High power rates driving away investors

As I See It
By: Neal H. Cruz
Philippine Daily Inquirer
9:33 pm | Thursday, November 3rd, 2011


Two stories on the first page of the Inquirer Business section attracted my attention yesterday. One reported that local firms are relocating to China and Vietnam because the very high power rates here make them uncompetitive in the world market. The Philippines now has the highest power rates in Asia, higher than even Japan, the most developed Asian country.
The second story reported that Meralco, the biggest power distributor in the Philippines, is targeting a core net income of P14.5 billion this year, an increase of 19 percent from P12.2 billion in 2010.
Meralco has sister companies that also produce power from which it buys the electricity that it distributes to consumers. The Meralco president and CEO is no longer a Lopez but Manuel V. Pangilinan of PLDT-Smart and a lot of other companies with government franchises like those involved in water distribution, road tollways, media, hospitals, etc.
The reason the two stories attract attention is that while exporters are losing their shirts because of high power rates, power companies are raking in profits like they have gold mines.
Here we are trying to attract foreign investors yet investors that are already here are moving out because our high power rates make doing business here uncompetitive. Why will investors transfer here when the atrociously high power rates will make it hard for them to compete in the international market?
We even want to amend our Constitution to allow foreigners to own land, believing that that would encourage investors to come in. No, it won’t if electric rates remain high and traffic remains congested. I said it before and I’ll say it again: lower power rates, decongest traffic, improve infrastructure and investors will rush in because we have a competent workforce who speak English fluently, something that other Asian countries don’t have.
The cost of electricity makes up from 40 to 50 percent of the price of a manufactured product. World trade is now very competitive because of the removal of many protective tariffs. How can companies located here compete in the world market if their production cost is high due to high power rates?
Add the time lost as people and materials wade in congested traffic, not to say corruption and red tape, and you will really think of moving to another country.
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