Progressives say ‘Public Service Act’ won’t give much-needed economic recovery


MANILA – Earlier this week, President Rodrigo Duterte signed into law the Public Service Act that would open up key industries in the country to foreign ownership. Big business and even lawmakers hailed this, saying it would propel the economy towards recovery.

The newly-signed Republic Act No. 11659 amended the 86-year-old Commonwealth Act 146 that re-defined a “public utility” in order to allow foreigners to invest in, own, and control businesses previously reserved for Filipinos.

Its passing, the National Economic and Development Authority (NEDA) claims, will bring in “more foreign investments and improve services, especially in transport and telecommunications where we are lagging behind.” The government’s economic arm added that the law “will benefit all Filipinos through better quality goods and services at lower prices and more meaningful job prospects.”

But progressives beg to disagree.

Ibon Foundation Executive Director Jose Enrique ‘Sonny’ Africa said that foreign direct investments are not “some kind of magic bullet for development.”

Increased foreign investments over the years

Africa said that four decades into opening up the economy to foreign direct investments (FDI), the Philippines is still “a poorly diversified economy with high unemployment” and is highly dependent on overseas work.

FDIs, he added, have been increasing both in absolute terms and share in the country’s economy. In the 1970s, it had an annual average of $80 million, which is equivalent to 0.5 percent of the Gross Domestic Product. In 2021, this stood at $10.5 billion, which is equivalent to 2.7 percent of the GDP.

Yet, Africa said the country is still faced with high unemployment, mostly low-productivity, low-paid or low-earning jobs. This was not changed even with the huge expansion of special economic zones that are disconnected from the domestic economy.

“Any increase in foreign investment from relaxing foreign ownership restrictions will also not change any of this,” he said.

Instead, the share of manufacturing and agriculture in the country’s economy is at its weakest in 70 years. In the manufacturing sector, Africa noted that it is at its smallest share of the GDP as it plunged to 18.6 percent and 19.2 percent in 2020 and 2021, respectively.

Agriculture, on the other hand, is at its smallest at 9.2 percent in 2019 and 9.6 percent in 2021.

‘Lazy economics’

Africa said he considers the relentless opening up of the country’s economy to foreign investment as both bad and lazy economics.

“It is lazy economics because it is being used as a substitute for the necessary but painstaking strategic agricultural development and industrialization that has served developed countries so well. It is bad economics because no country has ever developed from backwardness on the back of indiscriminate FDI liberalization,”

Citing the 2021 World Investment Report of the United Nations Conference on Trade and Development, he said that there has been a number of restrictive investment policies rising worldwide, including those of developed economies.

He also noted how countries like South Korea, Taiwan and China were able to develop their economies with less foreign investment in their periods of economic take-off than the Philippines. This, Africa said, happened “while they were heavily regulating foreign investment.”

Foreign direct investments in China, South Korea, Taiwan, and the Philippines (Graphics by Dawn Cecilia Peña / Bulatlat)

“FDI must be put in its proper context as a mere means to development and not an end in itself, which is what our economic policymakers make it out to be,” said Africa.

A circumvention, a betrayal

In a primer sent to the media, Bagong Alyansang Makabayan (Bayan)-Panay said the law will circumvent the 1987 Philippine Constitution, which states nationality requirement for public utilities as these should be owned and controlled by Filipinos and Filipino companies.

“The nationality requirement is intended to prevent foreigners from controlling public utilities which may be inimical to the nation’s interest and its security. It is also in line with the policy, contained in Sec. 19, Article II of the 1987 Constitution, that requires the state to develop a self-reliant and independent national economy effectively controlled by Filipinos,” said Bayan – Panay.

Meanwhile, Bayan Secretary General Renato Reyes Jr. said the signing of the amended PSA “completes the national betrayal of the Duterte regime” as it happened with the president nearing the end of his term.

“It is tantamount to the sell out of our national economy. What is interesting is if there will be midnight deals completed by the outgoing regime in favor of foreign interests,” Reyes said. (RVO) (

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