Philippines: President approves law to remove foreign equity restrictions on public service companies
On March 22, 2022, the President of the Philippines signed into law RA 11659, which amends the Public Service Act to relax foreign ownership restrictions imposed by the Philippine Constitution on “utilities.” RA 11659 will come into force on April 9, 2022, 15 days after its publication in general circulation newspapers on March 25, 2022. A copy of RA 11659 can be found here.
With the enactment of RA 11659, the Philippines now has a public service law that: (a) removes foreign equity restrictions on most public service companies, except those deemed “utilities” and “critical infrastructure”; (b). to limit the scope of “utilities” to public service companies involved in distribution and transmission of electricity, oil and petroleum product pipeline systems, water pipeline distribution systems, wastewater and sewer systems, seaports and PUVs; (c) to “critical infrastructure” “The scope is limited to owning, using or operating”
With the enactment of RA 11659, the industries covered by foreign equity restrictions will be limited to those considered utilities and critical infrastructure. As such, this will create more opportunities for foreign investors to invest in various public service sectors that are no longer considered utilities and are restricted by foreign equity. In addition, businesses that rely on these newly opened sectors (for example, business process outsourcing and information technology businesses) will benefit, as additional investment in these sectors is expected to lead to increased competition, lower prices and improved service quality.