The Philippines assured its trading partners of its commitment to liberalize at least eight investment areas, two of them deemed crucial to the success of the Duterte administration’s “Build, Build, Build” program.
In his closing statement at the country’s fifth trade-policy review at the World Trade Organization (WTO), Trade Undersecretary Ceferino S. Rodolfo Jr. said “the Philippines is already an open economy, with foreign investments allowed in a broad range of activities.” And it does not stop there, he added, as the government is inclined to open more sectors for foreign ownership through its three-pronged reform approach.
Rodolfo said the first part of this strategy is to review the eight investment areas President Duterte wants to liberalize. As listed in Memorandum Order 16 issued last November, the President intends to relax, if not remove, foreign-ownership cap on private recruitment; practice of particular professions; contracts for public works; public services; culture, production, milling, processing and trading of rice and corn; teaching at higher education levels; retail-trade enterprises; and domestic market enterprises.
Of these eight, Rodolfo said priority is placed on contracts for the construction and repair of locally funded public works and public services, except activities and systems that are recognized as public utilities. “By giving priority to these two areas, we look forward to creating a more liberal investment environment where our Build, Build, Build program would be able to deliver, deliver, deliver at the soonest possible time,” he explained.
Under Executive Order 184, or the 10th Regular Foreign Investment Negative List, contracts for the construction and repair of locally funded public works are limited to 25-percent foreign equity. On the other hand, foreign investors are allowed to own up to 40 percent in the operation of public utilities, with respect to Article 12, Section 11 of the Constitution.
Aside from this, Rodolfo also said Commonwealth Act 146, or the Public Services Act, will soon be amended by Congress. The 82-year-old law defines the sectors considered as public utilities and are therefore restricted to 40-percent foreign ownership.
“Through this amendment, our Congress will be able to provide a clear definition of public utility to cover only three sectors: distribution of electricity; transmission of electricity; and water-pipeline distribution or sewerage pipeline. This means that all other sectors in transportation—land, water and air—communication, electricity and water services will be opened to 100-percent foreign ownership,” the trade official said.
Rodolfo added there is also the consultative committee mandated by Duterte to review, among others, economic provisions of the Constitution that reserve certain activities to Filipino citizens. “The intention is to create a window for these activities to be liberalized through legislation,” he added.
The Philippine delegation, headed by Rodolfo, was quizzed last week by WTO member-countries on a number of issues relating to trade and economy. Among the questions raised was Manila’s efforts to remove restrictions on foreign ownership.
China, for one, inquired if the Philippines is considering to allow foreign participation on mining, energy, construction and public utilities. On the other hand, the United States asked for an update on the government’s steps to liberalize communications
and transportation.