NextGen Day

MANILA, Philippines – Members of the House of Representatives lauded the enactment of a bill amending the 85-year-old Public Service Act (PSA) on Tuesday, saying it could be a game-changer in terms of opening the Philippine economy to more foreign investors.

Sharon Garin, chairwoman of the House Committee on Economic Affairs, stated that the law’s passage will increase the Philippines’ foreign direct investment (FDI) by approximately PHP299 billion over the next five years.

Garin added that it is also expected to boost GDP growth by 0.47 percentage points above the baseline.

She stated that the new Public Service Act, as well as the Foreign Investment Act, will be “game changers” in terms of boosting foreign capital investments for many struggling businesses in the wake of the coronavirus pandemic.

“After decades of meetings, discussions, and debate, we have updated the relevant laws to reflect our country’s needs as we attempt to recover from the pandemic’s economic impact,” she said.

She stated that the PSA’s objective is to increase capital inflows, which will create jobs, develop resources, increase the value of exports, and help fuel the economy as a whole.

“When an investment climate is favorable, more businesses are created, which creates more jobs and introduces innovation to industries that must compete on a global scale. Finally, you will empower citizens with purchasing power, increase tax collections, and assist the government in providing higher-quality goods and services. “This is unquestionably a win-win situation,” Garin stated.

The amendments to the Public Service Act amended an 85-year-old statute to alter the legal definition of “public services” and those that fall under the umbrella of the “public utilities” industry.

The term “public utility” is now limited to the distribution and transmission of electricity, the transportation of petroleum and petroleum products, the distribution and transmission of water and wastewater systems, seaports, and public utility vehicles.

The new measure eliminates the 40% cap on foreign equity ownership in public services that are not classified as “public utilities.”

‘Crucial policy reform’

Deputy Speaker Bernadette Herrera concurred with Garin’s assessment that the new law is a game-changer, as it has the potential to attract additional foreign investors, thereby boosting job creation, economic growth, and recovery.

“This is without a doubt one of the most significant policy reforms initiated decades ago but only successfully implemented under the current administration, and for that, we cannot express our gratitude to President Rodrigo Roa Duterte,” Herrera said.

Herrera stated that the PSA amendments would allow for much-needed foreign investment and competition in these critical sectors.

Telecommunications, railways, expressways, airports, and shipping industries will be classified as public services under the amended PSA, allowing for up to 100 percent foreign ownership in these sectors.

“This will result in lower airline fares, lower transportation and shipping costs, and more affordable and efficient internet services for Filipino consumers,” she explained.

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