Online Debate: RP Should Allow Foreigners to Own Land

I was engaged in a weird online debate with a protectionist who told me that the existing ban on foreigners from owning land is justified because of the country’s territorial size and poor economic condition.

The conversation was triggered by this blog link (my blog article) I posted on this Facebook group, where I said that “the Philippines is one of the biggest free-riders in Asia, as it has been benefiting from the improved economic conditions of its Asian neighbors (e.g., Japan, Taiwan, Singapore, China, Hong Kong).”

The blog talks about how the Philippines stubbornly maintains its protectionist policies (e.g., the ban on foreign professionals to practice and the 60-40 rule imposed on foreign investors), while its liberalizing neighbors, which all achieved economic progress due to their economic openness, continue to attract and/or absorb Filipino workers, both domestic helpers and professionals alike. 

One Facebook user and group member named Roy Michael Chandler argued the Philippines should continue to prohibit foreigners from buying and owning real estate because of its small or limited land mass, and because real estate prices would increase if we allow foreigners to own land.

By law, foreigners are not allowed to acquire land in the Philippines. This politico-economic policy of the Philippine Government was inspired by the Filipino First policy promoted by the country’s so-called “intellectual”, political and academic elite in the past.

One of the intellectual godfathers of our modern-day Filipino Firsters was former president Garcia, who envisioned “to make the Filipinos first and supreme in the national economic household of the Philippines.” Garcia’s protectionist policy was, in fact, loaded with socialistic and welfarist justifications, saying that “for 400 years when we were under foreign domination the economic policy of this country had been defined and carried out principally for the benefit of the colonial power that at the time ruled us.”

Thus, in 1986 the Corazon Aquino regime retained country’s 60-40 protectionist laws and other restrictive, regulative policies, such as the ban on foreigners from acquiring land.

 Some of our retained protectionist policies include:

• the ban on foreigners from owning lands
• the 60-40 ownership arrangement favoring Filipinos
• the ban on foreign professionals from practicing their respective professions in the country
• the ban on foreign investors to join our media industry
• Other restrictions (negative list) in our foreign investment laws

Due to the country’s protectionist policies, the easiest way for a foreigner to acquire property is to marry a Filipina and have his spouse purchase property in her name.

So, in our discussion Roy Michael Chandler said: “Prohibition of foreigner owning land is justified. The Philippines doesn’t have alot of land mass. If the Philippines allowed non-citizens to own land, the prices for land would quickly escalate to impossible levels and many citizens would be priced out of the market which would just cause even more social strife. There are better means of improving the economy without sacrificing Philippine sovereignty.”

Mr. Roy Michael Chandler‘s Facebook info says he’s from Houston, Texas, and he’s got lots of Japanese anime-looking social network friends.

In reply to his comment, I said:

I think it is wrong to assume that allowing foreigners to own lands would automatically result in truck loads of wealthy foreigners and companies owning most of the country. That’s DEFINITELY NOT supported by history.

If that’s the case, then Michigan and Detroit should have attracted millions of property buyers from around the world because of their low home and property prices.

In re Philippines’ limited land area, I think this can be challenged by Singapore’s more liberal policy toward ownership of lands by foreigners. The last reported pop density in the PH is 308.0/km2, which means that this country remains big enough for Filipinos and foreigners. But what about the future? Well, pop trends show our birth rate has been declining for years. This is also a global trend. In Singapore, which is a very tiny city-state, foreigners can own “restricted properties” provided they obtain approval. The SG had to relax its formerly strict property laws in order to attract foreign talents and companies. LKY and his fellow statesmen knew that relaxed property ownership lands can impact investment.

Also, America, Canada, Australia and other rich economies allow foreigners to own land. Did that result in foreigners grabbing most of the countries’ land-holdings? No. It’s because of the following:

• Nobody can compel a property owner to sell his property.
• It is in the interest of the property owner to keep his property.
• It is NOT in the interest of a foreigner or a foreign company to buy excessively vast areas of land due to property taxation and other allied taxes.

But here’s why I am in favor of foreigners owning lands…

1. It can be a good mechanism to attract foreign investments.
2. Thus, it can increase the value of lands. Just imagine Apple or any tech giant buying parcels of land in Cagayan. That would increase the value of adjacent lands overnight. Remember that it is against the law to coerce someone into selling his property. By the way I am against eminent domain.
3.  It’d be an initial step for skilled, talented foreigners to seek citizenship and become part of our team. This is what Singapore did.

However, I believe a relaxed, or liberalized, property law is not what attracts foreigners to buy lands. Usually, land-buying by foreigners is dependent on certain factors– a) trade/business, b) leisure and tourism, c.) work/profession, d) they’rejust rich or investment.

It is simply the MEANS to an END (e.g., business, trade, work, etc.) A lot of wealthy foreigners buy lands abroad because of the country’s tourist destinations, beaches, stable peace and order situation. You don’t expect a British or Russian millionaire to buy lands in Somalia because of the country’s bad peace and order situation (assuming Somalia fully allows foreigners to own land).

What I’m trying to say is, you won’t expect foreigners to come here in droves once we allow them to own lands, and buy properties. That’s not how property buyers behave in the real world. Property buyers and companies buy lands because of their existing business. There must be some motivating factors, like–

• Ease of doing business (e.g., Singapore, NZ, US, Denmark, Norway, etc.)
• A good investment place. Which means the country must have stable economy.
• Less crime rates. Who’d like to buy property in a war-torn country even if it allows foreigners to buy and own lands?

Here’s Roy Michael Chandler‘s counter-argument: “It’s not an assumption, you just have to look at history of human behavior during the age of imperialism to see what happens when the interests of foreigners subvert the interests of the indiginous people. That’s why there really aren’t very many countries that allow non-citizens to own properties. Only countries that have large amounts of land like the U.S., Canada can afford to allow foreigners to own property. You just have to look at Singapore and it’s current state of land prices to see what can happen within the span of 20 years. The history of Hawaii is also another example.”

My reply:

 I think it’s wrong to compare “the age of imperialism” to today’s foreigners acquiring lands legally and without using force or fraud. It’s just a matter of reciprocity principle. Filipinos are allowed to buy and own lands in other countries. Why do we deny the same rights and privilege to foreigners?

Imperialism in the past involved the use of absolute force and plunder. It’s all about war. Should Americans, Canadians, Australians and other freer economies consider Filipinos “third-world” imperialists?

Like I said, history tells us that nations that allowed foreigners to own lands were never controlled, dominated by foreign interests. Instead, these liberalized nations achieved economic progress and industrialization because their “open” immigration policy attracted the best minds in the world.

The guy talked about imperialism and the usual leftist talking points. I wasn’t surprised.

Here’s what Mr. Roy Michael Chandler‘s said that I found utterly illogical, non-factual, and even disturbing: “Only countries that have large amounts of land like the U.S., Canada can afford to allow foreigners to own property.”

The question is: Who said so? What’s his legal, historical and scientific basis that “only countries that have large amounts of lands” can grant foreigners the right to own property?

Here’s my rebuttal for his baseless argument:

Let’s see. Your use of the word “only” makes me think what you said is an absolutist statement.

What I’m going to do is show you– or cite– liberalized countries smaller in size or land area than the Philippines. By “liberalized countries”, I mean countries that allow foreigners to own lands.

Now let’s look at real world economics and history.

The Philippine’s land area is 299,404 km².

Here are smaller countries (than the Philippines) that allow foreigners to buy and own lands:

• NEW ZEALAND: 268,680 km². In NZ, a foreigner can buy and own a regular house or parcel of land without any restriction, except for properties classified as “sensitive land”.
• SWITZERLAND. 41,285 km². Foreign nationals are allowed to buy a holiday or vacation home in tourist areas for “residential” purpose. Non-EU residents may buy property provided they apply for Swiss residence permit first. Also, they can directly buy a a property in “Andermatt Swiss Alps Project“, which allows foreigners freely buy a Swiss property without any restrictions or residence permit. [Source]
• MAURITUS: 2,040 km². Foreigners can purchase property in Mauritius as part of an investment project. [Source]
• DENMARK: 43,094 km². Denmark’s laws allow foreigners to own lands provided they comply with the following two requirements:1) they must live in the country for a period of at least five consecutive years, and 2) they must obtain permission from the Danish Ministry of Justice. [Source]
• IRELAND: 84,421 km². Foreigners are allowed to buy lands and properties and they face almost no restrictions.
• ESTONIA: 45,226 km². Here, foreigners can buy land without any special restrictions. Less than one per cent of all of Estonia’s land area is owned by foreigners. [Source]
• LUXEMBOURG: 2,586 km². Foreigners can freely buy property in Luxembourg and they face almost no restrictions.
• NETHERLANDS: 41,526 km². No restrictions are placed on foreigners for buying property in the Netherlands. [Source]
• TAIWAN: 36,193 km². Oh! Taiwan applies reciprocity rule! Foreign nationals, who are resident in Taiwan and hold an Alien Registration Card, are allowed to buy residential property in Taiwan, but only if Taiwan nationals are also entitled to buy property in the foreign national’s home country, according to the “reciprocity rule”. This means that Filipinos are forever barred from owning lands in Taiwan. The Taiwanese rule! [Source]
• GEORGIA: 153,909 km². Generally the answer is Yes. But Georgian law just recently placed a ban on selling agricultural land to foreign nationals. [Source]
• LITHUANIA: 65,200 km². Foreigners are freely permitted to buy and sell property in Lithuania, although approval is needed from the local municipality to purchase land. [Source]
• ICELAND: 103,001 km². Here, foreigners are permitted to buy and own lands. However, a bill submitted by the Minister of the Interior would greatly limit how much Icelandic property a foreigner could buy. [Source]

So, NO MORE excuses I think.

Now let’s focus on Taiwan’s reciprocity rule, which technically bans Filipinos from acquiring property. According to Taiwan’s reciprocity rule, Filipinos are, nevertheless, entitled to the lawful protection of their inheritance right in Taiwan. Which means that if a Filipino national inherited a land property in Taiwan, he’s entitled to the lawful protection of his inheritance. However that Filipino heir is banned, by law, from buying more property.

Taiwan listed a total of 59 “fully reciprocal nations”, which include South Korea, New Zealand, UK, Luxemburg, Ireland, United States, to name a few.

Some fully reciprocal nations whose citizens are allowed to buy property in Taiwan.

Taiwanese laws list the Philippines as a “conditionally reciprocal nation” due to its protectionist, restrictive policies on acquisition of property by foreigners.

Since the Philippine laws ban foreigners from acquiring property and limit building and/or condominium ownership by foreigners to 40%, Taiwan’s reciprocity rule “allows Philippine nationals or corporate aggregates to acquire 40% or less of all exclusive areas of strata titled constructional improvements（i.e. apartments or buildings）, as well as the entitled share of ownership of or superficies over the site pursuant to the “Apartment Building Management Act”.”

Fair enough! I think Taiwan should also impose reciprocal treatment against the Philippines when it comes to investment and practice of profession by Filipinos. Which means that Filipinos cannot own more than 40% of business and cannot practice any profession in Taiwan.

Now back to the online debate/discussion.

Despite debunking Roy Michael Chandler‘s baseless, non-factual, illogical argument/statement by showing him facts, he said: “It seems you’ll believe whatever you want to believe. Have you ever seen the land prices for London, Singapore, Netherlands currently? So my assertion still stands. Those are not third world underdeveloped countries. Philippines is less than a century old.”

My reply:

 Look who’s talking! I’ve shown you countries way smaller than the Philippines that allow foreigners to own land. I can say the same thing… ” It seems you’ll believe whatever you want to believe.”

You said above: “Only countries that have large amounts of land like the U.S., Canada can afford to allow foreigners to own property.”

THAT IS ABSOLUTELY NOT TRUE and PROVEN WRONG BY HISTORY. I’ve shown you facts. What would happen if America applied reciprocity rule and did not allow you to buy property? It’s all about fairness.

Land prices in those cities and countries are high because they’re dictated by real MARKET PRICES. My goodness! Do you even understand this concept? Or, you think there’s a universally acceptable market price for land property?

It’s either you’re saying property prices should not follow economic progress in a particular economic setting or you don’t know how market prices work.a

Roy Michael Chandler also said: “You just have to look at Singapore and it’s current state of land prices to see what can happen within the span of 20 years.”

I replied:

That’s just the logical, direct consequence of economic progress. When a country attracts foreign investment, expects land and property prices to rise! It’d be very disastrous if property prices did not follow Singapore’s economic rise. Also, the SG government cannot control property prices and set them below actual market prices. You want to make property prices affordable for the so-called poor and the unemployed? Well, you can do that. JUST DESTROY THE ECONOMY. Real world proof: DETROIT. However, I think the first victims of economic destruction would be the very same poor and unemployed people you wanted to help.

I also said:

Are you trying to compare the land property and/or real estate prices in London or Singapore or Hong Kong to those in Manila? For instance, real estate prices in London are high because of demand and market valuation. It’s a global city for god’s sake!

Like I said above, You want to make property prices affordable for the so-called poor and the unemployed? Well, you can do that. JUST DESTROY THE ECONOMY. Real world proof: DETROIT. However, I think the first victims of economic destruction would be the very same poor and unemployed people you wanted to help.

Also, I find this hilarious: “Have you ever seen the land prices for London, Singapore, Netherlands currently?”

So that is your argument why foreigner should not be allowed to buy and own lands? Wait! Are you blaming foreigners for high real estate prices in those economies?

Are you saying “high” land prices is bad? Bad for whom? But that’s exactly how the markets set real estate prices in those territories. You must be for price control then.

If that’s exactly how the markets assessed the value of land properties in those territories, then I say that’s a GOOD THING.

Now tell me exactly where I am wrong. I’ve patiently dealt with your arguments point by point and that’s just your counter-argument? That ” it seems you’ll believe whatever you want to believe”?

THREE questions for you, Roy Michael Chandler…

• You said “Only countries that have large amounts of land like the U.S., Canada can afford to allow foreigners to own property”, then those countries I mentioned must have made a crucial mistake then in allowing foreigners to own land…
• Give me an IDEAL territorial size to support your theory…
• Give me your ACCEPTABLE, UNIVERSAL price for real estate…

But instead of responding, this Roy Michael Chandler chose to troll and started throwing childish tantrums.

Here’s his hilarious response: “You expect me to teach you about the world for free? LOL go get a real education at a good university not in the Philippines.”

In spite of that I posted the following questions, which he might answer one of these days.

1. Are you saying the leaders of those 12 countries were wrong in allowing foreigners to own land? It’s because you said, “Only countries that have large amounts of land like the U.S., Canada can afford to allow foreigners to own property.”
2. Perhaps you have an IDEAL territorial size then. What is it?
3. Since you’re now BLAMING high real estate prices, you must have some generally acceptable or universal price for real estate products. What is it?

I’m still waiting for Roy Michael Chandler‘s final response.