News: BSP to review effects of peso rise on exports -
09 Feb 2008
The Bangko Sentral ng Pilipinas (BSP) said yesterday it would look into the effects of peso appreciation on the export industry, particularly business process outsourcing (BPO) and the so-called indigenous exporters.
The BSP said that the impact of foreign exchange rate fluctuations was not uniformly felt by the export sector since there were industries that have the offsetting benefit arising from their large import content.
BSP managing director Cyd Tuano Amador told reporters that the impact was more felt in the so-called indigenous sector or export industries that have very little import content.
Amador said the BPO industry was also expected to be affected although possibly not to the extent as indigenous exporters.
“We are updating our previous study of the BPO industry to determine the extent of losses they have suffered,” Amador said. “But of course there are always counterveiling factors that offset them, just not as direct as if you were an exporter who uses a lot of imported materials for your products,” Amador said.
The BSP’s baseline study of the BPO industry indicated that it generated over $2 billion in revenues and created over 138,000 new jobs, growing nearly 50 percent over a two-year period.
The survey covered the 2004 and 2005 period, establishing the baseline information on the BPO industry in an effort to determine exactly how these operations affect the country’s balance of payments (BOP).
According to the BSP, the bulk of revenues generated by BPOs do not pass through the banking system in any form that could be reported to the BSP.
The BSP said it surveyed 317 BPO companies and the response rate was around 63 percent, covering various BPO activities from call centers, animation, software development and transcription to other related outsourced activities.
According to the BSP, however, the results of the survey did not include responses from several big-ticket BPO companies, indicating that the initial results were still significantly understated.
The BSP reported that based on the baseline survey, the gross value added to the economy was estimated at 62.93 percent. This means that for every peso invested in BPOs, about 63 centavos is added to the economy as a whole.
In terms of employment, the survey indicated a strong 46 percent growth from the total 94,488 jobs in 2004 to 138,000 jobs in 2005.
BPO companies paid total compensation of P26.4 billion in 2004 and this surged to P42.4 billion in 2005 with revenues topping at $1.8 billion in 2004 and reaching $2 billion the following year.
The preliminary result also showed that 63 percent of foreign investments into BPO came from the US and Europe came in a distant second with 26.8 percent. Japan accounted for 1.4 percent and “other Asia” accounted for 8.4 percent.
The “other Asia” category included investments from India, Malaysia and Singapore.
Initially, the survey also indicated that the biggest expansion was seen in medical transcription which account for only a small percentage of BPOs in the country but has been expanding at a phenomenal rate of 85 percent.
The survey also revealed that although India was the country’s biggest competitor in the BPO business, there were Indian companies that invest in BPOs in the Philippines as well.
Source: PhilStar.com by Des Ferriols, 9 February 2008