Philippines’ lawmakers plan to attract more foreign direct investments by allowing full foreign ownership to its telecommunications and transportation sectors.

Congress of the Philippines last week (4 February 2022) approved a bill to amend the Public Service Act that caps foreign ownership of public utilities at 40%.

The reconciled law is now awaiting approval from the president Rodrigo Duterte.

The proposed amendment allows 100% foreign ownership in all economic sectors, including telecoms, domestic shipping, railways, subways, airlines, expressways, tollways and airports.

Sectors in natural monopolies, such as transmission and distribution of electricity, petroleum, water, seaports, and public utility vehicles, will remain restrictive to the 40% foreign ownership limit.

However, foreign state-owned enterprises remain barred from owning shares in public utility or critical infrastructures.

The lawmakers expect to see an increase of up to P299 billion ($5.82 billion) in foreign investment over the next 5 years.

The country has been lagging in foreign direct investments due to its restrictive economy, said House Tax Chief and Albay’s Representative Joey Salceda.

The country ranked third among the 83 countries with the most restrictive economies, based on 2020 data by Organization for Economic Cooperation and Development.

“Such business climate has dissuaded foreign investments from entering the country, and the lack of competition in public services has led to high prices and subpar quality of services,” Quimbo explained.