SMEs hobbled by high power cost

MANILA, Philippines–The  competitiveness of the country’s small- and medium-sized enterprises (SMEs) remains undermined by critical factors, such as the high cost of power and logistics, as well as inadequate transport infrastructure, which have been discouraging many firms from tapping the potential opportunities in an integrated regional economy.

Alfredo M. Yao, president of the Philippine Chamber of Commerce and Industry (PCCI), said in a workshop on Thursday that there was a considerable level of awareness on the tariff implications of the economic integration of the Association of Southeast Asian Nations (Asean) and the other free trade agreements that will go along with it.

However, the desire to embrace the potentials of the Asean Economic Community (AEC) was deemed “meager” because of concerns on the level of competitiveness of local industries against those of Asean neighbors, Yao said.

“In the several forums that we have conducted, the high cost of power and logistics, inadequate transport infrastructure, conflicting laws and regulations, issues related to taxation, business permits and licensing, and access of SMEs to financing and technology were the most common concerns raised that beset the private sector’s readiness for and competitiveness under AEC,” Yao said in a workshop that saw regional and global business leaders sharing their insights with Asian entrepreneurs.

Yao, however, said PCCI, the country’s largest business organization, viewed AEC in a positive light.

“But we acknowledge that the opportunities offered by greater openness can be achieved only if our local industries and SMEs are provided with the complementary support that will enable them to participate effectively and benefit from the global production network being built by Asean with its trade partners and important export markets,” he said.

“There is a need for the government and private sector to heed the adoption of an industrial road map for Philippine industries to be able to compete with the forthcoming Asean integration. This should mainstream the enhancement of a competitive business environment where SMEs are able to participate effectively and benefit from the global production network being built by Asean with its trade partners and important export markets,” he added.

Yao spoke during a workshop by the US-Asean Business Alliance, which is a collaboration between the US-Asean Business Council and the United States Agency for International Development, in partnership with Asean.

This was done in cooperation with the Department of Trade and Industry, PCCI and the Philippine Exporters Confederation, with the view of transferring knowledge and skills to help SMEs manage their businesses and more effectively gain access to regional and world markets through improved branding, technology and logistics.

Trade Undersecretary Zenaida C. Maglaya noted that SMEs in the Philippines contributed significantly to the local economy, accounting for 99.6 percent of total registered enterprises in the country.

“In our efforts to achieve the AEC goals in 2015, we endeavor to work on the great potential of our SMEs to further contribute to the economy. In this regard, we welcome initiatives such as the Business Alliance workshop as means of boosting Philippine SMEs’ competitiveness to better fare in the regional and global supply chains,” Maglaya said.