The American Chamber of Commerce (AmCham) here is urging the government to look at the possibility of allowing full foreign ownership in public utilities without necessarily amending the Constitution.
John Forbes, AmCham senior adviser, said the positive effects will come in ripples as aside from opening the country’s doors to more foreign direct investments (FDI), the stronger competition in public utilities will also give Filipino consumers access to better services at lower prices.
The Foreign Investment Negative List (FINL) only allows up to 40 percent foreign equity in public utilities. The list, however, is being revised every two years as mandated by the Foreign Investments Act of 1991, as amended by Republic Act 8179.
Forbes said as part of the ongoing review of the FINL, the government should consider public utilities as one of the investment areas where 100-percent foreign equity should be allowed.
“If your objective is to improve competition and increase investments in public utilities without changing the Constitution, this is one way to do it,” Forbes told the BusinessMirror.
He said the Constitution, anyway, does not clearly define what a public utility is.
The 1936 Public Service Act, he said, is probably the only law that details what public utilities are. [See reference below.]
This outdated law, Forbes said, should be included in the FINL review and determine if there is a way to fully liberalize the public utilities sector without tinkering with the Constitution.
“That is the objective of the FINL, to see if there is anything there in the list that can be removed,” Forbes said.
He noted that although revising a law could be troublesome, it is a lot easier than amending the Constitution.
The public utilities sector, because of the nature of its business, is one of the areas that can easily attract foreign investments, Forbes said.
Like in the United States, he said, there are many European players in the telecommunications sector, and there are also several American telecommunication firms in Europe.
The public utilities sector, he said, is one major reason why the US and Europe have the biggest exchange of FDI.
Source: Max V. de Leon, Business Mirror. 10 April 2013.
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*Commonwealth Act 146, also known as the The Public Service Law of 1936; under Chapter II: JURISDICTION, POWERS AND DUTIES OF THE [PUBLIC SERVICE] COMMISSION, Section 13:
(b) The term “public service” includes every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or compensation, with general or limited clientele, whether permanent, occasional or accidental, and done for general business purposes, any common carrier, railroad, street railway, traction railway, sub-way motor vehicle, either for freight or passenger, or both with or without fixed route and whether may be its classification, freight or carrier service of any class, express service, steamboat or steamship line, pontines, ferries, and water craft, engaged in the transportation of passengers or freight or both, shipyard, marine railways, marine repair shop, [warehouse] wharf or dock, ice plant, ice-refrigeration plant, canal, irrigation system, gas, electric light, heat and power water supply and power, petroleum, sewerage system, wire or wireless communications system, wire or wireless broadcasting stations and other similar public services: Provided, however, That a person engaged in agriculture, not otherwise a public service, who owns a motor vehicle and uses it personally and/or enters into a special contract whereby said motor vehicle is offered for hire or compensation to a third party or third parties engaged in agriculture, not itself or themselves a public service, for operation by the latter for a limited time and for a specific purpose directly connected with the cultivation of his or their farm, the transportation, processing, and marketing of agricultural products of such third party or third parties shall not be considered as operating a public service for the purposes of this Act.
Source: The LawPhil Project (Arellano Law Foundation)
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