MANILA – Members of the House of Representatives on Tuesday lauded the enactment of a law amending the 85-year-old Public Service Act (PSA), which could be a game-changer that would open up the Philippine economy to more foreign investors.
House Committee on Economic Affairs chair Sharon Garin said the passage of the law will increase the Philippines' foreign direct investments (FDI) by around PHP299 billion over the next five years.
Garin said it is also expected to increase the gross domestic product (GDP) growth rate by 0.47 percentage points above the baseline.
She said the new Public Service Act, along with the Foreign Investment Act, will be "game changers" designed to boost foreign investments of capital for many ailing businesses amid the coronavirus pandemic.
"After decades of meetings, discussions and debate, we now have updated the relevant laws that fit the needs of our country, as we try to move forward after the effects of the pandemic on our economy," she said.
She said the goal of the PSA Is to encourage more capital inflows, which will provide employment, develop resources, increase the value of exports, and help fuel the overall economy.
"When you have a good investment climate, you build more businesses that will generate more jobs and will introduce innovation to industries that need to compete in the international market. In the end, you give buying power to the people, have better tax collections, and will help the government provide a better quality of goods and services. It’s definitely a win-win situation,” Garin said.
The Public Service Act amendments modified an 85-year-old act to change the legal definition of “public services” and those that are blanketed by the category of the "public utilities" industry.
The law now limits "public utility" to distribution and transmission of electricity, petroleum and petroleum products transmission, water distribution and wastewater systems, seaports, and public utility vehicles.
Under the new measure, the 40 percent cap on foreign equity ownership is lifted from public services not classified as "public utility."
‘Most important policy reform’
Deputy Speaker Bernadette Herrera echoed Garin's remark that the new law is a game-changer, as it could help lure more foreign investors to boost jobs and economic growth and recovery.
“This is definitely one of the most important policy reforms initiated decades ago but has only been successfully legislated under the current administration, and we can’t thank President Rodrigo Roa Duterte enough for that,” Herrera said.
Herrera said the PSA amendments would open these key sectors to much-needed foreign investment and competition.
Under the amended PSA, the telecommunications, railways, expressways, airports, and shipping industries will be considered public services, allowing up to 100 percent foreign ownership in these sectors.
“This would translate to cheaper airfares, reduced transportation and shipping costs, and affordable and more efficient internet services for Filipino consumers,” she said. (PNA)