Philippine peso slump a relief for exporters

manila — The peso near a 12year low is providing some relief to Philippine exporters, who risk losing some tax perks and are facing tighter labour policies, the top executive for the electronics and semiconductor industry said.

“In general, it’s a blessing that the peso has weakened,” Dan Lachica, head of the Semiconductor

and Electronics Industries in the Philippines (Seipi), said. Even if 70 per cent of the industry’s inputs are imported and affected by the 6.7 per cent drop in the peso, with revenues in US currency “you’re able to stretch the value of your earnings.”

What alarms Seipi, the nation’s largest grouping of foreign and local electronics companies, is the government’s push to remove tax perks and its crackdown

on labour contracting amid higher production costs as faster inflation trims the purchasing power of the peso, Lachica said on July 9. The peso is among the worst performers in Asia this year along with the Indian rupee and Indonesian rupiah.

The industry, which accounts for about half of Philippine exports, is only now regaining its footing as foreign investors get used to President Rodrigo Duterte’s outbursts against the US during his first year in office in 2016, said Lachica. Recent challenges may slow the recovery in exports, which grew 11 per cent in 2017 after a dismal 0.1 per cent gain in 2016.

Shipments of electronics and semiconductors are forecast to rise six per cent this year even as total exports contracted for a fifth month in May, Lachica said.