New RFINL to exclude public utilities–Pernia

December 9, 2016 at 09:16

In an interview with the BusinessMirror, Socioeconomic Planning Secretary Ernesto M. Pernia said items in the RFINL, such as statutory provisions that can be removed through Congress, will also be removed.

Under the RFINL, a maximum of 40-percent foreign equity is allowed for public utilities. This is also the case with sectors, such as education, ownership of private lands, condominium units, and others.

“[The priorities] will include taking out items on the negative list that can be done by Congress. These are called statutory provisions. There are investment areas on the negative list that are statutorily prohibited that can be taken out by Congress,” Pernia said.

Bernabe said the Constitution does not define what a public utility is. It is only defined by the Public Services Act of 1930.

He said limiting the definition of public utilities in this law will enable the government to allow foreign players in this sector.

If we can limit the scope of the Public Services Act of what constitutes public utilities, then that will lay the framework for foreign investors to come in in critical areas like telecommunications,” Bernabe said.

PCC Chairman Arsenio M. Balisacan welcomed this move, noting that shortening the RFINL bodes well for the promotion of competition in the Philippines.

Balisacan believes competition is key to addressing the country’s development constraints and struggle to attain inclusive economic growth.

He said that for one, millions of Filipino students are deprived of receiving topnotch education simply because the RFINL only allows a 40-percent foreign equity in this sector.  Balisacan said this is the reason top foreign schools are locating in other Southeast Asian countries like Malaysia.

“I think it’s a good idea to lift the restrictions, not only in telecommunications, but in other sectors in the economy, including education,” Balisacan said.

For her part, Neda Deputy Director General Rosemarie G. Edillon said the government should also remove restrictions in the practice of professions.

The existing RFINL states that professions that do not allow any foreign participation include pharmacy, as well as radiologic and x-ray technologists.

Pharmacy is protected by Republic Act (RA) 5921, or the Pharmacy Law, while radiologic and x-ray technologists are protected by RA 7431, or the Radiologic Technology Act of 1992.

The RFINL contains investment areas/activities where foreign equity participation is limited by mandate of the Constitution and specific laws. It also consists of investment areas/activities where foreign equity participation is limited for reasons of defense, security, risk to public health and morals, and protection of small- and medium-sized domestic market enterprises.

The amendment of the list is headed by the Neda Secretariat, as provided for under Section 8 of RA 7042, or the Foreign Investments Act of 1991, which states that amendments may be made upon the recommendation of the secretary of national defense or the secretary of health, or the secretary of education, endorsed by the Neda, approved by the President, and promulgated by a Presidential Proclamation.

Source: https://www.businessmirror.com.ph/new-rfinl-to-exclude-public-utilities-pernia/