JFC backs more foreign stake in telcos

MANILA, Philippines — The Joint Foreign Chambers (JFC) is backing local business groups in opposing recommendations to retain the telecommunications sector as a public utility, saying this would prevent investments that foster greater competition and improved services.

In a statement, the JFC composed of the American, Australian-New Zealand, European, Japanese and Korean chambers in the country, as well as the Philippine Association of Multinational Companies Regional Headquarters Inc. said that like local business groups, they have concerns on the proposal to retain the 40 percent limit on foreign ownership for telecommunications being considered as the Senate conducts deliberations on Senate Bill 2094, which seeks to amend the Public Service Act (PSA).

“The JFC joins Philippine business groups in calling for the Senate to liberalize the telecommunications sector to foster competition and provide better quality services at lower cost,” it said.

Earlier, business groups Foundation for Economic Freedom, Federation of Filipino-Chinese Chambers of Commerce and Industry Inc., Makati Business Club, Management Association of the Philippines, Philippine Chamber of Commerce and Industry, Philippine Exporters Confederation Inc. and University of the Philippines School of Economics Alumni Association issued a statement opposing the recommendation to keep the telecommunications industry as a public utility.

Under the bill, the definition of public utilities would be limited to natural monopolies such as distribution and transmission of electricity, water and sewerage.

With other Southeast Asian countries having better telecommunications services than those offered in the Philippines, JFC is of the view that opening the sector to more foreign investments would bring improvements.

“As subscribers ourselves of the major Philippine telcos, while we appreciate the services they provide, we believe they will improve in quality and price when more competitors are allowed to operate in the country,” the JFC said.

JFC also said the PSA amendments, when approved, would not just match policies of neighbors like Singapore, Thailand, Vietnam, and Indonesia, but also comply with commitments made by the Philippines in the Association of Southeast Asian Nations (ASEAN) Comprehensive Investment Agreement to open investment in services to other ASEAN members effective in 2012 as part of the ASEAN Economic Community.

Moreover, JFC said the approval of the PSA amendments would help the Philippines become better qualified for trade and investment agreements such as the Comprehensive and Progressive Trans-Pacific Partnership.

To prevent foreign government-owned and influenced firms from controlling Philippine public services, JFC said the bill has provisions covering the adoption of national security review practices followed by major governments, which include Australia, Japan, and the US, in approving major new foreign investments.

In addition, JFC said the proposed reform would help improve the international ranking of the Philippines by the Organization of Economic Cooperation and Development in terms of openness to foreign investment.

The Philippines is currently ranked as among the most restrictive economies in the world for foreign investment in public services and JFC said this is preventing potential investors from entering the market.

“There will be positive spillover effects for other areas of investment. This benefits economic recovery when more FDI (foreign direct investment) is urgently needed to support GDP (gross domestic product) growth and provide new jobs when millions remain unemployed,” the JFC said.