Amendments to the Public Service Act (PSA) will pave the way for attracting more investments and bring the country closer to economic recovery, according to the Department of Trade and Industry.
DTI Secretary and Board of Investments chairman Ramon Lopez yesterday lauded Congress for its approval of the proposed measure, which forms part of the country’s major economic reform agenda.
“This is a monumental reform that will further strengthen the government’s economic recovery efforts as it liberalizes the 85-year-old restrictive policy of the PSA; this will also significantly improve the country’s investment climate,” he said in a statement.
Under the proposed measure, sectors not considered as public utilities will be liberalized and allowed to have up to 100 percent foreign equity.
Those classified as “public utility” are distribution and transmission of electricity, petroleum and petroleum products pipeline transmission systems, water pipeline distribution systems and wastewater pipeline systems, sewerage pipeline systems, seaports and public utility vehicles.
Other features of the proposed measure include preventing foreigners from owning more than 50 percent of the capital of companies engaged in the operation and management of critical infrastructure without their country according reciprocity to Philippine nationals.
In addition, the president will have the power to suspend or prohibit any proposed merger or acquisition, or investment in a public service that effectively results in the grant of control to a foreigner or a foreign corporation.
“Once President Duterte signs the bill into law, foreign equity restrictions will be eased out, which shall attract more global players that will modernize several sectors such as telecommunications, shipping, air carriers, railway and subways,” Lopez said.
He said there would also be increased competition in terms of services and products that will generate better quality of services and competitive pricing to the benefit of consumers.
In addition, he said higher investments would generate more jobs and income for the people.
“I’m confident that we can make economic recovery happen in the Philippines this year. With the amended PSA, we expect the entry of new foreign investors and the introduction of modern and new technologies in the aforementioned sectors,” he said.
The Philippines was ranked as the third most restrictive economy to foreign direct investments based on the 2020 Organization for Economic Cooperation and Development report.
Trade Undersecretary Rafaelita Aldaba said the PSA amendments would also have an indirect positive impact on the economy.
“A more competitive services sector will have indirect consequences toward economic growth. High quality transport or telecommunication infrastructures, for example, could influence the production costs and competitiveness of all firms across all sectors of the economy,” she said.
The amended PSA, along with the amendments to the Retail Trade Liberalization Act signed into law in December, as well as the Foreign Investment Act amendments ratified by Congress, are expected to allow the country to accelerate its recovery from the COVID pandemic.