Press Releases


December 15th, 2021

I am elated by the approval on second reading of the Public Service Act amendments by the Senate last night, and its very likely approval on third reading today. I expect to meet with my Senate counterparts on this matter during the session break if we can name the conferees to the bicameral conference committee tonight. The amendments to the Public Service Act is the most important of the investment liberalization laws promoted by the Duterte administration, and which we principally authored. This is the most oligarchy-busting reform of the administration. We are bound to open to competition a host of industries previously protected by the sixty-forty rule against majority foreign ownership. These areas include telecommunications, the development of which will be crucial if we are to progress in the digital economy.

I will also be discussing with my Senate counterparts some key provisions, including:

  1. Whether the House accepts the Senate’s addition of sectors to the list of public utilities in the House version. The Senate’s definition now includes airports, seaports, public utility vehicles, petroleum distribution systems, and tollways in public utilities. This is in addition to the House’s list, composed of distribution and transmission of electricity, and water pipeline and sewerage.
  2. Whether House agrees with introduction of category “critical infrastructure.” The Senate version introduces the definition “critical infrastructure” – loss of which “would have a critical impact on national security.” The list specifically includes telecommunications, air carriers, domestic shipping, railways and subways, tollways and expressways
  3. The standards for National Security Council review of critical infrastructure investments, including what could constitute disallowance and what qualifies as a national security threat.
  4. The refund mechanism in the House version that is absent in the Senate version. The House wants to refund to consumers profits of public services in excess of the allowed rates by the government.

These provisions will be very crucial to the final form of the measure. For example, the Senate version only provides for the disgorgement of profits for violations of rules set by the administrative agency concerned. It does not provide for a system to return to the public any moneys generated that are against the rules of the regulator. This to me is a clear public welfare issue that should be clarified. After all, it is the public that bears the cost of unjust hikes in the prices of utilities.

I also hope to discuss with my Senate counterparts certain issues concerning how ambiguous the provisions on national security review are. Under the current formulation of the Senate, there are no standards for what constitutes a national security threat. That creates massive uncertainty among the industries classified as “critical infrastructure.”

On the Senate’s prohibition against ownership of critical infrastructure by foreign state-owned enterprises, I am inclined to agree, although I will have to study whether it will be necessary to clarify that this should not include sovereign wealth funds and independently managed pension funds. Some of the world’s largest investment funds include the sovereign wealth funds of Singapore – heavily invested in the country – and the Government Pension Fund of Norway. I used to promote Philippine equities to these funds when I was a fund manager in the 1990s, and they were, and continue to be, very optimistic about the country’s long-term prospects. We should not miss out on them.

Hopefully, we can iron these issues out in the bicameral conference committee. I expect extensive discussions on the matter, especially as this is a highly technical measure. During the House discussions, dozens of interpellators put their names forward to ask questions. This measure is extremely important. We will spend the coming holidays studying how best to protect the public interest as we discuss this bill.

What I can tell you now is that there will probably be no adoption by the House. We will almost certainly want a bicameral conference committee on this. We hope to send a final version to President Duterte before the campaign period starts in February. (end)

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