The amended Public Services Act (PSA) is now ready for signature by President Duterte. Once signed into law, foreign businessmen will be given wider opportunities to invest in the public services sector in the country. Telecommunications and logistics sectors are seen to benefit the most in the amended PSA.

The ratified PSA bill contains a short list of public utilities which are considered “natural monopolies” and subject to the 60-40 percent ownership restriction in the Philippine Constitution since 1935. It also limits foreign ownership to 40 percent of seaports and most but not all types of Public Utility Vehicles (PUVs).

Once signed into law, telecommunications, most forms of transportation, and other public services will now be opened, creating significant larger foreign capital inflows in the future.

By opening up key economic sectors, particularly telecommunications, transportation and other services, and limiting the definition of public utilities largely to natural monopolies, the PSA amendments bill is expected to create jobs, improve technology, modernize and lower the prices of services to the benefit of Filipino consumers.

It will allow the Philippines to better participate as a member of advanced plurilateral trade and investment agreements.

For 85 years the Public Services Act (Commonwealth Act 146) has regulated public services and includes a long list of 25 services which are not natural monopolies and would not usually be considered public utilities under the best international practice.

These restrictions have been the basis of the reputation of the country as more closed to foreign investment than most Asian economies. It also created a business environment for the services sector that nurtured oligopolies and weakened competition to the detriment of consumers. Tens of billions of dollars in foreign investment did not come to the Philippines but instead went to neighboring countries.

Philippine infrastructure consistently ranks 6th behind Indonesia, Malaysia, Singapore, Thailand, and Vietnam in international indices. While the Build, Build, Build program is helping the Philippines to catch up, the PSA amendments bill will allow even more capital to be invested in the country and improve infrastructure services at no cost to the government and taxpayers.

This reform will also improve the international ranking of the Philippines by the Organization of Economic Cooperation and Development from its current unattractive placement as one of the three most restrictive economies in the world for foreign investment in public services.

The PSA amendments will match policies that Singapore, Thailand, and Vietnam already allow and that of Indonesia which last year opened to foreign investment. It also complies with commitments the Philippines made in the ASEAN Comprehensive Investment Agreement to open investment in services to other ASEAN members, effective in 2012, as part of the ASEAN Economic Community.

The new PSA is a game changer. It will fuel the much needed recovery of the Philippine economy.