Sy: PH economy teeters over strengthening peso
MANILA - Several sectors, including the retail trade and the critical overseas remittances, are nearing their critical buoyancy over the perceived threatening strength of the peso, according to Hans Sy, president of the SM Prime Holdings Inc.
“It should not go below P40 [to the US dollar],” Sy said in a huddle with reporters covering the launching of the upgraded SM Southmall here, from its status as one of the SM supermalls to one of only five premier, or luxury malls of the SM chain of malls.
A strengthened peso may be good for import activities due to the affordability of import items, but he said that this item could be easily overwhelmed by an expected dampening of the export sector, for instance, where exporters may find it hard to sell their products because it would mean an expensive product for foreign importers.
But he said the overseas Filipino workers (OFW) would be one of the sectors to absorb a direct effect over the declining value of their earnings remitted to their families in the Philippines.
“Consumer spending is doing fine and is expected to continue its strong showing ahead. But a very strong peso would force Filipino families, especially those depending on remittances abroad, to cut back on their spending,” he said.
He said remittances of more 10 million Filipinos have been one of the major drivers of the economy. They already remitted $17.32 billion this year up to September, according to bank records gathered by the Bangko Sentral ng Pilipinas (BSP).
The BSP said the amount could reach not less than $24.24 billion, as the Asian Bankers Association disclosed that about 40 percent of actual remittances sneak through informal channels.
“It’s not only the retail sector that is expected to suffer,” he warned. “Everybody, including the BPO [business-process outsourcing] would be affected.”
The SM Prime Holdings Inc., the country’s biggest mall developer, was set to spend at least P30 billion next year, with up to P13 billion to be spent on China alone, SM Prime Chief Financial Officer Jeffrey Lim earlier told reporters.
The spending of the SM Prime Holdings would be the biggest and formed part of the overall spending of the mother unit, SM Investments Corp., set for next year at P65 billion to help the Sy group of companies seek sustained earnings and spur growth of its core businesses.
Sy reiterated SM’s earlier announcement that the company would put up its regional shopping mall in Butuan City, and a multi-level mall and business building in Cagayan de Oro in the next two years, and three other malls in the three years thereafter.
Annie Garcia, president of the Shopping Center Management Corp., said the SM would open this year its fifth mall in China in Chongquing, a major city in central China. SM has been buoyed up by strong revenue showing of its SM City and SM Lifestyle mall in Xiamen, and two SM City mall in the cities of Jinjiang and Chendu.