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What Can Be Done To Lower the Country’s Extremely High Power Costs That Keep Local and Foreign Investments Away

November 14, 2011

EXERCISE: OP-ED Analysis

Given this article from the Daily Tribune
http://www.tribuneonline.org/commentary/20111114com5.html

“PinoyMonkeyPride, AntiPinoy, and GetRealPhilippines are really insulting the Filipino intelligence if, like Senate President Juan Ponce-Enrile and House Speaker Sonny Belmonte, they think Filipinos of all classes don’t already know that the country’s highest power costs in Asia is the very thing keeping local and foreign investments away — instead of the restriction on foreigners from owning properties and corporations in the Philippines, who, it must be said, already own the local oligarchs here.”

****

It’s one thing to be a writer, writing about business.

It’s another thing to be a businessman, speaking about business.

According to Sergio Ortiz-Luis, president of the Philippine Exporters Confederation, investors, particularly exporters, were getting tired of waiting for the government to address their perennial problems.
The exchange rate policy of the Bangko Sentral ng Pilipinas, for example, had led many local exporters to either scale down their operations or close shop altogether as the strong peso has reduced their competitiveness in the global market, Ortiz-Luis explained.
“Our exchange rate is so erratic, very much dependent on government policy.
For exporters, it’s like walking on a tightrope. They are helpless and they can’t plan properly,” he said in a phone interview.
“We should really amend the BSP’s mandate. When they make their policies regarding the exchange rate, it’s like they’re not part of the Philippines.
They don’t consider the plight of industries. The BSP shouldn’t just control inflation, but also help in the development of the country,” he added.
Speculation by foreign banks on the fate of the local currency in reference to the US dollar, he said, should not be taken that seriously. Government policy-makers should put the country’s welfare, particularly its attractiveness as an investment destination, and the survival of local exporters on top of their priority list when making policy decisions.
The constitutional restrictions on foreign ownership of land, he said, were another thing that the government should “seriously” consider addressing.
Other issues that needed resolution were high power rates and the lack of streamlined fiscal incentives.
“These are things that we should have done 30 years ago. These problems persist and remain unsolved,” he said. In an earlier interview, Ortiz-Luis said the state-owned Power Sector Assets and Liabilities Management Corp.’s pronouncement that the discounted power rates for economic zone locators would no longer be extended was a huge turnoff for exporters.
This has actually led some exporters to shut down their operations here and transfer to China, Vietnam or Indonesia.
But the Department of Energy said it was studying ways to keep the ecozone power discounts in place, either by an extension of the memorandum of agreement for the Ecozone Rate Program or the provision of discounted rates under different terms and references.

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Food for thought:

What Can Be Done To Lower the Country’s Extremely High Power Costs That Keep Local and Foreign Investments Away

1. Who owns the companies that generate electric power?
1.1 List electric companies by Region

2. Who benefits from the high power cost?

2.1 Direct benefits – revenue;
2.2 Indirect benefits – lesser competitors against local products and firms owned by oligarchy

3. Why are there only few companies that generate electric power? –
3.1 1987 constitution
3.2 Foreign Investments negative list – not more than 25% foreign ownership for public utilities

4. What can be done to increase the number of companies that generate electric power?
4.1 Is there enough local capital?
4.2 If there is not enough local capital – what can be done to increase capital?
4.2.1 – savings – is this the most efficient way
4.2.2 – foreign capital

At which point – it might be good to illustrate the business registration process – and how investments wind up in Vietnam instead of the Philippines.

Business Registration in the Philippines

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