Government allots P500M/year for industry competitiveness fund

MANILA, Philippines - The government has allotted half a billion yearly for the industry competitiveness fund (ICF) to help big ticket investors operating in ecozones outside the Philippine Economic Zone Authority (PEZA) cope with high electricity costs.

Big locators enjoyed a preferential power rate under the Ecozone Rate Program (ERP). Since the expiry and subsequent extension of the ERP, the government has been looking for alternative solutions.

Trade and Industry Undersecretary Cristino L. Panlilio said they are allocating P500 million every year to help mega locators in Subic, Baguio and Clark ecozones. The commitment of the government is to help big ticket locators for 10 years. Three years have already passed.

The fund was initially set up during the time of former President Arroyo. “My recommendation for this is retroactive,” he said. Panlilio said he is uncertain how much the allocation was but said it was definitely smaller because the firms then had relatively lower demand.

Firms that will enjoy the benefits of lower electricity rate should have an investment of $500 million and above.

Panlilio said this has already been presented to the economic cluster and they are now in the process of crafting the Implementing Rules and Regulations (IRR). ìThe task now is to include this in the General Appropriations Act of 2012,î Panlilio said. He said the IRR will be made by the Department of Trade and Industry and the Office of the Solicitor General. Panlilio said that the government definitely has budget for this.

The executive order for the ICF was signed in 2009. The ICF under EO 796 was established because the government said they understand the need for them to intervene in order to help investors. The ICF was used to support and incentivize qualified power intensive industries which contribute significantly to the economy by granting special power rates. The ICF was used to recover any financial impact that PSALM/NPC, Transco and PEZA have incurred in the grant of special power rates.