NEDA lauds enactment of amendments to Public Service Act

The National Economic and Development Authority (NEDA) lauds the enactment of Republic Act No. 11659 or the amendments to the Public Service Act (PSA), which President Rodrigo Roa Duterte signed into law yesterday.

The amendments to the PSA limit the coverage of public utilities and effectively liberalize key public services by allowing full foreign ownership in key sectors. This will encourage more foreign investments and innovation to lower prices, improve the quality of goods and services, and create more and better jobs.

“We thank President Duterte and legislators from both chambers of Congress for their commitment to pass landmark legislation amid the challenges brought about by the pandemic. This reform will help bring in more foreign investments and improve services, especially in transport and telecommunications where we are lagging behind. This will benefit all Filipinos through better quality goods and services at lower prices and more meaningful job prospects,” said Socioeconomic Planning Secretary Karl Kendrick T. Chua.

“We especially thank the chairpersons and principal authors Senator Grace Poe, Senator Franklin Drilon, and Representative Sharon Garin and Representative Joey Salceda, respectively, for their tireless efforts in shepherding the passage of this historic reform through the 18th Congress, as well as the House and Senate leaderships for their decisive action on all three of the economic liberalization measures,” he added.

Chua also extended his gratitude to the various personalities, former officials and other sectoral groups and their leaders who have supported PSA since its introduction in the House of Representatives in previous Congresses.

The measure limits the coverage of public utilities to key sectors that will be subject to the 60-40 percent foreign equity limitation. In general, these are sectors considered as natural monopolies where a single firm can serve the market at lower costs than having two or more firms.

These include the distribution of electricity, transmission of electricity, petroleum and petroleum products pipeline transmission systems, water pipeline distribution systems, and wastewater pipeline systems, including sewerage pipeline systems, seaports, and public utility vehicles.

To protect the country against national security concerns, the amendments also provide the following safeguard provisions:

First, the power of the President to suspend or prohibit any investments in a public service in the interest of national security upon the review, evaluation, and recommendation of the relevant government agency.

Second, the provision on restrictions on investments by foreign state-owned enterprises (SOE) prevents a foreign SOE from owning capital stock in a public utility or critical infrastructure.

Third, the provision on information security ensures entities engaged in the telecommunications business meet relevant ISO standards.

Fourth, the reciprocity clause prevents foreign nationals from owning more than 50 percent of capital in critical infrastructure unless the country of such foreign nationals accords reciprocity to Philippine nationals.

Lastly, the performance audit provision mandates the conduct of an independent evaluation to monitor a firm’s cost and quality of services to the public.

The Retail Trade Liberalization Act and the Foreign Investments Act were also signed on December 10, 2021, and March 2, 2022, respectively.

The enactment of the amendments to the PSA completes the administration’s economic liberalization reforms to increase the country’s competitiveness and create more and better jobs.

“The completion of the economic liberalization bills will revitalize our economy and encourage more investments and innovation as we continue to recover from the COVID-19 pandemic. The measures will also strengthen our domestic economy against external shocks, such as the Russia-Ukraine crisis,” he added.