Local businesses call for opening of 3 sectors to full foreign ownership

Four local business groups and a public-private organization warned the Senate against keeping any form of restriction on foreign ownership in key local industries, particularly telecommunications, transportation and power generation, as lawmakers move to amend a law that imposed these foreign ownership caps. This was contained in a joint statement released on Wednesday by the Philippine Chamber of Commerce and Industry, the Employers Confederation of the Philippines, the Philippine Exporters Confederation, Inc., the Supply Chain Management Association of the Philippines, as well as the public-private Export Development Council. “There has never been a time when we need more foreign direct investments such as now as we work toward the common objectives of recovery and sustainable progress,” they said. “As the Senate deliberates one of such measures in the form of the Public Service Act Amendment (PSA), we strongly oppose moves to return transportation and telecommunication, as well as power generation back to the definition of public utilities,” they added.

The Philippine Constitution requires that public utilities must be 60 percent Filipino-owned. It, however, did not define what “public utilities” specifically cover. Moreover, the PSA, or Commonwealth Act No. 146, listed and regulated public services, which were treated as public utilities.

The proposed amendments to the PSA—which was enacted in 1936—will define public utilities and differentiate them from public services, therefore opening the latter to full foreign ownership. Public services include a range of businesses—from telecommunication and transportation to ice plants.

“We urge the Senate to be bold in this particular policy decision. We have seen how timely and appropriate policy decisions elsewhere have led to significant positive results and these are inspirations that we can learn from,” they said.

Some quarters have expressed concern about the possibility that the Senate might not make the law as open to foreign business as companies were hoping for. Earlier, the Joint Foreign Chambers of the Philippines (JFC) warned the Senate against restricting foreign ownership in telecommunications and transportation. The local groups echoed JFC’s call, and added the power generation industry in the list.

“It was our economic czar, Secretary Karl Chua, who said … that if we want to move up in status from middle to high-income country, we need to focus on our manufacturing sector. The PSA Amendments are a manifestation of that focus,” said the local groups.

“There are four factors to production that prevent the Philippines from developing much-needed supply chains: high inter-island shipping rates, expensive and unreliable internet connection, unreliable power supply and inadequacy of infrastructure,” they said.