Lifting of foreign investment restrictions lauded

MANILA, Philippines — The Philippine Competition Commission (PCC) and foreign business groups lauded yesterday Congress’ ratification of amendments to the Public Service Act (PSA), which will allow 100 percent foreign ownership in certain sectors.

“I think the ratification of this bill by both chambers of Congress is a game-changer. We have been waiting for these amendments for so long because we recognize very very early on the pitiful inflow of foreign direct investments into the country has been stifled, limited by the very restrictive provisions of our laws on FDIs,” PCC chairman Arsenio Balisacan said in a press conference yesterday.

In a statement yesterday, members of the Joint Foreign Chambers (JFC) composed of the American, Australian-New Zealand, Canadian, European, Japanese and Korean chambers of commerce in the country, as well as the Philippine Association of Multinational Companies Regional Headquarters Inc. said they applaud the ratification by Congress of the bicameral conference committee report reconciling provisions of Senate Bill 2094 and House Bill 78, which amend the 1936 PSA.

With the amendments to the PSA certified as urgent for priority enactment by President Duterte, the JFC expressed optimism the measure would be signed into law during the current Congress.

Under the bill, sectors excluded from the list of public utilities would be allowed up to 100 percent foreign equity.

Identified as public utilities subject to the 40 percent foreign ownership limit are the distribution and 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.

“With enactment of the PSA amendments, important new investment opportunities in telecommunications, most forms of transportation, and other public services will now be open, creating significant larger foreign capital inflows in future years,” the JFC said.

Once the PSA amendments are signed into law, the JFC will intensify its efforts to promote the reform to companies in their member countries in Australia, Canada, Europe, Japan, South Korea, New Zealand, the United States and elsewhere.

“Many firms from our countries have successfully invested in the Philippines and are fully aware of the great opportunities and advantages that the Philippines offers in a wide range of business activities,” the JFC said.

The JFC and Philippine business groups have long been pushing for the easing of restrictions on foreign investment, saying these have hindered foreign firms’ participation in improving the quality of public services for Filipinos.

Aside from the PSA amendments, other investment liberalization bills pushed by the JFC were the Retail Trade Liberalization Act amendments signed into law last December, and the amendments to the Foreign Investments Act that was ratified by Congress also in December.

“These restrictions made the Philippine economy one of the most closed in Asia. Before the pandemic in Southeast Asia, when over $100 billion of FDI a year flowed into the region, too little reached the Philippines, and neighboring competing economies moved ahead of the Philippines,” the group said.

Through the PSA amendments, the JFC said the country would match policies in Singapore, Thailand, Vietnam and Indonesia that open to foreign investment.

The PSA amendments also comply with the Philippines’ commitments in the Association of Southeast Asian Nations Comprehensive Investment Agreement to open investment in services to other ASEAN members effective in 2012 as part of the ASEAN Economic Community.

In addition, the JFC said the PSA amendments would enable the country to better participate as a member of advanced plurilateral trade and investment agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership.

“The enactment of this law will implement a public commitment made in 2016 by the then incoming administration to pursue this landmark legislation,” the group said.