Government to check reports Asean countries subsidizing power

Business Mirror
SUNDAY, 27 NOVEMBER 2011 20:40 MAX V. DE LEON / REPORTER


GOVERNMENT think tank Philippine Institute for Development Studies (PIDS) will investigate reports that other Southeast Asian countries are subsidizing the power rates of their industries, thus giving them undue advantage over Philippine companies.


“We can bring this up in the WTO [World Trade Organization] for unfair trade practice or negotiate it in the Asean,” Josef Yap, PIDS president, said.


Yap said he received information that some countries in the region appear to be giving subsidies and special rates to their manufacturers and exporters, which contributes to their relatively lower power rates compared to the Philippines.


If this is true, Yap said this is a form of subsidy for the exporters that distorts trade.


“That is something that we will look at. We will investigate if other countries are subsidizing their power,” Yap said.


He said it is no longer a myth that the Philippines has already surpassed Japan on having a high cost of electricity.


Besides being less competitive in the international market, the Philippines is also losing investors to other countries in the region because of the relatively higher power rates in the country.


The high power rates in the Philippines, he said, is one major reason the manufacturing sector here continues to shrink, along with inadequate infrastructure, low investment rate and weak institutions that give rise
to governance concerns.


He noted that the share of the manufacturing sector to the country’s gross domestic product has been continuously dwindling, dropping from 25.7 percent in the 1980s to 22.2 percent in 2000 and then to 21.4 percent in 2009.


“During this period, the share of the manufacturing sector in Indonesia, Malaysia and Thailand increased sharply. This is the main reason that these countries have become more progressive than the Philippines,” Yap said.


Jesus Arranza, chairman of the Federation of Philippine Industries, said the high power rates, poor infrastructure and smuggling are the “headwinds” that are slowing down the pace of the growth of the manufacturing sector in the country.