MANILA, Philippines — Unlike Thailand, Malaysia and other regional peers, the Philippines lacks the fiscal capacity to provide government subsidies to shield Filipinos from rising electricity costs.“It’s not possible. The subsidy comes from the Universal Charge for Missionary Electrification (UCME),” Energy Undersecretary Rowena Cristina Guevara said on the sidelines of the 2025 BusinessWorld Economic Forum.Currently, the government supports power producers serving remote areas across the country through UCME, a non-bypassable charge imposed on on-grid consumers.“But when it comes to subsidies at the consumer level, we don’t do that unlike other countries, which have cheaper electricity costs,” Guevara said.
I highlighted important key points. Take note that regional peers are also mentioned. What do the regional peers with better fiscal capacity have? It's because Thailand and Malaysia are more open to FDI. Some say FDI is colonization, or new colonization. However, far from it, as FDI is actually defined by the Investopedia:
Foreign direct investment (FDI) is an ownership stake in a foreign company or project made by an investor, company, or government from another country.
Generally, the term is used to describe a business decision to acquire a substantial stake in a foreign business or to buy it outright to expand operations to a new region. The term is usually not used to describe a stock investment in a foreign company alone. FDI is a key element in international economic integration because it creates stable and long-lasting links between economies.
Why is electricity more expensive in the Philippines?
It's all about supply and demand. One person I argued with on Facebook (who I'll continue to dub here as Dumb Doggy, to respect his privacy, regardless of his intellectual level) would often mock supply and demand. Dumb Doggy would say, "Muh supply and demand is just an excuse by the rich!" However, we need to talk real here. No amount of insults will ever change the fundamental law of supply and demand (read here). Economic laws are just as real as all natural laws. It's not a conspiracy theory--it's all about natural laws!
If we look at the reality, there are so few electricity providers in the Philippines and so high a demand. It may not be a monopoly, but it's still an oligopoly. People who keep ranting out about oligarchs should know, oligarchy is power at the hands of the few. It's all about common sense that tells us that because the Philippines as a huge demand for electricity vs. not so many power providers, the cost of electricity will go high. People can go ahead and dismiss because I'm using a free domain. However, they may be following the free domain blogs of the likes of Teddy Casiño and Kilusang Mayo Uno.
We need to look into the problem of what's causing a shortage of electrical power. Simple: There's not enough Filipino businessmen who can provide for it. Even worse, some people continually suggests that basic needs must be provided by the government, not businessmen! That kind of principle was later rejected even by other Communists. Vladimir Lenin established the New Economic Policy (NEP). Later, Vietnam established Doi Moi under the late Nguyen Duy Cong aka Do Muoi--a man who consulted the late Lee Kuan Yew.
The Philippines doesn't prohibit FDIs in totality. However, the Philippines' excessive ownership restrictions are discouraging FDIs from entering (read here). Who in the right mind would want to invest in the Philippines, but they have to give up 60% of their earnings to a local partner (read here)? That's why I often ask if they're a-ok with me letting them rent a space, but I must get 60% of their net income. That kind of practice doesn't prohibit people from renting. However, it will certainly discourage investors from entering. The net income is barely half of the revenues. People would prefer to choose to rent a space where all they need to do is abide by other reasonable restrictions, without having to give up 60% ownership to the lessor!
In doing so, public services have become so limited. Electricity becomes costly as a result of a lack of competition. A Facebook page called "1987 ang Magpayaman sa Bansa" even says that if companies compete, it's to pay the lowest salaries. Excuse me but whoever owns that joke of a page doesn't think clearly. If the demand for labor increases, the minimum wage will also increase. Competition will also force certain products and services to increase in supply, which will reduce prices as a result. Of course, they will be significantly lower. However, it will mean that supply and demand will be met, with less inflation. Instead, people have been demanding #SahodItaasPresyoIbaba economics, without realizing it's plain bad accounting (read here).
That's why I've been renouncing the economic buffoonery of those who keep talking about imperialism, while using imported gadgets. They say, "No to American imperialism." while they're using Apple products (and they even had a choice for lower-priced items). Electricity is no different of a service. All businesses are subject to supply and demand. In fact, the irony is that Communist Vietnam has long liberalized the electricity sector, leaving so few industries in the negative list. Meanwhile, the Philippines, which is supposed to be a democracy, has failed to understand that!
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