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Consumer and employment interests and the Public Service Act

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Bienvenido S. Oplas, Jr.

My Cup Of Liberty

Consumer and employment interests and the Public Service Act

The Philippines has a huge and increasing economic potential mainly because of its big population, estimated at 108 million as of mid-2018 and the 13th largest in the world. Which means more entrepreneurs and workers, more producers and consumers.

We are also an archipelago with more than 7,500 islands and islets, lots of white sand beaches and deep fishing grounds (under Chinese control in certain areas now, to be sure). This means huge potential in tourism and fishery. Other countries, as we now see, are envious of coastal ones. One of the reasons for regional and world wars is the need by some countries to have more access to the sea, hence the need to invade and occupy their coastal neighbors.

The Philippines, however, is not able to optimize these potentials. Foreign direct investments (FDI), an important indicator for a country’s attractiveness to business, is not big. In the table below, I use FDI inward stock, the estimated accumulated FDIs in the country, and not FDI inflows. A country may attract $50 billion a year of inflows but if outflows are more than that, then net inflows will be negative. Data are from the UN Conference on Trade and Development (UNCTAD) World Investment Report (WIR) 2018.

Economy, FDI, & Tourism

We are also not able to optimize our huge tourism potential. Consider Macao with just 0.6 million population, yet they were able to attract $35.6 billion in tourism receipts in 2017, while the Philippines got only $7 billion. International tourism data are from the UN World Tourism Organization (UNWTO) Tourism Highlights 2018.

A big reason for these not so beautiful numbers for the Philippines is our non-friendly policies to foreign investments via Constitutional restrictions and the 83-year-old Public Service Act (PSA) enacted in 1936. That law has several sectors listed as “public utilities” where foreigners are prohibited from owning more than 40% equity.




An important legislative proposal at the moment is the PSA Amendment where telecommunications and transport (land, sea, air) are to be removed from the list of “public utilities,” thus allowing foreigners to own more than 50% and up to 100% equity. Only three sectors will be retained in the list — transmission of electricity, distribution of electricity, and water works and sewerage system. Explicit is a certain provision from Senate Bill 1754 (New Public Service Law of the Philippines) that “No other business or service shall be deemed a public utility other than those listed in this section.”

Two congressional bills seek to make the PSA Amendment. HB 5828 (Amending Commonwealth Act No. 146, known as the “Public Service Act”) was passed on third reading by the House of Representatives in September 2017. SB 1754 remains a committee report and needs to be passed on third reading so that a bicameral meeting may be set soon, for its enactment into law possibly before the congressional break during the May election campaign.

More investment liberalization measures should be done, especially airline and shipping line liberalization. Foreign investors and their managers need to see their potential and existing projects as often as possible. They want to see their investments here are secured and protected. Unlike in mainland Asia where tourists and investors can travel by land, say, from Thailand to Cambodia, Laos and Vietnam, they cannot do that in the Philippines.

Passengers are interested to see more choices in their domestic and international air travels. More choices in routes, days and time of flight, and airfare.

Consumers, investors and employees will greatly benefit from having more airline competition, with more airlines attracting more local and foreign visitors and entrepreneurs. This will create more domestic jobs, minimize labor migration, and fight poverty in the Philippines without the need for more taxes and public borrowings to finance endless government welfarist programs because many people are poor and have low-paying jobs.

 

Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers.

minimalgovernment@gmail.com