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Bill amending PSA gets Senate nod

REUTERS

By Alyssa Nicole O. Tan

THE SENATE on Wednesday approved on third and final reading a bill amending the Public Service Act (PSA) to allow 100% foreign ownership in telecommunications, airlines, domestic shipping, among others.

Nineteen senators voted in favor of Senate Bill 2094, which seeks to amend the 85-year-old Commonwealth Act 146 or PSA, while three senators voted against the measure.

Certified as urgent by President Rodrigo R. Duterte, the bill is one of the key reforms expected to help boost the economy’s recovery from the pandemic.

Under the approved version, the definition of public utility was changed to those involved in distribution and transmission of electricity, petroleum and petroleum products pipeline transmission, water and wastewater pipeline distribution systems, airports, seaports, public utility vehicles, and expressways and tollways. The Constitution limits foreign ownership in public utilities to 40%.

This amendment means 100% foreign ownership will now be allowed in telecommunications, air carriers, domestic shipping, railways and subways, and canals and irrigation.

“I believe that by opening up our economy to a diverse set of investors, we could provide our fellow Filipinos with more and better choices,” Senator Mary Grace Natividad S. Poe-Llamanzares, primary author and sponsor of the bill, told the plenary on Wednesday. “We are only making our country more competitive in the world stage.”

Senators Ana Theresia N. Hontiveros-Baraquel, Francis Pancratius N. Pangilinan and Ralph G. Recto voted against the measure.

Ms. Hontiveros-Baraquel said that she was “saddened” that many critical services such as telecommunications were opened up to 100% foreign ownership when foreign participation could have been limited to 70%.

She also noted that “tech-savvy neighbors” and “rogue non-state elements” have been targeting government and military installations and other very critical infrastructure in the region. The Philippines does not have proper cyber defense operations.

“I fear that we have just brought our guards down.”

Ms. Poe, who chairs the Senate Public Services Committee, said that national security concerns were taken into consideration by placing several layers of safeguards. “The country is now open for business, but it must be according to our terms and our specific needs.”

During the period of amendments, Mr. Recto proposed to include telecommunications, domestic shipping and airlines as part of the public utility industry but lost the nominal voting.

Senator Emmanuel Joel J. Villanueva said that he had voted in favor of 100% equity for the telecommunication industry because he was for liberalizing the economy while ensuring there are safety nets.

As for the airlines, Ms. Poe noted the need to provide assistance to the pandemic-battered industry. She said the country also needs more shipping companies to provide better services to Filipinos.

The bill’s final version also amended the definition of foreign state-owned enterprises, which now refers to “an entity in which a foreign state directly or indirectly owns more than 50% of the capital taking into account both the voting rights and beneficial ownership.”

Also included was a provision that states the National Economic and Development Authority (NEDA) and the Philippine Competition Commission are to “provide periodic advice to regulators as to which subcontracts will also need to be covered by the constitutional and other legal restrictions and which ones may be delivered even by foreign-owned subcontractors without putting operational resiliency at risk.”

Mr. Recto also recommended the removal of a paragraph that states that “reciprocity may be satisfied by any form of arrangement of exchange that is beneficial to Filipinos including according to rights of similar value in other economic sectors” as determined by NEDA, to ensure a “one is to one” reciprocity.

Meanwhile, foreign chambers said the approval of the PSA bill “will create jobs, improve technology, modernize and lower the prices of services to the benefit of Filipino consumers.”

“Liberalization of the economy is one of the most important measures needed to attain similar levels of foreign investment received by ASEAN neighbors and ensure the Philippine economy’s continued recovery from the pandemic,” seven foreign groups said in a joint statement on Wednesday.

They noted Philippine infrastructure consistently ranks 6th behind Indonesia, Malaysia, Singapore, Thailand, and Vietnam in international indices.

“The PSA amendments will match policies that Singapore, Thailand, and Vietnam already allow and that Indonesia last year opened to foreign investment… And it will allow the Philippines to better qualify to be a member of advanced plurilateral trade and investment agreements such as the Comprehensive and Progressive Transpacific Partnership,” it said.

The joint statement is backed by 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.

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