Wednesday, February 28, 2007 Actions to ease effect of strong peso ‘slow’
WHILE the country’s export industry is grateful for the measures implemented by the National Government to ease the impact of a stronger peso, exporters continue to wish for policies that will rein in the local currency.
“It (strengthening of the peso) brings opportunity losses, not actual (losses), since regional currencies are also strengthening,” said Philippine Exporters Confederation Inc. (Philexport) president Sergio Ortiz-Luis Jr. during a briefing with the press at the Manila Yacht Club last Saturday.
Ortiz-Luis said that while the foreign exchange is market driven, monetary authorities can still undertake measures “without intervening,” such as imposing limits on the trade of the currency.
He said that while the government is focusing on the peso as an indication of economic development, it needs to consider that the sectors that “actually contribute” to the growth—the export industry and the overseas Filipinos—are hurting.
Beneficiary
“We cannot deny that (the peso has strengthened because the economy is doing well),” he said. “But the biggest beneficiary of the peso’s strengthening is the government. Exporters and OFWs (overseas Filipino workers) who contribute more than half of the economy are hurting. So if they’re hurting, it cannot be true to say that the strengthening is good for the economy.”
“Slowly, the strengthening of the peso can wipe out a large part of the economy,” Ortiz-Luis said.
He said that if the foreign exchange rate would reach P40-$1 level, a “catastrophe” will occur, in which “no domestic manufacturer can survive in.”
The strengthening of the peso will make the country’s export goods more expensive and force Philippine exporters to be less competitive than other exporting countries, such as China.
Ortiz-Luis said the National Government has implemented several measures to remedy the situation. Among these measures are removal of certain fees imposed on export goods, improved system relating to fumigation of crates or containers for exports, and eventual removal of wharf fees.
But Ortiz-Luis said the effect of these strategies is “too slow” compared to the appreciation of the peso.
‘Not enough’
Gifts, Toys and House-ware Manufacturers and Exporters Association (Cebu GTH) president Jenifer Cruz told Sun.Star Cebu yesterday that the measures implemented by the government to ease the effect of the currency appreciation are “not enough.”
He said the GTH sector believes industry players will only be “comfortable” in a situation where the peso’s value is 52 to 53 against the dollar.
During his visit to Cebu for the inauguration of the new Sykes Cebu building, Trade and Industry Secretary Peter Favila expressed confusion over the continued objections from export groups.
“I’ve talked to the groups. The President has talked to them. They were grateful. So I don’t know where all these unhappiness come from,” he said.
Ortiz-Luis said the government can still do more to ease the effect of the peso appreciation.
He proposed cutting bureaucracy in the processing of certain permits and licenses that do not “necessarily mean reducing fees.”
He said government should also speed up repayment of loans, increase dollar reserves and provide exporters more access to financing.
Cost
Ambassador Donald Dee, who is also Philippine Chamber of Commerce and Industry president, said government should also concentrate on bringing down the cost of business or industry operations.
He proposed cuts in power costs, as well as monitoring and regulation of freight fees.
“There are a lot of costs in exporting that shouldn’t be there,” he said during the same press briefing hosted by Philexport.
Roberto Amores, Philex-port trustee representing the food sector, raised the need for the government to improve infrastructure in support of the agriculture industry and to address issues related to the country’s competitiveness in the global market for food items.
He said an exchange rate level of P49 to $1 would allow indigenous exporters some room for profit.
Indigenous exporters are those whose products use indigenous or local raw materials.
Ortiz-Luis expressed belief, though, that the government will listen to the export sector.
“Hindi naman sila bingi,” he said. (They are not deaf.) (LAP)
