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IN my previous article, I wrote about my childhood experience of growing up without electricity. It was magical to see, for the first time, the illumination of our house and our streets. This was in 1980. At the time, most of the country’s villages had yet to be energized. Millions of households in the rural areas had yet to experience the magic of electricity. This was also the era when personal computers and digital devices were just beginning to be invented. Telephones were analog and wireless communications were done mostly through short-range radios. Our Filipino overseas workers, mostly engineers in Saudi Arabia then, communicated by snail mail, which took months to arrive. It was unthinkable to communicate instantly and digitally in that period. Traveling by air was considered a luxury. The lifeblood of the global economy was oil.
Then the era of computers and internet happened in the 1990s. It was also the time of globalization, which opened economic borders.
Governments embarked on privatization, deregulation and liberalization of once government-controlled industries and utilities. Physical distance became irrelevant in some sectors. The first to go was snail mail. The internet birthed the likes of Yahoo, Hotmail, and in the Philippines — Pinoymail. Access to information became unlimited by electronically breaking down the walls and doors of libraries.
Google and Yahoo search engines brought information at the click of the mouse in seconds. These accelerated the semiconductor manufacturing industries all over the world. Semiconductor manufacturing created tiger economies in Asia as the US, the world’s tech leader, sought trade partners across the globe. Taiwan, Japan, South Korea, the Philippines, Malaysia, Thailand and Indonesia were some of the beneficiaries of this shift in global manufacturing.
In the Philippines, the Ramos administration converted the former US military bases — Subic, Clark and John Hay — into special economic and freeport zones. With the initial success, his administration created the Philippine Economic Zone Authority to expand the creation of these ecozones nationwide.
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In 1979, Texas Instruments established its first semiconductor manufacturing facilities in Baguio City. This preceded the other semiconductor manufacturing in the BCDA and PEZA zones created over a decade later in the 1990s. The arrival of Texas Instruments led further to the formation of the Semiconductor Electronics Industry Foundation, Inc. (SEIFI) to promote training and technology transfer. Up to this day, Texas Instruments ranks as one of the biggest exporters of the Philippines. Semiconductors comprise 40 percent of the country’s total exports.
However, this is limited to assembly, testing and packaging (ATP). Our country has yet to develop its capabilities in fabrication (wafer production) and IC design and R&D, which our neighboring countries currently possess. The lack of reliable and affordable power is the major stumbling block to our semiconductor industry flourishing.
Taiwan, despite its small size and population of 25 million, has 64 GW of installed power capacity, while the Philippines has a mere 30 GW of installed power for 115 million people and a land area more than 9 times the size of Taiwan. No wonder Taiwan leads the world in advanced semiconductor innovation and production. The negative power situation in the Philippines discourages foreign investments in manufacturing and other areas.
With the advent of the 2000s, the new century ushered in the era of fast-paced digital transformation. The invention of mobile devices radically transformed society as human beings became digital nomads, bringing their high-powered but portable computers — more compact and lighter but gigabits or terabits more powerful than the old PCs — in the palm of their hands. Markets, work, leisure, finance, and all aspects of human life now require the use of these electronic devices.
With the destruction caused by the adverse effects of fossil fuel and the shrinking of the global economy to something as small as a mobile phone, the lifeline of the economy has transformed from carbon-emitting oil to electricity and data. Even transportation is now powered by electricity, while the most precious commodity is data. These days, we are witnessing another revolutionary transformation in artificial intelligence.
Meantime, our communities in the countryside suffer from poverty and a lack of job opportunities. While our government has indeed provided access to electricity to more than 90 percent of the population, many of its people continue to suffer from a lack of industries and manufacturing in the countryside. These could have been massive job generators and economic catalysts. We can see this clearly in the stark contrast of economic productivity, where industries prefer to locate within the Meralco franchise and in areas served by private distribution utilities.
The Meralco franchise covers only 3 percent of the country’s land area, yet it is where more than 50 percent of the Philippine GDP is produced. The biggest industries prefer to locate within the Meralco franchise areas because it is where power is more reliable. As real estate prices increase in the urban sprawl of the NCR, industries are looking to the rural areas for expansion. But the power utilities in these areas are unprepared.
The focus on household energization by non-stock, non-profit electric cooperatives instead of providing reliable and sufficient power that will attract industries in the rural areas wrongly allocates precious government resources that should have been reallocated to build industries that will create the economies of scale.
Consequently, the increase in energy sales and drop in system losses caused by bigger power loads of industries will eventually bring much-needed resources to the electric cooperatives to lift the rest of the non-energized communities instead of depending on taxpayers’ money and member-consumer’s capex contribution. Brownouts and power fluctuations prevent private investments from coming to the rural communities. Tourism depends so much on electricity for air conditioning and food storage.
More importantly, our agriculture industry, where 25 percent of Filipinos work, can benefit from reliable and sufficient power, as it will allow farmers to extend the shelf life of their crops or create more value in food processing. This can increase agribusiness contribution to the GDP from a mere 15 percent to about the level of Thailand at 43 percent.
The challenge of the times is different from the 1970s and 1980s. We are now living in the era of global industries, digital age and artificial intelligence. We cannot survive as a nation if our energy policies remain trapped in the bygone era when, at this age, human life itself has transformed into a life powered by electricity and data. We must act now.
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