Philippine Exporters Confederation Inc. president Sergio Ortiz-Luis Jr. yesterday said that nine percent of exporters or 540 out of 6,000 closed shop last year.

Ortiz-Luis said the exporters, mostly small and medium scale, were unable to cope with rising power cost, the strong peso and high oil prices.

Philexport’s claim is validated by a survey done by Grant Thorton International, which showed that the ratio of exporters to business enterprises last year shrank by nine percent to 27 percent of total.

In his speech at the Philippine Energy Summit at the SMX Convention Center in Pasay City yesterday, Ortiz-Luis Jr. said "the viability of exporting as a business has eroded."

Ortiz-Luis noted that exports contracted by 2 percent in November to $3.95 billion from the same month in 2006.

The Philexport chief said the government should heed the group’s call for real open access to electricity to help them be more competitive.

A big 90 percent of exporters are home industries with capital of less than P5 million.

The Thorton survey showed more business, at 68 percent, cited energy cost as having the most impact on the cost of production here in the Philippines than anywhere else in the world.

Quoting studies conducted by the Semiconductor and Electronics Industries of the Philippines Inc. (SEIPI), Ortiz-Luis said that across industries, electricity has emerged as the third biggest expense item of exporters, averaging 15 percent of the cost of production.

"In terms of energy cost, the Philippines has lost out to competitors. Exporters have become less profitable… and a big part of that is because of cost of production," Ortiz-Luis said.

Electricity, SEIPI said, ranked behind the depreciation of the dollar and workers’ salaries in its share of costs. At enterprise level, SEIPI found that the share of electricity to costs ranged between eight and 35 percent.

Ortiz-Luis lamented that as late as 2005 when power rates in Luzon were at the P7.62 per kilowatt hour, the Philippines ranked third to Cambodia and Japan of having the highest power rates in Asia . "Now, at P11 per kwh we are the most expensive. Since then, Japan has allowed its industries to buy their supply directly from power generating companies

The Philexport is also pushing for the development and use of renewable energy.

The open access program, which is part of the Electric Power Industry Reform Act (EPIRA), will pave way for a more vigorous involvement by private investors in power generation, transmission and distribution in Luzon and the Visayas.