Business group to help 'priming' province

CITY OF SAN FERNANDO -- Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo on Tuesday urged members of the Pampanga Chamber of Commerce and Industry (PamCham) to lead the province's "priming" and help businesses to expand.

"If we can recall, in the past months our economy remains stable in spite of the global crisis. It is now that our business would continue on spending for expansion and create more businesses. It is also the time that consumers should spend so that we could have a more vibrant local market to fully recover from the crisis for 2010," Guinigundo stressed in PamCham's "Kapihan" at the Max's Restaurant here.

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Guinigundo made this statement as the BSP announced that it will continue to ease policy stance as inflation outlook remains favorable with the local economy.

"Remittances sent by our overseas Filipino workers went up and the country earned US$ 1.4 million," Guinigundo further said.

Inflation continues to decelerate and stood at 3.3 percent in May 2009, following its "peak" at 12.5 percent in August last year. With the deceleration of inflation, the BSP decided to cut its policy rates starting in December 2008 with the policy rates at 175 basis points until May 2009, bringing its overnight borrowing rate at 4.25 percent, the lowest since May 15, 1992 and the overnight lending rate at 6.25 percent.

Guinigundo noted that with fiscal restraint already being observed, the Philippines will likely experience more capital inflows coming as fiscal consolidation boosts investor sentiment.

The BSP, however, ruled out the adoption of tightened capital controls to address the continued influx of funds. Instead, the BSP will continue to push for further liberalization of the foreign exchange market - an initiative it started early in the year when it relaxed banks' currency trading rules and residents' outward investments, Guinigundo said.

"The general business condition is now better and therefore more conducive for business activities," Guinigundo said.

PamCham President Renato Romero, for his part, said PamCham members are embarking on business expansions this year and would closely participate in socio-civic programs in partnership with non-government groups.

He said they are ready to take on Guinigundo's call.