The House of Representatives approved on second reading the measure amending the Public Service Act to allow full foreign ownership of public utilities in the Philippines.
The Provisions of House Bill No. 78
Specifically, House Bill No. 78 delineates “public service” from “public utility.” The measure seeks to limit the definition of public utilities to electricity distribution and transmission, water and sewerage pipelines, air transportation, ports and airports, which will remain covered by the 60:40 ownership in favor of Filipinos.
Public service, on the other hand, will cover “common carrier, railroad, street railway, subway motor vehicle, ice refrigeration plant, irrigation system, marine railways, wire or wireless communications systems; wire or wireless broadcasting stations; freight or carrier services, steam boats ferries and war craft engaged in the transportation of passengers or freight, gas, electric light, heat and power water supply and power, petroleum and sewerage system, among others.”
If passed into law, the bill would give the National Economic and Development Authority (NEDA) secretariat and the Philippine Competition Commission (PCC) the power to recommend to Congress the classification of a public service as a public utility.
Foreign Investments and Job Creation
With the need to create more jobs for its growing population (From 40,100,000 in 1973 to 105,000,000 in 2017), attracting foreign investments has been a government priority since the 1980s. However, the country is still lagging in Foreign Direct Investments (FDIs) compared to its Southeast Asian neighbors like Vietnam, Indonesia, Singapore, and Malaysia.
In a survey released by the Business Times – Standard Chartered Leader’s Survey on 129 leaders and business owners from various industry sectors in April 2018, only 3% of the respondents expressed interest in expanding business operations in the Philippines. The country still needs to catch up with the more favorable investment outlook for its neighbors, and House Bill No. 78 is just one of the various initiatives that are expected to bolster foreign investment, and subsequently, job generation in the country.
Consumer Benefits
Leaders of the House of Representatives said the passage of House Bill No. 78 is needed to end the unreliable and expensive consumer goods and services in the country.
Albay Reprepresentative Joey Salceda, Chairman of House Committee on Ways and Means and principal author of the bill, stated that House Bill 78 would open competition in vital industries all over the country.
He emphasized that consumers’ woes stem from the lack of competition in the telecommunications and transportation industries because of ambiguity in the current definition of ‘public utility.’ Though capital intensive, both industries are subject to foreign ownership restrictions. Hence, the quality of goods and services tends to go down while prices go up to the disadvantage of consumers.
Salceda said the bill aims to “significantly contribute to increasing competition, as well as protecting the public interest. More competition among providers would result in lower prices and improved quality of basic services, creating a more competitive economy towards a better quality of life for all.”