European Union (EU) officials in the Philippines urged the government to open the water sector fully to foreign investors to increase competition and level the playing field so as to enhance water service in the country.
Walter van Hattum, head of the economic and trade section delegation of the EU to the Philippines, said many European companies in the water business want to feel more secure by being allowed to hold majority control of local companies rather than being constrained by the regulatory limits.
Philippine laws limit foreign ownership in crucial industries such as utilities to 40 percent, with 60 percent held by Filipino investors.
“Where EU can contribute rather than getting the bureaucratic …we are more than happy to do, but the management of the EU Chamber of Commerce agreed to…bring companies from Europe to the Philippines – [that]could be part of the solution,” Van Hattum told reporters in a press briefing on the sidelines of the Water Challenge Forum held in Pasay City. “If we want to achieve this, we need to level the playing field,” he said.
“It would help competition in the Philippines by opening up to foreign companies but especially in this kind of high-tech sector, I think it would make a balance,” he said.
“On government procurement, I think it’s more straightforward – that competition is doing the country a huge favor. On one end, it’s very positive that the current government is increasing infrastructure procurements but you can actually increase that not by… more money but by getting more competition in the bidding process,” Van Hattum added.
The EU official urged the government to allow foreign operators to join the biddings for water projects so they can equally compete with other companies. “You’ll get better services for a better price, partly because you will get new stakeholders coming in but also partly because the existing stakeholders will need to reduce their bids, they need to become more competitive because they want to continue having those kinds of contracts,” he explained further.
European Chamber of Commerce of the Philippines (ECCP) President Guenter Taus assured the government the local industry will benefit from what foreign investors could bring in.
“We’re not here to take over the Philippines, we’re here to help the Philippines’ technology to be at par with world standards.”
Letting in foreign investors to be part of competition and the system would enable technology transfer and lower local water prices down, Taus said.
“There’s a lot to be done to bring the price down. Leveling the playing field … so let’s open up a little bit and think outside the box. One of them is, you don’t need money or investment for technology to be brought into the Philippines. All you need to do is allow foreign companies to compete here,” he said.
“Because if you look at it, a lot of government procurement is driven by technology and you specify whatever there is, whatever the knowledge base of government, and you try to get proposals from two, three, four different companies, whereas, if you have a much stronger, more modern technology base, you might want to change the process to get to the same result and you save a lot of money in the process,” Taus explained.
Meanwhile, Sen. Loren Legarda, in her keynote speech at the forum highlighted the need to reform the overlapping and fragmented regulation of water supply services in the country by several government entities.
The senator said that factor hinders the enactment of a doable and long-term solution that could prevent water shortage in the country.
“The issue of having over 30 water agencies has been a challenge because of overlapping mandates and conflicting programs. We need to consolidate all water agencies in the country and craft a roadmap for sustainable water use,” Legarda said.
Water stress, amplified by climate change, will create a growing security challenge, she said.
In the Philippines, about 8 million Filipinos still lack access to safe water and about the same number still practice open defecation, said Legarda, who is chair of the Senate Committee on Climate Change.
A study by the World Resources Institute has warned that the Philippines is likely to experience severe water shortage by 2040 due to the combined impact of rapid population growth and climate change. Furthermore, the Philippines ranks 57th out of 167 countries that are highly vulnerable to severe water shortage.
Moreover, water affects food security as agriculture accounts for 70-85 percent of water consumption.
“But water security is not only about the provision of sufficient water for the needs of our people and our economic activities, it is also about having healthy ecosystems and building resilience to water-related disasters, including storms, floods and droughts,” she said.
Extreme weather events, such as intense or more frequent rains and increasing number of hot days, along with weak resource management, are factors that lead to low water security.
“The degradation of our environment is likewise a threat to water security, especially because forested watersheds and wetlands supply 75 percent of the world’s accessible freshwater.”
“We also need to strengthen resilience to water-related disasters. The country needs to evaluate existing programs to combat desertification and prevent flooding, and improve its evacuation strategies, early warning systems and disaster risk reduction and management plans. Capacity-building activities for indigenous peoples must be undertaken so they can adapt to water extremes,” Legarda added.