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Group hits ‘policy instability’ in Fedex case

MBC pushes move to lift restrictions on foreign investments



The head of the Philippines’ most influential business group has thrown its support behind Federal Express after the Court of Appeals voided one of the international cargo forwarding giant’s permits to operate in the country.

According to Makati Business Club (MBC) chair Ramon del Rosario, the recent CA ruling—which declared FedEx a foreign-owned public utility and, as such, prohibited by the Constitution from operating locally—highlighted the risks that make foreign investors think twice about doing business here.

“This is most unfortunate as it again illustrates the lack of stability and predictability in our economic policy environment,” Del Rosario said in a text message to the Inquirer.

At the same time, he pointed out that the court ruling “emphasizes the urgent need to address a fundamental problem in attracting foreign investments,” which are the restrictive economic provisions of the 1987 Constitution that limit foreign ownership to 40 percent of any local firm.

Del Rosario drew parallels between the recent adverse ruling against FedEx and a similar ruling released last year by the Supreme Court against telecommunications giant PLDT.

“The FedEx and PLDT court rulings demonstrate the inadequacy of relying on executive pronouncements and rulings that are subject to judicial challenge, without dealing with the constitutional restrictions,” he said.

Del Rosario said MBC was backing the moves of Congress to liberalize laws on foreign ownership in order to make the local environment more attractive to investments from overseas.

“It is time for Congress to act on these restrictions and we support [House] Speaker [Feliciano] Belmonte’s efforts in this regard,” he said.

FedEx—one of the largest freight forwarding companies in the world—holds a five-year permit to operate in the country granted by the Civil Aeronautics Board (CAB) in May 2011. The CAB permit was backed by a Department of Justice opinion issued in 2004 stating that “international air freight forwarders are not covered by the nationality requirement under the 1987 Constitution, hence, may be issued a certificate of public convenience subject to the CAB’s pertinent rules and regulations set forth under Republic Act No. 776 and other existing laws.”

However, in its decision first issued on Jan. 23, 2013, the CA said it was “not bound by the resolution of the justice secretary.” Siding with locally owned complainants Merit Freight International Inc. and Ace Logistics Inc., the court denied FedEx’s appeal in another decision dated June 6.

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Tags: Business , economy , Federal Express , Makati Business Club , News

  • Jake Lopez

    Let’s admit it. Filipino managers are good…if…led by a foreigner. Why not allow foreigners to invest and run businesses here in the country? We could learn from their expertise, in addition, they have the capital.

  • TV

    The Philippine constitution is outdated and needs to be overhauled to accommodate the modern ways of doing business in a globalized economy. Beats me why we keep holding back progress by sticking to an obsolete constitution.

  • http://antipinoy.com/ BongV

    and why should Filipino consumers protect the lousy services of Merit Freight International Inc. and Ace Logistics?

    Merit Freight International Inc. and Ace Logistics – and other Filipino providers should deliver value to consumers… like you know… actually delivering the parcels they were paid to do so – instead of preventing other firms who can do a better job and deliver value to Filipino consumers.

    An economy is made up of consumers and producers/providers. Why are we protecting providers at consumers expense? That is wrong – and is an obvious case of Filipino ignorance of the law of supply and demand.

    It is time to remove the economic restrictions. Enough with the duopoly of Globe and PLDT, ABS-CBN and GMA7 – don’t Filipinos get tired of having the same lousy services for decades? Geez.. it’s supposed to be a no-brainer.. though not for the Philippines where the average IQ is 86 – borderline em ow ar ow en es.

  • TruthHurts

    “a Department of Justice opinion issued in 2004 stating that “international air freight forwarders are not covered by the nationality requirement under the 1987 Constitution, hence, may be issued a certificate of public convenience”

    Where did the DOJ get that opinion and what is the rational basis for that? I couldn’t even find a rational basis for that opinion, which is the lowest and most basic of the three levels of scrutiny applied by courts when considering constitutional questions.

    “Del Rosario said MBC was backing the moves of Congress to liberalize laws on foreign ownership in order to make the local environment more attractive to investments from overseas.”

    Is that one way of saying that the MBC is incompetent to provide enough local jobs and regional trading to stir the local economy? Or is that another way of saying that the MBC is secretly in cahoots with foreign forces who desire to gain a foothold on a very lucrative country? They always cite “to make the Philippines and Philippine enterprises more globally competitive” when global competitiveness is not the problem of Filipinos but grave domestic problems such as poverty which could be remedied locally within the country.

  • RyanE

    I’m not a liar err lawyer but I think the CA decision is correct. There’s really a need to revisit that 60-40 provision in our constitution but sadly our alligators err legislators are quite pre-occupied with their pork barrels.

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