Unstable peso threatens profitability of exporters

Business profitability and feasibility of small and medium exporters are now being threatened because of the strengthening peso against the dollar.

"Our profit suffers, we cannot properly quote our products to our customers abroad if the peso's value to the dollar is not stable," said Gifts, Toys and Housewares (GTH) Exporters association in Cebu Jenifer Cruz.

He said the processing of an order is six months, if in six-month time the value of the peso moves back and forth, Cruz said exporters will have a hard time quoting their product in dollars.

"We can't change our quotation from time to time, because of the peso movement. Our business suffers," Cruz said.

Last week, exporters in Cebu have expressed apprehensions once again over the strengthening peso, as it landed the P50 level mark per one (US) dollar.

The recent pronouncements made by the Philippine economic managers saying that the peso will settle at around P48 to one dollar by yearend, worried the exporters based on a statement released recently by the PhilExport-Cebu.

"We really need a stable peso. Although, the value is largely market driven, but the government should also protect the exporters' interest," Cruz said in an interview yesterday.

Because of the threat brought by strong peso, PhilExport Cebu filed an urgent appeal to the President, her economic managers and even the House of Congress for further help in alleviating the pain that has been brought to bear on them by the strong currency. It prayed for the further reduction of the cost of doing business and the extension of financial assistance in the form of cheaper and easily accessible export loans.

According to Cruz, if the bigger export companies with much more established customer based abroad, have expressed apprehensions over this matter, how much more the small and medium exporters?

In February this year, PhilExport-Cebu submitted its position paper to the President and her economic team, praying for the rate stabilization of peso-dollar performance at around P54 to one-dollar level.

The organization also appealed for the government's intervention in its incessant fight for the elimination of red tape and the reduction of the cost of doing business, which claimed have added to their worsening situation, because of various aggravating factors such as expensive fuel price, rising labor costs, and tougher competition abroad.

One of the major challenges faced by Filipino exporters, especially those in the micro, small and medium-size industries, is that they do not have resources, such as expertise to go into sophisticated currency hedging and trading activities.

Dwindling cash reserves and higher factory prices will contribute to actual job losses in the export sector and market contraction goods abroad.

There are close to a hundred GTH exporters in Cebu, some of which are not members of the GTH exporters association.