By Alyssa Nicole O. Tan
THE SENATE is likely to open more sectors to foreign ownership when it continues to debate proposed changes to the Public Service Act (PSA) next month, but will weigh national security concerns and restrict investment by foreign state-owned companies, a key senator said.
“Senators are reviewing crucial sectors, (whether) those sectors should be liberalized considering the national security risk,” Senator Mary Grace Natividad S. Poe-Llamanzares, primary author and sponsor of the bill, told BusinessWorld in a Viber message.
Senate Bill No. 2094, certified as urgent by President Rodrigo R. Duterte, if passed, will modify the legal definition of public services, which are currently included in the “public utilities” industry. The amendments hope in part to address a finding by the Organisation for Economic Co-operation and Development that the Philippine economy is one of the most restrictive to foreign investment in public services.
The restrictions on state-owned foreign investors are apparently aimed at China, where many of the companies are government-controlled.
Business groups asked the Senate last month not to maintain the foreign equity restrictions in the transportation and telecommunications sectors, following the foreign business chambers, who in a joint statement noted that tens of billions of dollars in foreign investment did not come to the Philippines but instead went to neighboring countries.
Allowing foreign competition would improve the quality and pricing of internet connectivity, the foreign chambers added.
According to the 2020 Digital Quality of Life survey, the Philippines was 66th out of 85 countries. The study attributed the poor showing to expensive, low-quality internet and the need to upgrade infrastructure.
The National Economic and Development Authority reported that about 64% of barangays do not have telecommunication services, 88% have no free WiFi zones, and 70% have no fiber optic cable.
Under the measure, a change in the list of infrastructure deemed critical will ensure industries are liberalized and receive fresh capital, according to Ms. Poe, who chairs the Senate Committee on Public Services, in an earlier plenary session.
The list of critical infrastructure where 100% foreign ownership will be allowed includes telecommunications; air carriers; domestic shipping; railways and subways; and tollways and expressways.
During a previous amendment session, Senate President Pro Tempore Ralph G. Recto noted the possibility of Chinese businesses owning a telecommunication company 100%. “I am not against Chinese companies doing business in the Philippines, I am just worried, since we do have a problem in the South China Sea.”
Mr. Recto said if critical infrastructure is compromised in any way, it would have a “debilitative impact on national security.”
Safeguards will be in place such as vetting by the national security council, restrictions on investment by foreign state-owned companies, and the Congressional grant of a franchise, among others, Ms. Poe said.
“It is a compromise that they are opening up those industries; however, they have to go through stringent measures to be approved,” she added.
China — which claims about 85% of the South China Sea — has refused to recognize an international ruling invalidating its claim, and has sought to build bases on islands in the strategic waterway.
Richard J. Heydarian, professorial chair on geopolitics at the Polytechnic University of the Philippines, has said that the main issue surrounding China’s claim, based the so-called “nine-dash line” as delineated in the maps Beijing has issued, is a lack of clarity regarding the exact coordinates of its claim. “The ambiguity of China’s claims is suspicious, which (may indicate) opportunism and a potentially flexible definition.”
“China can have a maximalist definition, meaning all islands and natural resources within the nine-dash line are part of (its) territory,” Mr. Heydarian added. “But it can also have a minimalist definition, (in which it claims) the land features, their surrounding waters, and their fishery resources or oil and gas resources in that area.”