Whose gain?

Bahrain Tribune saved me the effort of commenting on the resurgence of the Philippine Peso. While I must say that I am excited by the prospect of the peso regaining its strength, it also send shivers down my spine because it is also a fact that this will not redound to lower cost of living and prices. In fact, the headline says it all:

Manila’s ‘profit’ in peso is overseas workers’ loss in actual terms

The Philippine peso hit its strongest value against the US dollar in three years on Friday appreciating by 51 pesso to $1 mark.

But the peso’s gain though seen as a positive indicator for the Philippine economy, is leaving most dollar-earning overseas Filipino workers (OFWs) asking: What’s the deal?

“My family will be losing as much as 2,000 pesos a month (roughly BD15) as soon as they convert my remittance,” said Benito Florendo, a 43-year-old worker at a construction company in Manama.

“We should be happy with the peso’s gain but it could mean a loss for us, it’s like a deduction on my monthly salary. I don’t see a good deal here for me,” he said.
OFW families in the Philippines are certain to feel the negative impact of the peso appreciation’s compared with their prized dollars three or four years ago when the peso was at its lowest at PhP55 to $1.

Although the Philippine government and business sectors were upbeat about the peso’s appreciation, many OFWs expressed worries that the prices of basic consumer goods had not gone down and that would make it harder for their families back home.

New taxes are expected to increase the prices to various products and services used by OFWs and their families – such as the mobile phones, long-distance calls and text messages.

“For now the direct impact is that we’re the first losers,” said Greg Esquivel, an IT worker in Bahrain for 10 years. “My family in the Philippines will find a portion of their budget slashed because of the changed conversion rate. That means losing a few thousand pesos while they will need to spend more on basic products and services,” he said.

The Philippine economy has been largely dollar-based and with now some eight-million Filipino workers abroad, every family left behind has been counting their take by the dollar.

This week, the Reformed Value Added Tax (R-VAT) scheme of the Arroyo government has hit the OFWs and their families harder as the prices of mobile phone communications, landlines, air fares, domestic cargo, and shipping increased from eight to 12 per cent.

“The strength of the peso I believe will be good in the long-term but for now the government should focus on regulating the prices which is a basic issue. The prices of goods are going up and that will add to burden on every Filipino,” Esquivel said.
The peso surge over the last year has been attributed by the government to strong investment inflow and, ironically, to huge remittance from overseas Filipino workers – an estimated $10 billion last year.

Remittance however seems unaffected with the drop in the peso-dollar rates.
A marketing executive from the Bahrain Financing Company said they did not feel any drop in remittance transactions in the past two months since the peso gained.

The BFC is one of the remittance centres for Filipino workers. “We saw an increase in remittance over the past month,” said BFC marketing executive Bobby Calimoso. “High rates or low rates many OFWs have no option but to send money home.”