Tuesday, June 17, 2008 Exporters optimistic about rising dollar but lament price increases
“THE balance is very critical at the moment.”
This was the assessment of the Philippine Exporters Confederation Inc. (Philexport)-Cebu on the appreciation of the dollar against the peso.
The peso closed at 44.485 against the dollar yesterday.
But the present worries of exporters have nothing to do with foreign exchange.
Philexport-Cebu executive director Fred Escalona said the income of exporters is being threatened by inflation, as the prices of goods and fuel continue to rise.
Still, Philexport-Cebu is optimistic that the value of the dollar will continue to “climb slowly.” This should pose positive gains for exporters with the US as their market since they could get more pesos for their dollar sales, Escalona told Sun.Star Cebu.
“You hardly see the dollar swinging in wide ranges. With the predictable situation that the dollar will appreciate, exporters are not noisy at the moment. They are not complaining. But ideally, they would prefer to have the value higher,” he said.
“The issue is not only about the exchange rate but also the whole economic situation because when America sneezes, the whole world catches a cold. This phrase is real. It’s in play now,” he said.
However, exporters will have to bear the brunt of rising prices of raw materials and fuel, as well as increasing labor costs, he said.
The National Statistics Office reported a 9.6 percent inflation rate for May this year, the highest since 1999. To temper inflation, the Bangko Sentral ng Pilipinas raised its key interest rates, a move that could dampen economic growth as investors and businesses hesitate to borrow funds to finance new investments and expansion plans.
“For the exporters, the gain on the currency will be spent and plowed by the (rising) costs of raw materials in the country as well as labor,” Escalona said.
He admitted, though, that workers are also affected by inflation.
He said that exporters are anticipating pressure from the labor sector, which will demand for higher wages to allow workers to cope with inflation.
He pointed out that the cost of labor in the country goes up every year and that the recent P17-wage increase per day was declared before the May inflation rate was reported.
“If people can’t afford to live with the P17 increase, they will (likely) ask for more. If they band together into labor unions and put pressure on the business sector, that will (possibly) translate to retrenchment,” Escalona said.
While exporters have to cope with inflation, Escalona said some companies still find different ways to help their employees, such as giving allowances, providing 20-percent increase in basic pay or more than the mandated P17 wage increase, and supplying free meals.
Philexport-Cebu, as the umbrella organization of eight exporting sectors—gifts, toys and houseware; fashion accessories; furniture; industrial goods; garments; food; seaweed; and electronics—is urging members to be efficient in order to be productive.
“Philexport is providing them the knowledge, through trainings, so that they will learn to sustain their operations and not waste time and money,” Escalona said.
Through its newly established Export Training and Coaching Center, the non-stock, non-profit organization will train exporters on export marketing strategies, market selection and product positioning for three days starting tomorrow. (NRC)
