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European telcos keen on Philippines after PSA amendments passed

Several European telecommunications companies are eyeing to enter the Philippines after Congress passed a measure allowing 100 percent ownership in the industry and in other public utilities, the European Chamber of Commerce of the Philippines (ECCP) said Friday.

During the virtual launch of the Doing Business in the Philippines 2022, ECCP president Lars Wittig said that the ratification of the bill amending the 85-year old Public Service Act (PSA) is an “absolute massive game-changer and it will create double-digits, billion dollar investments.”

Last week, the Senate and the House of Representatives ratified the bicameral conference committee report on the proposed measure modernizing the PSA. 

The bill is awaiting the signature of President Rodrigo Duterte.

The measure seeks to clear ambiguity surrounding the terms “public utility” and “public service,” identifying public utilities as the following: the distribution and transmission of electricity; petroleum and petroleum products pipeline transmission systems; water pipeline distribution systems and wastewater pipeline systems, including sewerage pipeline systems; seaports; and public utility vehicles.

According to the proposed law, any industry not included among these will remain public services and will be liberalized or open to 100% foreign ownership.

With this, Wittig said European telcos, who have expressed interest in the 2018 bidding for the third major telecommunications player in the country, “can go back and go for the 51%, 99%, or 100% ownership.”

The ECCP chief said it is now easier for the European telcos to enter the country as the 40 percent ownership limit on public utilities will be lifted.

“We know who they are. We know they’re very keen,” Wittig said.

“There are interests and potential investors, absolutely. The most obvious to refer to is telco,” he said.

Among the European telcos who expressed intent to participate in the third telco search were Norwegian telco Telenor, Austria-based Mobiltel, and UK’s Vodafone.

China Telecom-backed and Udenna-led DITO Telecommunity, formerly known as Mislatel consortium, emerged as the winner in the government-sponsored search for a third major telco player.

Meanwhile, Maurizio Cellini, first counsellor and head of Trade and Economic Affairs of the Delegation of the European Union to the Philippines, emphasized the need for the country to mobilize foreign investors given its potential as a fast-growing economy.

“From an investment angle, the European Union continues to see the Philippines as a large, fast-growing market. However, the Philippines does not succeed in mobilizing European traders and investors in line with its size and potential,” Cellini said.

The EU delegation official said that the Philippines attracts on average only 4% of the total EU foreign direct investments (FDIs) in Association of Southeast Asian Nations (ASEAN) countries.

The Philippines, however, remains to be among the most restrictive, placing 81st out of 83 countries, according to Organization for Economic Cooperation and Development (OECD) 2020 data on FDI Restrictiveness.

The ECCP, nevertheless, welcomed the government’s efforts in advancing key economic reforms such as the amendments to the Foreign Investments Act and Retail Trade Liberalization Act, as well as Public Services Act amendments.

“Alongside these policy reforms should be initiatives to promote competitiveness and ease of doing business in the country,” Wittig said.

He added that the ease of doing business coupled with relaxation of restrictions on foreign ownership will accelerate recovery and aid in shaping a more sustainable growth story for the Philippines.—LDF, GMA News