The Losing Power of the Pinoy Peso-- Again!

[4wrider]

There will be winners and there will loser in the devaluation of peso. Sure some exporters will come out with more competitive prices for their products and OFW's remittances will get to buy more here. But exporters of electronics, which by far the biggest in the country accounting for more than 40% of the total exports, will likely suffer because most of them are actually just toll assemblers of imported parts.

American and Japanese tourists will be happy to spend here but citizens of other countries whose currencies deteriorated may not feel like coming here.

Real property should be benefitted by a lesser valued peso if only Fil-ams and OFWs can keep their jobs abroad.

The mostly imported cars being sold here will definitely be higher if peso devaluation is the only factor being considered and us here, tsikoteers are the worse for it.

[tidus1203]

No one is a winner in this particular situation of peso devaluation because its more of deleveraging selling. Exports are only good if you can sell it. If you can't sell your exports the weak peso is irrelevant. Tourist visits especially from Western nations will decline, but the Japanese are savers so maybe they might still come but even so the Japanese are very prudent when it comes to money so luxuries like vacation trips might be delayed.

[Gen. Miting]

the devaluation of peso will bring in more BPO's here. if bpo's came into existence bec. it's a fraction of an expense of a intl. company. mas lalo sila pupunta dito coz mas cheaper ang labor

[tidus1203]

^^The problem is the BPO's client (US companies) are having tough times and will scale down. While some of them are already bankrupt.

[uls]

Ya no matter how cheap outsourcing to the Philippines will become, if the US companies are on the verge of bankruptcy, there's nothing to outsource

[jpdm]

Ya no matter how cheap outsourcing to the Philippines will become, if the US companies are on the verge of bankruptcy, there's nothing to outsource

hmmmm....how about UK outsourcing firms.....

[tidus1203]

The UK is also in terrible shape. UK is already in recession officially and the US believe it or not officially is still not in recession as of this posting. Recession being two straight quarters of negative GDP. But of course that is baloney and the US has been in recession since last year but the government always "doctors" the figures.

[uls]

where do BPOs get their earnings from?

Western companies

what happens when those companies shut down?

the BPOs have no more income.

Look at the source.

Many US and European companies in trouble.

just look at the what's happening in corporate bond market

NEW YORK, Nov 20 (Reuters) - U.S. credit default swaps widened to record levels on Thursday that suggest investors anticipate the worst period of investment-grade corporate bond defaults since at least 1980, according to analysts.

The main investment-grade credit default swap index widened by 22 basis points to 267 basis points, according to data from Markit Intraday. It had hit a record 275 basis points earlier on Thursday.

Concerns about the ailing commercial real estate market, fears of rising defaults and mounting troubles at U.S. automakers were weighing on investors' appetite for risk, strategists said.

In cash bonds, the corporate bond market was "falling apart" with spreads gapping wider, a trader said.

Companies will be defaulting on their debt in the coming months.

Even if the BPO cheerleaders keep telling everyone their businesses will be booming,

i will still be looking at the sources of their income --- the Western companies...

and they don't look like they're in good shape

[jpdm]

Well, let the peso slide further...

so that exporters will earn more...

OFWs will earn more..,

Local manufacturers using local materials will earn more....

A depreciated peso will discourage massive importation and will compel pinoy to use more local products and raw materials...

Agree with these.

The real drivers of the economy are the exporters (that uses more local materials) and OFWs.

Let the importers pay more for their imported merchandise...perhaps to force them to source their materials locally.

In the first place when they import, they are not helping per se the economy.

A weak peso will forced OFW to do the same buy more local goods with their additional peso...

Philippine Star
Updated November 21, 2008 12:00 AM

Indigenous products boost RP exports


Exports last September would have gone down were it not for the hefty growth of a handful of indigenous products, data released by the National Statistics Office (NSO) on export performance show.

But demonstrating resiliency in a crisis situation, food products kicked up five percent on export sales of $210.84 million compared to exports in the same month last year of $200.75 million. Bestseller was tuna with revenues of $40.95 million, up by an impressive 113.1 percent over exports in September 2007.


Growing at a double-digit rate of 17.9 percent were mineral products including gold, silver, copper, nickel and zinc on the strength of $268.60 million in export sales from $227.74 million the same month last year.


Woodcraft and furniture likewise remained strong, growing by 14.4 percent from $88.66 million sales last year to $101.39 million this September.



If its over $100 million monthly sales is sustained until yearend, furniture will break into the exclusive club of billion dollar industries in the Philippines presently occupied only by electronics, garments and food.


[SIZE=4]The combined growth of Philippine products whose raw materials are sourced locally[/SIZE], had given total export performance of $4.44 billion above water by 1.2 percent for the month of September over exports in the same period last year amounting to $3.38 billion


On a year-on-year basis, January to September export performance totaled $38.86 billion, still higher by a modest 4.04 percent over the same months in 2007. - Philexport News and Features

Indeed, a devalued peso will force exporters to use more locally source materials.

Electronic exports should use more local raw materials to provide more earnings to our country...

[uls]

all those are lagging indicators

puro data yan from months ago

ngayon lang nilabas sa news

the economy wasnt as bad months ago

[Monseratto]

Exports will only succeed if the countries they are exported to are doing well. Most of those countries are doing rather badly. No Orders=No Business. Even China is having problems already because there are no more orders coming in.

After decades of solid economic growth, China is battling an unknown as falling demand for its products triggers factory closures, sparks protests and raises fears of popular unrest, seen by many analysts as the biggest threat to one-Party rule.

[uls]

wait till they gather next year's first quarter data

[Monseratto]

wait till they gather next year's first quarter data

:hang: :hang: :hang:

[tidus1203]

Looks like the world's PIG, the US consumer is KO already. No more bacon for the rest of the exporting world!

[Gen. Miting]

Ya no matter how cheap outsourcing to the Philippines will become, if the US companies are on the verge of bankruptcy, there's nothing to outsource

i dont buy the media news the big companies in the States will fold or will close down. when the US announced the bailout plan, everybody wants a piece of the pie. that's why kung reklamo/humble mode ka, baka mabigyan ka ng pie. kung mayabang/mayaman ka pa din, eh bakit ka bibigyan ng pie?
kumbaga that's the signs of the times, yan ang laro nila ngaun

kayo na din nagsasabi sa US dollar thread, the FED is doing all it can to appreciate the dollar.

if at P42 = $1, the us companies can afford to outsource, what more at P55 = $1. like i said, bpo's definition in wikipedia is only a fraction of an expense of a US outsourcer.

----

we should not always think that the US is what is seems to be right now. I see something brewing, and at the end, America will still be in the frontline of all of this.

other countries, pag nakaproblem sa economy or income vs. expense, like accounting it's either boom or bust. sa US pag nakaproblema sa economy, the govt. bails out the companies.

dito what do you think will the govt. do if BPI, Ayala, SM, Lucio Tan, San Miguel apply for bankruptry? certainly the govt. will not bail out the companies mentioned. why bec. the said companies are richer than the govt. our govt. instead will prepare for martial law ...

yun thinking that the end is near bec. of the indicators is only applicable here.

[uls]

kayo na din nagsasabi sa US dollar thread, the FED is doing all it can to appreciate the dollar.

we didnt say that

The Fed's intention is to provide liquidity to the banks so they will lend out money.

Dollar strength wasnt the intention.

It just so happened that aside from the US, the rest of the world's economy is in trouble, so US investors pulled out their investments from other countries (selling the local currencies and buying dollars).

That caused huge demand for dollars outside the US. Kaya humina ang mga ibang currencies against the USD.

The yen is the exception. Coz yen carry traders had to sell dollars and buy yen.

Getting back to BPO...

i don't assume things like:

if at P42 = $1, the us companies can afford to outsource, what more at P55 = $1

Your explanation on why the BPO industry will boom is entirely based on USD PHP exchange rate.

It's not about affordability.

It's about the US companies having enough business activity to outsource.

US consumers have cut back on spending.

US companies don't have as much business activity as before.... so there's less business to process.

well, maybe more business following up delinquent CC accounts.

keep in mind that the outsourcing boom we experienced here was the result of US economic expansion which was a result of US consumer spending...

which was a result of overborrowing and overspending by consumers and overlending by banks.

Now things have reversed.

Banks have tightened credit, consumers have cut back spending.

So i cannot see how our BPO industry can keep on expanding.

the BPO industry is entirely dependent on US business activity.

[Gen. Miting]

we didnt say that

The Fed's intention is to provide liquidity to the banks so they will lend out money.

Dollar strength wasnt the intention.

It just so happened that aside from the US, the rest of the world's economy is in trouble, so US investors pulled out their investments from other countries (selling the local currencies and buying dollars).

That caused huge demand for dollars outside the US. Kaya humina ang mga ibang currencies against the USD.

The yen is the exception. Coz yen carry traders had to sell dollars and buy yen.

Getting back to BPO...

i don't assume things like:


Your explanation on why the BPO industry will boom is entirely based on USD PHP exchange rate.

It's not about affordability.

It's about the US companies having enough business activity to outsource.

US consumers have cut back on spending.

US companies don't have as much business activity as before.... so there's less business to process.

well, maybe more business following up delinquent CC accounts.

keep in mind that the outsourcing boom we experienced here was the result of US economic expansion which was a result of US consumer spending...

which was a result of overborrowing and overspending by consumers and overlending by banks.

Now things have reversed.

Banks have tightened credit, consumers have cut back spending.

So i cannot see how our BPO industry can keep on expanding.

the BPO industry is entirely dependent on US business activity.

ok given that all grim things that you mentioned above will happen, dont you think US companies will tend to outsource more now?

business process outsourcing is now a proven business strategy be it expansion or downsizing. in expansion, you minimize cost and maximize profits by concentrating on the outsourcer's core business. in downsizing, you minimize cost <period>.

and now that our peso has devaluated against the dollar, hindi ba mas maging lucrative investment potential ang Pilipinas. if before a $10,000 (P42 = $1) investment can provide salary for 20 entry level bpo agent at P21K/mo. a $10,000 at P55 = $1, can hire 26 (or six more) entry level bpo agent at P21k.

===========

in contrast, if US companies pull out their outsourcing and go stateside and go local. dont you think it will be a more stupid move in the worsening global crisis situation? why bec they are literally going to pseudo-expansion mode, if they are going to rebuild or to start from scratch the jobs/dept. that they have been conveniently outsourcing.

[Monseratto]

ok given that all grim things that you mentioned above will happen, dont you think US companies will tend to outsource more now?

Just hope Citi survives these next few weeks...

Citigroup to expand workforce in RP

Outsourcing expansion seen creating 1,000 new jobs


WHILE AMERICAN financial giant Citigroup is streamlining across the globe, it expects to create about 1,000 new jobs and triple its workforce in the Philippines next year, picking the country as a regional hub for business process outsourcing (BPO).

"Citi is repositioning in Asia-Pacific but we remain focused on growth. As we review our operations and where we can be more efficient, something which we have been doing even before the downtrend in the global financial markets, we in the Philippines are optimistic that instead of reducing head count, we will be growing," Citibank country business manager Mark Jones said.

Jones said Citibank had a staff of about 500 in the country and would likely hire an additional 1,000 in the coming year as part of plans to build processing centers and expand its domestic banking business.

"We expect the Philippines to be a preferred location for regional hubs or center of excellence because of superior skilled workers and attractive labor costs," Jones said.

"From call centers to financial reporting and service centers, there's a whole lot of activity moving to the Philippines," he said.

http://business.inquirer.net/money/t...orkforce-in-RP

[uls]

ok given that all grim things that you mentioned above will happen, dont you think US companies will tend to outsource more now?

business process outsourcing is now a proven business strategy be it expansion or downsizing. in expansion, you minimize cost and maximize profits by concentrating on the outsourcer's core business. in downsizing, you minimize cost <period>.

and now that our peso has devaluated against the dollar, hindi ba mas maging lucrative investment potential ang Pilipinas. if before a $10,000 (P42 = $1) investment can provide salary for 20 entry level bpo agent at P21K/mo. a $10,000 at P55 = $1, can hire 26 (or six more) entry level bpo agent at P21k.

===========

in contrast, if US companies pull out their outsourcing and go stateside and go local. dont you think it will be a more stupid move in the worsening global crisis situation? why bec they are literally going to pseudo-expansion mode, if they are going to rebuild or to start from scratch the jobs/dept. that they have been conveniently outsourcing.

They have already outsourced everything that can be outsourced and they are still in trouble.

what is there left to outsource? Their core businesses?

if their business activity gets cut in half, they wouldnt have that much work to outsource.

cost cutting? reduce BPO expenses. that's cost cutting.

who said they will move outsourcing work back to the US?

There's no work to move back to the US. Business activity has vanished.

When times were good, you bought a mansion, and you need 10 household staff just to maintain the place...

then you fall into hard times, and move into a tiny apartment, and you no longer need the 10 staff

anyway, no point in arguing

it's all speculation

we'll see in the coming months

[tidus1203]

There has to be business activity to outsource. If there is no activity what is there to outsource? Obviously you can't outsource core activities but everything that can be outsourced like back office work and customer service via phone and email is already outsourced. You can't outsource the management or the production team or the marketing team....