* This is my column in BusinessWorld last May 29, 2019.
One of the oldest laws in the Philippines yet having a
huge and restrictive impact on the modern economy is Commonwealth Act 146 or
the Public Service Act (PSA), which was approved on November 7, 1936, or nearly
83 years ago.
That law lists five sectors as “public utilities,” and
hence, foreign capital is restricted, if not prohibited. These are (a)
transmission of electricity, (b) distribution of electricity, (c) water works
and sewerage system, (d) telecommunications, and (e) transportation (land, sea,
air).
Where there is restriction, there is limited or no
competition and thus, consumers are penalized with the limited choices. The
solution is to expand competition, and one proposed legislation is amending the
PSA and removing for now sectors (d) and (e), telecommunications and
transportation. These are contained in HB 5828 (passed on third reading since
September 2017) and SB 1754 (still a Senate Committee Report).
Two relevant news here and I quote portions of those
stories:
1. “Public Service Act Amendments to open economy to more
investments, generate more jobs – Poe”
(Senate Press Release, February 15, 2018).
“Poe, chairperson of the Senate committee on public
services, said the proposed amendments seek to address the confusion in the
definition of a public utility and public services, which, for several decades,
hampered economic growth. ‘Foreign entities would be allowed to come in and
invest. The goal is to increase competition, provide better quality services
and also to create jobs,’ Poe said.”
2. “Senate eyes approval of Public Services Act
amendments before 17th Congress ends in June” (BusinessWorld, April 3, 2019)
“‘Increasing FDI and promoting national security are not
conflicting goals. The country can have both as long as proper safeguards are
observed’” she (Sen. Poe) said, “Foreign competition can give consumers more
genuine alternatives to existing services.”
These are good announcements and there are many numbers
to prove this. One is about domestic tourism and domestic airports. In the
ASEAN, there are three big archipelagic countries, with their estimated number
of islands — Indonesia with 18,100 islands, Philippines with 7,500, and
Thailand with 1,400 islands.
More islands mean more shipping lines and seaports
needed, or better yet, more airlines and more airports needed. Indonesia and
Thailand have expanded their number of airports over the last 10 years and
their domestic passengers have nearly tripled. The Philippines did not expand
its domestic airports and domestic passengers have only doubled. Vietnam has
consolidated its domestic airports but it has expanded the number of domestic
and foreign airlines into its soil and domestic passengers have expanded more
than four times (see table).
To further promote the Philippines’ domestic and
international tourism, and in the process further expand our GDP size, we need
further airlines liberalization, further expansion of existing provincial
airports, and further improvement of roads, seaports, energy and other physical
infrastructures to serve the many resorts and hotels in many provinces and
islands of the country.
There is only one week left in the current Congress that
will have sessions until June 7, 2019. The Senate and then the bicameral committee
should pass the PSA Amendment bills into law. This should be among the
important laws that the Duterte administration can do for the consumers,
passengers, visitors and investors.
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See also:
BWorld 331, How governments expand, May 31, 2019
BWorld 332, The global taxpayers conference, June 02, 2019
