Foreign groups oppose equity cap on telco, transport sectors

MANILA, Philippines — Foreign business groups have warned against moves to keep the foreign equity restrictions in the transport and telco sectors, saying these run counter to efforts   to boost foreign investments.

In a statement yesterday, the Joint Foreign Chambers (JFC) said they strongly support the passage of amendments to the Public Service Act (PSA), which seek to limit public utilities to natural monopolies such as electricity, water and sewerage, and open up key economic sectors such as transport and telecommunications.

“We caution the Senate against including numerous favored sub-sectors under the public utility definition to protect them from competition. Any moves to retain 60-40 foreign equity restrictions, specifically for the major transportation and telecommunications sectors, and add legislative franchise requirements where none existed, will thwart the intention of the bill and the positive impact it can bring to the business community and consumers,” the JFC declared.

It said both transportation and telecommunications are not natural monopolies as there are many players that operate in these sectors in the country.

“It is crucial to apply the proposed definition consistently in identifying the sectors that should be considered public utilities to maintain the internal integrity of the bill,” the JFC said.

Instead of keeping service sectors closed to foreign investment in the guise of national security, JFC said the country should balance national security protection with the need to attract foreign investments.

The JFC also pointed out that the Senate bill has safeguards to address the national security concerns.

“To catch up, the economy must open up. The status quo has proven insufficient to address the needs of the country. Retaining the 60-40 foreign equity restriction will prevent accomplishment of the intentions of the proposed reform to liberalize the Philippine economy to attract greater foreign investment, facilitate competition, fund infrastructure, create jobs and improve the quality of public services in the country,” the JFC said.

With foreign investors interested in investing in the Philippines, JFC said it is important to take advantage of this opportunity by sending a clear message the country is open for business.

“We urge the Senate to stay true to the intentions of the proposed reform by opening the transportation and telecommunications sectors to greater foreign investment, for the benefit of the Philippine economy, the business community, and the Filipino consumer,” the JFC said.

The bill seeking to amend the PSA has been certified as urgent by President Duterte.

JFC is a coalition of the American, Australian-New Zealand, Canadian, European, Japanese, and Korean chambers in the country, as well as the Philippine Association of Multinational Companies Regional Headquarters Inc.