House OKs on final reading bill easing limits to foreign ownership of public services

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Metro Manila (CNN Philippines, March 10) – The House of Representatives on Tuesday approved on final reading the bill which will amend the decades-old Commonwealth Act No. 146 or the Public Service Act, lifting foreign ownership limits in certain sectors.

House Bill No. 78, authored by House Ways and Means Committee chairperson Joey Ma. Salceda, received 146 approval votes, 43 voted against the bill, and one abstention.

If approved into law, the bill will also open the telecommunications and transport sectors to foreign ownership. The 1987 Constitution provides that 60-percent of a public utility must be owned by Filipinos.

“This legislative reform will significantly contribute to increasing competition, as well as protecting the public interest. More competition among providers would result in lower prices and improved quality of basic services in the Philippines creating a more competitive economy towards a better quality of life for all,” said Salceda in his explanatory note.

The amendment in PSA will limit public utility to sectors engaged in electricity distribution and transmission as well as water pipeline distribution or sewerage pipeline system.

Further, the National Economic and Development Authority and the Philippine Competition Commission can recommend to the Congress what commodity or service passes as a public utility based on the following criteria:

- It regularly supplies and directly transmits and distributes to the public through a network a commodity or service of public consequence

- The commodity or service is necessary to the public and a natural monopoly that needs to be regulated when the common good so requires

- The commodity or service is necessary for the maintenance of life and occupation of residents

- The commodity or service is obligated to provide adequate service to the public on demand

The bill also imposes a 12-percent cap on rate of return and prohibits income tax as operating expense for rate-determination purposes for public services and utilities.