Proper implementation of the amended Philippine Service Act (PSA) will improve public services and enhance the prospects for the country to join the ranks of dynamic and prosperous economies in Asia, the Philippine Competition Commission (PCC) said.
In a statement, PCC welcomed the recent signing into law of the amendments to the PSA, calling it a game-changing economic measure that will enable the country to gain new investment and market opportunities and boost our chances to recover better from the aftermath of the pandemic.
‘With the proper implementation of the PSA, opening up industries that were once heavily characterized by limited players and equity limitations will improve our public services and enhance the prospects for the Philippines to join the ranks of dynamic and prosperous economies in Asia,” said the anti-trust body.
The PCC has long recognized the need for robust competition in sectors with significant impact on consumers. Since 2016, the PCC has expressed its support for reforms that encourage the entry of new players and increase the competitive pressure in our markets, ultimately benefitting consumers through lower prices, better quality, and wider variety of choices.
The enactment of these amendments, which encourage investments, promote job growth, and accelerate technology transfer, at this time and after more than 80 years, became more urgent as a post-pandemic response to hasten our economic recovery.
The amended PSA or RA 11659 eases or lifts restrictions on foreign investments in public services by amending the 85-years-old public service law, distinguish definitions between “public utilities” and “public services”, and repeal provisions that limit foreign participation in certain economic activities.
Earlier, local and foreign investors also hailed the signing into law of the amended PSA by President Duterte, while Trade and Industry Secretary Ramon M. Lopez revealed at least investment leads of $100 billion over a two-year period as the law opens up to 100 percent foreign ownership of public services in the country and creating more jobs for Filipinos.
Initially, Lopez said the amended PSA is projected to haul in more than $60 billion investments in the telecommunications, transportation, logistics and railways sectors. “This is still understated as other leaders have not indicated investment amount. Can be over $100 billion over two years,“ Lopez added without identifying the investment leads.
The amended PSA limits the coverage of public utilities to key sectors that will be subject to the 60 percent to 40 percent foreign equity limitation.
In general, these are sectors considered as natural monopolies where a single firm can serve the market at lower costs than having two or more firms.
These include the distribution of electricity, transmission of electricity, petroleum and petroleum products pipeline transmission systems, water pipeline distribution systems, and wastewater pipeline systems, including sewerage pipeline systems, seaports, and public utility vehicles.
To protect the country against national security concerns, the amendments also provide a number safeguard provisions.
First is the power of the President to suspend or prohibit any investments in a public service in the interest of national security upon the review, evaluation, and recommendation of the relevant government agency.
Second, the provision on restrictions on investments by foreign state-owned enterprises (SOE) prevents a foreign SOE from owning capital stock in a public utility or critical infrastructure.
Third, the provision on information security ensures entities engaged in the telecommunications business meet relevant ISO standards.
Fourth, the reciprocity clause prevents foreign nationals from owning more than 50 percent of capital in critical infrastructure unless the country of such foreign nationals accords reciprocity to Philippine nationals.
Lastly, the performance audit provision mandates the conduct of an independent evaluation to monitor a firm's cost and quality of services to the public.