Amended Public Service Act up for President Duterte’s signature

Ratified by Congress on February 2, the consolidated version of House Bill No. 78 and Senate Bill No. 2094 amending the Public Service Act (PSA) is reported to have been formally transmitted to the Malacañang last Monday for President Rodrigo Duterte’s approval.

The amendment has excluded telecommunications, domestic shipping, airports, subways and railways, expressways and tollways from the definition of public utility. Thus, said industries will be allowed to have 100 percent foreign ownership. Distribution and transmission of electricity, petroleum and petroleum products pipeline transmission systems, water pipeline distribution systems and wastewater pipeline systems, seaports, and public utility vehicles are still included in the classification of public utility.

The measure also prohibits foreign nationals from owning more than 50 percent of the capital of entities engaged in the operation and management of critical infrastructure, unless his or her country accords reciprocity to Philippine nationals.

The PSA, also known as Commonwealth Act No. 146, conforms to the constitutional provision which mandates 60 percent ownership of public utilities shall be Filipino (Article XII, Section 11).

Representative Jose Ma. Clemente “Joey” Salceda, who served as House Ways and Means Chair, described the proposal as “the most important economic reform” since the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.

“We expect an increase in FDIs (foreign direct investments) by around PHP 299USD 5INR 432EUR 5CNY 37 billion over the next five years from the final version of the sectors that will be opened up as a result of the PSA amendments. We also expect gross value added (GVA) growth in these areas to cause a GDP (gross domestic product) growth rate that is 0.47 percentage points higher than the baseline,” Salceda said.

Senate President Vicente “Tito” Sotto, for his part, observed last year that amendments in the constitution may not be needed in light of the recent developments.

“Again, we are establishing the tax regime of Philippine offshore gaming corporations and the amendments to the Public Services Act. With these, there is a possibility that we might be able to achieve the opening up of our market even though we have not changed the constitution,” Sotto said.

The British Chamber of Commerce Philippines, meanwhile, welcomed the ratification of the consolidated bill.

“As interests from UK companies remain high, the British Chamber is confident that more UK investors will consider the Philippines as an ideal investment destination in Southeast Asia. Considering the country’s already existing attributes, such as having a young and talented workforce, having a competitive and attractive investment landscape will further enhance the country’s capability to attract investors,” the chamber said in a press release.

The President can approve, veto in part, or veto entirely the bill ratified by Congress. President Duterte has certified the amended PSA as an urgent measure.