NextGen Day

MANILA, Philippines — The National Economic and Development Authority (NEDA) applauds President Rodrigo Roa Duterte’s signing of Republic Act No. 11659, or the revisions to the Public Service Act (PSA), into law on Monday.

By allowing complete foreign ownership in critical areas, the PSA amendments effectively limit the scope of public utilities while effectively liberalizing important public services.

More international investment and innovation will be encouraged, lowering prices, improving the quality of goods and services, and creating more and better jobs.

“We appreciate President Duterte’s resolve to passing landmark legislation despite the hurdles posed by the pandemic, as well as legislators from both chambers of Congress.” This change will aid in attracting more foreign investment and improving services, particularly in the areas of transportation and telecommunications, where we currently lag behind. All Filipinos would benefit from better quality goods and services at lower prices, as well as more relevant job opportunities,” Socioeconomic Planning Secretary Karl Kendrick Chua said in a statement on Tuesday.

“We thank Senator Grace Poe, Senator Franklin Drilon, Representative Sharon Garin, and Representative Joey Salceda, respectively, for their tireless efforts in shepherding this historic reform through the 18th Congress, as well as the House and Senate leadership for their decisive action on all three of the economic liberalization measures,” he added.

Chua also acknowledged the different celebrities, retired officials, and other sectoral groupings and their leaders who have supported PSA from its debut in previous Congresses in the House of Representatives.

The measure restricts public utilities to a few critical industries that will be subject to the 60-40 foreign equity limit.

These are areas that are regarded as natural monopolies in which a single firm can serve the market at a lower cost than two or more firms.

Electricity distribution, transmission, petroleum and petroleum products pipeline transmission systems, water pipeline distribution systems, and wastewater pipeline systems, including sewage pipeline systems, seaports, and public utility vehicles are all examples of these.

The revisions also include the following safety provisions to defend the country from national security threats:

First, upon the examination, appraisal, and advice of the relevant government agency, the President has the authority to suspend or ban any investments in public service in the interest of national security.

Second, the clause prohibiting foreign state-owned enterprises (SOE) from owning capital stock in a public utility or vital infrastructure precludes a foreign SOE from owning capital stock in a public utility or critical infrastructure.

Third, the information security clause requires that telecommunications companies adhere to appropriate ISO standards.

Fourth, the reciprocity provision prohibits foreign citizens from owning more than 50% of vital infrastructure capital unless their home country grants reciprocity to Philippine nationals.

Finally, the performance audit requirement requires an impartial examination to track a company’s cost and quality of public services.

On December 10, 2021, and March 2, 2022, the Retail Trade Liberalization Act and the Foreign Investments Act were both signed.

The passage of the PSA amendments brings the administration’s economic liberalization measures to a close, allowing the country to become more competitive and create more and better jobs.

“As we recover from the Covid-19 (coronavirus disease 2019) pandemic, the passage of the economic liberalization bills will revitalize our economy and stimulate additional investments and innovation.” The restrictions will also help to protect our internal economy from external shocks like the Russia-Ukraine crisis, he continued.

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