Eunice D.

Saludo
BSN 2A SOTEJO

FINAL ACTIVITY

The 60/40 rule under the 1987 Constitution is a law in the Philippines that aims to

have an equity rule on owning business in the country. This is enacted by the Philippines in

order to regulate the foreign investments and the businesses operated in the country. This law

states that 60% of the businesses here in the country should be owned by Filipinos and the

other 40% can only be owned by foreign investors. This was stated in Republic Act 7042 of

1991 also known as the Foreign Investment Act. This law provides the restrictions of what

are the activities that are allowed and not allowed to be operated and also includes how many

percent of foreign equity they can allow certain activities. The 60/40 rule is known as the

legacy in the years 1950s and 1960s as “economic nationalism”. It is from a nationalist

mentality that local enterprises should dominate the country it belongs to.

With the belief of Professor Constantino saying that industrialization could be

achieved through economic nationalism or protectionism meaning that this 60/40 restriction

rule should be applies in our market. I do believe that this 60/40 rule is not the way to

industrialize our country because as it states that 60% of the businesses should be owned by

Filipino and the 40% should only be owned by foreign investors. It is not bad that we want to

own what is ours but we need the help of the outside world in order to progress after all we

are a democratic country. This restriction rule is not the key for the Philippines to

industrialize because this restriction only make the elites or rich people here in our country

richer because they have the ability to put up business. With the small competition here in our

country it is really possible to makes a higher charges of the products and then the salaries for

the staff can be small so the result is the business can earn higher and more. This restriction

also makes our fellow citizens in great poverty because the wages of the companies here are
giving small wages because the competition for labor is not that tight because of the

restrictions given to foreign investors. The competition is not that tight because foreign

investors are not allowed to freely establish enterprises that they wanted because there is a

process first before conducting and establishing one. The reason why our fellow citizens are

migrating to other country because the salary here does not pay off the basic necessities in

life because of the small wages they earn in their living. The prices of goods here in our

country is also increasing because there is this restriction that is implemented wherein

because the supply is low yet the demand is too high so resulting to high prices of goods in

the market. Another thing is also the government that we have; the corruption is also one

reason why this rule is making our fellow citizens in great poverty. This 60/40 restriction rule

is not the key for industrialization in the Philippines because as we all know the word

globalization can be attributed to industrialization. Globalization is in fast paced form

nowadays and in order to catch up with these trends that globalization has to offer we should

freely open our economy to foreign investors because they benefit the country and its people.

In order for the Philippines to be an industrialized country which the Americans think

that we should and always be an agricultural place is through the revision of the 60/40

restriction rule. The 60/40 rule should not be abolished but it should be revised. We should

allow the free entry of foreign investments by revising the 60/40 restriction rule. As for me,

upon reading some commentaries in the internet by different businessmen and economists, I

believe that 10/90 restriction rule should be the revised rule of the 60/40 rule. Actually it

would be best if it is 100% just like the other rich countries in the Southeast Asia but it is

better if we still have little “control” over our economy because as one author says, “If you

don’t own, you don’t control”. With this restriction rule it is not difficult for foreign investors

to enter our economy because there are great and large privilege in doing and putting up

businesses. The 10/90 restriction rule says that 10% is only owned by the Filipinos and then
the 90% is all for foreign investors. It is better if there are more foreign investors here in our

country because it only means that there are more opportunities that can result to more jobs

and higher salary of the people. Since the competition is tighter because there are more

enterprises then the tendency will be these enterprises will lower the prices of their goods in

order to make profit since they know now that there are more providers of those certain

goods. Since there are more businesses now there are indeed a great need for more workers

and laborers. Since there are lots of opportunities for work, the companies will make their

salary higher than the other since the competition to get employees is tighter. In order to

impress and attract skilled and dedicated workers the companies will make their offer more

beautiful than ever. In this sense, of the salary being raised then the Filipino family will now

respond to the basic necessities of their lives. Another thing is there is no thinking of

migrating to other rich countries for salary increase because our country can provide the

salary that they want and deserved. With that said we can utilize the craftsmanship and the

brain of our Filipino workers towards the progress of industrialization. The revision of the

60/40 restriction rule is the key for the Philippines to industrialization because being open for

foreign investor does not only benefit the country but it mainly benefits the citizens of the

country.

The 60/40 restriction rule is not a bad after all since it promotes economic nationalism

and protectionism but in order for industrialization to progress in our country a revision is

highly needed. Foreign investors and investments are good after all since it open a lot of

opportunities to the country and its people. With the revision of the restriction rule it

eliminated inequality between the elites and the poor. With the restriction as we all know rich

people become richer but with these revisions there is a chance for ordinary people to earn

the money that they need for their basic necessities in life. A little change is good sometimes.