Electronics firms back Enrile bills

MANILA, Philippines – The Semiconductors and Electronics Industries in the Philippines Inc. (SEIPI) has expressed support to the twin power bills of Sen. Juan Ponce Enrile.

SEIPI president Ernie Santiago said one of the first items in SEIPI’s agenda is to call for government’s immediate implementation of measures to bring down electricity rates in the country.

“Most of our electronics and semiconductors companies are directly competing with our neighboring countries in terms of cost. We have to be cost competitive so that we can keep multinational companies here, as well as be in the radar of foreign investors. How can we be competitive if we have very high power costs?” Santiago said.

Power costs comprise 25 to 30 percent of industries’ total cost of doing business.

The Philippines has the highest power cost in the country, next to Japan, owing to layers of government charges that become passed-on costs to electricity consumers, Santiago pointed out.

“Thus, we are renewing our call for government to initiate measures to bring down power rates in the country at the soonest possible time. We support all measures that will bring down power rates in the country,” the SEIPI official said.

In particular, the proposed cut in indigenous energy sources like Malampaya’s natural gas has been long advocated by the business community, particularly by SEIPI which even joined Senate Bill (SB) 3148’s technical working group.

SB 3148 or the Electricity Rate Reduction Act, authored by Senate President Juan Ponce Enrile, seeks to remove the disparities in treatment of royalties of indigenous energy sources not covered by the Renewable Energy Act of 2008, namely, natural gas, oil and coal.

The bill proposes that government share of royalties collected in the exploration, development and production of indigenous energy sources shall be reduced to three percent of net proceeds levied on generation companies. The tax savings will, in turn, be redirected to lower electricity rates to Filipino consumers in a significant and sustainable manner.

SEIPI said government royalties imposed on power firms tapping or wishing to tap into the country’s indigenous sources of energy are sky-high, if not totally prohibitive.

SB 3148’s twin bill, SB 3147, completes the package of legislative measures which will reduce electricity rates in the country.

SB 3147 or the Uniform Franchise Tax Measure proposes that government adopts a franchise tax regime where electric utilities are levied three percent tax on their gross distribution income in lieu of all national and local taxes.

Currently, government is charging power utility firms with a 12 percent value added tax (VAT) on top of corporate income tax, and a local franchise tax imposed on their gross receipts which they simply pass on as additional charges to consumers. – Donnabelle L. Gatdula