PCC: Concerns over foreign ownership of utilities may be addressed through regulation

Font Size


NATIONAL SECURITY concerns arising from the removal of foreign ownership restriction in telecommunications, transportation and other industries can be addressed through regulation, according to the Philippine Competition Commission (PCC) commissioner.

“Understandably, there are security concerns in so far as certain public services which are no longer classified as part of the public utilities… We believe that those can be best addressed by regulation rather than limitation on ownership,” PCC Commissioner Johannes Benjamin R. Bernabe told BusinessWorld in an interview on Monday.

The House of Representatives passed House Bill No. 78, which seeks to amend the 83-year old Commonwealth Act No. 146 or the Public Services Act, on second reading last week. The bill proposed to limit the definition of pubic utilities to power transmission and distribution, water distribution pipeline system and sewerage pipeline system. Under the 1987 Constitution, foreign ownership of public utilities is limited to 40%.

Critics have said that HB 78 is a way to bypass the Constitutional limits on foreign ownership of public utilities, as it did not include telecommunications, power and transport in the definition of public utilities.

Mr. Bernabe said national security risks can occur regardless of the ownership of public utilities.

“If the fear is that the content is being manipulated, or if the fear is that vital information are being compromised then that is something that can happen whether or not its 60-40 (60% Filipino-owned, 40% foreign-owned),” he said.

“So what you really need are regulatory measures in place to make sure that those security breaches do not happen.”

HB 78 also provides a clearer definition of “public utility” which had been used interchangeably with “public services.”

Mr. Bernabe said public utilities are industries, considered as natural monopolies, and may pose risks if largely owned by foreigners.

He said the Public Services Act needs to be updated to identify industries that are no longer natural monopolies.

“Telecoms, before it was a natural monopoly simply because of the cost of laying down a backbone for the entire country, but now you have Wifi, you have satellites, cell sites, which can replicate the transmission required for telecoms, so its time has come,” he said.

HB 78’s counterpart measure is still pending at the committee level in the Senate.

The Cabinet included the measure as of the priorities for the first regular session of the 18th Congress. It also topped the list of bills supported by 14 local and foreign business groups, which was submitted to Congress last July.

The measure nearly hurdled the 17th Congress after it was approved in the House of Representatives, but failed to secure final approval in the Senate before the June 2019 adjournment. — Charmaine A. Tadalan