Militant lawmakers and organizations are poised to file legal challenges if President Rodrigo Duterte’s government allows foreign corporations to control public utilities like telecommunications and transportation.
Bayan Muna Rep. Carlos Zarate and the party-list’s former congressman, Neri Colmenares, warned that Duterte’s allies in Congress are trying to go around constitutional prohibitions on foreign control of key industries.
The think tank Ibon Foundation also slammed the government’s plans, saying decades of liberalization have been marked with a lack of technology transfer, the outward flow of revenue and the hardships experienced small and medium-scale industries facing competition from global giants.
Duterte and his chief economic planning officer, Ernestio Pernia, announced this week moves to strip down industrial protectionism to boost economic growth via direct foreign ownership.
House Bill 5828 also passed on third reading in September. The measure amends the Public Service Act, liberalizing protected industries in a bid to lure greater foreign investment.
The bill limits the definition of public utility to three sectors: distribution of electricity; transmission of electricity and water pipeline distribution system or sewerage pipeline.
Among its authors are former President and now Pampanga Rep. Gloria Macapagal Arroyo, Albay Rep. Joey Salceda, both staunch advocates of liberalization.
Zarate said passage of the measure would mean opening up the telecommunications and transportation sectors to foreign control.
“They’re trying to avoid a constitutional amendment move that could face defeat,” he told ABS-CBN News.
The Constitution allows Congress to approve a negative list of industries, or where local ownership must be above 60%.
But Section 11 of Article XII of the Philippine Constitution states that only Filipino citizens or corporations with at least 60% Filipino ownership can have a franchise, certificate, or any other form of authorization for the operation of a public utility.
“This can certainly be challenged for being unconstitutional as it essentially violates the constitutional policy on public service industries,” Colmenares said.
“They’ll be hard-pressed to explain why they do not consider telecommunications a public service industry,” the former lawmaker said.
Earlier, opposition Rep. Edcel Lagman questioned why common carriers have been dropped from the list of public utilities.
Transport groups also warned that millions of small owners of public utility vehicles could be gobbled up by big foreign corporations if the government opens up the sector to their control.
Duterte has ordered the phaseout of hundreds of thousands of old jeepneys by January 2018.
In their stead, he wants new, environmentally-safe and energy-efficient models, which cost an average of P1.4 million, way beyond the purchasing capacity of single-unit owners .
Colmenares said Duterte has ordered all government offices to help Congress draft legislation to ease investment restrictions.
Pernia set the tone for full liberalization by expressing impatience at an initial list that allowed 60% foreign ownership.
“I said bring it up to 100% for certain areas,” Pernia told reporters.
Studies are now being made on the potential of opening up "retail, trade, professions, public utilities, and contractors," he added.
While Duterte faces much criticism for human rights violations linked to his crackdown on the narcotics trade, investment firms and multilateral development agencies have praised him hewing to the policies of former president Arroyo.
The economy grew 6.9% in the years third quarter beating the 6.5% expectations of investment analysts and accelerating from the previous quarter.
Pernia said he expects bigger growth in the coming year with foreign investors jostling for a share of the government’s massive infrastructure budget.
Ibon Foundation, however, said Duterte is following the economic policies of his predecessors with no thought for the poor that he claims as his base.
The think tank noted that foreign investments generally increased through 2011 (US$558M) to 2015 (US$1,840M).
“And yet a crisis in jobs persists: there remains 11.5 million combined unemployed and underemployed Filipinos with 2 of 3 citizens employed in irregular work,” it said in reply to questions from ABS-CBN News.
“Foreign investments also have not seen technology transfer while revenues are mostly repatriated to home countries,” Ibon said.