The Philippine Competition Commission is supporting initiatives to amend certain provisions in the 80-year-old Public Service Act, such as the lifting of the foreign equity cap on certain industries including telecommunications and transportation.
The Philippine constitution limits foreign ownership in the operation of public utilities such as telco and transport to only 40 percent, and reserves the other 60 percent to Filipino citizens or corporations.
“To begin with, the Public Service Act is antiquated. It still refers to certain business activities such as ice plants and canals as public services or public utilities. With the current economic and business landscape, it is time to update the list of business activities considered as public utilities,” said PCC commissioner Johannes Benjamin Bernabe.
The limitation restricted foreign direct investments in the country and competition in the market, said Bernabe.
He noted that in certain sectors like telecommunications, one way of promoting a competitive environment was to open fully the market to foreign players.
“The foreign equity cap unfortunately discourages entry of new foreign players in the sector that provide services to the public,” said Bernabe.
Enhancing competition will help improve the quality of goods and services in the market, give consumers more choices and keep prices generally affordable, the PCC said.
Several bills have been filed in both houses of Congress that seek to amend the PSA to remove certain industries considered as public services and lift the ownership restrictions imposed on foreign investors.
The PCC is proposing “to define public utility as a person who operates, manages, and controls for public use the following: electricity transmission; electricity distribution; water pipeline distribution systems; gas or petroleum pipeline distribution systems; and sewerage systems,” said Bernabe.
“So there will be only five public utilities whose foreign ownership will be restricted to 40 percent,” said Bernabe.
The industries to be removed from the list such as telco and transport would still be regulated by an agency to protect the welfare of consumers.