Post-SONA Priority Business Legislation

President Duterte’s term-ender State of the Nation Address (SONA) on Monday, July 26, 2021, highlighted the Administration’s misses on its common legislative agenda (CLA) set by the Legislative-Executive Development Advisory Council’s (LEDAC) during the 17^th and 18^th Congresses. Only 11 months remaining in the Office, the Duterte Administration has enacted 24% or 14 out of the 58 CLAs identified as of the President’s last SONA, surprisingly despite the fact that members of the President’s party list—PDP-Laban, constitute a supermajority in the House of Representatives.

While the remaining 44 CLAs are getting hurdles in the House of Representatives, President Duterte called on the Congress to expedite the passing of 12 legislative measures before his term finally ends at noon on June 30, 2022. These include:

1. Unifying the system of separation, retirement, and pension for uniformed personnel
2. Free legal assistance for police and soldiers
3. Foreign Investments Act amendments
4. Public Service Act amendments
5. Retail and Trade Liberalization Act amendments
6. Creation of a Department for Overseas Filipinos
7. E-governance Act
8. Creation of the Philippine Center for Disease Prevention and Control
9. Creation of the Virology Institute of the Philippines
10. Creation of a Department of Disaster Resilience
11. Law mandating evacuation centers in provinces, cities, and municipalities mandatory
12. Modernization of the Bureau of Fire Protection

Of the listed measures, one is focused on providing an inter-agency digital infrastructure for the national and local government and their attached agencies, a common internal records management information system and information database, and digital portals for the delivery of public services through the e-Governance Act.

Another is proposed to create a Department for Overseas Filipinos to streamline all agencies that serve as helpdesks for the overseas Filipino workers, while two are aimed at strengthening the benefits received by the uniformed and armed personnel of the Philippines, and at providing legal assistance to them when faced with legal actions in performance of their duty.

Eight reforms, however, are expected to have a long-term effect on the business sectors in the country. These are hoped to be the legacy reforms that the Duterte Administration will provide to the ailing economy following the impact of the pandemic. These are as follows:

Pandemic mitigation and disaster response

While legacy policies and achievements of the Duterte Administration were emphasized in his speech, including that of increasing the infrastructure spending of the government to 5% of its gross domestic product (GDP) from an average of 2% of the previous administrations, the battle against the proliferation and usage of illegal drugs, the validity extension of Philippine passports and driver’s license, and pinning down of oligarchs and anti-state rebel groups, among others, the SONA was rather lacking in providing adequate direction for combating the pressing battle of the country against the COVID-19 virus and its variants in the President’s final year in office.

The creation of additional bed spaces and quarantine facilities may gain accolades, but the necessity to contain the viral contagion is still left to the ostensible effect of community lockdowns should another surge of cases occur. This may impose risks on labor-intensive and export-oriented industries that are more likely to boost economic recovery.

President Duterte, however, called on Congress to prioritize the creation of the Philippine Center for Disease Prevention and Control, and the Virology Institute of the Philippines to address the concerns of similar health-related crises in the future.

Disaster preparedness and response was also a predominant theme in the SONA given that the country is frequented by natural calamities year-round. The creation of a Department of Disaster Resilience and modernization of the Bureau of Fire Protection are hoped to facilitate readiness of the country against disasters.

Low hanging fruits that keep on hanging

For more than a decade, various congresses have attempted to amend business laws that are restrictive to feasible range of investment levels, but to no avail. The triad of laws have been deemed as economic enablers to facilitate more domestic and foreign investments in the country.

Hurdles have embattled the reform of the Public Service Act of 1936 (Commonwealth Act No. 146) that has been restricting foreign investments in fundamental sectors of the country. Since the enactment of the PSA Act, investment in public services and utilities is subject to 60% Filipino ownership before getting approved. The proposed amendment will then provide a statutory definition of public services and public utility, and separate public services from the constitutionally restrictive 60-40 investment ownership rule.

Another low hanging fruit legislation for several years is the amendment to the Foreign Investment Act of 1991 (RA 7042, as amended by RA 8179). While serving the purpose of attracting foreign direct investments (FDI) when it was enacted, the 28-year-old law has been lagging behind the modern dynamics of business investments, and would thus need a fine tuning. In 2018, the Organization for Economic Cooperation and Development’s (OECD) FDI Regulatory Restrictiveness Index ranked the Philippines among the most restrictive economies in terms of FDI rules in the business services sector, telecommunications, media, electricity, and transport industries. It is now viewed as timely to reform the law’s appropriateness to the contemporary destinations of foreign investments.

Finally, the Retail Trade Liberalization Act amendment will be a welcome development to foreign retailers in the country. The proposed amendment will reduce the minimum paid-up capital requirements for foreign retail enterprises from US$2.5 million to US$1 million, while those who wish to establish more than one physical store are required to invest at least PHP 25 million (US$524,000) for each store. It will also remove pre-qualification requirements for foreign retailers to have been engaged in the retailing industry for the past five years, or to have at least five retailing branches located anywhere worldwide.