Stable forex is crucial to sustain BPO growth

CEBU, Philippines -  The Philippines should adopt a careful balancing measure in controlling the foreign exchange rate in order to sustain growth for some driver industries specifically the Business Process Outsourcing (BPO).

Economist Jonathan L. Ravelas said that the Philippine peso exchange to a dollar should ideally settle in the P44 to P45 level. If it goes stronger than this, it could further hurt the BPO investors.

“As our peso strengthens it will also hurt the BPO’s viabilities,” Ravelas warned, adding that although BPO prospects in the country is promising, the foreign exchange dimension should also be seriously considered, as this is the heart of BPO investors’ interest in putting their offshore sites here.

Despite the instability of the foreign exchange though, Ravelas said the Philippines is still among the top pick destinations of outsourcing companies because of the good quality of manpower.

Being tagged as the “Heart of Asia”, the Philippine’s edge of having people with high EQ is one of the solid attractions that bring BPO investments in the Philippines.

On the other hand, the country shouldn’t be complacent on this edge because at the end of the day, he said, BPOs should also consider their business viability. Meaning, if the business is already hurting because of unstable foreign exchange, which largely affect their businesses and profitability, BPO investors could easily fly to another competing destination.

“We have the language and the EQ,” he said that is why the Philippines is outsmarting other countries like India in attracting BPO investments.

However, he warned that despite these qualities, the government should also sustain the BPO growth by providing stable currency rate, and most of all improving the

The P44 to P45 exchange rate would surely attract the Foreign Direct Investments (FDIs) to the Philippines, however, “if we don’t have the right infrastructure we are shunning them away.”

Ravelas, who is also the first vice president and chief market strategist of Banco de Oro Universal Bank, said that now is the best time for   the Philippines to give all-out support to the BPO sector, as the attraction is there, and the two biggest markets for BPO — the US and Europe are now economically challenged.

About 80 percent (or $7 billion) of the US$9 billion BPO receipts done in the Philippines are coming from United States and Europe.

While the crises being faced by the US and Europe could boost the BPO sector here, it is also expected to weaken the OFW remittance figure, as more Filipinos might be out of job in these countries.

Therefore, boosting the BPO market, meaning holding the existing investors to stay in the country for long term and attracting more of this kind of investments, “is far better than OFW.”

Significantly, the sector (BPO) is also expected to increase by 30 percent in the next three years of which revenue income of workers will level that of the OFW remittance which now stands at over $18 billion. (FREEMAN)