PHILIPPINE Batteries Inc. (PBI) manufacturer of car batteries carrying the Motolite brand, is now considering the option of moving its P1-billion expansion plan to Indonesia, instead of increasing the capacity of its Bulacan plant, if the government will not heed calls for interventions that will depreciate the peso to a “more competitive” level of P43 to P45 versus the dollar.
Jesus Montemayor, president of PBI, which is a unit of Ramcar, said the current peso-dollar exchange rate is not ideal for the company as it is competing in the overseas market with countries such as Korea and Indonesia, which have been keeping weaker currencies.
“We want to strengthen our export program by doubling our capacity and become a major player in the region. But with the current exchange rate, we are no longer competitive compared to other countries,” Montemayor told the BusinessMirror.
With this, he said the company is now looking at an alternative production hub for its export program, and Indonesia is the top candidate.
He said Indonesia has its advantages aside from having a market size that is eight times larger than the Philippines. Besides, Montemayor added, the Indonesian currency is not appreciating strongly.
Also, Montemayor said PBI wants to increase its footprint in the Indonesian market.
He said the company will make the decision before the end of the year.
PBI is currently producing 460,000 batteries per month in its Santa Maria, Bulacan plant, with 55 percent of the output going to the international market.
Montemayor said PBI is pushing through with its expansion plan at its Bulacan site next year, which will increase its production by another 150,000 units with only about 20,000 of the additional output allotted for the domestic market.
“But what we are really looking at is a new plant that will double our production,” he said.
This new plant, which will probably entail an investment of up to P1 billion, will supply the company’s export program, he said.
And since this will be a long-term commitment, Montemayor said their primary consideration is the foreign-exchange policy of the country that they will choose.
He said the Philippines can still bag this investment if the company will see a positive policy direction from the government in managing the exchange rate.
Montemayor said there are several ways for the government to keep the value of the peso at a comfortable level for exporters and overseas Filipino workers (OFWs). One of these, he said, is to increase the capitalization of the Bangko Sentral ng Pilipinas so it will have more available funds when it needs to make interventions in managing the exchange-rate fluctuations.
The Philippines should also be more active in investing its dollars abroad, he said.
Montemayor said the government should lean toward peso depreciation rather than appreciation since the dollar earnings being brought in by the OFWs, business-process outsourcing firms and merchandise exporters have made the country a net exporter.
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Source: Max V. De Leon, Business Mirror (20 August 2012)
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