Strong peso to slow export growth

MANILA, Philippines - The export sector is expecting a slower growth in the next three years due to the continued strengthening of the peso against the dollar.

In an interview with reporters, Philippine Exporters Confederation of the Philippines (Philexport) president Sergio Ortiz Luis Jr. said that instead of posting a 25-percent growth for 2011 to 2013, the sector will only grow by 10 percent.

He said this figure is still being studied, but definitely the 25 percent will not be met anymore given the strong peso dollar exchange rate.

With regards to the business process outsourcing (BPO) sector, Ortiz Luis said that some of those who are planning to expand their BPO centers here are now considering going to Indonesia for their expansion plan. “They are looking at the costs,” Ortiz-Luis explained.

On the side of the government, Trade Secretary Gregory L. Domingo said that the peso is very hard to control because the continued inflow of the dollar has been contributing to the strong peso. Domingo said that the outlook for exports is dependent on the peso.

He said that even at the 40 to $1 level, there is still some net positive growth, albeit slower than when the peso was trading at the levels of 45 to 46.

However, he conceded that some products will become less competitive while others will not be competitive at all. “They should shift to high value products,” Domingo said.

Meanwhile, the government has expressed concern over the low utilization of Free Trade Agreements (FTAs) of the country that is why they considered launching the roadshow to educate businessmen on the benefits of the FTA.

The Philippines has the following FTAs with ASEAN Free Trade Agreement (AFTA), Australia-New Zealand (AANZFTA), China (ACFTA), Japan (AJFTA/JPEPA), and Korea (AKFTA). These FTAs bring a number of trade benefits, primarily tariff elimination or reduction that make Philippine exports products more competitive.