Biz groups push for Public Service Act changes

MANILA, Philippines — A broad aggrupation of Philippine and foreign business groups is pushing for the ratification of the amendments to the Public Service Act before Congress goes on recess on Feb. 5 for the election campaign.

The appeal was made in a joint statement by the American Chamber of Commerce of the Philippines, Australian-New Zealand Chamber of Commerce Philippines, British Chamber of Commerce of the Philippines, Canadian Chamber of Commerce of the Philippines, Dutch Chamber of Commerce in the Philippines, European Chamber of Commerce of the Philippines, French Chamber of Commerce and Industry in the Philippines, Financial Executives Institute of the Philippines, German-Philippine Chamber of Commerce and Industry, Japanese Chamber of Commerce and Industry of the Philippines Inc., Korean Chamber of Commerce Philippines, Management Association of the Philippines, Makati Business Club, Nordic Chamber of Commerce of the Philippines, Philippine Association of Multinational Companies Regional Headquarters Inc., Philippine Cable and Telecommunications Association Inc., Philippine-Swiss Business Council, Semiconductor and Electronics Industries in the Philippines Foundation Inc., Spanish Chamber of Commerce in the Philippines (La Cámara), US-ASEAN Business Council, US Chamber of Commerce, and Women’s Business Council Philippines.

The Senate approved on third reading in December the bill that seeks to allow greater foreign ownership in certain sectors after the House of Representatives’ approval of its version in March 2020.

“The business groups encourage the bicameral committee to adopt the most liberal provisions between the two versions,” the groups said.

In particular, the groups are recommending that operations and maintenance concessions in airports and seaports be allowed for fully foreign-owned companies to allow world-class standards and technology to be brought to the country.

In addition, the groups said tollways or expressways should be liberalized for foreign investment in the same way as railways and subways.

The groups also want the foreign ownership restriction lifted for air carriers to allow access to foreign capital, to help in recovery from the pandemic and to expand operations as well as increase competition in the industry.

“Telecommunications must be excluded from the definition of public utility. Likewise, the exclusion of passive infrastructure and value-added services from the definition of ‘telecommunications’ to avoid erecting a new and substantial barrier to the entry of competition in the market for internet services, which would stifle the growth of community internet,” the groups said.

The groups also want public utility vehicles (PUVs) to be excluded from the definition of “public utilities,” citing these are not natural monopolies.

They said workers in land transportation businesses would not be displaced and would serve as drivers and mechanics for the PUVs.

“Moreover, this reform should allow international carriers to undertake their first and last mile of delivery services to pick up and deliver to customers in the Philippines, as they do in most of the world. Allowing this will encourage these global firms to invest more in international gateways, as they have at Clark, and increase the role of the Philippines as a regional air cargo hub, which in turn will attract new export manufacturing firms to locate in the country,” the groups said.

The groups are also of the view that reciprocity provision should not be a barrier to foreign investments needed in the country.

As for the concerns on national security being raised, the groups said these should be addressed in the Senate bill, which restricts state-owned enterprises from owning public services and provides that foreign investments in public services would need to be reviewed and approved by the President.

“The PSA reform is one of the most important for the Philippine economy in many decades and is essential to restoring and eventually exceeding pre-pandemic rates of economic growth,” the groups said.

The groups said encouraging foreign investments in critical infrastructure would allow the country to quickly modernize infrastructure including telecommunications/broadband and air, ground, and marine transportation services.

Citing an estimate made in Congress, the groups said the passage of the House measure into law would lead to over $300 billion new foreign direct investments (FDI) over the next five years and nearly a half percent to the country’s annual gross domestic product growth.

“Eventually, consumers will enjoy the benefits of increased competition from more choices of service providers with better technology, pricing, and customer service,” the groups said.

Further, the groups said the PSA amendments along with the Retail Trade Law amendments recently signed into law, are expected to result in an improvement in the Philippines’ ranking by the Organization for Economic Cooperation and Development which placed the Philippines as third most restrictive to FDIs out of 83 economies

“This will improve the reputation of the Philippines as an economy that welcomes foreign investment, and annual FDI inflow levels should increase to levels well above Malaysia and Thailand and may even begin to approach Vietnam,” the groups said.