PH salvation lies in export sector dev’t, says BSP

Traders urged to strengthen forex sources other than remittances

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BSP Governor Amando Tetangco Jr. FILE PHOTO

The Bangko Sentral ng Pilipinas wants an export sector development agenda drawn up to ensure that the country’s foreign exchange reserves remain at a healthy level in the face of worsening global economic conditions.

According to BSP Governor Amando Tetangco Jr., boosting the export sector’s competitiveness will reduce the country’s dependence on remittances as source of foreign currencies.

To develop the export sector, Tetangco said, private firms are highly encouraged to invest more in research and development of new products that the Philippines can competitively sell in the global market.

“There have been concerns that the Philippines may be over-reliant on remittances from overseas Filipinos in terms of financing its foreign exchange needs,” Tetangco said in a speech last week during a gathering of Chinese-Filipino businessmen.

It is important, he said, “to promote a sustainable external position” by increasing investments in the export sector.

The country currently has about $84 billion in foreign exchange reserves—more than enough to cover nearly a year’s worth of the country’s import requirements, the BSP said, citing international benchmarks.

Remittances, which amounted to about $21 billion last year, would continue to provide a steady stream of foreign exchange liquidity for the Philippines, Tetangco said.

But he stressed that the country could become more resilient to external shocks if it could strengthen other sources of foreign exchange.

Currently, the Philippines relies heavily on electronics for its export revenue. Electronics—mainly intermediate goods that serve as inputs to consumer products like cellular phones and computers—account for at least half of the country’s export earnings.

The trade in electronics is considered highly vulnerable to the economic conditions of export markets. This is because, in a time of crisis, people tend to focus spending on basic needs and reduce the purchase of non-essentials, economists explained.

In 2011, the Philippines suffered a contraction in export earnings due to the economic problems of the United States and the euro zone. The BSP believes it is high time for the country to develop new products that can be exported and enhance those that are now being shipped out to drum up demand.

The country’s total export revenue in 2012 almost came to $52 billion, up by 7.6 percent year on year. The growth rate fell short of the government’s target of 10 percent, but was still a stark improvement from the contraction seen in 2011.

Also, some traders claim that the strengthening of the peso has led to the decline in the country’s export earnings.

The peso’s appreciation has made Philippine goods more expensive to foreign buyers and, therefore, less competitive in the global market, the said.

But the BSP said that the export sector should not bank on the exchange rate to be competitive.

Exporters must strive to become more efficient and competitive by enhancing products for exports, while searching for other export markets, the regulator said.

The BSP has already implemented several measures, such as the purchase of more dollars, to prevent the peso from appreciating too sharply.

But the regulator added that it still maintained a policy of letting the market determine the exchange rate. This is because, while a weak peso benefits the export sector, it also makes imported goods more expensive, among other disadvantages, the BSP said.

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  • Oliver82

    Agriculture & Industrial Sector needs to improve and developed.

  • http://freemindonline.blogspot.com/ FreemindOnline

    If you give the power to think, to innovate, and to decide to more people. This will mean more will be capable to plan their own future, more will be capable to think on their own, more will be capable to vote on their own, more will not be reliant to corrupt officials.

    I think what Mr Tetangco is proposing will not sit along perfectly to a few influential people who controls the Philippine government and it’s officials. Overseas remittances and it’s effects guarantees that Filipinos remain retroactive to government decisions and actions.

    Unless Mr Tetangco is conspiring to make the Philippines an export reliant country that will make it more vulnerable to foreign or external shocks, the people running the government will not understand alternative and fall back plans, or even long term planning for that matter. The Philippine government is and will be a linear thinker unless it gets the right people to run the country.

  • Nitsog

    Aquino is beholden to LP who indirectly made him president, thus he has no political will to remove the pork barrel in which the lawmakers enjoyed. try to remove the pork barrel and the party will be his enemy. if you are in his shoes will you be ungrateful to your party. ?

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