Senate approves bill allowing 100% foreign ownership of utilities

If the bill becomes law, foreigners can wholly own telecom operators, airlines, national shipping companies, railways and subways in the Philippines.

MANILA, Philippines — A bill allowing foreigners to fully own and control businesses in key sectors in the Philippines like telecommunications and transportation is set to become law after gaining Senate approval.

On Wednesday, Dec. 15, a total of 19 senators voted to pass third and final reading of Senate Bill (SB) 2094, which would allow 100% foreign ownership of utilities such as telecommunications carriers. , airlines, inland navigation, railways and metros. .

Only three senators rejected SB 2094: Pro-Tempore Senate Speaker Ralph Recto and opposition senators Risa Hontiveros and Kiko Pangilinan.

Senators were able to give the bill their final go-ahead just a day after passing it at second reading, as it had previously been certified urgent by President Rodrigo Duterte. This allowed the Senate to waive the mandatory three-day interval between approving a bill at second and third reading.

SB 2094 would liberalize public services in the country through amendments to Commonwealth Act 46 or the Civil Service Act, which would distinguish between the definitions of public services and public services.

The 1987 Constitution requires 60% Philippine ownership if the company operates as a “public utility”.

But SB 2094 seeks to limit the definition of utilities to only the following: electricity distribution, electricity transmission, piped water supply and sewerage, airports, seaports, and utility vehicles.

This means that if SB 2094 is enacted, other industries considered utilities would no longer be considered utilities and would therefore be exempt from the Constitution’s 60-40 foreign ownership rule.

Senate Public Services Committee Chair Grace Poe said SB 2094 would allow the Philippines to be more competitive with neighboring Southeast Asian countries, which have long relaxed restrictions on foreign investors to create more jobs and government revenue.

“The main objective of this measure is to provide choices for consumers, and I believe that by opening our economy to a diverse set of investors, we could provide our fellow Filipinos with more and better choices,” said Poe.

“We are only making our country more competitive on the world stage. Hindi na tayo mapag-iiwanan (We would no longer be left behind),” she added.

Hontiveros, however, raised national security concerns, noting that Congress is seeking to open up industries like telecommunications to foreigners when “we have tech-savvy neighbors as well as rogue non-state elements that directly target foreigners.” facilities in the region”.

Hontiveros noted that the Philippines does not even have the proper cyber defense mechanisms to protect against possible espionage by other countries.

“By allowing 100% foreign ownership, we are opening our phones and all of our critical internet-connected devices, appliances and public facilities to state and non-state foreign interests that may have malicious designs on our national security. It is a fact and the government is aware of the existence of these clear and present threats,” Hontiveros said.

Poe, however, said SB 2094 has some safeguards in place to avoid such cases.

“I would like to emphasize that in this attempt to liberalize our economy, we have taken into account national security concerns. We recognize that some industries are critical infrastructure. Thus, transactions resulting in control of these industries are subject to multiple layers of safeguards,” Poe said.

The House of Representatives already approved its own version of SB 2094 in March 2020. This means that the House and Senate would have to convene a bicameral conference committee to reconcile conflicting provisions in their respective versions.

One chamber may also simply adopt the other’s version to expedite the transmission of the final bill to Malacañang for Duterte’s signature. –