pretty similar to Indonesia's for the land part. The rationale is simple, to protect locals, so natives can live in their own country. If there's no land ownership rule, then foreigners can eventually buy the entire country by gradually acquiring the land. Thus, there will be no Philippines anymore.

For the business part, here in Indonesia there's no general hard cap of 40%, but industries are selectively capped; some crucial businesses are 100% local, while some businesses can be 100% owned by foreigners. But the norm, off the top of my head, would be 51% local ownership. I generally agree with the cap as well; that's to prevent essential sectors from being controlled by foreigners.

On paper, it can be a hindrance to economic growth if you think only of the % increase in GDP, but if the money isn't used to grow the country and local communities and only becomes capital outflow, then it's useless (or some say low-quality growth).

[348Judah]

Law are always amended and this is where we must be current about some things that are bound to law that we may not know of them, for instance, if you buy a land today and make every document necessary for the acquisition of this land, then later you go to discover that there are natural resources embedded underneath, the government will prove to you that you only have the right to the land, but any other thing be low the land does not belong to you but to the government, which is why illegal mining or any mineral position that does not go through the government procedures will be against the law.

[Stepstowealth]

Do you think these provisions in a constitution are a big deterrent to economic growth,

Countries that have such policies are countries that have prioritized ownership and control by locals to ensure that they remain in control of their economy than foreign investors, but without proper encouragement to local entrepreneurs to help them build capacity to a level where foreign investors do not see them as not valuable enough to partner with for investment in their country, foreign investors will always be discouraged from investing in the country because nobody wants to partner with someone that they see as someone that will not contribute anything, but will want to share in the profit. If countries that have these policies properly invest in human capital development foreign investors will be encouraged coming to invest in their country.

[AmaGold70]

Actually this kind of constitution can retard economic growth, and there are some constitution that need to be properly reviewed from time to time. Sometimes, some people don't know the effect of or negative impact of their actions except when they are told, developing an economy alone can be difficult without the help of foreigners, and any country that doesn't give room or welcome foreign investors will remain underdeveloped for so long. I don't really know how long this constitution restricting foreigners from owning landed properties have been, and no matter how long it has been, there has to be some changes. Am also convinced that there must be some Philippines in other countries who owns landed properties there, and are absolutely welcomed, why would theirs be different.

[uchegod-21]

That is not a hindrance to economic growth but however it limits numbers of foreign investment in the country, sometimes the people who made this laws did out of necessity and previous problems that arose as a result of foreign investments, they are not foolish nor do they desire the stagnation of the economy but however what lead to this could be that foreign investors often end up gaining much control over the economy or the market than the indigenous people hence that could be a Neo-colonial approach which the government are totally avoiding but the populous do not understand that, I believe they are protecting the national interest than just desperate for economic growth. You need to learn this about sovereign nations, if they do the opposite you might not have a say in your country as foreigners with higher financial capability will over take the government of the day and the ownership of the national treasures.

You said this is not a hindrance to economic growth, but still admitted that it limits the number of foreign investment in the country. Your statement is highly contradictory,  except you are failing to recognise the level of impact foreign investments have on the economy of the country. These impacts range from revenue generated through tax from these foreign companies, to employments created, including the availability of foreign products or services in the country which would have been imported if these foreign investors didn't bring those products down to the country. The list just goes on

Countries through their constitutions are trying to do things in the  best interest of their people, but laws ain't supposed to be too rigid, they should understand when there is need for some adjustments if the old laws ain't favourable. Any law that discourages investors, whether foreign or local investors should be looked into seriously. The result of such outdated laws will be felt in the present day economy.

[Fortify]

There's never usually a single reason that a country is or is not successful - it takes a complex web of different interactions and facilities that most developed countries have built up over centuries. Foreigners have a similar position when it comes to owning land in places like China or Dubai, but you might argue that those countries have engineered their own version of success. You really need a diverse economy to be successful but also to extract as much value out of the things that your country has an advantage in, like growing certain crops or exporting a well respected labor force. Maybe that is the problem, so many Filipinos are going overseas and accepting low paying jobs that it becomes a perpetual cycle and makes it harder to build up your own economy with the people who actually remain. Blaming it on a single document from long ago and one point is not going to change the situation even if it were reversed now - but it's probably a good start.

[Juse14]

Just imagine that 60% is in the hands of the natives, they will surely find it very difficult to move and expand their business in your country.

That's the reality here in our country: a foreigner with $10 million to invest will need to find partners with investment capacity who can match his investment and fill the 60%. With only a handful of millionaires here, he has few options; he cannot find a partner that he desires because of a lack of funds.

Some dubious foreigner will resort to creating dummies for his business, and when caught, corrupt officials will make him their cash cow so he can keep running a business that benefits locals.

That would be a very dilemma in the investment climate, should the regulations be changed and the human resources be increased in order to make regulations that are beneficial to the economy there, I can't even imagine that foreign investors would dare to invest their capital.

For foreign citizens who open a business needs to be properly audited by the government, but if the condition is that the government in your country is corrupt then it's useless, even when there are honest entrepreneurs who build their business in your country, will certainly take advantage of the power possessed by the person to drain the money of entrepreneurs for personal and group interests.

There is a saying in business like a ruler should not fight against the ruler because it will die.

[Cheema02]

Law are always amended and this is where we must be current about some things that are bound to law that we may not know of them, for instance, if you buy a land today and make every document necessary for the acquisition of this land, then later you go to discover that there are natural resources embedded underneath, the government will prove to you that you only have the right to the land, but any other thing be low the land does not belong to you but to the government, which is why illegal mining or any mineral position that does not go through the government procedures will be against the law.

As we know, every country runs its legal process through law and the law does not remain the same from the beginning, because with the passage of time, amendments are required to revise it, laws are amended, especially in cases of land and natural resources. For example, in Pakistan, a PEPA act was established in 1997, but in this law, different amendments are done like in this law some powers were delegated to the EPA Punjab, so after these amendments, the EPA know dealing directly with air violators. So, when we buy any land like agricultural and commercial, in some laws, we have all in all charge.

 in some countries we aren't owners of the area beneath this land, so that's the reason why we don't trace rare earth minerals, because our country doesn't allow us to trace minerals. What's your plan for your land? If the government allowed for digging, would you trace minerals? I think if our budget and government allow us, we should trace the minerals, but a lot of permissions and NOCs are a big problem. At the end of buying any area or land, we should read and research the laws of that region and then make a decision about it.

[Royal Cap]

If there are so many restrictions on foreigners owning businesses and buying land, it is natural that no big company will want to invest there. When a foreign investor brings in million of dollars, he naturally wants to keep full control of his business in his own hands.  If he is forced to give 60 percent shares to a local without doing any work, then instead of building a factory in your country, he will go to another place where foreigners have 100% ownership. But in our country foreign investors have 100 percent ownership in most sectors and they can also buy land for business if they want. But although the rules are easy on paper, in reality foreigners lose interest due to the amount of harassment they have to face due to corruption and extortion at every level, So I would say that it is not enough to just relax the rules in the constitution, if there is no real business environment and security in the country, no foreign investor will want to take risks.

[Creeper0]

Foreign investment is very important for the development of a country, if the government of a country has a strict stance on foreign investment, then the development of that country is somewhat difficult, especially when domestic investors are not able to achieve the desired development. When the change in the economic structure of the country becomes difficult for local investors, then it is better to create a friendly environment for foreign investors in that country. Without an open market and a friendly investment environment, the development of the economy of that country becomes almost impossible.

We should look at countries like Singapore, China, South Korea and Ireland, which have developed themselves through the use of domestic resources as well as through FDI inflows. FDI alone cannot be effective in the economic development of a country. By making skilled manpower, infrastructure and government policies friendly to FDI, good benefits can be obtained. But due to personal interests and the dominance of local businessmen, many countries, despite being underdeveloped, do not create a friendly environment for foreign investment, but rather impose strict policies.