By Bernie Cahiles-Magkilat
Trade and Industry Secretary Ramon M. Lopez has remained confident the country’s goods and services exports growth target of nine percent this year can be achieved, to be boosted by the depreciation of the peso against the US dollar.
“We are still confident we can hit eight to nine percent (growth) because of the favorable foreign exchange rate, which helps in the volume,” Lopez told reporters after meeting with the Export Development Council (EDC), which he also chairs.
Lopez noted that exports of goods and services in the first six months this year improved by 4.1 percent despite the higher base last year.
Initially, the government reported of a 10 percent growth in exports in 2017 but this was later corrected to 20 percent.
In theory, a weak peso would boost the country’s exports since it would mean cheaper goods and services, thus encouraging other countries to buy. But, it would also mean the importing from other countries with a weak currency would be more expensive.
On Friday, the local currency closed at P54.21 against the US dollar. Lopez said that EDC has discussed the most critical factor facing exporters at present is supply constraint, like sugar.
Already, the DTI is working with the Sugar Regulatory Authority to allow food processors to directly import their requirement with the least non-tariff requirements.
By allowing food processors to import directly, they would be able to enjoy lower cost of sugar at P1,700 to P1,900 per 50-kg bag from what is available in the market at more than P2,300 per bag.
Since there is no supply and the locally available supply is expensive, food processors would rather not produce, thus limiting their export capability.
“So, we work closely with the Department of Agriculture because this is a supply chain issue,” Lopez said. Food processors affected by supply constraints include coconut-based products, mango and pineapple.
Had it not for the supply constraints, Lopez said, “We could have done 9 percent instead of 4 percent,” he added.