TWG on Other Legal Issues

Local Housing Boards:
Another Layer of Bureaucracy?
Among the many bills on housing and real estate pending in the legislature are several versions mandating the creation of Local Housing Boards in all cities, including first to third class municipalities, all over the country.

To say the least, real estate developers are often left alone to contend with the tedious and expensive process of securing development permit from the local Sangunians, not to mention all other permits, licenses and clearances from the from various government agencies from the national down to the barangay level. Yet here comes another legislative measure seeking to make local housing boards a regular fixture in all local government units nationwide.

We are concerned that the local housing board will only serve as an additional layer of bureaucratic red tape in the local government units and consequently increase development cost. This will then redound to the increase in the price of housing units as developers will be left with no other choice but to pass on the extra cost to home buyers.

If I may recall, since the function of approving development permits for subdivision projects was devolved to the local government units by virtue of the Local Government Code of 1991, also known as Republic Act No. 7160, our development cost has, for some reason, tremendously increased, and the development period became substantially longer.

We also regret to admit that some, if not most, LGUs lack the depth of technical capacity and resources for effective shelter and urban development and management that is present in national agencies such as the Housing and Land Use Regulatory Board (HLURB). In all fairness, local officials are required to perform other equally important functions for their constituencies, making it hard to devote the needed time and focus in meeting their respective housing challenges.

If the HLURB has already approved the Comprehensive Land Use Plan (CLUP) for every city or municipality which is expected to be implemented properly by the local government units through their zoning powers, then the creation of another board is no longer necessary.

Lastly, aside from R.A. 7160, we already have other housing-related legislations that are meant to make available at affordable cost decent housing and basic services to the homeless. Among them are: the Urban Development and Housing (UDHA) or Republic Act No. 7279 of 1992 which addresses balanced housing, eviction, resettlement and relocation; and the Comprehensive and Integrated Shelter Finance Act (CISFA) of 1994 which provides the mechanism for continuous funding support for pro-poor housing.

The housing industry is no doubt a vital sector in our country’s future. It is a key sector of our economy that addresses not only the problem of homelessness but provides millions of jobs to the unemployed and billions of revenues to government.

However, in order for the private sector to fulfill its Constitutional mandate to assist in government efforts towards implementing a continuing program of urban land reform and housing to serve the underprivileged and homeless, government must harmonize its housing policies and do away with conflicting, unreasonable and overlapping requirements imposed upon an already heavily-taxed and highly-regulated industry.

Hence, mandating all LGUs to create their own local housing boards can only be a workable measure if the housing functions of said LGUs will be fully taken over by the new boards and not merely duplicated to institutionalize deliberate delays and justify government inaction or slow decision-making.

Allowing Foreigners to
Own Land in the Philippines

Article XII, Section 1 of the 1987 Philippine Constitution on national economy and patrimony states that, “The State shall promote industrialization and full employment based on sound agricultural development and agrarian reform, through industries that make full of efficient use of human and natural resources, and which are competitive in both domestic and foreign markets. However, the State shall protect Filipino enterprises against unfair foreign competition and trade practices.”

            Ownership of land in the Philippines therefore is restricted to persons or entities considered as either Philippine nationals or Filipino citizens. Former Filipinos with dual citizenship and corporations with at least 60% Filipino ownership are permitted to own land, buildings, condominiums and townhouses subject to the limitations prescribed by Law.

            Foreign nationals, however, may buy condominium units as long as not more than 40% of all the units in a project are acquired by foreigners. Alien acquisition of Philippine real estate may also be allowed under the following circumstances: (1) land has been acquired prior to the 1935 Philippine Constitution; and (2) if acquisition is the result of hereditary succession.
            In Asia, it is possible for foreigners to own land in Malaysia, Singapore and Thailand subject to the limits, restrictions and prior government approval as to the extent of such ownership and its intended use. South Korea and Taiwan allow ownership by foreigners but only from countries which allow reciprocity of such privilege. The Philippines and Cambodia share the protectionist policy on allowing only corporations with minority foreign shareholding to acquire land within their territories. China, Laos, Hong Kong, Myanmar and Vietnam are among several countries that do not allow private freehold land ownership at all.
According to the Organization for Economic Cooperation and Development (OECD), Malaysia and Thailand have long been among the most open in the developing world to foreign investment. These countries were quick to recognize the powerful role that foreign investors could play in fuelling local economic growth.

Industry sources reveal that out of the rapidly increasing population of close to 100 million Filipinos as of 2010, only 10% or about 10 million are able to invest surplus income in various types of business activities. The gap in investment capacity accounts for the low and average-income Filipinos and the millions of others on hand-to-mouth subsistence.

The Chamber of Real Estate & Builders’ Associations, Inc. (CREBA) urges our lawmakers to review and revisit the existing Constitutional prohibition for 100% ownership of land in the Philippines by foreigners. CREBA believes that aside from the existing government incentives, allowing foreigners to own land in the Philippines will encourage foreign investors to put bigger and more substantial investments in the Philippines and attract the much-needed capital that will unleash the economic multiplier effects of intensified construction and real estate development activities. It will also promote additional opportunities for local businesses and employment and raise additional government revenues from taxes and other fees to support the efficient delivery of basic services.

However, this privilege shall not come without corresponding mechanisms of control, some of which are covered by various existing laws. For one, in order to protect our natural resources, acquisition of lands by foreigners shall be limited to lands classified as alienable and disposable.

Agricultural lands purchased by foreigners must remain agricultural in use and shall not be converted to any other purpose. The produce emanating therefrom shall be retained for local consumption, and any excess in production can only be exported after due government certification.

To channel investments where they are needed most, ownership shall likewise be limited to undeveloped and under-developed areas to spur growth of new communities and centers of business activities particularly in the countryside.

Attracting and encouraging foreign direct investments is a key factor if the Philippines is to ever move its citizens beyond the boundaries, if not shackles, of the developing world. Hence, foreign land ownership is a huge issue which must be addressed to attain national economic development and progress. Property rights and real estate ownership security, in particular, allow investors the confidence, flexibility and capacity to take more risks with their investments. Ergo, it encourages bigger investments and promotes the infusion of other equally-significant resources.

As property rights control how individuals benefit from the ownership and transfer of their property, its strong enforcement is a determinant of economic success. Corporations and individuals will naturally prefer to create new forms of property to generate wealth only when they are assured that their rights are protected against unjust or unlawful actions by others.

Modest adjustments to existing foreign property ownership legislation to improve inbound investment could help produce major benefits not only in real estate and construction, but also to retail consumption, education, transport, education, and tourism.

Recently, our lawmakers have agreed to revive discussions to amend the 1987 Constitution - with particular focus on its economic provisions, rather than the political structure - through a bilateral constituent assembly. This method is likely to remove what could be the biggest legislative stumbling block to charter change by allowing the Senate and the House to vote separately prior to ratification by the people via a plebiscite.

We earnestly hope that both Houses of Congress can include in the list of priorities for Constitutional amendment the provision for foreigners 100% ownership of land in the Philippines. #