THE Philippine Competition Commission (PCC) supports legislative initiatives to amend certain provisions of the Public Service Act (PSA), particularly on foreign equity limits in the transportation and telecommunications industries.
“To begin with, the Public Service Act is antiquated. It still refers to certain business activities such as ice plants and canals as public services or public utilities. With the current economic and business landscape, it is time to update the list of business activities considered as public utilities,” PCC Commissioner Johannes Benjamin Bernabe said in a statement.
The Constitution limits foreign ownership in public utilities to 40 percent, and reserves 60 percent for Filipino citizens or corporations. Amending the PSA is meant to address this legal obstacle by streamlining the list of activities to be considered public utilities, according to the antitrust body.
The limitation has been a constraint to foreign direct investment (FDI) in the country and to encouraging competition in the market, Bernabe said.
“If you look at certain sectors like telecommunications, one way of promoting a competitive environment is to open fully the market to foreign players. The foreign equity cap unfortunately discourages entry of new foreign players in the sector that provide services to the public,” he added.
Improving competition in certain sectors and industries is incorporated in the Duterte administration’s Philippine Development Plan 2017-2022, specifically the chapter on building the framework for a national competition policy, which the PCC helped to draft with the National Economic and Development Authority (NEDA).
Enhancing competition—the primary mandate of the PCC—would help improve the quality of goods and services in the market, give consumers more choices and keep prices generally affordable.
Several bills have been filed in both houses of Congress seeking to amend the law, remove certain industries considered as public services and in effect lift the foreign ownership limits.
Albay Rep. Joey Salceda has filed House Bill 4468 that seeks to amend the definition of “public services” and “public utilities” under the law.
The PCC is proposing “to define public utility as a person who operates, manages, and controls for public use the following: electricity transmission; electricity distribution; water pipeline distribution systems; gas or petroleum pipeline distribution systems; and sewerage systems,” Bernabe said.
“So, there will be only five public utilities whose foreign ownership will be restricted to 40 percent,” he said.
The industries that would be removed from the legal definition of what constitutes a public service or public utility such as telecommunications and transportation would still be regulated by the government to protect the welfare of consumers, he said.
“In our proposed definition, we say that those business activities that have been delisted from the Public Service Act are considered as business affected with public interest and will continue to be regulated as such by the relevant sector regulators,” Bernabe added.
“You still want consumers to be protected, ensure that there is adequate access and reasonably priced services, and the services are of a certain quality or standard that will allow reasonable download and upload speeds,” he added.