NextGen Day

MANILA, Philippines — President Rodrigo Duterte has received the measure modifying the Public Service Act (PSA), which is expected to be signed into law in the coming days.

According to House Ways and Means Committee chair and Albay (2nd District) Rep. Joey Salceda on Monday, the measure will stimulate investment in areas that are critical to public welfare, thereby helping to bridge the country’s investment gap.

Except in the transmission and distribution of electricity, water pipeline and sewerage, seaports, petroleum pipeline, and public utility vehicles, the law effectively opens up all economic sectors to 100 percent foreign equity.

“The PSA modifications will be critical to the rehabilitation of the economy. Due to Covid-19 indebtedness, our newly freed-up budgetary space will be limited. As a result, we require another source of funds to fund our public investment demands in place of government spending. Foreign direct investments will help close the gap, according to Salceda.

He noted that the proposal is the country’s closest approach to overcoming the “growth overhang” caused by the 1987 Constitution’s foreign equity prohibitions.

“Prior to these reforms, we were the only government that used implication to prohibit foreign equity in particular industries.” All public services were believed to be public utilities. “Only the latter, not the larger category, is specifically limited by the Constitution,” he stated.

The PSA modifications, according to Salceda, will have a significant influence on job creation and investment.

He estimates that the final version of the industries that will be opened up as a result of the PSA modifications will result in an increase in foreign direct investments of roughly PHP299 billion over the next five years.

“Why do other nations pay higher wages for our labor in order to attract OFWs (overseas Filipino workers)?” They have money that we don’t have to invest in our own country’s development. Our people construct public services on foreign turf with foreign capital. “Why don’t we just let in the foreign capital and let our workers develop our own country with foreign investments?” he suggested.

He predicted that foreign capital infusions will result in considerable job development in telecommunications, heavy transportation, and other critical public services as a result of the proposed modifications.

According to Salceda, it may inspire OFWs to devote their talents and knowledge to the country without having to leave their families.

According to Salceda, the PSA amendment’s principal economic benefit is that it creates a credible threat of external competition for domestic firms in crucial areas.

According to him, a credible threat of competition is viewed as a pro-competitive tool that decreases monopoly or oligopoly and motivates local players to enhance efficiency.

More competition equals cheaper pricing in general, he added, and if public utilities and services charge rates that are higher than those set by regulators, they must reimburse the public and pay fines.

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