The peso exchange rate against the dollar jumped up and down wildly in the last few days like an electrocuted frog, owing perhaps—or at least according to “experts” in the financial markets—to some political tension abroad.
The peso actually weakened by P1 per dollar since it hovered at P43.20 per dollar early this month, hitting P44.20 last week, before it recovered somewhat to P43.80 in the past few days.
And the business sector dislikes any erratic movement in the exchange rate, right?
Anyway, reports of mounting armed conflicts in Iraq and Syria, coupled with the decision of the US government to bomb parts of Iraq—labeled nicely as “air strikes”—apparently turned the financial markets jittery.
Still, in any free moving market like that of the foreign exchange here, the players could always find reasons for the rates to move according to the dictates of the so-called invisible hand—you know, the technical sounding “market forces.”
The conflict in the Middle East was one of those thought-up reasons for the mysterious peso exchange rate movement lately. That part of the world happened to employ tens of thousands of Filipino workers. Thus, news of war there should only sow fear in the domestic business scene because, for one, it could affect the jobs of those overseas Filipino workers (OFWs).
Meaning, of course, less dollar remittances! And this country has relied on the OFW remittances for the past couple of decades to prop up its economy, right?
Still, the recent fit of peso exchange rate would necessarily alarm business, because it could suggest a semblance of wisdom in the prognosis—offered by some naysaying groups—about an overheating domestic economy.
Look, boss, the Bangko Sentral already announced another round of increases in the interest rates, mainly because of the central bank’s anticipation of higher inflation rates, which was predicted to hover at 6 percent year on year.
But some economic researchers in the business sector believed that money supply could not be the main reason behind the inflationary drift in the economy. If prices of almost everything were going up a bit lately, as the economists argued, it could be due to some cost-push factors.
For instance, the entire business sector got hit in the gut by the sweeping and harsh increase in the cost of logistics. For the delivery of imported raw materials and exported items to and from the Port of Manila, the cost of trucking has already gone up by more than 200 percent. Wow!
One reason could be the congestion at the piers, thanks partly to the persisting bureaucratic red tape in the Bureau of Customs, wreaking havoc in the delivery schedules of businesses.
According to our contacts in the trucking business, there was a time when trucks could make two trips a day, but nowadays they could only make a single freaking trip in two days, if they were lucky, because a simple delivery would normally take three days.
The problem of course had something to do with impositions of the government—such as truck ban of the MMDA and the City of Manila, and the newfound technique of the BOC on how to delay the release of shipments.
Let us remember that the truckers—mostly small- and medium—sized businesses with rather limited capital and all—could hardly shoulder the hidden cost from the horrendous traffic in the entire metropolis; they had to tuck it into their pricing.
The limited infrastructure in Mega Manila—including the surrounding provinces—also led to the shortage of shipping containers, because of the longer turnaround time due to the delay in the delivery.
There was also the problem of where to park empty containers. Believe it or not, businesses had to spend more money to bring empty containers to some empty lots in Laguna, which was at least two hours’ drive to and from the nearest ports.
And that was why the business community harped about the need for infrastructure, some capital investments on the economy that only the government could initiate and pursue, such as the construction of a dozen more bridges across the Pasig River to ease the traffic or more flyovers.
Unfortunately, the Aquino (Part II) administration had the money to spend in the past three years, amounting to an estimated P150 billion in “savings” that eventually went into a program known as the infamous DAP, the disbursement acceleration program.
Well, others believed that the amount could be much more than P150 billion, such as Sen. Nancy Binay (daughter of Vice President Jejomar Binay, adjudged for the meantime as the leading candidate in the coming presidential elections in 2016), who talked about some P213 billion in funds released by the administration under the DAP.
Until somebody would conduct a full audit of the DAP money, we actually could never know the actual amount, or how many bridges, flyovers, seaports and airports that the DAP money could have financed all over the country in the past three years.
Here were the words of our leader Benigno Simeon (aka BS) on the DAP money: “Malinaw na hindi ninakaw ang pondo ng gobyerno—sinikap itong gastusin para maiparating ang benepisyo sa Pilipino (It is clear that government funds were not stolen—they were spent to deliver benefits to the Filipino people).”
In other words, mga bossing ko, no cause for alarm!
But our leader, BS, also made special mention of news organizations in his spirited defense of the DAP, such as the time he said that the program was “unjustly and oddly vilified in the media.”
The controversy surrounding the mysterious releases by the government under the DAP, declared as illegal by the Supreme Court, suddenly became the fault of media acting as watchdog of public interest.
We all know that our government, especially the Aquino (Part II) administration, borrows tons and tons of money to cover its yearly budget, and those borrowings actually financed the DAP—P150 billion of it, or it could be P213 billion, but then again it could be more.
Whether or not the loans that became the DAP actually went to investments in infrastructure to enhance our economic efficiency, nobody could as yet say.
We just know that the unbearable congestion in the streets, the seaports, and airports in this country would exact an alarming cost on business, meaning, ultimately, on ordinary guys like you and me!
Written by: Conrado R. Banal III