Public Services bill to remove Congress' mandate over critical sectors, allow foreign ownership, groups warn

A lawmaker and an infrastructure-oriented group have expressed alarm over the proposed Public Services Act, which will remove the limit on foreign ownership on certain critical sectors.

House Bill No. 78 inched closer to the House of Representatives’ final nod after it was approved on second reading this week.

Bayan Muna party-list Representative Carlos Zarate said allowing foreign ownership of telecommunications could put in peril national security.

“May national security implications ‘yan. Ang China, halimbawa, if they can control telecommunications company, worst case scenario they can put it on or off,” Zarate said.

In a statement, former party-list Rep. Terry Ridon, now convenor of Infrawatch PH, said the bill “omitted critical regulated sectors from the ambit of legislative franchise approval” citing broadcast, telecoms, tollways, airlines and rail.

“While the authors proselytize the impact of the measure on competition and foreign investment, what is left unsaid is that critical regulated sectors, such as broadcast, telecoms, tollways and airlines, which currently require legislative franchises, will no longer be subject to direct congressional scrutiny,” he said.

“This is nothing but a surrender of the public interest over critical regulated sectors. This is a surrender of Congress’ constitutional mandate,” Ridon added.

He continued, “By removing these sectors from the list of industries considered as public utilities, the primacy of public interest is diminished. The stature of Congress is diminished, as these businesses can now operate without the fear of direct congressional scrutiny.”

Deputy Speaker Sharon Garin, one of the bill's authors, said its benefits outweigh the concerns raised by some quarters.

“We will be able to attract more investors…considering we have slowest internet. [The state of our] transportation is bad, and this can be improved kung may foreign ownership,” Garin said.

“In case may transaction na palagay ng agencies will be threat to national security or national interest, the government can say, hindi puede ‘yan,” Garin added.

Public utilities, public services

Under the 1987 Constitution, at least 60% of public utility enterprises' capital stock must be owned by Filipino citizens or corporations.

House Bill No. 78 referred to public utility as an entity that operates, manages for public use the following:

• distribution of electricity
• transmission of electricity
• water pipeline distribution system
• sewerage pipeline system

The bill said that the secretariat of the National Economic Development Authority, in consultation with the Philippine Competition Commission, shall recommend to Congress the classification of a public service as a public utility on the basis of the following:

• the person regularly supplies, directly transmits and distributes to the public a network, -commodity or service of public consequence; 
• a commodity or service necessary to the public and a natural monopoly that needs to be regulated; and,
• the commodity or service is needed to provide adequate service to the public

In limiting coverage of what could be considered as a public utility, the bill reclassified sectors as “public services” which are “non-rivalrous or imbued with public interest” and would no longer be covered by the 60-40 foreign ownership limit, including the following:

• marine repair shop
• wharf or dock
• canal
• public market
• irrigation system
• gas, electric light, heat and power
• water supply and power
• petroleum,
• sewerage system
• telecommunications system
• wire/wireless communications system

The bill added a provision that states that, “In the interest of national security, the president, after review, evaluation and recommendation of the relevant government department or administrative agency, may suspend or prohibit any proposed merger or acquisition transaction, or any investment in a public service that effectively results in the grant of control, whether direct or indirect, to a foreigner or a foreign corporation.”

The Philippine Competition Commission shall be consulted on all matters relating to mergers and acquisitions, it added.

With this provision, Ridon said these regulated sectors will now be answerable directly only to administrative agencies such as the National Telecommunications Commission, Civil Aeronautics Board, Toll Regulatory Commission on matters concerning the businesses’ operations.

“By removing these sectors from the list of industries considered as public utilities, the primacy of public interest is diminished. The stature of Congress is diminished, as these businesses can now operate without the fear of direct congressional scrutiny,” he said.

A counterpart bill is being deliberated at the Senate.—LDF, GMA News