Cebu exporters have long practiced product diversification to cushion the impact of the global financial crisis and the volatility of the local currency, an industry leader said.
Philippine Export Confederation of the Philippines-Cebu (Philexport-Cebu) executive director Fred Escalona said the implementation of the Sector Export Marketing Plan (Semp), which aims to finetune operations among other measures, has long been incorporated in the export sector to address effects of the global financial crisis.
”What we wanted are new measures so exporters can still become competitive in light of the volatility of the local currency,” Escalona said.
Earlier, the Bangko Sentral ng Pilipinas (BSP) told Filipino exporter not to just count on a stable peso, and instead, diversify products and services to remain competitive despite a volatile exchange rate.
BSP deputy governor Diwa Guinigundo said in a recent report that competitiveness of exporters should be determined by their products or services, rather than external factors like the exchange rate.
Escalona said BSP may lowering its interest rate relative to those in effect in Japan and the United States.
The US, for instance has almost zero interest rates, which has helped in pump-priming its economy.
Escalona also said that BSP should accelerate the payment of foreign debts with active participation in the market.
Cebu exporters have long asked the BSP to maintain a stable peso exchange rate with the US dollar.
Escalona said a P45 level can still give room to exporters to reinvest in promotions and marketing. If the peso goes below P45, he said it will be a burden to exporters, especially to those who have not fully recovered from the crisis.
Escalona said exporters who use locally obtained raw materials for their products will be more affected than those who use imported raw materials.
The Philippine peso picked up slightly against the dollar on Monday at P43.9 to the US currency.
Rizal Commercial Banking Corp. (RCBC) senior vice-president for Visayas and Mindanao Prudencio Gesta said that the recent peso appreciation is due to the massive inflow of investments in the country’s stock market.
The country’s foreign portfolio investments registered a net inflow of USD926 million in the first five months of the year, up by more than five times from USD182 million in the same period in 2009.
Simon Wong, regional economist of Standard Chartered Bank’s Global Research, said that among the reasons for the recent appreciation of the peso is the general US dollar weakness against most Asian currencies and the strong external position of the Philippines, which benefits from remittance inflows.
”But the appreciation of the peso against the dollar is in the middle of the range,” said BSP governor Armando Tentango Jr. in his recent visit to Cebu.
Tetangco said what is happening in the local currency is a regional phenomenon, as other regional currencies have also appreciated against the dollar.