Ratify Public Service Act amendments before Feb 5—business groups

Leaders of major business associations in the Philippines are calling on Congress to ratify the consolidated bill amending the Public Service Act (PSA) before the legislative branch of government goes on recess on February 5.

The Senate and House of Representatives have passed on third reading their respective draft bills seeking amendments to the PSA.

The joint appeal letter, sent to the House Committee on Economic Affairs and the Senate Committee on Public Services on January 25, said amending the PSA will promote foreign direct investment (FDI) in the country and enable the economy to attain pre-pandemic economic growth rates.

The letter was signed by George Barcelon, president of the Philippine Chamber of Commerce and Industry (PCCI); Sergio Ortiz-Luis, Jr. president of the Philippine Exporters Confederation, Inc.; Pierre Carlo Curay, president of the Supply Chain Management Association of the Philippines; and Christopher Lawrence Arnuco, executive director of the Export Development Council.

The business groups said they are one with other business aggrupations supporting the passage of the amended PSA, and expressed hope the Congressional Bicameral Conference Committee will adopt the most liberal provisions between the two versions of the bill in certain key areas.

For airports and seaports, operations and maintenance concessions should be allowed for fully foreign-owned companies, the statement said. “The world’s best airport and seaport operators could bring world-class standards and technology to serve the Philippine public who travel by air and sea.”

Tollways/expressways should also be liberalized for foreign investment, similar to railways and subways.

“The Senate version classifies tollways as a public utility but not railroad and subways. This is illogical. Indonesia is seeking foreign investors for its 2,818-kilometer Trans- Sumatra Toll Road with 24 segments costing US$34 billion. The Philippines could do the same,” the trade groups said.

At the same time, they said foreign ownership restrictions on air carriers should be lifted to allow existing air carriers to access foreign capital for their recovery from the pandemic and for operational expansion.

Removing these restrictions will also create an enabling environment for more players, increase competition in the industry, reduce the cost and improve the quality of air travel for the public, and make local carriers competitive with their international peers, the letter said.

Telecommunications must also be excluded from the definition of “public utility,” while passive infrastructure and value-added services must be excluded from the definition of “telecommunications” to avoid erecting a new barrier to the entry of competition in internet services and to allow the growth of community internet.

Public utility vehicles (PUVs) should likewise be excluded from the definition of public utility to increase competition in domestic land transportation services and attract foreign investment in modernization efforts.

“Filipino workers in land transportation businesses would not be displaced as they will remain as drivers and mechanics that service PUVs,” said the letter.

Moreover, this reform will allow international carriers to undertake first and last mile of delivery services and encourage global firms to invest more in international gateways, as they have at Clark, while increasing the role of the Philippines as a regional air cargo hub. In turn, this will attract new export manufacturing firms to locate in the country.

“Overall, this reform can result in improvement in the quality and cost of logistics in the country, thereby increasing our economic competitiveness,” the leaders added.

Finally, the business groups said lawmakers should make sure the reciprocity provision in the draft bill will not prevent important foreign investment from coming into the Philippines.

“When the Philippine economy needs more foreign capital, the law should not require that a Filipino firm be allowed the same in the country of the investor. The reciprocity provision should not be a barrier to needed investment,” they stressed.

They said concerns with national security should be satisfied by the language in the Senate bill, which restricts state-owned enterprises from owning public services and creates a process for all foreign investments in public services to be reviewed and approved by the Philippine president.

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