Low export sales despite weak peso worries Philexport exec
Amid a continuing depreciation of the peso versus the dollar, the local exporting industry is supposedly seen to benefit.
However, local business leaders have noted that despite the opportunity for exporting to flourish with the depreciation of the peso value, exports have remained low.
Philexport Cebu Chairman Apolinar Suarez said that while he had seen “insignificant” impact of the depreciation of the peso, as well as the increase in prices of fuel, the industry had been suffering from low export sales.
“For the export industry, you might say it is a windfall, but our biggest problem is our very low export sales,” Suarez told Cebu Daily News.
He said that the local exporters in Cebu had been reporting lower sales since earlier this year especially in the fashion accessories, home decors, and furniture.
Other products like food and semiconductors have been doing okay.
One of the reasons Philexport Cebu sees is that other countries in Southeast Asia have also beefed up their exporting industry.
Among those with the highest increase is Vietnam.
Suarez said this was because China production had been moving to Vietnam which was the nearest for them logistically.
Trade barriers between China and the United States is also another factor.
“Definitely, this year has been challenging for exports. We are hoping in the next three months, makabawi kami (we will be able to recover),” he added.
Recently, the peso has slid to yet another 12-year low. Last Tuesday, the peso closed at P54.31 to a dollar. It was even lower than the peso’s last trade of P54.23.
This is the lowest since November 22, 2005.
Cebu Chamber of Commerce and Industry (CCCI) President Antonio Chiu agrees that the local export industry’s situation is “alarming.”
“What is alarming is that data from Neda (National Economic Development Authority) shows us that in the last six months, our exports have been having negative growth contrary to the normal thinking that a weaker currency will encourage more exports,” he said.
He added that this situation is happening with the country’s Southeast Asian neighbors’ exports are increasing.
According to Chiu, the depreciation of the peso would also put a lot more pressure on the country’s inflation rate which had already been high at 6.4 percent as of August, since so many basic commodities had been import-dependent.
But the most important commodity affecting the Classes C and D had been the price of rice, he said.
“This commodity has been totally mismanaged resulting into very high prices and will lead to social unrest if not addressed immediately. Our government should make public officials accountable to the people and not to just allow them to resign as in the case of NFA (National Food Authority) which has done so much damage to the economy particularly the poor,” Chiu said.
Cebu Business Club President Gordon Alan Joseph agreed that the situation would be expected to worsen the country’s inflation rate.
He added that while the country’s economic situation had been worsening, they had yet to see an effective response from the government.
The Monetary Board is expected to convene today (Thursday) to decide whether to raise interest rates further given the country’s high inflation rate.
The Bangko Sentral ng Pilipinas (BSP) has raised its key overnight borrowing rate by 50 basis points during its meeting last August in a bid to temper what is described as the beginnings of second-round inflationary effects in the local economy.
Prior to this, the BSP has also increased interest rates in two successive 25-basis point moves.
For his part, Mandaue Chamber of Commerce and Industry (MCCI) Vice President for External Affairs Steven Yu said the twin impact of a depreciating peso and increasing oil prices would be “detrimental” to the bottomline of any business.
At the same time, he said it would be “inflationary” to the consuming public.
“It means that businesses and consumers will have to squeeze their budget because both costs of doing business and costs of living will increase,” Yu said.
However, he pointed out that there would still be a silver lining with the arrival of the Christmas season when consumers would be expected to spend more.
This will be supported by the release of workers’ 13th month pay and other yearend bonuses.
By this time, Yu said they hope that crude prices will correct and peso will appreciate back to P53 to P53.50 level.
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