CEBU, Philippines - The PhilExport-Cebu shares the sentiment of the entire business community and expressed its intent to support the three business groups in the province to call the attention of the Bangko Sentral ng Pilipinas for an effective management policy of the country’s foreign exchange movement.
PhilExport-Cebu executive director Fred Escalona said “we are willing to work with the other chamber of commerce organizations on this pressing issue.”
Last week, Mandaue Chamber of Commerce and Industry (MCCI) president Eric Ng Mendoza announced that together with the two other big business organizations here the Cebu Business Club (CBC) and the Cebu Chamber of Commerce and Industry (CCCI), joint advocacy will be submitted to BSP and other concerned government agencies in the national level to re-iterate their complain on the continued strengthening of the Peso.
“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.
Mendoza said that the heavy inflow of “hot-money” to the country, has further strengthen 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 volatility of the peso imperils the ability of the local industries including the exporters to correctly make accurate pricing and market projections, Mendoza said.
Likewise, Escalona said the export industry is bound to experience another depressing situation if the foreign exchange will not be managed property by the BSP.
According to Escalona, the inflow of hot-money to the Philippines that boosted the strength of the Peso is “creating bubbles again.” Its presence does not imply stability of the Philippine currency, but danger is expected, thus creating another economic chaos, Escalona said.
Although the BSP has reiterated its stand that the foreign exchange in the Philippines strictly adheres to a “free-float” policy, Mendoza said that the business sector is 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 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.
“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 Escalona.
At this point though, Escalona said the export sector, through the PhilExport-Cebu is still waiting for the invitation from the three chambers for its intention to join with the advocacy.