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SHOULD
power rates remain uncompetitive within the first half
of the year, some semiconductor and electronics
companies could consider leaving the country by the
second semester.
“We have
relayed to the government this concern that if we don’t
see some improvements in our power costs by the second
half of the year, some manufacturing companies could
leave the Philippines,” Arthur Young, president of the
Semiconductor and Electronics Industries of the
Philippines Inc. (Seipi), told attendees of the European
Chamber of Commerce of the Philippines Business Forum.
The
Seipi official said the
Philippines
remains to have one of the highest power costs today in
the region of $0.12 per kilowatt (kWh) to $0.14/kWh.
Young
noted that
China,
on the other hand, offers power costs at $0.08/kWh to
$0.09/kWh, while Thailand and Taiwan offer $0.05/kWh to
$0.06/kWh.
Young
said this is a serious a concern that Seipi has
communicated to the government in a very serious way,
adding that “if we don’t see some improvement [in] costs
by the second half of the year, manufacturing companies
will be leaving the country.”
Meanwhile, University of the
Philippines
professor Benjamin Diokno underscored the need for
diversification of the economy, particularly in
manufacturing.
Diokno
quickly added, however, that the country’s 7.3-percent
growth last year is a difficult act to follow this year
considering harsher external factors like the recession
in the US, world economic growth and low consumption
growth owing to the strong peso against the dollar.
Diokno
said the slow government spending, owing to its effort
to balance the budget, does not do the country any good;
it is more of a test of manhood than good economics.
“The
political turmoil, perception of corruption, weaker US
and world economy and the government’s obsession to
balance the budget will slow investments in the
country,” said Diokno.
In
response to Young’s warning, First Gen Corp. president
and chief executive Federico R. Lopez reiterated his
call to the government to use the royalties it gets from
the Malampaya natural gas to lower the cost of power to
industries.
“If the
government will be using the royalties to provide
subsidy of some sort, it should be something that will
get job creation rolling in this country,” the First Gen
official told the BusinessMirror.
Lopez
said the government should use the royalties to lower
power rates to big industries, especially the ones that
are exporting, especially with the Seipi warning that
manufacturers will leave the country.
Lopez
also noted that talks of accelerating open access or
doing it in an interim manner is good, as it increases
the competitive tension among the private industry
players.
“However, it does not really address power rates,” said
Lopez, adding that the government should really look
into the direction of the royalties to reduce and pass
on the reductions to the big industries.
Lopez
said the interim open access puts competitive tension
and, to a certain extent, will also bring down rates to
those big industries.
“With
prices of fuel and coal continuing to reach record
highs, and the threat of manufacturing industries
leaving the country, it is really essential for the
government to reduce those royalties on indigenous fuel
sources like natural gas and geothermal,” Lopez said.
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