The enactment of the revised Public Service Act (PSA) is anticipated to spark more investments from German companies and other foreign investors, the German-Philippine Chamber of Commerce and Industry (GPCCI) said.
GPCCI Executive Director Christopher Zimmer said in a news statement issued on Thursday that the recent ratification of the bill amending PSA was a “positive” development, saying it will encourage more foreign investments into the country.
The PSA amendments, which were recently ratified by both houses of Congress, seek to liberalize the economy by permitting 100-percent foreign ownership on sectors not listed as public utilities.
As a result, economic managers and lawmakers projected that foreign investments will increase by around P299 billion over the next five years.
The measure identified public utilities as follows: (1) distribution and transmission of electricity; (2) petroleum and petroleum products pipeline transmission systems; (3) water pipeline distribution systems and wastewater pipeline systems, including sewerage pipeline systems; (4) seaports; and (5) public utility vehicles.
The bill is currently awaiting the signing of President Duterte.
“We certainly welcome the positive developments as we look forward on the establishment of much-needed reforms to enable foreign investors to participate in critical and fundamental areas of local public services,” Zimmer said.
“Aside from locally introducing international public service standards, we would also like to present sustainable business practices in the liberalized sectors,” he added.
With the amendments in place, air carriers, domestic shipping, expressways, railways, subways and telecommunications will be open to 100-percent foreign ownership.
“Companies not only from Germany, but also all over Europe, already see immense opportunities once this reform is signed into law,” GPCCI President Stefan Schmitz said.
“Moreover, effectively utilizing the advantages from this major economic reform shall provide certainty among investors and shall also encourage job creation that would not only help stimulate the recovery of the Philippine economy, but also exceed the growth rates of the country from pre-pandemic times,” he added.
In a survey last December 2021, 57 percent of the German firms that have local operations share an optimistic outlook for their businesses in the next 12 months on the back of positive medium-term economic projection and growing confidence in local investments.
Some 32 percent considered the current situation of their companies as “good,” which is higher than 21 percent in the previous study. Nearly half said they were satisfied while the remaining 20 percent said it was “bad.”
The top risks identified by the respondents in the next 12 months, meanwhile, include demand, economic policy framework and price of raw materials.