ASEAN KEY DESTINATIONS
Philippines exporters lower target
In a press conference, Sergio Ortiz-Luis Jr., Philippine Exporters Confederation Inc. (Philexport) president, said the previous 25-percent annual exports growth target set for 2011 to 2013 would likely be slashed to 10-percent because of the peso's appreciation.
The public-private Export Development Council is drafting the Philippine Export Development Plan 2011-2013, which President Benigno Aquino 3rd would approve before yearend.
Ortiz-Luis said Philexport has received reports that "a lot" of small and indigenous exporters downsized their operations when the foreign exchange rate was at P46:$1, while some semiconductor and electronics manufacturers "dropped some lines" when the forex slid below the P45:$1 level.
Business process outsourcing (BPO) players are also considering expansion in other locations such as Indonesia, with the forex breaching the P43:$1 mark, the Philexport official said.
Philippine economic managers however ruled out state subsidies in the form of a development or support fund for exporters.
"I think we will still see net positive growth [of exports next year], but at a slower phase than [with forex at between] P45 to P46 [to the dollar]," Department of Trade and Industry (DTI) Secretary Gregory Domingo said.
"Some products will be less competitive, some not at all," he said.
If the exchange rate stays at the P42:$1 level for a long time, exporters may have to shift to producing higher-value products and supplying higher-end markets, the DTI chief said, adding that shipments to the US will be most affected by the weaker dollar.
But "I don't think the government, at this point, can give subsidies," he said.
Manufacturers should instead tap other markets with which the Philippines maintains a free-trade agreement (FTA), the DTI chief said.
The Philippines has a bilateral FTA with Japan and, as part of the Association of Southeast Asian Nations, has trade pacts with Australia and New Zealand, China, Japan and South Korea.
Separately, Socioeconomic Planning Secretary Cayetano Paderanga said the government would best "invest the dollars that are coming into the country in the needed infrastructure, like highways."
The peso on Tuesday broke into the 42-to-a-dollar level, the highest in two-and-a-half years, before giving way to a correction on Friday.
At the Philippine Dealing System, the local unit slashed 17 centavos to close at 42.70 against the greenback from Thursday's 42.53 finish.
"The correction came just on time, with dollar holdings expected to accumulate over the weekend. It will help smoothen volatility especially with the strong momentum of the peso," a trader said.
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