FOREIGN business groups operating in the Philippines on Wednesday hailed the Senate passage on third and final reading of the measure amending the 85-year-old Public Services Act (PSA), saying it breaks the country’s image as one of the most restrictive in the region, and will ease inflows of more investments.
However, the bill is not expected to be among those sent to Malacañang for signing into law by year-end, because the House of Representatives sent word it would not adopt the Senate version, having listed sticky issues it first wants to resolve with its counterpart, including the addition of more sectors to the list of public utilities identified in the House version and the introduction of “critical infrastructure” category.
What was billed as an “oligarchy-busting reform” by Rep. Joey Sarte Salceda will likely be submitted to President Duterte before the campaign period starts in February, Salceda said on Wednesday.
Also on Wednesday, the Joint Foreign Chambers (JFC) hailed the approval of Senate Bill 2094, which seeks to revise provisions of the Public Services Act (PSA).
“The JFC expressed optimism that the game-changing law will pass in the current Congress as the bill has been certified urgent for immediate enactment by President Rodrigo Duterte,” the group said in a statement.
Sen. Grace Poe, chairman of the Senate Committee on Public Services and sponsor of the bill, said the measure intends to provide Filipino consumers with “more and better choices,” adding that future generations of Filipinos will “truly benefit” from liberalizing the country’s public services.
She said the bill provides a clearer definition of the terms “public services” and “public utilities” in the existing law. In the 1987 Constitution, only corporations that are at least 60-percent owned by Filipinos shall be given the franchise, certificate and authorization to operate as a public utility.
Under SB 2094, public utility refers to a “public service that operates, manages or controls for public use” any of the following: distribution or transmission of electricity; petroleum and petroleum products pipeline distribution systems, water pipelines distribution systems and wastewater pipeline systems; as well as airports, seaports, public utility vehicles and tollways or expressways.
Those not classified as a public utility shall otherwise be considered as a public service, which will not be bound by the restriction on foreign ownership. Public services include telecommunications, air carriers, domestic shipping, railways and subways.
During the period of interpellation on the proposed law, Poe explained that such public services are identified in the bill as “critical infrastructure” and will continue to be subject to regulation by relevant agencies under existing laws.
The Senate version limits the industries considered as public utilities—or those sectors that, if destroyed, will adversely impact national security. As a result, the industries outside of the scope will not be subject to 40-percent foreign equity restriction, as public utilities are, thereby liberalizing the said sectors.
The Senate version allows full foreign ownership for the following sectors: telecommunications, air carriers, domestic shipping, railways and subways and canals and irrigation systems.
Meanwhile, the following are still subjected to 40-percent foreign ownership restriction: distribution or transmission of electricity; petroleum and petroleum products pipeline transmission; water pipeline distribution systems and wastewater pipelines systems; airports; seaports; public utility vehicles; and expressways and tollways.
“We strongly support the passage of this vital legislation and pledge our efforts to bring the reform to the attention of appropriate firms in our member countries in the United States, Australia-New Zealand, Canada, Korea, Japan, and Europe,” the JFC said.
The foreign business groups said they will encourage said countries to bring in more investments that can support the public services in the country.
“With its large, growing economy, the Philippines will enjoy many benefits when local and foreign firms compete side-by-side and together to provide the Filipino with better services that this reform will bring,” it added.
Closed to investments
IT is time for such restrictions to be lifted, the JFC said, as this branded the country as “more closed to foreign investment than most Asian economies.”
“It also created a business environment for the services sector that nurtured oligopolies and weakened competition to the detriment of consumers,” they said. “Tens of billions of dollars in foreign investment did not come to the Philippines but instead went to our neighbors.”
Enacting the PSA amendments will place the country on a par with Singapore, Thailand, Vietnam and Indonesia in terms of being open to foreign ventures, the group explained.
In addition, the group said passage of the reform will mean more job opportunities, better technology and cheaper cost of public services for the consumers.
The signatories include the American Chamber of Commerce of the Philippines, Australian-New Zealand Commerce of the Philippines, Canadian Chamber of Commerce of the Philippines, European Chamber of Commerce of the Philippines, Japanese Chamber of Commerce & Industry of the Philippines, Korean Chamber of Commerce of the Philippines and Philippine Association of Multinational Companies Regional Headquarters Inc.
Risa’s dissent
IN casting her negative vote, Sen. Risa Hontiveros said she accepts the principle that Congress has the power to define what services are a public utility and which ones are not.
However, she expressed sadness, “that many other critical services have been opened up to 100 percent foreign ownership by our bill when, as Senator Recto repeatedly proposed, we could have limited foreign participation say to 70 percent, which allows Filipinos and even the state to have direct knowledge of what goes on inside these critical facilities.” Hontiveros added: “Specifically I also vote NO, because the Telecomms industry is being opened up by our Senate Bill to 100 percent foreign ownership, and we are doing this at a time when we have tech-savvy neighbors as well as rogue non-state elements that are directly targeting facilities in the region, including government and military installations and other very critical infrastructure.”
House panel’s ‘issues’
SALCEDA said House members will surely seek a congressional bicameral conference committee to resolve disagreeing provisions between their and the Senate’s versions of the bill.
“What I can tell you now is that there will probably be no adoption by the House. We will almost certainly want a bicameral conference committee on this. We hope to send a final version to President Duterte before the campaign period starts in February,” Salceda said.
Salceda said he expects to meet with their Senate counterparts during the session break for the bicameral conference committee.
The issues raised by Salceda on the Senate version include the addition of more sectors to the list of public utilities identified in the House version and the introduction of “critical infrastructure” category.
The House earlier approved its version on March 10, 2020.
Salceda said he will also discuss the standards for National Security Council review of critical infrastructure investments, including what could constitute disallowance and what qualifies as a national security threat, with his Senate counterparts.
Lastly, Salceda noted that the refund mechanism to consumers in the House version is absent in the Senate’s version.
“These provisions will be very crucial to the final form of the measure. For example, the Senate version only provides for the disgorgement of profits for violations of rules set by the administrative agency concerned,” he said.
“It does not provide for a system to return to the public any money generated that is against the rules of the regulator. This to me is a clear public welfare issue that should be clarified. After all, it is the public that bears the cost of unjust hikes in the prices of utilities,” he added.
Image courtesy of AP/AARON FAVILA
