The Public Service Act and

Economic Recovery
 The country is currently experiencing challenges.

A recession Rising unemployment Struggling MSMEs

The country’s The unemployment
economy shrank by rate in July 2020 was
estimated at 25.9%

16.5%
of businesses surveyed
10.0% by DTI from June 4 to
17 have closed their
in April-June compared
operations
to last year
SOURCE: Philippine Statistics Authority SOURCE: Philippine Statistics Authority SOURCE: Philippine News Agency
The pandemic increased the need for Filipinos to have
access to reliable and affordable internet access.

remote learning

buying and working from

selling goods home
Businesses and MSMEs need internet access to transition to
e-commerce to participate in the digital economy to
improve their productivity and resiliency.

Online selling Online banking and Efficient logistics

use of FINTECH
 However, the state of internet services is poor.

• Only 67% of the Philippine

population has access to the
internet
• The cost of internet is high
• The quality of service in
unreliable

Sources:
• We Are Social & Hootsuite, (2020). Digital 2020 Report. https://datareportal.com/reports/digital-2020-philippines
• International Telecommunications Union. (2019). Measuring Digital Development: ICT Price Trends.
• Speedtest by Ookla. (2020, May) Speedtest Global Index. https://www.speedtest.net/global-index
The most recent 2020 Digital Quality of Life survey, which
measured the digital experience of countries, ranked the
Philippines 66th out of 85 countries. The study noted that
expensive, low quality internet and the need to upgrade
infrastructure as the reasons for the low ranking.

Source: Business World. (2020, August 18). Expensive, slow internet pulls down Philippine digital ranking.
In addition, internet access in the Philippines is slow and expensive.

FIXED BROADBAND PRICE IN PP$, SELECTED NATIONS IN ASIAN, 2019

COUNTRY SPEED COST
IN MBIT/S Purchasing Power Parity Most Value for Money (PPP$
per Mbit/s)

Singapore 1024 44.01 0.0

Malaysia 30 50.40 1.7
Thailand 50 51.41 1.0
Viet Nam 2.5 17.77 7.1
Philippines 3 34.23 11.4
Lao P.D.R 3 48.25 16.1
Cambodia 4 29.36 7.3
SOURCE: International Telecommunications Union. (2019). Measuring digital development: ICT Price Trends
As a result, Filipinos are struggling with resuming essential
activities safely.
 The transportation and logistics sectors also play
a crucial role in today’s new normal.

Online transactions cannot be TNVs could provide people

fully utilized without a good with a safe alternative mode
logistics industry. of transportation.
 Unfortunately, our logistics industry requires much improvement,
particularly in the areas of infrastructure and competence.

International Logistics Performance Index, Selected Asian Countries, 2018

SOURCE: The World Bank. (2018). International Logistics Performance Index.

 The shipping industry, which is a key player in the logistics
sector, is also plagued with challenges.

1. Shipping cost is high - average port-to-port cost per nautical mile in

the Philippines is $1.47, which is higher than Indonesia’s $0.77 and
Malaysia’s $1.36*;
2. High costs due to lack of competition - Few operators serve most
shipping routes, with more than 40% of routes served by a single
operator;
3. Inadequacy of infrastructure such as ports and port facilities; and
4. Aging ships which are mostly imported second hand from other
countries.

SOURCE: Economic Research Institute for ASEAN and East Asia & The Maritime Industry Development Plan; , World Bank "Fostering Competition in
the Philippines- the Challenge of Restrictive Regulations , November 2018
THE PHILIPPINES NEEDS IMPROVED TELECOMMUNICATIONS AND
TRANSPORTATION SERVICES FOR ECONOMIC RECOVERY.
The World Bank
estimated that “Reforms
of all service sector could
cause the annual GDP to
grow by .02% and add
US$ 0.6 billion to GDP”.
The liberalization of the
telecommunication and
transport sectors will
substantially contribute to
the estimated GDP
growth.
World Bank "Fostering Competition in the
Philippines- the Challenge of Restrictive
Regulations , November 2018 OECD
The internet can serve as
a powerful catalyst for
job creation because jobs
are created within the
internet ecosystem. A
Global SME survey
discovered that 2.6 jobs
were created for every
one that was lost
because of the
development of the
Internet Economy.
Maryka, J., Roxburgh, C. (October 2011). The
great transformer: The impact of the internet
on economic growth and prosperity.
McKinsey Global Institute
The development of a
competitive service sector
will enhance: 1) inclusive
growth and productivity
through the creation of
productive jobs, 2) enable
access to goods and
services for all parts of
society as well as MSMEs,
and 3) generate positive
spillovers on
manufacturing
productivity in global
value chains (GVCs).
Organization for Economic Co-Operation
and Development (OECD). (2018, March).
Investment Policy Reviews: Southeast
Asia, (14- 15).
 IN ORDER TO IMPROVE THE TELECOMMUNICATIONS AND
TRANSPORTATION INFRASTRUCTURE IN THE COUNTRY, WE NEED
INFUSION OF CAPITAL.

• PHP 800B to improve broadband services

• PHP 45.2B to upgrade domestic shipping to support the

Philippine Nautical Highway

Sources:
• The Oxford Business Group. (2015). Building infrastructure with an eye to future growth in the Philippine IT sector. The Report: Philippines 2015.
https://oxfordbusinessgroup.com/overview/building-infrastructure-eye-future-growth-philippine-it-sector
• Maritime Industry Authority, (2018). Formulation of the Ten- Year Maritime Industry Development Plan.
 TO GET THE INFUSION OF CAPITAL, THE PHILIPPINES NEEDS
TO BE MORE COMPETITIVE IN ATTRACTING FDI FROM
DIVERSE INVESTORS.
2019 FDI Regulatory Restrictiveness Index

We are not competitive

in attracting FDI because
we have one of the most
restrictive FDI policies
among ASEAN countries.

SOURCE: OECD. (2019). FDI Regulatory Restrictiveness Index

ENACTING THE AMENDMENTS TO THE PUBLIC SERVICE ACT
WILL ENABLE THE PHILIPPINES TO BE MORE COMPETITIVE IN
ATTRACTING FDI FROM DIVERSE INVESTORS.
 PSA Outcomes
ACCESS TO FAST, RELIABLE & AFFORDABLE
MOBILE AND INTERNET SERVICES

Schools from unserved

Cheaper and more and underserved areas will
reliable mobile services have access to the internet

Farmers and MSMEs will have

Access to innovative
financial services: 1) money
transfers; 2) mobile banking;
and 3) utility & bill payment
services
access to markets and services
provided by government, along
with new technologies such as
online businesses,
telecommuting & online
procurement
 PSA Outcomes
EFFICIENT, SAFE & RELIABLE TRANSPORTATION SERVICES
Improvement of existing infrastructure Cheaper and safer domestic shipping
of people and products
- MRT, PNR
- lower domestic shipping
- RORO ports
costs translate to lower prices
- Regional Airports
of food and products
- Clark Int’l Airport
- ships with better safety
records
Construction & operation of new
Access to transportation innovations
infrastructure
- app-based transportation for
- Manila-Clark Railway people and packages necessary
- Mindanao Railway for business, logistics, tourism
- Metro Manila subway - safe, secure, & convenient
 The PSA addresses concerns on national security.

Improves competitiveness of the Philippines to attract foreign direct investment

1 and ensure that no single foreign country will dominate investments in the
telecommunication and transport sectors.

Attracting investors from a diverse number of countries will minimize potential

2 risks that the country may face as the United States continues to implement its
Clean Network program. Telecommunication companies are heavily invested in
technology from China and may not be able to access the US internet in the
future.
Screening of Investments from National Security threats: Proposes strict screening

3 of FDI in critical infrastructure and adopts internationally accepted security

standards patterned after countries such as the United States, the United
Kingdom, Australia, Japan and Taiwan.
 The Philippines is capable of protecting itself from potential
threats to national security posed by foreign investments.

AFP Spokesperson Maj. Gen. Edgard Arevalo stated that safeguards

have been put in place against espionage and other security risks
stating that:

“ We addressed that. The risk to have

that possibility is very low. There’s a
low threat in terms of concerns about
spying, listening devices or
eavesdropping. We have studied that.
”
Source: AFP: Measures in place vs China spying via telco. Nestor Corrales, Inquirer.net. September 16, 2020.
https://newsinfo.inquirer.net/1334419/afp-measures-in-place-vs-china-spying-via-telco#ixzz6YCiXvCFq
 The PSA addresses concerns of the services sector.

Strengthens regulatory policies to ensure a fair playing and not

1 adversely affect Filipino companies. For example, MARINA will

continue to regulate entry and exit in the routes to avoid
ruinous competition for local companies.

Help attract FDI needed by local industries such as shipping

2 and airlines to recover from the crisis of the COVID-19
pandemic.
 Economic managers call for the enactment of the PSA as
crucial legislation for economic recovery.
“The economic team also supports complementary bills that will open up our country to
more foreign direct investments, such as amendments to the Foreign Investments Act, the
Retail Trade Liberalization Act, and the Public Service Act.” – Carlos G. Dominguez, DoF
Secretary

“[The Public Service Act] will be a key milestone in capturing more foreign investments in
the post-pandemic era.” – Karl Kendrick T. Chua, NEDA Acting Secretary

“The Philippines’ dismal ranking is the reason behind the urgent need for more reforms such
as amendments to the Retail Trade Liberalization Act (RTLA) and the Public Service Act (PSA).”
– Ramon M. Lopez, DTI Secretary

Sources
• https://www.dof.gov.ph/download/pre-sona-edc-speech-sec-dominguez/?wpdmdl=26413&refresh=5f489b3c1be5e1598593852
• Manila Standard. (2020, July 5). Public Service Act vital for PH growth—solon. https://manilastandard.net/news/national/327837/public-service-act-vital-for-ph-growth-solon.html
• Ibanez, J. (2020, September 1). Reforms pushed to attract more FDI. Business World. https://www.bworldonline.com/reforms-pushed-to-attract-more-fdi/
 Proposed Amendments
PROVIDE INCREASE
a clear definition of the penalties for violations to a
a public utility MINIMUM of 5K and MAXIMUM
of P2M/day, disgorgement of
profits and treble damages
INSTITUTE
an appropriate mechanism
for fixing rates based on
reasonable rate of return

REVIEW RECOGNIZE
of Foreign Direct Investment the transfer of functions of the
in covered transactions Public Service Commission to
various administrative agencies
 We strongly urge for your
support for the speedy
enactment of the amendments to
the Public Service Act.