Many are lamenting the downturn in the value of the Philippine Peso (PHP) in recent months and even years. The most negative issue effecting this downturn is that it lowers the purchasing power of ordinary Filipinos in the global marketplace. However, there is a hidden benefit to having a weak currency in developing nations – one that The Philippines can and should take advantage of.
The weaker one’s national currency, the more one’s exports are sought on the wider international market as when adjusted to the currency values of foreign markets, they will be more affordable than those produced in nations with stronger currencies.
Just as President Rodrigo Duterte has jump-started the economy with his infrastructure programme ‘Build, Build, Build!‘, now it is time to ‘build, build, build’ new factories in The Philippines. As China continues to diversify its economy and with wages in China continuing to rise, many in China are looking for markets abroad in which to mass produce goods which will ultimately be sold throughout the world. The Philippines under Duterte, has developed one of the best relations between any ASEAN nation and China, in a dramatic turn of events from just several years ago. Duterte can and should use the general warmth and respectful nature of contemporary Sino-Philippine relations in order to encourage Chinese companies to set up factories in The Philippines. This will not only create local jobs but it will allow The Philippines to develop its own manufacturing base based on the Chinese model while also inviting other international partners to locate their factories to The Philippines.
Ultimately, The Philippines should work on developing products of its own that are sought after on the world market. These can range from agriculture to textiles, furniture and other finished goods. The weak PHP will mean that these products will be much sought after in wealthy markets including China, South Korea, Singapore, parts of The Middle East, parts of Europe and the United States, but is also means that The Philippines could become one of South East Asia’s top exporters to parts of Africa, where traditionally weak economies have lowered the purchasing power of consumers. A weak PHP makes goods produced in The Philippines more attractive to the vast African marketplace than those of Asian nations with stronger currencies.
The Philippines should also consider using the weak PHP to partner with Russia. Tourism is an easy way to attract injections of Russian cash and promoting The Philippines as a top year round South East Asian destination for Russians can be done in a simple and cost effective manner. As Russians are always eager for English teachers to work on Russian soil, one could easily envisage an exchange programme where Filipinos with the right educational credentials can easily work in Russia as English teachers, while Russian speakers can come as seasonal or part time workers in The Philippines to work at resorts catering to Russian tourists.
But in the longer term, The Philippines should sign a free trade agreement with the Russian led Eurasian Economic Union (EAEU). The diversity of the topography and climates of Eurasia vis-a-vis The Philippines automatically means that agricultural goods from The Philippines would be a valued commodity throughout the EAEU. Furthermore, just as is the case with China, countries from the EAEU, most notably Russia, would also be able to help The Philippines develop its own industrial economy which could pay substantial dividends in the long term future.
A weak currency has obvious downsides, but there are also great benefits to being in the position the PHP is in today. Rather than lament the current state of affairs, The Philippines can seize the opportunity in fields as diverse as industry, agriculture and tourism in order to bring more foreign investment into what has already been named the investment capital of the world.