Strong Peso to delay export sector's recovery
May 11, 2010 The Philippine Exporters Confederation (Philexport) expects the recovery of the export industry this year would be sustained until 2011 should the peso-dollar exchange rate does not improve this year.
Philexport President Sergio Ortiz-Luis Jr. said the sector could regain losses brought about by global trade slump amid the better performance of the electronics and metal sectors in the months of January and February.
"Unfortunately, the small and medium enterprises especially the indigenous exporters who were poised to rehire and normalize activities last December, are not accepting orders because of the exchange rate.
They lose and they can't raise their prices because they won't be competitive," he said.
Ortiz-Luis said exporters were hoping that the sector could recover in the second half of the year what they have lost in 2008, had the indigenous exporters been spared from the strengthening peso.
"Hopefully, the exchange rate can improve so indigenous exporters can start accepting orders and rehire their people. Otherwise, we will end up with exporting of usual import-dependent exports with low value-added," he stressed.
Indigenous exporters are more affected by the strong peso as they have almost 100 percent local costs but only earn less from their exports because of dollar's weakness.
"For the semiconductor, P44 (forex) plus is okay. But for the indigenous exporters, it cannot be lower than P46 because prices here remain," said Ortiz-Luis.
The peso fell back to the P45 level against the US dollar this month from last April's P44.63 and March's P45.74 average.
"The way it goes, we have to wait for 2011 to recover what we have lost because of the crisis," he added.
The Philexport projected a growth of only 10 to 15 percent for the exports industry this year.
Aggregate merchandise exports for the first two months of 2010 however rose by 42.4 percent to $7.146 billion during the same period last year due mainly to the robust performance of electronics sector.
- Published in the Sun.Star Davao newspaper on May 11, 2010.
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