Public Service Act IRR out, opening key areas to 100% foreign equity

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Public Service Act IRR out, opening key areas to 100% foreign equity
Socioeconomic Planning Secretary Arsenio Balisacan said the release of the Public Service Act implementing rules and regulations "will further improve the country’s position as an ideal investment hub, which will help enhance employment opportunities and allow more Filipinos to benefit from more improved goods and services.” Photo from the National Economic and Development Authority.
  • The National Economic and Development Authority (NEDA) has released the implementing rules for Republic Act No. 11659, opening the way for 100% foreign ownership of businesses in select industries such as airports, railways, expressways, and telecoms
  • Power transmission, water and wastewater pipeline distribution, petroleum and petroleum products pipeline transmission, seaports, and public utility vehicles still subject to the 60-40% foreign equity limitation
  • NEDA chief Arsenio Balisacan says the PSA changes should attract much-needed capital and technology, sustain the government’s high-growth trajectory, and generate high-quality jobs

The Amended Public Service Act (PSA) implementing rules and regulations have been released, opening the way for full foreign ownership of businesses in select industries such as airports, railways, expressways, and telecommunications.

The National Economic and Development Authority (NEDA) released the IRR for Republic Act No. 11659 on March 20, after extensive review and consultations with the public, legislators, relevant administrative agencies, and other key stakeholders, the agency said in a press statement.

When they take effect on April 4, 2023, the PSA amendments will enable the liberalization of key public services by allowing 100% foreign ownership of businesses in select industries, unlike previously when foreign ownership was limited to 40%.

Not all public services, however, will be opened fully to foreign investors. Utilities such as power transmission and distribution, water and wastewater pipeline distribution system including sewerage, petroleum and petroleum products pipeline transmission systems, seaports, and public utility vehicles remain subject to the 60-40% foreign equity limitation.

“The implementation of policies on competition and regulatory efficiency necessitates comprehensive and transparent consultations with key stakeholders and legislators to ensure that these remain faithful to public interest,” said Socioeconomic Planning Secretary Arsenio M. Balisacan, adding that all 21 agencies, including NEDA, approved the IRR.

“With the IRR already in place, we see this as a landmark reform that will further improve the country’s position as an ideal investment hub, which will help enhance employment opportunities and allow more Filipinos to benefit from more improved goods and services,” Balisacan, who is also NEDA director general, added.

Accordingly, the amendments also provide safeguard provisions to protect the country against national security concerns that may arise through any proposed merger or acquisition, or any investment in a public service.

“The PSA amendments form a critical part of our endeavor to attract foreign investments to the country to boost market competitiveness, foster innovation, and create high-quality jobs,” Balisacan said.

He said relevant administrative agencies may issue guidelines and circulars for the effective implementation of RA No. 11659 and its IRR, provided that these remain consistent with Commonwealth Act No. 146 as amended, as well as with RA No. 11659 and its IRR.

The NEDA chief said that, along with complementary government policies and measures, as well as the Marcos Administration’s continuous efforts to raise investor interest in the country, “the Philippines [should] be able to attract much-needed capital and technology, sustain its high-growth trajectory, and generate high-quality jobs enabling rapid poverty reduction in the next six years”.

These policies and measures include the amendments to the Foreign Investments Act (FIA), the Retail Trade Liberalization Act (RTLA), the passage of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, the Regional Comprehensive Economic Partnership (RCEP) ratification, amendments to the IRR of the Build-Operate-Transfer (BOT) Law, and approval of the NEDA Joint Venture Guidelines.

The amended PSA Act was signed on March 21, 2022.

Download the IRR here.