Albay Rep, Joey Sarte Salceda urges the government to focus on industries that earn foreign currency, as well as on domestic agriculture to manage “imported inflation” from imported food, oil, and other essential commodities.
Salceda, chair of the Committee on Ways and Means, made the suggestion saying the dollar was likely to continue getting stronger against the peso in the near-term, at P65-68.
He described the continuing strength of the dollar against the peso as a “monetary storm.” “The US Fed has to make double the rate hikes it has already done before it succeeds in curtailing inflation. That’s a super-typhoon. You can’t fight the storm, but you can adapt.”
“There is no resistance. There is no anchor, so to speak. So, I can see the dollar sustaining its strength against the peso. It will continue,” Salceda said.
“Based on the country’s recent history, periods of currency weakness average at 38 percent depreciation. Depreciation in the early 1970s, by 41 percent, even led to an eventual boom in Philippine exported commodities by 1974. Depending on where you start counting, the PHP has depreciated by 18 percent to 23 percent against the dollar during this period of depreciation. So, if history repeats, there’s quite some way to go,” Salceda said.
“This could go as high as 65 to 68 pesos per dollar. And, frankly, there’s not much we can do. To return to stable core inflation, the US needs to achieve 5 percent disinflation that it achieved in the early 1980s, and that took 6500 basis points in interest rate hikes. The Fed under Powell has so far increased the Fed rate by just 2250 basis points. So, hang on. This is still bound to be quite a ride,” Salceda added.
“The Bangko Sentral ng Pilipinas will not be able to sustain a policy of keeping our interest rate differential with the US.
We can’t raise rates too aggressively without sacrificing economic recovery because the currency depreciation isn’t primarily our fault. We can’t do much to protect the peso.”
“Instead, what we can do, as I’ve said repeatedly this year, is – if the dollar is stronger than the peso, then let’s just earn more dollars,” the solon said.
Instead of being “hawkish” on protecting the peso’s value, Salceda strongly recommended focusing on what he calls the “Big 4” dollar earners: OFWs deployment, the BPO sector, foreign-employed freelancers, and tourism.
“We need to reduce the bottlenecks for OFW deployment. Everybody who freely wants to go should have the opportunity to go. That includes helping our healthcare workers pass their accreditation tests, providing training for workers in heavy industries such as petroleum workers in the Middle East, giving language skills trainings,” he stressed.”
“If we are going to sustain our OFW deployment policy, we should at least give them value-adding skills, so that we’re not forced to send domestic helpers or other low-pay overseas jobs,” he added.
“The second thing is to help our BPO sector expand. We’ve succeeded in helping them keep their work-from-home privileges. The next step is to make permitting, tax compliance, and other doing-business concerns easier for BPOs.”
“Thirdly, we need to equip people who want to become remote freelance workers for foreign employers. That includes virtual assistants, independent creatives and PR people, designers, and others who earn dollars by working remotely and contractually. I suggest that we set up digital jobs centers that will allow them to set up bank accounts, have billing addresses, get home internet access, and improve their skills and portfolios. That’s even better than OFW deployment because they stay here while earning OFW pay.”
“We also need to maximize tourism. There is a P2 billion budget for tourism branding and advertisement, consistent with PBBM’s directive for a Filipino brand. Success on that front will be more crucial now,” Salceda said.