Exporters confident of meeting 11% percent growth

Filipino exporters remain confident of meeting their full-year growth target of 11 percent for 2007, despite uncompetitive export records in the first four months of the year due to continued peso appreciation. Sergio Ortiz-Luis, president of the Philippine Exporters Confederation Inc. (Philexport), said they have high hopes that the seasonal surge of shipments to country’s different markets abroad towards the end of the year will be able to offset the relatively poor showing of the sector from January to April. Ortiz-Luis said the yearly pattern is for exports to achieve higher growth during the third and fourth quarter of the year when orders for the Christmas season get delivered. ““We are crossing our fingers a surge will come in the second half of the year," he said. The sector only managed to achieve an 8.1-percent growth in the first four months of the year, way off its full-year growth target of 11 percent for 2007. Trade Secretary Peter B. Favila even pegged a higher target of 12 percent export receipt increment for the year. Philexport has appealed to the government for more state support to small exporters who have been hit by the continued rise of the peso. The group said their members are losing up to P1.5 billion in export revenues per month on goods contracted in the first quarter of this year when the exchange rate was over P50 to the dollar, which has since gone down to P45 plus to the dollar when they made their deliveries this month. Philexport said this translated to losses of P5 per dollar of sales. The food industry as a whole, had experienced a decline of 7.9 percent in sales in April, which indicated that the strong peso has been derailing its growth momentum. Philexport also reported that 75 small and medium-sized exporters in Cebu and Metro Manila have closed shop since January. The big industries that import their raw materials like electronics and machine parts are not affected by exchange rate fluctuations. Ortiz-Luis said only the Development Bank of the Philippines (DBP) has come up with a concrete program to help exporters. The bank will soon roll out a A $1-billion hedging facility. Ortiz-Luis said the $1-billion hedging scheme will be like an insurance program. “The exporter can go to DBP and take in an insurance that the peso value of the contracted export product will be the same when the delivery is made." The DBP, he said, will buy the dollar equivalent to the value of the covered goods and charge the exporter a small interest rate for the peso that it uses in the dollar purchases. The bank will the use the dollar in its investment portfolio to keep it earning. “When the goods are paid and the peso equivalent of the exported good has gone down, the DBP will pay the exchange rate difference to the covered goods. This assures the exporter that he will not incur exchange rate losses in his deals," Ortiz-Luis said.