After offering to China the privilege to operate a telecommunication (telecom) carrier in the country, the government is now considering a consortium to challenge the duopoly of Globe Telecom Inc. and PLDT Inc., as proposed by the Department of Information and Communications Technology (DICT).
In the Cabinet meeting on Tuesday night, the DICT advised President Duterte to think about allowing a consortium to play the role of the third player in the telecom industry.
“[The] DICT [recommended] a consortium for third player,” Presidential communications Secretary Martin M. Andanar told the BusinessMirror.
The recommendation was raised to the President in light of his recent offer to China to operate the third telecom carrier in the country. Competition officials, including competition body chief Arsenio M. Balisacan, lauded the offer, but some research groups did not receive it positively.
Research group Ibon Foundation, for one, warned on allowing the entry of a foreign telecom company will lead to an issue of national security. Citing a 2006 study on the United States telecom industry by the US National Academy of Sciences, Ibon said telecom infrastructure is crucial to homeland security and transmission of vital intelligence, such that the entry of a foreign player might compromise national security.
On top of security concerns, the restriction on foreign participation is also seen as an obstruction to the entry of a Chinese telecom company. This was also threshed out during the Cabinet meeting, according to Andanar.
Duterte has recently instructed his economic team to further liberalize certain investment areas as part of efforts to bolster foreign participation in the country. Under Memorandum Order 16, the President directed the National Economic and Development Authority (Neda) Board and its member-agencies to “take immediate steps to lift or ease existing restrictions on foreign participation” in certain investment areas.
The presidential memorandum listed seven industries for further liberalization, including public services, such as power transmission and distribution, water-pipeline distribution system and sewerage-pipeline system. The list, however, did not include public utilities, which covers the telecom industry.
Under Executive Order (EO) 184, Series of 2015, or the 10th Regular Foreign Investment Negative List (RFINL), public utilities are open to foreign investors to up to 40-percent ownership. Socioeconomic Planning Secretary Ernesto M. Pernia in July said the President is partial to permit foreign investors to own up to 70 percent in public utilities in fulfillment of his campaign promise to attract more foreign investors to open business in the country.
Under the 10th RFINL, foreign investors are allowed to own to up to 40 percent in operation of public utilities, with respect to Article 12, Section 11 of the 1987 Constitution. The highest law of the land, however, does not define what public utilities are.
Duterte is also asking the Neda board to immediately advise him on restrictions on foreign ownership that may already be lifted or eased through an executive order. He plans to repeal EO 184 soon, and issue a new RFINL.