Amended Public Service Act boosts PH global competitiveness (Sabong News)
Author
Manila Bulletin
Date
MARCH 28 2022
Three months before the completion of its term, the Duterte administration could point with justifiable pride to the enactment of three vital economic liberalization laws that would boost the Philippine economy’s global competitiveness — and cushion the impact of external shocks such as those brought about by the raging Ukraine-Russia conflict.
The enactment last week of Republic Act 11569, or the amended Public Services Act (PSA), completes the trio of economic liberalization bills, together with the Retail Trade Liberalization Act and the Foreign Investments Act that were signed into law on December 10, 2021, and March 2, 2022, respectively.
Socio-economic Planning Secretary Karl Kendrick Chua pointed out: “This reform will help bring in more foreign investments and improve services, especially in transport and telecommunications where we are lagging behind. This will benefit all Filipinos through better quality goods and services at lower prices and more meaningful job prospects.”
The focal point of the new measure is to limit the coverage of public utilities to key sectors that will be subject to the 40 percent foreign equity limitation. In general, these are sectors considered as natural monopolies where a single firm can serve the market at lower costs than having two or more firms. These include the distribution of electricity, transmission of electricity, petroleum and petroleum products pipeline transmission systems, water pipeline distribution systems, and wastewater pipeline systems, including sewerage pipeline systems, seaports, and public utility vehicles.
Noteworthy are the safeguard provisions in the new law, including: the power of the President to suspend or prohibit investments that would be deemed detrimental to national security; restrictions on state-owned enterprises from owning capital stock in a public utility or critical infrastructure; enforcement of information security measures for those engaged in telecommunications; reciprocity clause prevents foreign nationals from owning more than 50 percent of capital in critical infrastructure unless Philippine firms are similarly allowed; and a performance review mandate that requires independent evaluation of a firm’s cost and quality performance.
The Foundation for Economic Freedom has pointed out that the enactment of amendments to the PSA would open up investment opportunities for the transportation and logistics sectors, and will benefit small farmers and consumers with the expected decrease in prices of basic goods. The telecommunications sector would also be boosted by innovations and reduced costs.
According to a report of the Organization for Economic Cooperation and Development (OECD) in 2020, the Philippines was ranked as the third most restrictive out of 83 economies on the Foreign direct Investments (FDI) Regulatory Restrictiveness Index, following Palestine and Libya.
The Board of Investments (BOI) expects that with the passage of the amended PSA, together with the Retail Trade Liberalization Act and the Foreign Investments Act, a higher quantum of new investments — including fresh equity from global trade and industry institutions — would revitalize the pace of economic recovery as the country moves away from the harsh effects of the coronavirus pandemic.
