EU-Ph business network tackles Public Services Act amendment

The EURO-PH Advocacy Forum on Public Services organized by the EU-Philippines Business Network tackled the newly proposed House Bill 5828, which provides a statutory definition of public utility, where Third District Rep. Arthur Yap is one of the principal authors.

HB 5828 proposes to lift foreign restrictions especially on e-commerce, transport, communications, and energy.

The bill also aims to improve public services which can greatly impact the quality of the lives of Filipinos as well as encourage and facilitate innovation in the public and private sector.

Yap was with Department of Transportation Asec. Leah Merida-Quiambao, Foundation for Economic Freedom president Calixto Chikiamco, Smart Inc. head of Regulatory Affairs and Sun Cellular Head of Legal and Regulatory Affairs- -Lawyer Roy Ibay, UP College of Law professor- -Dr. Joseph Angeles, and Independent journalist James Deakin during the forum on September 21 at EDSA Shangri-la.

Abad Alacantara and Associates Partner and Bloomberg Anchor Tony Abad (a lawyer) served as moderators in the forum.

HB 5828, entitled An Act Providing for the Definition of Public Utility, Further Amending for the Purpose Commonwealth Act No. 146, Otherwise Known as the “Public Service Act,” As Amended, consolidated five House bills separately filed by Yap,former President and now Pampanga Rep. Gloria Macapagal-Arroyo, Albay Rep. Joey Salceda, Quezon City Rep. Feliciano Belmonte Jr., Quezon City Rep. Jose Christopher Belmonte, and Makati City Rep. Manuel Monsour Del Rosario III.

In a committee report on May 31, House Committee on Economic Affairs chaired by Yap recommended the approval of HB 5828 in substitution to Macapagal-Arroyo’s HB 4389, Salceda’s HB 4468, Yap’s HB 4501, HB 4787 of Reps. Feliciano and Jose Christopher Belmonte, and Del Rosario’s HB 4996.

The five bills were entitled “An Act further amending Commonwealth Act No. 146 or the Public Service Act As Amended”.

Printed copies of HB 5828 were distributed to members of House of Representatives on August 31.

Yap pushes for the amendment of the “Public Service Act” to support the Duterte administration’s economic agenda of opening up the economy to foreign trade, conserving and sustaining the growth environment.

When amended, the measure will open the telecommunications, transports, and power industries to 100 percent capitalization by foreign players –resulting in an improved quality and lowered cost of services to the benefit of all Filipino consumers, Yap explained.

On March 7 this year, the Technical Working Group of the House Committee on Economic Affairs chaired Yap approved the amendments to the PSA bill and HB 5828 contained the consolidated version of the proposed amendment.

The country will open its doors to foreign investments in telecommunications and power to enhance competition, bring down the costs and improve the quality of services as President Rodrigo Duterte had earlier explained in one of his interviews upon his return from the Asia Pacific Economic Summit held in Peru in 2016.

Yap his proposed amendment to the Public Service law would fulfill this goal by providing a clear definition of “public utility”, clarifying once and for all the ambiguity in its definition under the existing Act. This situation is caused by the indistinctness in the definitions of public utility and public service, terms used interchangeably under the Public Service Act. Because of this, competition and foreign investment are inhibited because the limitations that should only apply to the operation of public utilities are usually also applied to all public services.

In identifying the needed reforms in the law, Yap highlighted the need to clarify the definition of public utilities in order to open up certain industries to more competition and also, the need to provide a mechanism for rate-fixing would allow a reasonable rate of return to attract investments into public utilities.

The key to fixing this problem is to develop a clear statutory definition of a public utility through amending the Act. Representatives Gloria Macapagal-Arroyo, Joey Salceda, and Rep. Feliciano Belmonte Jr. and Jose Christopher Belmonte also filed similar measures, House Bills 4389, 4468, and 4787, respectively.

“Those are not public services now, they are commercial services that should be made available for those who want to invest. But because of this enumeration, certain consumer services are priced unreasonably high. Worse, we cannot attract foreign investments here because then, they would fall under the 60-40 rule”, Rep. Gloria Macapagal-Arroyo said, referring to the enumerated services under the PSA. According to the former president and renowned economist, opening PH to foreign investors had always been one of her thrusts during her nine-year stint in the Malacañan.

In October 2016, the Joint Foreign Chambers (JFC) in the Philippines manifested the need to amend the antiquated 80-year-old Act, deeming it hampering the entry of Foreign Direct Investments (FDIs) to the country, particularly the infrastructure space.

Under the existing Act, foreign ownership on the operation of public utilities is limited to forty percent (40%). Telecommunications, for instance, is considered a “public utility” in the existing Act, a critical infrastructure area for the country yet quality remains substandard and expensive because only a few local players or oligarchs effectively control the market.

Furthermore, the JFC presented that the demand for infrastructure exceeds the available supply.  Rep. Yap’s Bill aims to separate the physical infrastructure from the services, as only the latter should be considered as public utility imbued with public interest.

Under the proposed House bills, public utility is enumerated as electric power transmission, electric power distribution, water pipeline distribution, and sewerage pipeline system –a clear statutory definition excluding electric power generation, electric power supply, crude oil and petroleum products, telecommunications, broadcasting, and other public services.

The National Telecommunications Commission (NTC) represented by Deputy Commissioner Edgardo Cabarros supports the amendment of the PSA, citing instances wherein foreign investors refused to put in stocks of public utilities due to the 40% limit to foreign ownership. Recently, San Miguel Corp. failed to challenge the two foreign-owned firms in the telecom industry – Philippine Long Distance Telephone (PLDT) and Globe –after its supposed technical partnership with Australian Telstra fell through.

But lifting the limit, according to Bayan Muna Rep. Carlos Zarate, might result in a price increase.

He further compared the proposed move with the repercussions of the “Downstream Oil Industry Deregulation Law” wherein prices of petroleum products still continued to rise despite an increase in the number of industry players when the government lifted its control over the oil industry.

UP College of Law represented by Dr. Joseph Angeles expressed support to the intent of amending the Act, opining that “one way of indirectly lifting these foreign equity requirements and taking these industries out of the angle of being considered as public utilities is by providing a more specific and delineated definition of public utility”.

“The movement is to push the supply curb to the right and higher, and by that, assuming the demand remains the same, prices will go down,” according to Salceda, vice-chair of the Committee on Economic Affairs.

With regard to government control, the proposed amendments also include the transfer of certain functions, powers and duties of the Public Service Commission to various administrative agencies of the government.

These agencies include DOTr, Land Transportation Franchising and Regulatory Board, Land Transportation Office, Civil Aviation Authority, Civil Aeronautics Board, Coast Guard, Maritime Industry Authority, Philippine Ports Authority, Department of Information and Communications Technology, National Telecommunications Commission, Department of Energy, Energy Regulatory Commission, Department of Environment and Natural Resources, National Water Resources Board, Local Water Utilities Administration, Philippine Competition Commission and others.




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