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Group hits ‘policy instability’ in Fedex case

MBC pushes move to lift restrictions on foreign investments
By: - Reporter / @daxinq
/ 09:53 PM August 11, 2013


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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