Business groups call on BSP to reassess monetary policies

CEBU, Philippines – The Cebu business sector led by the Mandaue Chamber of Commerce and Industry (MCCI) and the Cebu Business Club (CBC) will soon issue a position paper reiterating its call to the Bangko Sentral Ng Pilipinas (BSP) to reconsider the monetary policies that affect the foreign exchange movement.

MCCI president Eric Ng Mendoza yesterday said that the Cebu business sector is concerned with the strengthening peso, as it will not only hurt exporters but also the other local industries.

Mendoza and CBC president Gordon Allan "Dondi" Joseph had an informal discussion on this issue, and soon the two chambers will also invite the participation of the Cebu Chamber of Commerce and Industry (CCCI).

"The sudden strengthening of our local currency as a result of continued weakness of the US dollar may undermine our industries' capability to be competitive," said Mendoza.

He said the heavy inflow of "hot-money" to the country has further strengthened the value of the Philippine peso, and that BSP should be able to manage the movement "very well" to protect the greater interest of the Filipinos.

"These [hot-money inflows] are not foreign direct investments, but funds that temporarily flow into our market which is favoring the emerging Asia's faster recovery and better yields in investment instruments like our robust stock market," he added.

The danger now is the ability of the local industries including the exporters to project correctly especially for pricing, market projections, Mendoza said.

Although, the BSP has reiterated its stand that the foreign exchange in the Philippines strictly adheres a "free-float" policy, Mendoza said that the business sector in Cebu is appeal for the BSP to take a radical action now, and take the good example of Asian countries, wherein they were able to manage their currency well amid external intervention.

"Countries like Hong Kong, an Asian financial hub, had been able to manage its currency pegging it in the level of 7.7 versus the US dollar over many years. This is very stable and predictable for business especially those dollar-earning industries, and sectors," Ng said.

In the Philippines, this policy should much more be adopted because the economy is largely export-driven, and majority of the industries and consumer based is depending on dollar-earning channels.

He said the fast growing Business Process Outsourcing (BPO) is a dollar earning sector, the OFWs, tourism, among others are dollar dependents.

"We hope that, our government and economic managers will consider reviewing our existing monetary policies, with emphasis on studying whether intervening is effective tool to manage the foreign exchange, or if the "free-float" policy is still applicable in these times of unpredictability.

Last week, the PhilExport-Cebu called the attention of the BSP to consider a revamp of the current monetary system.

"We feel it is time for a major revamp of the monetary system. In the case of the Philippines, competitiveness is no longer the key issue, as other neighboring countries [our competitors] are also in the same situation," said PhilExport-Cebu executive director Fred Escalona.

Mendoza added that the Philippines has a lot of models to look at in terms of effective foreign exchange management.

On the other hand, economist and market analyst Wilfred Son Keng Po in an earlier interview said that the private sector, especially the exporters should stop complaining on the continued strengthening of the Peso, as the current level is already a result of brilliant manipulative intervention made by the BSP.

Businessmen should understand, that if it were not of the BSP's intervention to manage the real value of Philippine Peso versus the green-buck, peso is now on the P29 value per one-dollar.

"BSP has done a good job [managing the foreign exchange]. The reason why our central bank is considered as one of the best central banks in the world," Son Keng Po said. (FREEMAN)