Finally, the Philippines is abandoning the decades-old approach of conservatism and is now braving to join the rest of the world in opening up its economy. With the passage of House Bill No.78 and Senate Bill No.2094 the amendment to the Public Service Act, the age-old problem of investors in owning 100% foreign equity has now been laid to rest.
While the country is on its road to economic recuperation brought about by the changes due to COVID 19, the lawmakers are looking forward to encapsulating financial recovery by foreign investing.
In a bicameral conference committee by the Senate and House of Representatives, amendments of the Public Service Act redefines the public utilities that remain restricted to foreign investment are now open for investing.
The bill has been transmitted to President Rodrigo Duterte for signature.
AMENDMENTS ON PUBLIC SERVICE ACT
With the restrictions in the Constitution for foreigners, the amendment in the PSA opens up to 100 percent foreign equity. The lifting of foreign investment restrictions will be on all sectors except the transmission and distribution of electricity, seaports, petroleum pipeline, public utility vehicles, and water pipeline and sewerage. The pertinent provisions of the Public Service Act specifically Section 13 (b), (c) state that:
SEC 13. (b) The term “public service” includes every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or compensation, with general or limited clientele, whether permanent, occasional or accidental, and done for general business purposes, any common carrier, railroad, street railway, traction railway, sub-way motor vehicle, either for freight or passenger, or both with or without fixed route and whether may be its classification, freight or carrier service of any class, express service, steamboat or steamship line, pontines, ferries, and water craft, engaged in the transportation of passengers or freight or both, shipyard, marine railways, marine repair shop, [warehouse] wharf or dock, ice plant, ice-refrigeration plant, canal, irrigation system, gas, electric light, heat and power water supply and power, petroleum, sewerage system, wire or wireless communications system, wire or wireless broadcasting stations and other similar public services: Provided, however, That a person engaged in agriculture, not otherwise a public service, who owns a motor vehicle and uses it personally and/or enters into a special contract whereby said motor vehicle is offered for hire or compensation to a third party or third parties engaged in agriculture, not itself or themselves a public service, for operation by the latter for a limited time and for a specific purpose directly connected with the cultivation of his or their farm, the transportation, processing, and marketing of agricultural products of such third party or third parties shall not be considered as operating a public service for the purposes of this Act.
(c) The word “person” includes every individual, co-partnership, joint-stock company or corporation, whether domestic or foreign, their lessees, trustees, or receivers, as well as any municipality, province, city, government-owned or controlled corporation, or agency of the Government of the Philippines, and whatever other persons or entities that may own or possess or operate public services. (As amended by Com. Act 454 and RA No. 2677)Public Service Act specifically Section 13 (b), (c)
The above-quoted portion added a new provision in the amendment which states that “no person shall be deemed a public utility unless otherwise subsequently provided by law.” Included in the bill are penal provisions for violations.
The Congress remains positive that the amendment of foreign capital will boost the economy and a higher gross domestic product (GDP) growth is at hand. The lawmakers are looking into possibilities for a pro-competitive measure reducing local monopoly and improving local market efficiency. More jobs are expected to open and improve public utilities and public services are expected to go beyond the local expectation.
Included in the amendment are opportunities for foreign investment in the telecommunications industry, airports, railways, and shipping. These are among those mentioned of “public utility” that is ratified in the amendment.
The easement of the 85-year-old Commonwealth Act 146 or PSA boosts confidence for our economy to thrive along with our Asian neighbors. More jobs are expected to be created by giving foreign investors the chance to invest more in industries that have been sealed in the country for decades. To attain the same level as other ASIAN nations, liberalization of the economy is one of the core factors. It is high time that we are at par with other countries in trade to attain a stronger bond on an investment agreement.