Infra, power – hurdles to growth


    VISITING Japanese businessmen have expressed keen interest in investing in the Philippines but cited inadequate infrastructure and the high cost of power as hurdles to growth that could limit business expansion plans in the country.

    “In all the sessions we conducted, the presentations made from the Filipino side were very positive. They all spoke of the attractiveness and good points about this country which all made the participants from Japan want to invest in this country,” Akio Mimura, chairman of the Japan Chamber of Commerce and Industry (JCCI), said.

    Mimura, who is a former chairman and now advisor and honorary chairman of Nippon Steel and Sumitomo Metal Corp., the second largest steel producer in the world, leads a 100-member delegation currently visiting the Philippines. It is JCCI’s first outbound business mission since 1992.

    “For any industry, including the manufacturing industry, to come and participate in the business activities of any given country, to have international competitiveness, there are various elements that contribute to international competitiveness,” Mimura said.

    “One thing is the power/price of power/electricity power. If the level of electricity prices is high— and in the Philippines, power is very expensive—that will affect international competitiveness. Another point would be the transportation cost. Again, this is very important for international competitiveness. So, infrastructure like airports, seaports, and roads—such basic infrastructure must be in place, which is very important for the upgrade of the international competitiveness of any industry,” he said.

    “So this is something we’ve raised in those meetings and one thing that I suggested is the promotion or employment of PPP or Private Public Partnership projects. Because of the fiscal constraints, there are many countries following the introduction of the PPP. And I said that the PPP will be one way to go for as a direction,” he added.

    Mimura pointed out that the Japanese business delegation is impressed with the number of PPP projects currently implemented.

    “There’s no doubt about the (lack of) infrastructure being an obstacle. To solve this infrastructure problem, PPP is one of the ways to go about it.

    However, PPP . . . is not a panacea to this question. There are certain roles to be played by the government. There are certain risks that the private sector cannot possibly take so there should be discussions involving the government to discuss how to proceed with the PPP. I think that would be the next stage modality in trying to have an appropriate way of handling the problem of infrastructure,” he said.

    Mimura said other infrastructure projects are needed such as tax-related transparency.

    “This is a very big question in making any investment decision. Another soft aspect of infrastructure would be nurturing and training human resources,” Mimura said.

    “So you see we talked about SMEs, we talked about infrastructure, we talked about electronics so I’ve covered all points raised in this discussion.”

    During the discussion with representatives of the Philippine government and JCCI, the host government appeared fully and completely aware of those infrastructure-related matters and other issues as well.

    “Renewable energy is being developed and power generation plants are planned, and so forth. They talked about preventing possible blackouts and they said there should be no worry about possible blackouts or brownouts,” Mimura said.

    “The Philippine government explained that there are particular incentives given to the decision to invest in power generation in certain areas where supply is very tight, so they urged the Japanese investors to study very carefully the availability of special incentives.

    “There are issues that are not only limited to the Philippines, such as the case of the high economy growth era of Japan – we grew our economy so rapidly and there were bottlenecks in our country. There is no doubt about that. So you see, it’s not possible for any country of the world to grow very much with everything satisfied. It’s not possible. In the Philippines, we know that you have infrastructure-related problems, you’ve got that challenge but if other elements and other factors are strong, then there is a very good prospect for strong growth in this country.”

    “I have an impression that there is much progress compared with the past. The practical study, the practical discussion is going on within the government. There are different levels of incentives available for different geographical regions and on top of it, there is practical grouping of power sources. There is a very practical approach employed by the government of the Philippines in grouping the power sources so my general impression is that there is much progress in the power policy in this country,” he concluded.

    The business mission is composed of executives from various sectors such as construction, metal manufacturing, telecommunications, trading, banking, automotive and auto parts, travel, food, air transport, and electric power.

    Companies joining the mission are Honda Motor Co., Ltd., Marubeni Corporation, Sumitomo Mitsui Banking Corporation, Japan Airlines, Co., Ltd., ANA Holdings, Inc., ITOCHU Corporation, Electric Power Development Co., Ltd., Taiyo Stainless Spring Co., Ltd., The Bank of Tokyo-Mitsubishi UFJ, Ltd., Komoto Industry Co., Ltd., Shigeru Co., Ltd., Dial Service Co., Ltd., Idea Consultants, Inc., Mitsui & Co., Ltd., Fukuda Corporation, Mitsui Mining and Smelting Co., Ltd., Sanwa Denki Kogyo Co., Ltd., Mitsubishi Corporation, JTB Corporation, IHI Corporation, Sumitomo Corporation, and Mizuho Financial Group.


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    1. What energy policy? Waiting until there is a problem then using the Band-Aid approach is not a policy. It takes 3-4 years and 150 or more signatures to build a power plant. The power companies don’t like to invest in maintenance. Who is accountable? As I recall, a few years ago, foreign consultants made a few recommendations and their advise was ignored. Foreign investment in manufacturing requires plentiful and cheap electricity. That will never happen with solar and wind power. The poor suffer the most from high energy prices. Manufacturing can create a lot of jobs. There would be competition for jobs and wages would increase. The standard of living would improve. The Department of Energy appears helpless and or clueless. A strong energy policy requires a strong leader willing to enforce the policy as it develops. Who will that leader be?

    2. Poor infrastructure and inadequate, unreliable & expensive cost of power is the result of the poor energy policies resulting to collusion of the 4 to 5 tycoons controlling the industry.

      Solution? Only god knows!