Senate urged to open up telco, transport sectors to foreign control

The Joint Foreign Chambers of the Philippines (JFC) warned the Senate against keeping the foreign ownership restrictions on telecommunications and transportation, saying this will defeat the purpose of amending the decades-old Public Service Act (PSA).

In a statement on Monday, the JFC said it strongly supports opening up the economy to foreign investors by amending the PSA—first enacted in 1936—so that public services will be differentiated from public utilities, thus allowing full foreign ownership.

The Constitution currently requires that public utilities be 60 percent Filipino-owned. Public services, meanwhile, cover a wide range of businesses from telecommunication and transportation to even ice plants that should be open to full foreign ownership.

“We caution the Senate against including numerous favored subsectors under the public utility definition to protect them from competition. Any moves to retain 60-40 foreign equity restrictions, specifically for the major transportation and telecommunications sectors, and add legislative franchise requirements where none existed, will thwart the intention of the bill and the positive impact it can bring to the business community and consumers,” the JFC said.

The JFC is a coalition of the American, Australian-New Zealand, Canadian, European, Japanese, Korean chambers and regional headquarters. Its member-companies account for over $100 billion worth of bilateral trade and some $30 billion of investments in the Philippines.

Under the proposed amendments in Senate Bill No. 2094, the National Economic Development Authority, in consultation with the country’s antitrust body, can recommend to Congress to classify a public service as a public utility based on certain standards, including when the commodity or service is a natural monopoly.

A natural monopoly exists when a specific industry has very high costs that make it difficult or unviable for other players to enter, as in the case, for example, of the national transmission line that connects the power grids.

“Both transportation and telecommunications are not natural monopolies. There are numerous transportation companies and three telecommunications companies that operate viably in the country,” it added.

“There is strong interest among foreign investors from various countries to invest in the Philippines. We must maximize this opportunity by sending a strong signal to the global community that the Philippines is open for business,” it added.

The JFC said that the status quo has been insufficient in addressing the needs of the country. “To catch up, the economy must open up,” it said.