PHL is third-largest ‘seller’ of farmlands to foreigners

DESPITE its prohibition on the foreign ownership of land, the Philippines emerged as one of the countries with the largest tracts of farmland that were ceded to foreigners globally, according to the 2013 World Trade Organization (WTO) Report.

In the report titled Factors Shaping the Future of World Trade, the WTO said with around 5.2 million hectares acquired by foreigners, the Philippines is considered the third top destination of foreign investment in land in the world.

The country with the biggest farmland area acquired by foreigners was Democratic Republic of the Congo with 8.1 million hectares, followed by Indonesia with 7.1 million hectares.

Among Southeast Asian countries, only Indonesia and the Philippines were included in the top 10.

In terms of buyers, foreigners from the United Kingdom, the United States, and China bought the most farmland with 4.4 million hectares, 3.7 million hectares and 3.4 million hectares, respectively. Malaysia, a member of the Association of Southeast Asian Nations (Asean), rounded up the top 10 buyers by purchasing a million hectares of farmland on foreign soil.

“Although countries where arable land and water are particularly scarce [e.g., countries in the Middle East and countries with a growing demand for food, energy and raw materials, such as China and India] are active players, the top investors are companies from the United Kingdom and the United States. The destinations of these investments are countries in Africa, Southeast Asia, South America, as well as the Russian Federation and Ukraine,” the WTO said.

The report stated these farmlands were acquired by foreigners through long-term leases, outright purchases or contracts, with the acquired land being devoted to raising crops for food or biofuels.

The WTO, however, expressed concern the property rights in countries where farmlands were purchased are “weakly enforced” and may have led to illegal displacements of the original landowners.

“Clearly, the often negative attention these activities have attracted underscore how increased competition for natural resource supplies can raise international tensions, especially if the natural resource is seen as vital for food or national security by other states,” the WTO said.

The Bureau of Agricultural Statistics said the country’s total agricultural land area is 9.671 million hectares. This consists of 4.936 million hectares of arable land, 4.225 million hectares of permanent cropland and less than a million hectares each of permanent meadows/pastures, forest land and other lands.

The Philippines does not allow foreigners to own land. Only Filipino citizens and corporations or partnerships that are at least 60-percent Filipino-owned are entitled to own or acquire land in the country.

Foreigners or non-Filipinos may, however, purchase condominiums, buildings, and enter into a long-term land lease.

The WTO said land ownership, particularly natural resources, affect market powers and geopolitics. It could also move to explain trade patterns in many countries.

“More concentrated control over natural resources confers market power, which can be enhanced through the use of restrictive trade policies. Concentration may also enable resource-abundant countries to use it to pursue noneconomic objectives. Countries faced with acute resource scarcity may in turn, pursue natural resource security at the expense of international relations,” the WTO said.

“To the extent that these geopolitical factors create or exacerbate international tension, they can increase the price of natural resources beyond what would have been created by monopoly power and also increase price volatility. Both of these can have harmful effects on the global economy and trade,” it added.

In its report, the WTO also discusses shifts in production and consumption patterns, continuing technological innovation, new ways of doing business and policies.

The report also looks at economic and political institutions as well as cultural customs among countries that help shape international cooperation, particularly trade.

The WTO believes that the future of trade will also be affected by the extent to which politics and policies successfully address issues of growing social concern, such as the availability of jobs and persistent income inequality.

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