MANILA – The amended the Public Service Act (PSA) transmitted to Malacañang last week, now awaits the signature of President Rodrigo Duterte anytime now.
The measure is expected to encourage investment in sectors that are essential to public welfare, which in turn would help close the investment gap in the country, according to House Ways and Means Committee chair and Albay (2nd District) Rep. Joey Salceda.
The measure effectively opens up to 100% foreign equity across economic sectors, except in the transmission and distribution of electricity, water pipeline and sewerage, seaports, petroleum pipeline, and public utility vehicles.
“The PSA amendments will be very crucial for economic recovery. Our freed-up fiscal space will be limited due to debts induce by the Covid-19 pandemic. So, in place of government spending, we need another source of capital for our public investment needs. Foreign direct investments will help fill that gap,” Salceda said in a statement.
The measure is the closest the country has formulated to overcome the “growth overhang” caused by the 1987 Constitution’s foreign equity restrictions, he added.
“Prior to these amendments, we were the only country to limit foreign equity in many industries on the mere basis of implications. We just assumed that all public services are public utilities. The Constitution only explicitly limits foreign capital in the latter, not the broader category,” he said.
Salceda assured the PSA amendments would yield massive impacts on job creation and foreign direct investments (FDIs).
He expecting an increase in FDIs by around P299 billion over the next five years from the final version of the sectors that will be opened up as a result of the PSA amendments.
“Why do other countries pay more for our labor, attracting OFWs (overseas Filipino workers)? They have capital that we do not have for our own national development. Abroad, our workers build public services with foreign capital on foreign soil. Why don’t we just bring the foreign capital here and let our workers build our own country with foreign investments instead?” he said.
The lawmaker, a respected economist, said there would be strong jobs growth in telecommunications, heavy transport, and other key public services as a result of foreign capital infusions due to the proposed amendments. It may encourage OFWs to devote their skills and expertise in the country without leaving their families, he projected.
According to Salceda, one key economic benefit of the PSA amendments for local players in key sectors is that it will provide them a credible defense from threats of external competition.
He explained that the credible threat of competition is seen as a pro-competitive measure that reduces monopoly or oligopoly and encourages local players to improve efficiency.
More competition means lower prices generally, and if public utilities and services exceed the rates set by the regulators, they have to refund the excess collections from the public and pay fines, he added.