Oligopolies stall Philippines development; more FDI needed – Salceda

by Delon Porcalla (The Philippine Star), 14 Jun 2021

MANILA, Philippines — The Philippines remains a laggard among its Asian neighbors, partly because of the influence oligopolies have over practically all administrations and, as such, local tycoons’ businesses thrive and deprive the country of much-needed foreign direct investments.

This was the assessment made recently by Albay Rep. Joey Salceda on the state of economic affairs in the country, in a recent digital forum sponsored by the Department of the Interior and Local Government (DILG).

“Operating as monopolies and oligopolies, the corporate conglomerates find it convenient to restrict production and investment below the competitive level,” the economist lawmaker who chairs the House ways and means committee said.

An oligopoly exists when a market or industry is dominated by a small group of large producers and sellers.

Citing the country’s few FDI, Salceda explained that foreign investors’ “willingness to invest” is “inhibited by their concentrated ownership structure and their uncertainties about the stability and duration of government favoritism.”

The DILG-led webinar sessions are held in support of Resolution of Both Houses 2 (RBH 2), authored by Speaker Lord Allan Velasco, which seeks to open up the country to more foreign investors by amending restrictive economic provisions in the Constitution.

Asked about the impact of opening the economy on the micro, small and medium enterprises (MSMEs), Salceda said more FDI should benefit market competition.

“FDI restrictions lead to lack of competition in the country which increases oligopolistic power and reduces the need to invest. As a result, oligopolies are the ones benefitting from profits, influence law, and prevent foreign competitions to enter the Philippines,” he said.

Salceda lamented that while the country’s post-Marcos Constitution made sure dictatorships will never see the light of day again, its very rigid protectionist economic policies allowed domestic industries to be controlled by oligopolies.

“In trying to be nationalistic with our Constitution, we have ironically fattened our domestic oligopolies, at the expense of the people. Shamefully, and once again, we are the most oligopolistic market in the region,” he said.

Seeking to correct this is what moved the House to approve RBH 2 on third and final reading last June 1. It is now pending before the Senate.

Ako Bicol party-list Rep. Alfredo Garbin Jr., who heads the House committee on constitutional amendments, remarked on Independence Day last Saturday that Filipinos should be “free” from the “economic chains” in the 1987 Constitution.

“Twenty (20) years of the 21st Century have passed and we are realizing now that we cannot prosper in the remaining decades of this 21st Century if we keep ourselves chained to these restrictive economic provisions,” said Garbin as he urged the Senate to act on RBH 2.