With just a few days left before Congress goes on recess, industry groups are rushing lawmakers to pass the amendments to the Public Services Act (PSA) that proposes to remove foreign ownership restrictions on several economic areas.
In a news statement issued on Monday, business groups called on the House of Representatives to pass on third reading House Bill 78, introducing changes to the PSA. They also asked the Senate to legislate the counterpart version of the measure, which they said will be crucial in attracting investments to the Philippines.
“We commend the House of Representatives for approving HB 78, its bill amending the Public Services Act, on second reading on February 18, 2020,” the industry groups said, “and we look forward to its eventual passage on third reading.”
Amending the PSA will provide a definition on what are public utilities, which, under Article XII, Section 11 of the 1987 Constitution, are prohibited from being owned by foreigners. In doing so, industries that fall outside the coverage of public utilities, such as telecommunications, can soon be operated by foreign investors.
“We strongly urge the Senate to pass this crucial piece of legislation, as its enactment into law will enable the Philippines to lift its momentum towards economic growth and development to a higher level and improve the lives of citizens,” the industry groups added.
Under HB 78, the definition of public utilities was limited to distribution of electricity, electricity transmission, and water pipeline distribution or sewerage pipeline system. The measure—which will revise the 84-year-old Commonwealth Act 146, or the Public Service Act of 1936—will also institute a rate setting mechanism and is geared toward fostering competition.
The industry groups argued the passage of PSA amendments will help the Philippines recover from its declining foreign direct investments, which slipped over 30 percent to $6.4 billion from January to November of last year, from $6.4 billion during the same period in 2018.
They claimed that foreign investments registered in Southeast Asian economies reached an all-time high at $177 billion last year, more than China’s $140-billion foreign direct investments print. They said legislating the amendments to the PSA will attract the capital pouring into the region, absorbed mostly by Singapore, Vietnam and Thailand.
As to the criticism that opening sensitive industries, such as telecommunications, to foreigners could be risky for the Philippines, they explained HB 78 adopted the framework utilized by the United States and the European Union in assessing prospective investments.
“The bill strongly considers the protection of national security by adopting the same framework and measures for scrutinizing FDI for security risks used by countries; such [as] United States and Australia, and the European Union,” the industries said. “An increase in FDI will create more business opportunities and jobs to improve the quality of life of Filipinos.”
The statement was issued at a time legislators are nearing to call off session this week and are, therefore, trying to rush the passage of priority measures, including the Corporate Income Tax and Incentives Rationalization Act, popular as the Citira bill.
The Joint Foreign Chambers of the Philippines represented the foreigners in the statement. On the other hand, the Bankers Association of the Philippines, Foundation for Economic Freedom, Makati Business Club, Management Association of the Philippines and the Semiconductor and Electronics Industries in the Philippines Foundation Inc. signed for the locals.
