Costly power eroding electronics industry

By Lenie Lectura, BusinessMirror

Posted at Feb 13 2013 07:47 AM | Updated as of Feb 13 2013 03:47 PM

MANILA - The growth of the country’s electronics industry could be boosted by a steadier supply and cheaper cost of power.

Believing so, the Semiconductor and Electronics Industry in the Philippines Inc. (Seipi) said in a statement on Tuesday that it is “closely monitoring the status of several big-ticket infrastructure power projects in the country, which are needed to assure not only a reliable, but inexpensive supply of electricity for both the new and the existing factories in the electronics industry, as well as in other sectors of the economy.”

The group noted that some of these projects are facing legal and policy hurdles. “Given the uncertainty, Seipi [also] believes that there is a need for the government to exert extra efforts and remove the legal and policy obstacles affecting these infrastructure projects,” according to the statement.

While it acknowledged the government’s efforts in requiring proponents of power-plant projects to adopt measures for the protection of the environment, the group said that it further believes that equal weight should be accorded to recognizing advantages of a reliable supply of cheap electricity.

“It is important for the government to resolve the issues in the power sector in order to dispel jitters among investors and enhance the country’s appeal as an investment destination,” Seipi added.

Recently, an environmental case against a 600-megawatt power project in Subic of Redondo Peninsula Energy was dismissed by the Court of Appeals.

The local electronics industry accounts for half of the country’s export shipments, aside from providing direct employment to 557,000 Filipinos. But for the past two years, this major source of Philippine exports and provider of jobs experienced a flat growth.

According to Seipi, the industry was hampered not only by a global slump in trade and consumer demand but also by adverse local factors, such as the high cost of local electricity, which erodes the sector’s profitability and its ability to increase overseas deliveries. Several of its member-companies have re-evaluated their expansion plans and others opted for expanding in other locations outside the Philippines as a result of continued increase in the price of local electricity

Despite the power concern, Seipi said that it is anticipating a turnaround this year as new factories start operating and selling overseas their products that include mobile-phone chips and microprocessors for computers.