Saturday, January 19, 2008 Export sector faces crisis
THE export industry now faces a full-blown crisis and may even contract this year.
Sergio R. Ortiz-Luis, Jr., president of the Philippine Exporters Confederation, Inc. (Philexport), admitted this for the first time when addressing the first national meeting of the umbrella organization of exporters in Manila this week.
His projection bolstered revised forecast of below zero growth made by the Semiconductor and Electronics Industries in the Philippines, Inc. (Seipi) a few days earlier from an optimistic five percent projection it made for its segment of the export sector before last year ended.
Seipi members account between 65 and 70 percent of monthly exports.
"We may not be able to talk of any growth in exports this year. The global and local climates are such that we may have to struggle just to stay in business," Luis pointed out.
Already, small and medium-sized members of the export federation in the provinces have reported laying-off some of their workers.
Luis cited four major reasons behind the grim projection. One is the continued strengthening of the peso that has moved to P40 to the dollar before the week ended.
Second is the continued rise of the cost of electricity. The biggest electric distributor in Luzon has petitioned the Energy Regulatory Board for a new increase in its distribution rates. Retail rates of electricity in Luzon had gone up to a record high of P11 per kilowatt-hour.
Third reason is the historic rise in the price of crude oil that hit $100 a barrel late December. This is bound to increase the cost of moving goods on land and across waters this year.
Fourth is the looming economic recession in the United States, the single biggest destination of Philippine products.
In the light of these developments, the export leader reiterated his call on the government to stop borrowing in dollars beginning this year and keep on paying old dollar loans with remittances from overseas Filipino workers (OFWs).
The bold move of stopping foreign borrowings, he explained, would siphon off too much greenbacks floating in the domestic economy, putting further pressure on the peso's continued appreciation.
"If they are serious to really help save the export industry, the economic managers must go all the way and stop foreign borrowings. A crisis situation demands bold decisions. And we are an industry in crisis," Luis asserted. (Abe P. Belena, Philexport News and Features)
