Press Release
December 15, 2021

Senate OKs amendments to Public Service Act

The Senate has passed on third and final reading the bill that would open up the Philippines to more foreign investors.

Senate Bill (SB) 2094 hurdled the upper chamber with 19 affirmative votes, three negative votes and zero abstention from senators during the hybrid plenary session Wednesday, Dec. 15.

It seeks to amend the 85-year-old Commonwealth Act No. 146, known as the Public Service Act, and ease the restriction on foreign investments in public services.

Sen. Grace Poe, chairperson of the Senate Committee on Public Services and sponsor of the bill, said the measure primarily intends to provide Filipino consumers with "more and better choices." She said she believes that the future generation of Filipinos will "truly benefit" in liberalizing the country's public services.

SBN 2094, according to Poe, provides a clearer definition of the terms "public services" and "public utilities" in the existing law. In the 1987 Constitution, only corporations that are at least 60-percent owned by Filipinos shall be given the franchise, certificate and authorization to operate as a public utility.

Under the bill, public utility refers to a "public service that operates, manages or controls for public use" any of the following: distribution or transmission of electricity; petroleum and petroleum products pipeline distribution systems, water pipelines distribution systems and wastewater pipeline systems; as well as airports, seaports, public utility vehicles and tollways or expressways.

Those not classified as a public utility shall otherwise be considered as a public service, which will not be bound by the restriction on foreign ownership. Public services include telecommunications, air carriers, domestic shipping, railways and subways.

During the period of interpellation on the proposed law, Poe explained that such public services are identified in the bill as "critical infrastructure" and will continue to be subject to regulation by relevant agencies under existing laws.

She also assured that the measure contains safeguards to protect national security, which include prohibiting foreign state-owned enterprises from owning capital in any public service classified as critical infrastructure, and review of the foreign investments by the National Security Council.

It also contains a reciprocity clause stating foreign nationals shall not be allowed to own more than 40 percent of capital in public services engaged in the operation and management of critical infrastructure, unless their country accords reciprocity to Philippine nationals.

The bill also proposes raising the penalties for persons who commit prohibited acts or neglect, with fines not less than the current value of the original fine based on the consumer price index, or imprisonment of not lower than six years up to a maximum of 12 years, or both.

"We need to be forward-looking and not be hampered by some of our mistrust and fears," she told her colleagues before the bill's second reading approval on Tuesday, Dec. 14.

President Duterte previously certified the urgent approval of SBN 2094, with economic managers saying that it will help the Philippines recover from the impacts of the COVID-19 pandemic and improve its standing in mobilizing more foreign capital to the country.

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