foreign investments in the Philippines

Duterte certifies as urgent 3 bills easing foreign investment restrictions

Pia Ranada
Duterte certifies as urgent 3 bills easing foreign investment restrictions

PALACE MEETING. President Rodrigo Duterte listens to Finance Secretary Sonny Dominguez during a meeting in Malacañang Golf Clubhouse.

Malacañang photo

One of the bills seeks to allow 100% foreign ownership of 'public services' like telecommunications and transportation

At the behest of his economic team, President Rodrigo Duterte has certified as urgent measures that allow full foreign ownership of public services and less restrictions on foreign investments.

In a letter to Senate President Vicente Sotto III sent by Finance Secretary Carlos Dominguez III to reporters on Tuesday, April 13, Duterte certified the following bills as urgent:

  • Senate Bill No 2094 – Seeks to amend the Public Service Act
  • Senate Bill No 1156 – Seeks to amend the Foreign Investments Act of 1991
  • Senate Bill No 1840 – Seeks to amend the Retail Trade Liberalization Act of 2000 by lowering the required paid-up capital for foreign retail enterprises

The House already passed its version of the amendment to the Public Service Act, which allows 100% foreign ownership of public utilities, in March 2020.

Senator Grace Poe, as chairperson of the Senate public services committee, sponsored the Senate version of the measure in plenary on March 10 but it has yet to pass on second reading.

The measure allows 100% foreign ownership of public services like telecommunications, power, and transportation by distinguishing between “public services” and “public utilities.” This is critical because the 1987 Constitution only requires 60% Filipino ownership of a firm if the firm is operating a “public utility.”

But under the proposed bill, public utilities are limited to just three services: electricity distribution, electricity transmission, and water pipeline distribution and sewerage.

This means that other services – like telecommunications, transportation power generation, petroleum, wire or wireless communications – would no longer be labelled as public utilities and would thus be exempt from the requirement that firms running them should be 60% owned by Filipinos.

“All other public services that are not natural monopolies will be freed from such foreign equity restriction but not from any of their other responsibilities as public service providers,” Poe had said in her sponsorship speech.

Bid to attract foreign investments

Meanwhile, proposed amendments to the Foreign Investments Act are intended to further ease rules on foreign businesses deemed to be among the most restrictive in Southeast Asia.

Dominguez and some lawmakers have bemoaned how such restrictions have led the Philippines to report among the lowest foreign direct investments in the region.

Duterte’s economic team says these package of reforms would give the economy a much-needed boost amid a pandemic by attracting more foreign capital and providing more jobs.

But some lawmakers have assailed the proposed amendment to the Public Service Act as “unconstitutional,” claiming it circumvents the constitutional requirement that important public services be kept safe from foreign interests and influence.

Poe gave assurances that the measure contains safeguards to protect Philippine security and sovereignty. For instance, foreign investments that could result in control of critical infrastructure will be reviewed by the National Security Council. No single country will also be allowed to dominate investments in critical sectors. – Rappler.com

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Pia Ranada

Pia Ranada is a senior reporter for Rappler covering Philippine politics and environmental issues. For tips and story suggestions, email her at pia.ranada@rappler.com.