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THE
government can stop the impending closure of several
small and medium exporters due to the continued peso
appreciation once the planned $1-billion hedging
facility is put to operation.
Sergio
Ortiz-Luis, president of the Philippine Exporters
Confederation Inc. (Philexport), said while the scheme
is not the long-term solution they are seeking from the
government, it will still be enough to prod small to
medium-scale exporters to start accepting orders again.
“The $1
billion is more than enough to protect the small and
medium exporters so they would not stop operations,”
Ortiz-Luis said.
He noted
that indigenous exporters, or those with high local
value-added and are therefore harshly affected by the
rising value of the peso, have already become
uncompetitive compared to their foreign counterparts in
terms of pricing.
With
this, Ortiz-Luis said they have stopped taking orders,
as by doing so they would simply be incurring more
losses.
This,
because they expect the peso to continue appreciating
versus the dollar.
An
estimated $1.5 billion in annual export revenues could
be lost by the country once the export-oriented firms
start closing, according to the association.
Ortiz-Luis said the $1-billion hedging facility is
timely since it would give small exporters the guarantee
that the value of the dollar when they started taking
orders and incurred production costs would be at the
same level when they get their revenues.
The
government announced over the weekend that the
Development Bank of the Philippines (DBP) is now
preparing the mechanisms to guide the exporters’ use of
the hedging facility.
Trade
Secretary Peter B. Favila said they are looking at
giving exporters three options for the use of the
facility although he did not elaborate them.
The
scheme will be in operation within the week.
Ortiz-Luis said as an added support, the government
should also look at nondirect interventions such as
paying the dollar-denominated debt, decreasing foreign
borrowing and strengthening the reserves of the country.
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