AMENDING the 83-year-old Public Service Act (PSA) will be a key milestone in capturing more foreign investment in the post-pandemic era, Socioeconomic Planning Secretary Karl Kendrick T. Chua said.
“Number one is the Public Service Act that will help us clarify what is a public utility and what is not a public utility, and a lot of these, in particular, telecoms, will be instrumental in maintaining productivity in the new normal,” he said.
A pending measure seeks to amend Commonwealth Act No. 46 by clearly defining “public services,” which is currently interpreted as including “public utilities.”
If passed, the definition of public utilities will be limited to power transmission and distribution and waterworks and sewerage systems, allowing more foreign investment in telecoms.
At present, public utilities are subject to a foreign equity cap of 40% as provided for under the 1987 Constitution.
Mr. Chua was speaking during a House Economic Affairs committee hearing, during which he was asked for his recommendations for capturing a larger share of foreign investment.
“With this pandemic, how can we stay on track and make the Philippines an attractive destination for FDI (Foreign Direct Investment) to come in,” Nueva Ecija Rep. Rosanna V. Vergara said in the hearing.
Mr. Chua also cited the proposed Corporate Recovery and Tax Incentives for Enterprises Act, which is the revised version of the Corporate Income Tax and Incentives Rationalization Act (CITIRA).
“We recognize that tax incentives are important; however, the present design is not going to attract investors in the same way as other countries do because our present incentive are one-size-fits all,” Mr. Chua said.
He said the current system offers a four to six year income tax holiday, followed by a 5% tax on gross income earned across all industries and regions.
“What we are proposing is that we have targeted incentives by region and by industry.”
The PSA amendments and CITIRA bill have both hurdled the chamber, as House Bill Nos. 78 and 4157, respectively, and are pending in the Senate. — Charmaine A. Tadalan