President Rodrigo Duterte has ordered a review of all government contracts with companies and other countries to remove "onerous" provisions that he said could harm Filipinos.

He instructed all government agencies at a Cabinet meeting on Monday to "check and review all contracts... and remove onerous provisions that might be detrimental to the lives of Filipinos", his spokesman Salvador Panelo told reporters yesterday.

It was unclear how many contracts would be up for review, or the scope of such investigations.

The order seems to stem from Mr Duterte's frustrations over a severe water shortage that hit large parts of metropolitan Manila for weeks last month.

Taps ran dry for some six million customers of privately held concessionaire Manila Water.

Executives of Manila Water owned up to the "supply deficit situation". They said they were caught unprepared when a key water source began to dry up following a prolonged dry spell, as they had insisted on servicing more customers than their infrastructure could handle.

Mr Duterte berated local water agency officials, and threatened to scrap the contracts of Manila Water and the capital's other concessionaire, Maynilad Water Services.

Mr Panelo said Mr Duterte was upset over a ruling in September last year by an arbitration court in Singapore that allowed Maynilad Water to claim over 3.4 billion pesos (S$88 million) in indemnity over rate hikes that the government had blocked in 2015 and 2016.

Justice Secretary Menardo Guevarra said Mr Duterte found it unfair that the government would have to indemnify its concessionaires for delays in the implementation of water rate hikes, which "unduly ties the hands" of the government.

Mr Duterte then ordered the justice department to review the government's water concession agreements, as well as other "onerous... contracts with private domestic companies".

"Contractual provisions that are contrary to public interest or public policy may be invalidated under our laws," said Mr Guevarra.

Mr Domingo Yap, president of a business chamber of thousands of Filipino-Chinese entrepreneurs, welcomed the announcement.

"There is nothing wrong with the government review. As a matter of fact, we want the government to be transparent. The President now is very strict. He wants no corruption. On our part, that is advantageous," he told Reuters.

"We like the government to be transparent. But once we approve a deal after scrutiny and it is found to be free from corruption, the projects should be fast-tracked."

Mr Robert Roces, chief economist at Security Bank in Manila, said the review should be a positive development.

"Worst case is that this results in inefficiency if and when a sudden halt is ordered to projects already rolled out," he told Reuters.