Government News Analysis

Right of ownership

Property Rights; 2017 Index of Economic Freedom

The phrase, ‘safe as houses’ only applies where the owners of those houses have protection under the law – everywhere else they’re as safe as quicksand. Property rights – the ability of an individual to acquire property secured by clear laws, fully enforced by the state – or the absence of them, therefore, are one measure of a country’s economic freedom. They’re also a measure of the effectiveness of a country’s rule of law. So how safe is it to buy property in the Philippines?

The 2017 Economic Freedom Index (EFI) – produced by the prestigious Washington-based think tank, The Heritage Foundation – evaluates economic freedom by means of four main criteria – Rule of Law; Government Size; Regulatory Efficiency; Open Markets – each of which contains three areas of investigation.

Here we look at the first of these and its first component ‘Property Rights’. Overall in this index – which ranks 186 countries world wide on the level of their economic freedom – the Philippines came 5th out of the 10 states in the Association of Southeast Asian Nations (Asean) and was classified as “Moderately Free”.

So, turning from the general to the particular, here are the results we’ve adapted to show the Asean countries’ scores for Rule of Law/Property Rights – the more certain the legal protection of property, the higher the country’s score; similarly, the greater the chances of government expropriation of property, the lower a country’s score. In other words, the higher the score, the greater the economic freedom in this area.

The positions shown are how each country ranked in Asean. 1st Singapore, 97.1; 2nd Malaysia, 85.3; 3rd Brunei, 62.5; 4th Thailand, 51.3; 5th Vietnam 49.7; 6th Philippines, 49.2; 7th Indonesia, 48.3; 8th Cambodia, 42.4; 9th Laos, 35.3; 10th Myanmar 23.0.

Basically, every country below Thailand has been found wanting as far as their property rights are concerned. Scores below 50 denote that the court system is highly inefficient, and delays are so long that they deter the use of the court system; corruption is present; the judiciary is influenced by other branches of government.

Furthermore expropriation – the seizing of property by the state – is possible for countries with scores below 50. Actually, it’s more than possible in the Philippines’ case; the government’s power of eminent domain allows it to buy private property for public use – say, for the right of way (ROW) for a government infrastructure project.

That’s covered by the Act Facilitating the Acquisition of ROW Site or Location for National Government Infrastructure Projects signed into law by former president, Benigno “Noynoy” Aquino in March 2016. While this legislation was widely welcomed and enables the government to press ahead with its works’ projects, unless good governance is observed there’s plenty of scope for abuse. Furthermore, such cases regularly end up before a court with endless wrangles over compensation settlements.

Here’s what the EFI report said about the rule of law in the Philippines, generally: “Implementation of laws protecting property rights is weak. Judicial independence is strong, but the rule of law is generally ineffectual. Courts are hampered by inefficiency, low pay, intimidation, and complex procedures. Corruption and cronyism are pervasive. A few dozen leading families hold a disproportionate share of land, corporate wealth, and political power”. That’s not a great report card.

There’s little doubt that an individual’s property rights are intrinsic to the economic freedom of a country. Here’s what two US presidents had to say on the subject. George Washington: “Freedom and property rights are inseparable. You can’t have one without the other”. Abraham Lincoln: “Whenever there is a conflict between human rights and property rights, human rights must prevail”.

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  • For foreigners it is impossible to own land and impossible to own more than 40% of a company even if they paid 100% of the company capital. Many philippino polititians say that we need foreign investors. Well judge yourself if it is attractive to invest in the Philippines under these circumstances.

  • Well I am questioning the laws on land. Every Filippino can buy and own land in my country. No restrictions, same applies to companies. But Filippinos seem to be over protective to say it on a friendly way.

    • I empathize with you. However, it is in our constitution that the land “belongs to the patrimony of the filipino people.” Thus, only filipino citizens can own land here. Sad to say, each country has different constitutions. So, foreigners ownings lands in your country is permissible. That is why there is a move to amend our constitution to change this provision, among others, to pave the way for foreign ownership of real property in the phil.

  • @ Fidel, do you think that Filippinos are superior to foreigners? Give me an honest answer please. Do not forget, you are a foreigner almost everywhere in the world if you travel abroad.

  • Practically, foreigners own the big companies here in the Pinas like Smart telecom, Phil steel corporation and others. Foreigners are the biggest players here not Filipinos.

  • From a practical perspective, the reason why Phil laws are protective of land in the Phil is that there is not much to share with foreigners. It is a small country that opening it up to foreign ownership will jack up prices tremendously to the detriment of the citizenry who could barely afford to buy land nowadays. Just my opinion.