TRANSCRIPT OF SEN. GRACE POE's SPONSORSHIP SPEECH

It is my honor to present to the body a measure that has been a long time coming.

In a nutshell, the proposed amendments to Commonwealth Act 146, more commonly known as the Public Service Act, seek to improve the quality of public services and goods and have it at a lower cost by encouraging more competition in its provision. It seeks to finally amend an 85-year old law which probably never envisioned a population of 110 million people all reliant on very few providers for its basic everyday needs.

We desire to achieve this goal through the following features of this bill:

First, we are taking advantage of our legislative power by finally clearing the ambiguity surrounding the interchangeably used terms "public utility" and "public service." This is in recognition of the much broader nature of the umbrella term, so to speak, "public service" as against its subset term "public utility."

The term "public utility" will be limited to just three services, namely, distribution of electricity; transmission of electricity; and water pipeline distribution and sewerage pipeline systems.

This distinction is not trivial and carries with it huge ramifications in terms of the constitutional restriction on foreign equity. "Public utilities" are to be treated as natural monopolies which must be restricted pursuant to Section 11, Article 12 of the Constitution. 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.

We are not redefining things. We are declaring as public policy that the expansion of the investment base will benefit the public by allowing meaningful competition with more players, domestic and foreign, to slug it out to win the satisfaction of the Filipino people.

Sa ganitong paraan, magiging paligsahan ang pagbibigay ng dekalidad na serbisyo at produkto sa pinakamababang presyo para sa mga Pilipino. Inaasahan nating ito na ang magwawakas sa "take it or leave it" attitude ng mga nagpakasasang monopolya nitong nakaraang siglo.

As the realm of public services evolves, this bill gives the National Economic and Development Authority, Philippine Competition Commission, and all concerned agencies, power to recommend to Congress to reclassify public services as public utilities based on these criteria:

a. One, the service regularly supplies and directly transmits and distributes to the public through a network a commodity or service of public consequence;

b. Two, the service is a natural monopoly;

c. Three, the service is necessary for the maintenance of life and occupation of the public; and

d. Four, the service is obligated to provide adequate service to the public on demand.

Second, it is about time that we see public service providers as partners and not enemies of the people just because they collect and we pay. The measure acknowledges the need for a flexible methodology for rate setting that will allow recovery of prudent and efficient costs and a reasonable rate of return.

Third, it is also time to amend the old fines of erring public service providers. A measly P200 per day of violation isn't enough disincentive to do right by the public. Sa lumang kalakaran, marahil ay mas makakatipid pa sila kung magbabayad ng multa kaysa pagandahin ang kanilang serbisyo publiko.

Once enacted, a violator will now be fined up to P2 million plus "disgorgement of profits" and additional "treble damages." If public interest is not enough incentive, we certainly hope that these updated fines will.

Panghuli, maraming safeguards ang inilagay sa panukalang ito na naglalayong protektahan ang interes ng ating bayan at mga kababayan, at siguraduhin na walang iisang bansa ang mangingibabaw sa pamumuhunan sa ating mga pampublikong sektor.

To allay the fears that this measure will put the country's sovereignty at risk, we put a provision tasking the National Security Council to initiate a review of foreign investments that would result in the control of any critical infrastructure in the country. Critical infrastructure refers to assets that are so vital to the country that the incapacity of such assets would have a debilitating impact on national security. These are the transmission and distribution of electricity, water and sewerage pipeline systems, telcos, and common carriers. This review will eventually be submitted for approval or appropriate action by the President.

Another safeguard can be found in the reciprocity clause which provides that foreign nationals may only own more than 40 percent of the public services identified as critical infrastructure if their country accords a reciprocal right to Filipinos by law, treaty or international agreement.

Moreover, foreign employees are only allowed after a determination of non-availability of a competent, able and willing Filipino. Foreign employment shall not be more than 25 percent of the total employees of any given corporation.

Other safeguards in the bill include the critical infrastructure's compliance with ISO standards on information security, annual performance audit, regular studies and comprehensive baseline survey to be performed by several administrative agencies, and the conduct of a congressional oversight and periodic review.

The country's top economic and financial experts are in full support of this measure. According to them, not only will this measure hasten the country's economic recovery from the catastrophic effects of the pandemic, but it will also improve the competitiveness of the country in attracting foreign direct investments.

We also see this strategy being employed elsewhere in the world-hindi nag-iisa ang Pilipinas sa pagpapatupad ng ganitong panukala. Our next-door neighbor Indonesia is about to issue a decree trimming down the list of industries with foreign investment limitations from 300 to 48. Some of its liberalized industries include communications, IT, energy, tourism and creatives. Higher foreign participation in public services is also implemented in countries like Singapore, Hong Kong, Vietnam and China, just to name a few.

Meanwhile, the global average of foreign-equity ownership in public services is at 90 percent. This probably affirms the soundness of opening the economy as a tool to combat the sudden downturn caused by the current pandemic. Ultimately, these amendments have the capacity not only to improve the quality of public services in the country, but also to transform the Philippines into a more globally competitive arena where businesses flourish, and each and every Filipino thrives.

Fellow senators, it is high time that we consider again these amendments which have been repeatedly proposed in past Congresses. In fact, it was also around this time three years ago when I stood up before you to endorse the very same measure. Taking our learnings from the previous deliberations and with more inputs and better support from the Executive, it is my honor to endorse this to the Chamber again for deliberation.