Strong peso hurting IT industry in PH

by Kathleen A. Martin, ABS-CBNnews.com

Posted at Mar 14 2013 11:20 AM | Updated as of Mar 15 2013 12:28 AM

MANILA, Philippines -- The appreciating peso has also been hurting the IT industry despite central efforts to curb the currency strength, Paco Sandejas, managing partner at Narra Venture Capital, said.

"I'm in software and electronics manufacturing and in both industries, we have very thin margins. So if the exchange rate goes 10% off, you're going to be in real trouble," Sandejas told ANC's Inside Business on Wednesday. "Right now, we're (the currency) already fluctuating by 5%."

From its finish of P41.05 to a dollar in end-2012, the local currency closed P40.585:$1 on Wednesday. The peso has been trading below the P41:$1-band since the start of the year.

As a result, Sandejas said the industry should be focused on delivering new products and advancements to cope with the losses brought about by the gains in the peso.

"The challenge for us is ... we're trying to stay away from that fight and go to higher-margin businesses... where you have 40-50% gross margins," Sandejas pointed out.

The local currency appreciated by more than 6% last year from its P43.84-to-a-dollar finish in end-2011.

The strong peso has not only cut revenues of the exports industry and the still-booming business process outsourcing (BPO) sector, but also reduced the spending power of families dependent on OFW remittances.