Don’t blame strong peso for your woes, BSP tells exporters

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) urged exporters to stop complaining about the strengthening of the peso against the dollar and should instead focus on improving their competitiveness to be able to survive in the global market.

BSP Deputy Governor Diwa Guinigundo said in an interview with reporters that exporters need to revisit their strategies in order to survive the global competition.

“Our export sector is very important and we realize their difficulty, however they should be reminded that competitiveness in the global market extends beyond a weak currency,” Guinigundo stressed.

He pointed out that exporters should focus on boosting their competitiveness through improved operating efficiencies.

“Our exporters will also have to rethink their framework of competitiveness and start focusing on more fundamental and perhaps more important aspects of competitiveness,” he added.

According to Guinigundo, a latest survey conducted by the International Monetary Fund (IMF) showed that export competitiveness is based on the quality of product, lower costs, and ability of exporters to turn-around and deliver orders.

However, Guinigundo said the government would continue to address major business constraints including poor infrastructure as well as high power and electricity costs in the country.

“The challenge on the part of the government is to provide cheap infrastructure or power to exporters whose competitiveness are being affected by high power and labor costs,” he added.

He pointed out that the BSP has not been remiss in pursuing its mandate to smoothen the volatility of the peso against the dollar either when the peso is strengthening or weakening against the greenback.

Latest data showed that the central bank booked P6.88 billion in losses from January to November last year as a result of its foreign exchange transactions to pursue its mandate to smoothen foreign exchange movement. This was a complete reversal of the P8.3 billion gains it booked in the same period in 2008 as a result of its foreign exchange transactions.

Despite losses from its foreign exchange transactions, the BSP still managed to post a net income of P10.26 billion during the period although 18.6 percent lower than the P12.6 billion earnings it made in the same period in 2008.

The BSP official cited the case of Japanese car companies and other exporters who remained competitive despite the value of the Japanese yen against the US dollar.

“Despite the value of the yen relative to other currencies, they remained competitive. The reason is they were able to do just in time inventory system and they don’t hold to many inventory in their warehouse so the cost of handling it is not so much,” he explained.

Guinigundo made the statement after exporters represented by the Philippine Exporters Confederation (Philexport) slammed the government for allowing the peso to further strengthen against the US dollar even warning that this policy could revert the industry back to a negative growth this year.

He said members of the government’s economic team would conduct roadshows in the provinces next month to apprise exporters as well as small and medium-sized enterprises on the economic developments of the country.

“A month from now, we plan to go around the Philippines again and share with our exporters and other stakeholders the key economic and financial developments, the challenge to exporters with the improvement in the global economy and how they can be competitive,” he added.

The focus of the discussions would be competitiveness in terms of reducing power costs and putting in order the kind of governance needed to improve the operating efficiencies of exporters. –Lawrence Agcaoili (The Philippine Star)