The enactment of an updated Public Service Act (PSA) in the first quarter of 2022 has become distinctly possible after the passage of the Senate bill that would be harmonized with the House of Representatives’ bill. This would complement the earlier enactment of the Retail Trade Liberalization Law and amendments to the Foreign Investment Act.

The country is now at parity with Singapore, Thailand and Indonesia that have crafted similar legislation designed to increase the level of foreign investments in the emergent ASEAN Economic Community whose clout is derived from its large market and strategic location in the global economic map. Post-pandemic recovery could also be accelerated by the confluence of positive effects that a more favorable investment climate generates.

Foreign businesses would be allowed 100 percent ownership of, among others, telecommunications, air carriers, domestic shipping, railways and subways, and canals and irrigation.

Only the following are classified as public utilities and remain subject to the 60-40 foreign ownership restriction: distribution or transmission of electricity; petroleum and petroleum products pipeline transmission or distribution systems; water pipeline distribution systems and wastewater pipeline systems, airports, seaports, public utility vehicles (defined as road vehicles that carry passengers and/or cargo for a fee, offering services to the public, namely trucks-for-hire, UV express service, public utility buses, public utility jeepneys, tricycles, filcabs, and taxis); and expressways and tollways.

As noted by the Joint Foreign Chambers, this reform will also improve the international ranking of the Philippines by the Organization of Economic Cooperation and Development (OECD) from its current unattractive placement as one of the three most restrictive economies in the world for foreign investment in public services.

Members of the Joint Foreign Chambers are: American Chamber of Commerce of the Philippines, Australian-New Zealand Commerce of the Philippines, Canadian Chamber of Commerce of the Philippines, European Chamber of Commerce of the Philippines, Japanese Chamber of Commerce & Industry of the Philippines, Korean Chamber of Commerce of the Philippines Philippines, and Association of Multinational Companies Regional Headquarters, Inc.

The Foundation for Economic Freedom has also lauded the latest legislative reform measure as a sign of “commitment to the Philippine business community and Filipino consumers to pass the necessary reforms to open up the economy, while protecting the country’s national security.” It also expressed the hope that both chambers of Congress“ will work swiftly to complete the bicameral deliberations of this bill, to ensure the speedy enactment of this transformational piece of legislation so that the country may realize its benefits as soon as possible.” Beyond the enactment of these vital laws, attention must also be paid to the manner in which local government units (LGUs) regulate business activities. Recall that when President Duterte deplored the poor quality of mobile telephone services, the telecommunications companies pointed to the highly restrictive regulations imposed by local governments.

It is hoped that they will enable rather than hinder retail trade liberalization and foreign investments particularly in public utilities by refraining from imposing unreasonable levies and adding red tape that impedes the ease of doing business.