THE INCREASING cost of power could reduce the competitiveness of the country’s rubber exporters when the Asean Free Trade Area or AFTA takes full effect by 2015, in lieu of the AEC (ASEAN Economic Council), according to an industry source.
In the country, electricity accounts nearly 50% of the cost of processing rubber, said Bonifacio Tan, CEO of Farma Rubber Industries, during a recent forum organised by the regional unit of Department of Trade and Industry (DTI).
The manufacture of rubber-based products has been identified as among key priority investment sectors in the ASEAN in 2015.
As the electricity prices hike up, local processors, which normally ships dried and processed rubber (crumbs), would rather export raw and unprocessed (cuplumps) rubber to offset costs. This might not adversely affect the processors but will reduce the income of small farmers, he said.
Regulation of energy prices is being eyed as the solution, according to Bayan Muna Representative Carlos Zarate, adding that while the regulation should be handled by the Government, but as it stands, the private operators are the ones who rule over the energy sector.