4 sectors eyed for foreign ownership limit

Published January 30, 2020, 12:00 AM

by manilabulletin_admin


The Philippine Competition Commission (PCC) is firm on its position to open up competition in most industries by limiting the 60-40 foreign-Filipino ownership restriction to only four sectors — distribution of electricity; transmission of electricity; gas or petroleum pipeline system; water pipeline or sewerage pipeline system.

Philippine Competition Commissioner Commissioner Amabelle C. Asuncion identified these sectors as priority as they fall under public utilities and of public service.

These businesses or services regularly supply and directly transmit and distribute to the public through a network, a commodity or service of public consequence. The business should also fall under natural monopoly and necessary for the maintenance of life and occupation of residents. The business is also obligated to provide adequate service to the public on demand and can be restricted in its operation when the public interest so requires.

In identifying these priority sectors to be covered by the 60-40 foreign ownership restriction, Asuncion said these are sectors with strong tendencies as they are public utilities and because of their nature they are natural monopoly investors have to invest huge capital to recover their capital.

“These are natural monopoly industries where competition will not be efficient because for instance there are two players in a small geographic area they will naturally die,” said Asuncion in a chance interview at the 2020 Manila Forum on Competition in Developing Countries.

Asuncion said that there is a need to revisit the definition of public sector that can be offered under 60-40 or under nationalized industries to ensure only those that are considered public interest are covered. For instance, she said, ice plant is considered public service, but it is not really.

There is no definition of public service but just jurisprudence. Thus, PCC would like to come up with a list of those covered with 60-40 foreign ownership also in consultation with other agencies because there is also an existing Foreign Investment Negative List.

Asuncion, however, said that even with the opening of most sectors, this does mean they are no longer regulated because there are agencies that implement the regulations.

“We expect industries from the foreign ownership restriction would raise issues why they are not covered,” said Asuncion.

But, she stressed that the amendments to the current Public Services Act will allow more investments joint ventures with foreign firms and bring in more investments into the country.

As long as the current PSA is maintained, Asuncion said the PCC perspective is it limits the number of potential investors into the country.
“In a globalized economy, there is a need for more players in an industry,” she said.