Exports and the robust peso

NEDA Secretary Romulo Neri recently called on the Bangko Sentral to intervene on the pesos' appreciation after exporters cried they have had enough. From what I learned, Cebu exporters have already mapped an advocacy plan to pressure government to contain the peso's strength which I think is not only too much of an asking but only seeks to address their own woes.

Of course, we all know the export industry is one of the country's economic engines. Exports in fact contribute more than half of the country's GDP and employ by the thousands. But if we really come to think of it, only a few export industries are actually affected by the peso's improving performance since more than half of exports are mostly semiconductors and are commonly owned by foreigners.

In many sense, a large majority of exporters are not affected by the peso's strength and may even welcome it since they also get to benefit from low import prices and logistics costs.

It is true that exports with considerable local content such as furniture, seaweeds, food and other locally produced items are those that are actually affected by the peso's rise. But then again, entrepreneurs from these sectors also get to benefit from the peso's improving purchasing power and hopefully benefit from low fuel prices and energy.

The peso's appreciation should be best viewed from the point of who's going to reap the most benefit. And it is no argument that almost everybody is going to gain from it one way or the other.

Just imagine how much the appreciation would mean to improving fiscal savings which could be useful to improving government services?

Economists believed that for every P1 improvement in the peso, the government saves about P5 billion. And if the rate stays at P51 to the greenback this year, the amount of savings in loan payments would amount to P30 billion this year alone.

And P30 billion is more than enough to build hundreds of schools, and a dozen of vital infrastructure in the countrysides and health programs for the underprivileged. If we are to stop the peso from going up, would the export sector be willing to return this favor to the Filipinos?

If we let the peso settle to its real level of 45 to the dollar, then we gain more than P60 billion this year. That is twice the social welfare and health projects that the government can give to the country this year.

But the larger reason is that, a strong peso also means better buying power for the common Filipino. It is a sign of a good economy. So why fix a problem when it presents already a solution?

If the advocacy of exporters is to effect direct intervention to stop the peso from appreciating, then that advocacy is so self-serving.

Exporters should ask for fuel price rollback or energy rates adjustments. Credit extension to affected exporters or tax breaks instead. These are doable and more concrete measures to cushion the impact of the exchange rate - not intervention.

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