Recto rejects full foreign ownership of telcos in proposed Public Service Act amendments

Published August 3, 2021, 12:02 PM

by Vanne Elaine Terrazola

Senate President Pro Tempore Ralph Recto has expressed concern over a proposal that would allow a total foreign ownership of telecommunication companies as part of the amendments to the Public Service Act (PSA).

Senate President Pro Tempore Ralph Recto (Senate PRIB)

During the plenary debates on Senate Bill No. 2094 on Monday, August 2, Recto said the bill, which does not list telecommunications as a public utility, might pose risks to the Philippines’ national security.

Under the Constitution, only corporations that are 60-percent owned by Filipinos may be allowed to operate in the country as a public utility.

“In effect under this bill, we are allowing a hundred-percent ownership of telecommunications, is that correct?” Recto asked Senator Grace Poe, sponsor of the SB 2094.

“Yes. Well, yes, we are. Subject to review,” Poe responded.

The bill, instead, identifies telecommunication as a public service still subject to existing regulations, but under “critical infrastructure”.

Critical infrastructure was defined as the “systems and assets, whether physical or virtual so vital to the Republic of the Philippines that the incapacity of destruction of such systems or assets would have a debilitating impact on national security”.

Poe said investments on critical infrastructure “will automatically trigger a review from the National Security Council (NSC).”

Aside from telecommunications, common carriers — such as airlines and other modes of public transportation — will also not be covered by the restriction on foreign ownership.

“There is a provision in our critical infrastructure that there should be reciprocity,” Poe also assured.

But Recto said such a proposal would deviate from the intent of the Constitution and its framers, as well as the interpretations of the Supreme Court in “numerous” rulings.

“I think it cannot be not overemphasized how critical telecommunications today is,” the Senate leader stressed.

“I have reservations, frankly speaking, allowing [total foreign ownership] because of national security issues. Moreso today that you have all these fake news as well, very critical. It can change people’s minds. Public perception can be changed. What more if we allow a 100-percent foreign ownership?” he further said.

Telecommunications, he maintained, should remain a public utility and “majority of [its] ownership should be left to Filipinos.”

Poe, in defense of the bill, explained: “I think the answer is pretty simple, we have a limited amount of capital available from our local investors. So, yes, there is risk, but when we think also of the rewards of opening up certain industries, that will create more jobs.”

For Recto, however, the government should rather focus on attracting foreign investors in manufacturing, export-oriented and similar industries that will not threaten national security.

Poe said she will consider Recto’s inputs in amending the bill.

SB 2094 was certified as an urgent measure by President Duterte as part of the response to the COVID-19 pandemic.