Amended Public Service Act could boost FTA moves for US, PHL

THE amendments to the eight-decade-old Public Service Act (PSA) could boost efforts of Manila and Washington to forge a free trade agreement (FTA), according to a nongovernment organization.

“With the new amendment to the Public Service Act, there is a significant opening here where the Philippine economy is far more open on Telecoms and Digital trade than it is on most other issues which has further long been the barrier to a US-Philippine [free trade agreement] FTA,” said Gregory B. Poling, Senior Fellow and Director, Southeast Asia Program and Asia Maritime Transparency Initiative at the Center for Strategic and International Studies (CSIS). He spoke at Makati Business Club (MBC)’s Virtual Economic Briefing on the US-Indo Pacific Economic Framework (IPEF) recently.

Poling said the Clean Energy, Decarbonization, and Infrastructure and Supply chain pillars are the reasons the Philippines and other framework partners joined the US-led economic framework.

The senior fellow emphasized that the Philippines entering into the said economic framework is “perfect timing” given that the country is currently the only member of Association of Southeast Asian Nations (Asean) “that agrees to the APEC standards on digital privacy, so it’s closest to the US and Japan on that issue.”

Further, Poling added, “It’s got the booming [business process outsourcing] BPO sector and a wide open digital economy,” unlike, he said, most of the partners in Asean other than Singapore.

Republic Act 11659 or the amended Public Service Act was signed by former President Rodrigo Duterte on March 21, 2022. RA 11659 seeks to ease or lift restrictions on foreign investments in public services by amending the 85-year-old public service law, distinguishing definitions between “public utilities” and “public services,” as it will repeal provisions that limit foreign participation in certain economic activities.

Earlier this year, former Trade Secretary Ramon M. Lopez said the enactment of the amended PSA could lead to over $100-billion investments in telecommunication, transportation and logistics in the next two years.

As of March 2022, Lopez said potential investments in the sectors of telecommunication, transportation, logistics and railway—where foreigners are now allowed to own 100 percent equity—is over $60 billion.

In fact, Elon Musk’s Starlink, an American-based satellite internet provider which uses low Earth orbit satellites (LEOs), has already ushered investments in the country, according to the former Trade chief. Lopez attributed the clinching of these investments to the PSA and Executive Order 127, which expands internet services through inclusive access to satellite services.

During his stint as Trade chief, Lopez had always lauded the enactment of the amended PSA as “another landmark reform” that “finally” opened up critical sectors like telecommunications and transportation, shipping, railways, to more foreign players. He added that PSA could be an avenue to attract more foreign players, allowing greater competition, more technology-based innovations, better quality services and lower costs to be enjoyed by all consumers and users.

For its part, the German-Philippine Chamber of Commerce and Industry (GPCCI) said in March that the amended PSA would attract global players to help “modernize” the Philippine public service sectors with “increased competition seen to generate higher quality of service and competitive pricing” for Filipino consumers.

Meanwhile, the Foundation for Economic Freedom (FEF) emphasized in March that as new foreign investments enter the country, the amended PSA establishes rules to protect the country from malign intentions that endanger its national security. Moreover, FEF said, the provisions on vetting of potential investments in critical infrastructure and the requirement for an ISO certification for Information Security for telecommunications investors ensures that the Philippines will be less vulnerable to cyber threats and domination of foreign interests.