PCCI advocates for power subsidies to attract investments

The Philippine Chamber of Commerce and Industry (PCCI) has called on the government to implement power subsidies as a key policy to attract foreign investments into the country.

Speaking at the Power Summit 2024 in Makati City, PCCI President Enunina Mangio emphasized the importance of reliable energy supply and affordable power costs in making the Philippines more appealing to investors.

Mangio highlighted the country’s significant challenges, including the depletion of the Malampaya natural gas fields, a growing population, and the transition from coal. She pointed out that considering some of the highest electricity rates in Asia, these challenges must be tackled with precision and foresight.

PCCI Chairman and Director for Energy and Power George Barcelon stated that the Philippines has the highest electricity rate in the region at USD0.19 per kilowatt-hour (kWh) in 2023, compared to Thailand’s USD0.125, Indonesia’s USD0.089, Vietnam’s USD0.076, and Malaysia’s USD0.047. 

Despite high costs, the country’s per capita electricity consumption remains low at 0.90 megawatt-hours (MWh), compared to Indonesia’s 1 MWh, Thailand’s 2.9 MWh, and Malaysia’s 5.1 MWh.

Barcelon noted that lower power costs in neighboring ASEAN countries have resulted in higher foreign direct investments (FDIs). 

In 2022, Indonesia secured USD24.7 billion in FDIs, Vietnam USD17.9 billion, Malaysia USD14.73 billion, and Thailand USD11.23 billion, while the Philippines attracted only USD9.37 billion.

According to Barcelon, some countries have used power subsidies as investments to attract investors and boost economic growth, successfully achieving their goals. 

As a result, he suggested urgent executive action on power subsidies, recommending measures such as incentives, a uniform franchise tax for distribution utilities, and VAT zero-rating on electricity sales to consumers.

Barcelon emphasized the need for a shift in perspective, viewing “subsidy as an investment rather than a cost with no payback.” He also suggested including power sustainability, quality, reliability, and cost as key components of the national growth strategy.

Additional PCCI proposals include developing a power supply deployment strategy, streamlining approval processes for new power plants, power supply agreements, and rate-setting mechanisms. The group also recommended enhancing the management and technical capacity of electric cooperatives and distribution utilities and creating Regional Power Councils to draft the Energy and Power Strategic Program for each grid.