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HIGHER power costs are turning off foreign investors at a time when
they are already spooked by global economic uncertainties, the
Philippine Chamber of Commerce and Industry (PCCI) said.
Donald Dee, PCCI president, said power now
contributes 30 percent to 40 percent of industry’s operating
expenses. For light industries such as garments and furniture, power
accounted for 25 percent to 30 percent of operating expenses.
“High power cost is not caused by high
inflation because it has been high seen before even with low
inflation,” Dee said in a phone interview.
Inflation is expected to remain high until the
third quarter of the year due to skyrocketing oil and commodity
prices. Inflation hit a three-year high of 8.4 percent last month.
Dee said the high cost of power was driven by
high transmission, distribution and generation charges.
He said energy-intensive industries such as the
steel sector is discouraged from investing in the country due to
costlier power.
“We’re always behind [in the region]
in terms of FDIs [foreign direct investments] because of high power
cost. It’s the reason why we’re not competitive,” Dee said.
At end-February, FDIs reached $194 million,
bringing the two-month total to $327 million, according to the
Bangko Sentral ng Pilipinas (BSP). FDIs however dropped by 74.5
percent compared with $1.281 billion last year. The BSP forecast
FDIs reaching $4.3 billion this year, of which $1.2 billion would be
spent on mining projects.
Power costs can be reduced by removing the
royalty fees for indigenous materials, Ernesto Santiago,
Semiconductor and Electronics Industries of the Philippines Inc. (Seipi)
executive director, earlier said.
He cited the natural-gas output of the Malampaya
project, which is taxed even if production is for domestic
consumption.
-- Maricel E. Burgonio
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