Strong peso hurts Filipinos working abroad


Posted at Dec 14 2012 05:06 PM | Updated as of Dec 15 2012 01:06 AM

SINGAPORE - Single mother Analiza Jacer left the Philippines six years ago to work abroad to support a son back home.

She moved from Macau to Singapore two years ago and works two jobs, as a cost management advisor and a sales representative.

She sends home about 1,200 Singapore dollars ($1000 USD) every month for her son Ishmael's school expenses and to help out several relatives.

"So that he can also have a future, a good future, because you know, even if you have graduated university, it's still hard to find a job, so that's why it's better to finish school, that's why I work here as a single parent, so I do it for him. I have no choice but to provide for him, right?" Jacer said.

The Philippine peso is one of the best performing currencies in Asia, surging by nearly 7 percent this year.

It hit a four-year-high, reaching 40.85 to 1 U.S. dollar in early December.

The Philippines is the second-fastest growing economy in Asia, expanding by 7.1 percent in the third quarter. Low interest rates, credit rating upgrades, and a stock market soaring to record highs have marked its growth.

This year, Jacer saw the peso value of her earnings in Singapore steadily dropping, as the Philippine peso appreciated to a four-year high.

Back home, her sister Joanna Jacer-Bernabe who takes care of Ishmael, said they were scrimping on some food expenses, and had cut down on leisure activities to make do with reduced remittances.

"Yes, the peso is appreciating, but the value of what is reaching the dependants of the overseas workers is diminishing," Joanna Jacer-Bernabe said.

While Analiza is one of millions of overseas workers finding themselves on the losing end of the country's economic resurgence, she says returning to the Philippines is not an option, as incomes are still too low.

Analysts say a strengthening peso adds to the rosy economic outlook, as it eases pressure on foreign debt payments and imports.

But it's a double-edged sword, as it also hurts exports, U.S. dollar-dependent industries like business process outsourcing (BPO) and overseas workers' remittances.

There are 9.5 million Filipinos working abroad, out of its 94.8 million population.

Remittances from Filipinos working abroad comprise 10 percent of the gross national product, not only building up foreign currency reserves but also fuelling consumption spending by workers' families.

To a large extent, economist Emilio Neri said, the country's much-touted credit rating upgrades would not have been possible without the contribution of remittances to economic stability, with overseas workers constantly sending dollars even during the financial crisis.

"The reason why we've been enjoying 14 years of uninterrupted growth is because of these remittances. And again, it's quite ironic that these are the same people who have to pay the price of progress," Neri said.

Sustained appreciation of the peso at the current pace, if left uncontained, could further hurt overseas workers and in the long run, dampen the economic outlook, Neri added.

Though remittances have grown by 5.1 percent this year, it is the slowest growth in years.

"If our sources of foreign currencies do not continue to grow at the pace necessary to be able to bring in all of these other resources we need to be able to bring the economy to a higher level of growth, then it can come to a point of, that it would be difficult to sustain, the growth that we're enjoying now," Neri said.

He recommends lower interest rates and further buying of U.S. dollars by the Central Bank, to temper the peso's appreciation.

With the government expecting bigger spending requirements in the coming years for large-scale infrastructure projects that the country badly needs, a dent on dollar inflows could hurt growth.

For Filipinos in Singapore, giving up the life overseas is increasingly tempting.

Rhodel Flores dela Ysla has just left his job at Google, and will be spending his first Christmas in the Philippines in six years, bringing home his son and wife. He is undecided about moving back home for good, but the depreciation of his earnings is weighing on his mind.

"First of all, when the peso is getting stronger, of course you feel a sense of pride that your country is somehow coming up and getting stronger and recovering from this economic crisis that is going on around the world. But at the same time you're sad because, if you're a foreign worker and you think that your money is getting stronger, that means what you're earning here is like nothing at all," he said.

Workers like dela Ysla and Jacer are still likely to stake their futures abroad, until the Philippine economy grows big enough to make space for them back home.

That will take time, analysts say, as foreign direct investments in manufacturing and other heavy industries are still much lower compared to neighbouring countries.