Business groups urge Congress for swift PSA passage

Published March 12, 2021, 2:29 PM

by Bernie Cahiles-Magkilat

Local business groups have strongly called for the passage in Congress the amendments to the Public Service Act (PSA) stressing this will help local firms recover from the pandemic, contradicting concerns of some Senators that the bill will pose a threat to domestic industries.  

In a joint statement, ten local business groups urged for the speedy passage of the amendments to the PSA within the current 18th Congress to help businesses recover from the impact of the pandemic.   These groups include Financial Executives Association of the Philippines (FINEX), Filipina CEO Circle, Investment House Association of the Philippines, Judicial Reform Initiative, Management Association of the Philippines (MAP), Makati Business Club (MBC), Philippine Chamber of Commerce and Industry (PCCI), Philippine Retailers Association (PRA), Philippine Women’s Economic Network and the Women’s Business Council.

“As local business owners and executives, we see the passage of the Amendments to the Public Service Act as crucial to the country’s long-term ability to attract investment, promote competition, and create jobs and to the whole-of-nation effort to facilitate safe economic recovery. We hope that Senate will heed our call as this bill has been approved by the House of Representatives,” said Coco Alcuaz, Executive Director of Makati Business Club.

In a separate statement, other local business organizations together with economists also expressed support for the enactment of the bill.

The Federation of Filipino Chinese Chambers of Commerce and Industry, Inc. (FCCCII) and the U.P School of Economics Alumni Association agreed with the stand of the Department of Finance in asking the legislature to “act on something doable and immediately achievable.”  

“The PSA is one of the structural reforms that need to be passed to make our country attractive to foreign investors to complement the tax reforms recently enacted by the government. If we delay these reforms, it can result in the country lagging behind our ASEAN neighbors in our quest for economic recovery and sustainability,” said Jeffry Ng, President of the U.P School of Economics Alumni Association.

The Competitive Currency Forum (CCF) likewise urged President Duterte to call upon lawmakers to pass the Public Service Act specifically citing its importance to facilitating improved access to broadband technology throughout the whole country. 

“We wrote a letter to the President to show our support for his efforts towards economic recovery. Our internet connectivity is way below international standards, and is a huge barrier for the ability of MSMEs to participate in the digital economy. This negatively impacts the recovery of small businesses and the livelihood of their employees,” explained Oscar Barrera, PhilExport Trustee and one of the Convenors of the CCF.

The Amendments to the Public Service Act was passed by the House of Representatives on March 10, 2020 and is currently pending with the Senate Committee on Public Services, chaired by Senator Grace Poe.

The Philippine Competition Commission (PCC) has long been supporting initiatives in Congress to amend certain provisions in the 80-year-old PSA such as the lifting of the foreign equity cap on certain industries including telecommunications and transportation.

The Constitution limits foreign ownership of 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. Amending the PSA is meant to address this legal obstacle by streamlining the list of activities to be considered public utilities under the Constitution.

“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 has been a concrete constraint on the inflow of foreign direct investments in the country and in increasing competition in the market, said Bernabe.

The PCC, for its part, 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