Philippine Government Allows Businesses with 100% Foreign Ownership in Transportation and Communications
Power, communications, and transportations industry are vital for the operations of the country. One of the recent laws in the Philippines is allowing businesses with 100% foreign ownership regarding the transportation and communications industry to operate.
The public utility business is a business entity that focuses on providing for the public’s demands at large. The organizations that focus on these industries provide electricity, power, communications, and transportation.
Power and electricity make it possible for people to enjoy the many conveniences the technology brings. In its purest sense, power and electricity capacitate every household, office, and business with their functions.
Communications allow everyone to connect with their loved ones. In a professional sense, it allows the continuity of business operations without hassles or miscommunication. When communication efficiency and convenience are taken away, people lose their instant connectivity from their work and colleagues.
Transportation, on the other hand, allows everyone to get to places conveniently. Those who can’t afford to purchase a private vehicle can travel around on a public utility vehicle. In the Philippines, people rely heavily on the communications and transportation industry. For them, these two industries are vital for their daily lives. This is because people need to communicate and travel.
Now, what happens to companies with 100% foreign ownership that will not be able to operate? Furthermore, will this benefit the people of the Philippines and its economy? Let’s understand further.
House Bill 78: Amendment to the Public Service Act
On 10th March 2020, the House of Representatives approved the amendment to the Public Service Act that initially prohibited the foreign ownership of companies belonging to the power, transportation, and communications industry.
The 1987 constitution provides that companies belonging in the mentioned industry must only have 40% foreign ownership. However, after the amendment, companies belonging to these industries can now be at 100%.
The 1987 constitution initially stated, “No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or corporations or associations organized under the laws of the Philippines, at least sixty per centum of whose capital is owned by such citizens. The state shall encourage equity participation in public utilities by the general public. The participation of foreign investors in the governing body of any public utility enterprise shall be limited to their proportionate share in its capital, and all the executive and managing officers of such corporation or association must be citizens of the Philippines.”
With 136 yes votes, 43 no votes, and only one representative to abstain, the earlier passage from the 1987 constitution is amended.
The Scenarios of 100% Foreign Ownership to Public Utilities Industry
There are always two sides to the coin. We consider both positive and negative scenarios. Read them more below.
- Labor conditions unfavorable to Filipino workers
- Uncontrolled authority over management and ownership concerns
- Job security issues
- Increased job opportunities
- More competing organizations
- Encourages foreign investment
Although we cannot identify how each scenario will play out in the implementation of businesses with 100% foreign ownership, this move will impact the Philippines’ economic scene with an attractive avenue for foreign incorporation.
How 3E Accounting Can Help
Now that the Philippines has paved the way for foreign company incorporation for public utilities, this will attract investors and organizations alike to provide their services to the Filipino people.
If you are a foreign company that intends to deliver exceptional service and products to Filipino people’s benefit, 3E Accounting can help you! 3E Accounting provides exemplary services and aid, such as Philippine company registration for organizations that want to invest in the Philippines.
Book a call with us or send us a message. 3E Accounting is more than happy to help!