Philippine Bill Seeks to Open up “Public Services” to Foreign Players

Sep 2019

House Bill (HB) No. 78, a proposed amendment to 83-year old Public Service Act or Commonwealth Act No. 146, which aims to open up certain utilities to investments from foreign players and foster healthy competition between them and local companies, has further advanced in the Philippine Congress.  It could potentially open up sectors such electric power generation and supply, transportation, and telecommunication. 

The Bill, which was filed in 2018, will redefine the term ”public utility’’ which is not specifically defined in the Philippine Constitution and has since been used interchangeably with “public service”. The latter encompasses all industries and businesses that own, manage, and operate all services that cater to the public interest, including power & electricity, water supply, sewerage, telecommunications, broadcasting, and more. Investments in these industries are limited only to Philippine citizens or entities with a minimum of  60% of capital stock owned and controlled by Philippine citizens.

As per this bill, public utilities will be narrowed down to a subset of public service, to only constitute three industries, namely the distribution of electricity, transmission of electricity and water pipeline distribution or sewerage pipeline system. Electric power generation and supply, crude oil and petroleum products, transportation, broadcasting and telecommunication will no longer be considered “public utilities”. 

Nationality restrictions on ownership would be removed for public services, and their application would be limited to those that fall within the proposed limited definition of public utilities. Similarly, this would limit the application of the constitutional restriction on public utilities to those defined as such. This would have significant consequences to foreign investments in the areas of transportation, broadcasting, telecommunication, and power generation and supply.

In addition, HB No. 78 when passed, will also give the Philippine Competition Commission (PCC) and the National Economic Development Authority (NEDA) the power to subsequently classify industries as falling under public utilities through a separate bill endorsed by the Congress.

(Sources: Rappler; Business World)

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