Bill seeking to ease limits to foreign ownership of public services nears House approval

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Metro Manila (CNN Philippines, February 18) — A bill seeking to ease restrictions on foreign ownership of public services is a step closer to passing the House of Representatives after it approved the measure on second reading on Tuesday.

With the House Bill No. 78, introduced by Albay 2nd District Rep. Joey Salceda, being passed on second reading, the House only needs to wait for at least three days for it to pass on final reading.

Similar bills are still pending at the committee level in the Senate.

The measure seeks to amend the Public Service Act to limit the definition of public utilities to only cover electricity distribution and transmission, and water pipeline and sewerage pipeline systems.

By doing this, the measure aims to allow more foreign investments into businesses which are currently considered to be public utilities, including common carriers, railways, gas, irrigation systems, communications systems and broadcasting stations.

Under the bill, Congress can determine what other businesses would be considered as public utilities upon the recommendation of the National Economic and Development Authority (NEDA) and the Philippine Competition Commission (PCC).

NEDA and PCC can recommend the reclassification of a public service as a public utility based on the following:

- 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

“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,” Salceda said in the explanatory note of the bill.

The bill also seeks to impose a 12-percent cap on the rate of return and prohibits income taxes to be used as operating expense for rate-determination purposes for public services and utilities.

The 1987 Constitution requires that at least 60 percent of a public utility be owned by Filipinos.