Republic Act No. 11659 or the amendments to the Public Service Act (PSA), was signed into law by President Rodrigo Roa Duterte.
The amendments to the PSA limit the coverage of public utilities and effectively liberalize key public services by allowing full foreign ownership in key sectors. This will encourage more foreign investments and innovation to lower prices, improve the quality of goods and services, and create more and better jobs.
The measure limits the coverage of public utilities to key sectors that will be subject to the 60-40 percent foreign equity limitation. In general, these are sectors considered as natural monopolies where a single firm can serve the market at lower costs than having two or more firms.
These include the distribution of electricity, transmission of electricity, petroleum and petroleum products pipeline transmission systems, water pipeline distribution systems, and wastewater pipeline systems, including sewerage pipeline systems, seaports, and public utility vehicles.
To protect the country against national security concerns, the amendments also provide the following safeguard provisions: First, the power of the President to suspend or prohibit any investments in a public service in the interest of national security upon the review, evaluation, and recommendation of the relevant government agency. Second, the provision on restrictions on investments by foreign state-owned enterprises (SOE) prevents a foreign SOE from owning capital stock in a public utility or critical infrastructure. Third, the provision on information security ensures entities engaged in the telecommunications business meet relevant ISO standards. Fourth, the reciprocity clause prevents foreign nationals from owning more than 50 percent of capital in critical infrastructure unless the country of such foreign nationals accords reciprocity to Philippine nationals. Lastly, the performance audit provision mandates the conduct of an independent evaluation to monitor a firm's cost and quality of services to the public.
The Retail Trade Liberalization Act and the Foreign Investments Act were also signed on December 10, 2021, and March 2, 2022, respectively. The enactment of the amendments to the PSA completes the administration's economic liberalization reforms to increase the country's competitiveness and create more and better jobs.
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