Lawmakers and concerned sectors wary of Chinese control over critical infrastructure and the national security risks it poses are opposing the measure to amend the Philippines’ Public Service Act that aims to do away with the 60-40 rule on foreign ownership of telecommunications and transportation businesses.
Senate Bill No. 2094, which is being discussed at the Senate level, seeks to amend Commonwealth Act No. 146 or the Public Service law and effectively exclude telecommunications from the definition of public utilities in the amendatory bill.
Reacting to the proposal, Sen. Panfilo Lacson warned the new PSA might face a “constitutional challenge” for being against the intent of the 1986 Charter framers. He said the minutes of the Constitutional Commission clearly identified telecommunications as a public utility, the ownership of which should remain controlled by Filipinos.
Sen. Risa Hontiveros was also concerned about increased Chinese incursions into Philippine territory, as she warned against the Chinese government owning crucial infrastructure in the Philippines if the 100-percent ownership of utilities is allowed.
She foresees “grave consequences to national security” if telecoms would be excluded as a public utility, as this would enable Chinese government-controlled companies like China Telecom to gain a stronghold over the critical communications sector.
Around the region, other legislators are also echoing security fears against China’s deliberate inroads into governments and industries across Asia.
Queensland Senator James McGrath, in a recent speech to the Australian Senate, warned that China was using Communist Party-controlled owned instrumentalities such as China Telecom and Dito Telecommunity as “Trojan Horses” to infiltrate the infrastructure of smaller nations in the Indo-China region.
“While China has continued with its wolf warrior diplomacy and while territorial concerns continue to be raised, including in seas off Japan, Vietnam and the Philippines, the Chinese Communist Party government and its military arm have been quietly making strategic acquisitions of another kind,” he said.
Sen. McGrath was particularly worried about China Telecom’s 40-percent share in Dito Telecommunity.
“Many are concerned that Dito Telecommunity is a Trojan horse for spying, including on the armed forces of the Philippines and its allies, the United States and Australia. When we consider how many Australian companies house parts of their businesses in the Philippines, such as call centers, this should ring alarm bells with cybersecurity experts,” he said.
According to the United States Federal Communications Commission, the Chinese Communist Party government has “substantial control” over China Telecom. Chinatel describes itself as a “main force for building a cyber power”, and it is bound by China’s National Intelligence Law article 7, which states, “Any organisation or citizen shall support and assist and cooperate with the state intelligence work in accordance with the law, and keep the secrets of the national intelligence work known to the public”.
Another reason for concern is US President Joe Biden’s signing of Executive Order 13959 in June, listing 59 Chinese companies that are banned from receiving US investments due to their suspected ties to Chinese military, defense or surveillance technology sectors. Dito owner China Telecommunications Corp. is one of those companies included in the list of US-banned companies.
Sen. McGrath was wary of proposals in the Philippines under Senate Bill Number 2094 to allow 100-percent foreign ownership of public utilities, including telecommunications and transportation. “Filipino lawmakers are rightly concerned that this could allow China to own infrastructure which is crucial to the Philippines,” he said.