Expanded aid for exporters

Palace order expanding power subsidy outside ecozones being drafted

EXPORTERS ARE SEEKING subsidized power costs for those operating outside economic zones, officials of a private-public sector group said.

The Export Development Council (EDC) is drafting an executive order that will set aside funding for small export-oriented firms to partly offset their power expenses.

The proposal comes in the wake of a recent government decision to shelve the release of the P800-million balance of a P1-billion export support fund. The money has instead been rechanneled to relieving the impact of an ongoing dry spell.

“We’re drafting an executive order to secure a subsidy to help exporters with their power requirements, particularly those not included in discounts for economic zone [locators],” EDC Vice-Chairman Sergio R. Ortiz-Luis, Jr. said in a telephone interview on Friday.

“It was supposed to be funded out of the P1-billion export support fund,” he said, referring to the amount promised by President Gloria Macapagal Arroyo in late 2008 when the sector was bracing for the global downturn.

Only P200 million of the fund has been released, however, and this tranche has already been earmarked for various product promotion and development projects.

No amount has been pegged for the expanded subsidy, but the council is looking at accounting for roughly 10% of power costs, Mr. Ortiz-Luis said.

Trade Senior Undersecretary Thomas G. Aquino confirmed that a proposal was in the works.

“No amount has been estimated yet. [The proposal] is still at the executive committee of the EDC,” Mr. Aquino said in a text message yesterday.

Rules regarding which exporters qualify have yet to be drafted as well, although the thrust is that the support should go to small and medium-sized enterprises, Messrs. Ortiz-Luis and Aquino said.

Smaller “indigenous” exporters of handicrafts, furniture, food and other items with high local content have yet to recover from the slump and are now hurting from the strengthening peso, Mr. Ortiz-Luis has argued.

Larger firms in economic zones, meanwhile, already enjoy cheaper electricity under the government’s “ecozone rate program”.

The proposal will be presented to the council for approval next month, Mr. Ortiz-Luis said, before it can go any further. The EDC will also have to get feedback from the government on the latter’s “appetite” for spending, he said.

Already, the government has reported to have breached the first quarter deficit ceiling by P23.3 billion. The Finance department wants to limit this year’s deficit to P293.2 billion. –JESSICA ANNE D. HERMOSA, Reporter, Businessworld