THE country’s trade chief and top business groups want the new House leadership to prioritize the passage of measures that will open up the economy to foreign participation.
Trade Secretary Ramon M. Lopez said he expects the House of Representatives to put in effort in passing several liberalization measures under Speaker Gloria Macapagal-Arroyo. He argued the country can no longer bear to lose investment opportunities resulting from restrictions on foreign ownership.
Among the bills Lopez wants the Arroyo speakership to prioritize is House Bill 4595, filed by Rep. Arthur C. Yap of the Third District of Bohol. HB 4595 seeks to lift foreign equity and capitalization requirements in Republic Act 8762, or the Retail Trade
According to Lopez, if the measure is neglected, then the country can bid farewell to potential investors in the
“We won’t maximize the potentials
in investment,” he told the BusinessMirror. This sentiment was echoed by John D. Forbes, senior advisor of the American Chamber of Commerce of the Philippines (AmCham). In a text message to the BusinessMirror, he listed amendments to the retail trade liberalization law as one piece of legislation American investors are looking forward to.
HB 4595 has yet to make significant progress in Congress, as it is pending deliberations in the House Committee on Trade and Industry.
Another piece of legislation Lopez and Forbes urged Arroyo to act on is HB 5828, which was coauthored by the Speaker herself. HB 5828 consolidates House Bills 4389, 4468, 4501, 4787, and 4996, and amends the Public Service Act (PSA) by redefining utilities, particularly excluding telecommunications.
Article 12, Section 11 of the 1987 Constitution holds that public utilities must be solely operated by firms that are 60 percent owned by Filipinos. Removing telecommunications from the strict definition of utilities is seen to boost competition in the sector.
To properly define what utilities are, Rep. Yap of Bohol, who is House Committee on Economic Affairs chairman, earlier asked the President to certify as urgent the amendments to the PSA or the Commonwealth Act 146.
According to Yap, telecommunication companies are “not utilities in the same sense as power distribution and sewerage distribution are.”
He said telecoms in Hong Kong, Korea, Malaysia, Singapore, Indonesia, Vietnam and other parts of the world are not considered as utilities. Hence, there is a need for a proper definition “so they [telecoms] can be removed from the ambit of constitutional prohibitions.” In co-sponsoring the measure earlier, Arroyo had said that amending the 80-year-old law will provide a better quality of services to the Filipino people.
“Consumers often experience high prices and poor quality of basic services in the Philippines, because only a few local players or oligarchs effectively control the market. Competition and foreign investment are inhibited, because limitations that should only apply to the operation of a utility are usually also applied to all public services,” Arroyo had said.
“The key to solving this problem is to develop a clear statutory definition of a public utility by amending the Public Service Act,” she added.
HB 5828 defines public utility as “a person that operates, manages and controls for public use” distribution of electricity, transmission of electricity and water pipeline distribution system or sewerage pipeline system. The bill passed the House’s third and final reading September of last year and is now awaiting Senate action.
‘Speaker knows her economics’
George T. Barcelon, chairman of the Philippine Chamber of Commerce and Industry, claimed business executives have no problem working with Arroyo. He said the Speaker knows her economics, and believes liberalization measures will be prioritized under her leadership.
“The business community is comfortable with Speaker Arroyo because she is an economist, and we know that she will focus on the economic issues. One issue that has been discussed in Congress is the share of foreign equity, [and] we have to liberalize that,” Barcelon told the BusinessMirror.
“At the same time, I hope the TRAIN 2 [second Tax Reform for Acceleration and Inclusion], as what the President made clear in his Sona [State of the Nation Address], within the year is passed,” he added.
The TRAIN 2 will slash corporate income tax (CIT) to 25 percent from 30 percent and will also rationalize tax incentives. It will also create the Fiscal Incentives Regulatory Board tasked to approve fiscal incentives and headed by the finance chief.
Forbes also listed the reduction of CIT as one measure his group wants Arroyo to put first. He hopes, however, that the rationalization of fiscal incentives will be able to maintain the country’s export competitiveness.
On top of this, AmCham’s wish list of action it hopes the new House leadership will prioritize: amendments to the build-operate-transfer law; TRAIN 1B or amnesty with bank secrecy reforms; amendments to the Central Bank Act; and amendments to the agricultural tariffication law.
Lopez, for his part, wants Arroyo to push for amendments to the Corporation Code; renewal of the Magna Carta for Micro, Small and Medium Enterprises that lapses this year; and the institutionalization of the Pondo sa Pagbabago at Pag-asenso program.
Arroyo was elected House Speaker on Monday, and took her oath just minutes before President Duterte was to deliver his third State of the Nation Address. She got the approval of 184 lawmakers, and is expected to deliver priority legislations of this administration. In a speech last Thursday, President Duterte said he hopes there will be changes with Arroyo at the helm of the House of Representatives.
With a report by Jovee Marie N. dela Cruz
Image credits: Nonie Reyes