MANILA, Philippines — Telecommunications, airlines, highways and tolls, railways and shipping in the country will now be open to full foreign ownership after President Rodrigo Duterte signed into law the Republic Act on Monday no ° 11659 modifying the 85-year-old civil service. Law (PSA).
The amendment excluded these economic sectors from the definition of public service in the LSP and are therefore no longer subject to the 40% foreign ownership cap on public services under the 1987 Constitution.
Amended PSL limits utilities to electricity distribution and transmission, petroleum and petroleum products pipeline transportation systems, water and sewage distribution networks, seaports, and vehicles of public service.
The president thanked Congress for approving the measure which he said would help lead the country towards economic recovery amid the pandemic.
“I believe that through this law, the relaxation of restrictions on foreign capital, we will attract more global investors, modernize several sectors of the civil service and improve the delivery of essential services,” Duterte said.
“It is also expected to generate more jobs for Filipinos, improve basic services for Filipino consumers, and enable the exchange of skills and technologies with the country’s foreign partners,” he added.
Ranked as the third most restrictive economy in the world based on the Organization for Economic Co-operation and Development (OECD) 2020 report, the Philippines will benefit from the modified PSA as it will attract foreign capital, generate more jobs and introduce innovations that can lead to improved quality and lower prices for public services.
More jobs, lower prices
The American Chamber of Commerce in the Philippines (AmCham) said on Monday that the signing of the amended PSA, along with the earlier enactment of investment easing measures, made the Duterte administration “very business-friendly.”
“AmCham is delighted that the bill is signed today. This is major legislation that will further open the Philippines to more foreign investment that will create jobs,” AmCham Executive Director Ebb Hinchliffe said in a Viber message to the Inquirer.
“There are several American companies [which I’m] no freedom to name right now who are waiting for the bill to be signed. Add that to the CREATE bill (Corporate Recovery and Tax Incentives for Enterprises), the retail bill, the amendments to the FIA (Foreign Investments Act), and now PSA, it’s been a Congress and a very business-friendly administration,” he said. .
The Joint Foreign Chambers (JFC), which groups almost all foreign companies operating in the country, described the amended PSA as a game-changing law.
According to JFC, this would correspond to the foreign investment policies of Singapore, Thailand, Vietnam and Indonesia.
It also meets the Philippines’ commitments under the ASEAN Comprehensive Investment Agreement to open up investment in services to other members of the Association of Southeast Asian Nations. (ASEAN) within the framework of the ASEAN Economic Community.
“We are committed to efforts to bring reform to the attention of businesses in our member countries in the United States, Australia-New Zealand, Canada, Korea, Japan and Europe. We will encourage them to invest in the Philippines and support better public services for the Filipino people with capital and technology,” JFC said earlier.
Commerce Secretary Ramon Lopez, who is also chairman of the Board of Investments, had also said such an amendment to the PSA would pave the way for more foreign investment in the Philippines.
“Restrictions on foreign capital will be relaxed, which will attract more global players who will modernize several sectors such as telecommunications, maritime transport, airlines, railways and metros. Likewise, there will be increased competition in terms of services and products which will generate better quality of services and competitive prices for the benefit of consumers. Higher investments will also generate more jobs and income for the population,” Lopez said.
“I am confident that we can make economic recovery happen in the Philippines this year. With the modification [PSA]we expect the entry of new foreign investors and the introduction of modern and new technologies in these sectors,” he said.
The PSA amendment complements the three foreign investment liberalization bills pushed by Duterte’s economic team instead of changing the economic provisions of the 1987 Constitution, which would have taken longer and been controversial despite the attempts to change only its economic provisions – among others the most restrictive in the world which has made the Philippines a laggard in attracting foreign investment to ASEAN.
In April last year, President Duterte urged Congress to fast-track three bills that would further open the economy to more foreign investors and, according to his economic directors, help the economy recover from the recession. caused by the pandemic.
In an April 12, 2021 letter to Senate President Vicente Sotto III and President Lord Allan Velasco, the President said he had certified the immediate adoption of amendments to the PSA, FIA and liberalization of retail trade.
The team had argued that greater foreign participation in local industries would not only promote more domestic competition, but also create more jobs.
The amended FIA is well positioned to attract more foreign investment amid the COVID-19 pandemic, as it imposes less stringent requirements on potential foreign investors to enter the Philippine market.
The proposed amendment to the Retail Business Act aims to lower the cap on capital required for foreign retailers to set up in the Philippines.
Duterte signed RA 11595 amending the Retail Liberalization Act 2000 in January 2022, while RA 11647, which amended the 1991 FIA, was signed on March 2.
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