The Philippine Inter-island Shipping Association recommends the inclusion of sea and air ports among “critical” infrastructure facilities under Senate Bill 2094, which aims to amend the Public Services Act
Common carriers, including domestic ships, are part of critical infrastructure under SB 2094 but not sea and air ports
Reciprocity should be on a “one on one basis’ within the same specific industry sector and not on general terms
The Philippine Inter-island Shipping Association (PISA) has offered recommendations to the Senate bill seeking to amend the Public Services Act (PSA), including adding sea and air ports to the list of “critical infrastructure” system to “complete the supply chain.”
In a letter to Senate Committee on Public Services chair Senator Grace Poe dated April 7, PISA also expressed concern over the bill’s reciprocity provision, saying reciprocity should operate on a “one-on-one basis” within the same specific industry sector and not on general terms.
Senate Bill (SB) No. 2094 aims to clear “the ambiguity surrounding the interchangeably used terms ‘public utility’ and ‘public service,’” and limit public utility to just three services—distribution of electricity; transmission of electricity; and water pipeline distribution and sewerage pipeline systems.
Transportation, telecommunications, broadcasting, and other public services are excluded from the definition of public utility under the measure. The exclusion will effectively allow 100% foreign ownership in these industries as they will no longer be considered public services or be covered by the 60%-40% ownership principle under the Constitution.
Under SB 2094, sea and air ports are not classified as critical infrastructure although common carriers are. Common carriers are persons, corporations, firms or associations engaged in the carriage or transport of passengers or goods or both, by land, water, or air, for compensation, offering their services to the public, as defined by Article 1732 of Republic Act No. 386 (Civil Code of the Philippines), as amended.
Also included in the SB 2094 list of critical infrastructure are transmission and distribution of electricity, water and sewerage pipeline systems, and telecommunications. Critical infrastructure, according to the bill, refers to systems and assets vital to the country that the incapacity of such assets would debilitate national security. One of the reasons why PISA wants to keep domestic shipping as a public utility is national security.
Under SB 2094, any proposed foreign investment in sectors listed as critical infrastructure will require a review by the National Security Council. With sea and air ports not listed as critical infrastructure, investments in them are automatically not subject to such review.
Since the intent of the “critical infrastructure” provision is to ensure the country’s national security at all times, PISA said “we must ensure that these essential services are not compromised even if an investor without the same commitment to our country puts in a lot of capital into our country.”
The group therefore expressed “concern on how the provision (on reciprocity) is satisfied” under SB 2094.
The measure’s reciprocity clause provides that foreign nationals may own more than 40% of public services identified as critical infrastructure only if their country accords a reciprocal right to Filipinos by law, treaty or international agreement.
“Reciprocity may be satisfied by any form or arrangement of exchange that is beneficial to Filipinos, including according rights of similar value in other economic sectors, as may be determined by the Director-General of the National Economic and Development Authority,” according to SB 2094.
But PISA pointed out: “Allowing reciprocity clause to include investment in any economic sector is in effect compromising the very purpose and essence of ensuring the viability of essential critical infrastructure.”
It added, “If the reciprocity clause must be retained, we recommend that the reciprocity be on a ‘one on one basis’ within the same specific industry sector—allowing foreign nationals to own more than 40 percent in sea, air, and land public transport assets and infrastructure, only if their own countries accord the same privilege to Filipinos in the same business activity, with the same potential business value and opportunity, and with consideration by not only NEDA but by the Department of National Defense.”
For example, PISA said reciprocity in the case of an Indonesian or Japanese shipping company investing in the domestic trade without a Filipino partner should allow a Filipino shipping company “to also enter the very strict Indonesian and Japanese cabotage regime which for small ships requires 100 percent ownership.”
Since Indonesia has more islands than the Philippines, PISA noted that reciprocity in their respective shipping industries could potentially be a more than “one-on-one,” which would not be a fair exchange.
On the other hand, if a Singaporean shipping company invests in the Philippines, “we would not have the ability to also benefit from their trade since Singapore does not have an equivalent scale for coastal trade.”
SB 2094 is pending second reading, while its counterpart measure in the Lower House, House Bill (HB) 78, was passed on third and final reading in March 2020. SB 2094 substitutes various Senate bills filed in the Senate to amend the PSA, and takes into consideration HB 78.
Last March, the Senate Public Services Committee chaired by Poe endorsed the approval of SB 2094.
President Rodrigo Duterte certified the PSA bill as urgent on April 13. – Roumina Pablo