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Cunning maneuver

Prohibiting state-owned enterprises to engage in the public service sector is discriminatory to the People’s Republic of China and even inimical to the economic interests of the Philippines.



Senators are again trying to pull a fast one amid the percolating drama in relation to the coming polls by inserting a controversial provision in the bill to amend the Public Service Act, which is one of the reform measures that President Rodrigo Duterte wanted done before he steps down in June.

Former presidential spokesperson Harry Roque Jr. branded as unconstitutional the Senate amendment to the 1936 Public Service Act since it seeks to prohibit state-owned foreign enterprises to engage in public services.

Indirectly, the bill is targeting Chinese state firms and their local partners even if it is not specifically identified in the bill.

The provision of the bill that sought to amend the 1936 Public Service Act (PSA) is discriminatory against China which makes it “patently unconstitutional.”

“Prohibiting state-owned enterprises to engage in the public service sector is discriminatory to the People’s Republic of China and even inimical to the economic interests of the Philippines because both countries own businesses that are key players in the power generation and distribution industry,” Roque said.

Instead of liberalizing the antiquated and restrictive law, Roque said it will become discriminatory if the Senate version pulls through. The Senate passed on third and final reading Senate Bill 2094 last month.

Such a limiting provision has been struck down by the Supreme Court in previous occasions such as in the attempt of the previous regime to form the Truth Commission that solely seek to probe the conduct of the administration of former President Gloria Macapagal Arroyo.

The SC cited the equal protection clause under the 1987 Constitution for junking the Executive Order creating the body.

The Constitution states that everyone in the Philippines, which includes foreigners, is entitled to equal protection of the law.

Senate Bill 2094 embodying the Amendments to the PSA, restrict investments by foreign state-owned enterprises on public utility, critical infrastructure which is referred to as public service that operates, manages, or controls for public use on any of the following: (a) distribution or transmission of electricity; (b) petroleum and petroleum products’ pipeline distribution systems; (c) water pipelines distribution systems; and (d) wastewater pipeline systems; as well as (d) airports, seaports, public utility vehicles, and toll-ways or expressways.

The rationale stated in the bill in including such a provision is to protect national security.

Most Chinese investments in the country and elsewhere are state-owned and controlled.

In a webinar on post-pandemic recovery, Roque posited on the senators on the need to discriminate against Chinese state enterprises when it is not relevant to the law.

“The law is about liberalizing the PSA. It recognizes that if we are to achieve better public service to the people, we need to allow more players into the sector,” he noted .

Industrialist Federation of Filipino Chinese Chambers of Commerce & Industry (FFCCCII) President Henry Lim Bon Liong noted the limiting provision will work against the thrust to generate more investments.

ASEAN neighbors have more significant share of foreign investments and the stiff competition does not need another restrictive law.

“The amendments to the PSA, which is part of President Duterte’s legislative priorities, will hopefully make our foreign investment policies at par with our neighbors. We hope that the approval of the correct version of this bill in the House and Senate will pave the way for its enactment into law,” Lim added.

George Siy, economic analyst and director at the think tank Integrated Development Studies Institute notd the provision will affect several economic sectors,
“Our telcos are capitalized by Indonesians and Singapore government enterprises, the National Grid Corp of the Philippines by the Chinese,” he said.

According to Siy, the country needs new capital and technology inflows from abroad into critical infrastructure.

It appears that the bill was motivated by foreign dictates that sought to blot out the influence of China in the local economy since it is a threat to the long-established hegemony in the country.