SAWALI E-newsletter Volume 2 Issue 4

For a complete free PDF copy, e-mail at sawalinews.yahoo.com.ph

Strong Peso, weak call

(Note: I could not get the name behind this article. But upon reading, I immediately sensed the need to include this. One of the important issues for OFWs this year is the continuous appreciation of peso against the dollar with non-expected consequences of increased prices of commodities and lack of job or business opportunities in the country.
The article offers insights and directly points to the real culprit to the mess that we are in. Personally, I find it an awakening to the reality that this attitude of non-confidence in our own country and the preference of most Pinoys to work abroad are starting to set their drawbacks against our economy. Once again, we are challenged to do our share in shaping the future of our country. Spend those dollars wisely, be real heroes, create business in the Philippines. - Ed)


There are two pragmatic schools of thought on the strengthening of the peso against the dollar: 1) the dollar has been sliding down steadily in the international market and 2) the Philippine treasury is enjoying a cache of dollar reserves.

The international phenomenon is a domino effect of US’ internal economic policies, and there is not much that we can do about it.

A strong currency should generally indicate a thriving economy. The expected ripple effect should reflect growth in investments, vibrant export trade and generation of new jobs at the very least.

But the imbalance in the equation, tipping the scale heavily in favor of the dollar reserves, results to artificial growth of the economy that leads to overvaluation of the currency.

The United Nations Conference on Trade and Development (UNCTAD) released its report on global trends in investment flows, saying that the Philippines is not attracting investments, specifically foreign direct investments (FDIs), compared with its neighbors despite its huge potentials.

Many of investment pledges never materialized after Board of Investments (BOI) and Philippine Economic Zone Authority (PEZA) gave the investors fiscal perks, including tax holidays and duty-free importation of machines, among many others.

Despite the exuberant numbers from both, the country’s figures on capital formation hardly improved in the last several years. Imports, likewise, have not been rising, an indication that business managers and factory owners are not investing in new machines. Nor are they upgrading their office equipment or buying new ones.

That’s the same reason why we have an overvalued peso that is hurting the country’s bread and butter: the exporters and OFWs.

The problem lies with the business sector. Factories and importers are not using much of those dollars due to “political uncertainties.” Thus, the accumulation of those dollars within the borders is causing the peso’s overvaluation. Adding to the equation is OFW’s remittances in increasing amounts.

In fairness, FDI figures, released by the Bangko Sentral ng Pilipinas, have also been posting encouraging trends.

But it’s likely that those figures simply reflect intercompany transfers that do not translate to the building of factories.

Proof: the job pictures have not been improving despite the tremendous hype about a 7%+ growth rate in the last two quarters. Statistically, a number of Filipinos accepting job offers abroad continues to surge.

Why? It’s because of “lack of investor confidence.” Despite some good economic statistics, investors are holding back.

Many economists advocate a ‘free float’ (letting the international market determine the value of a country’s currency), but such a policy often leads to rapid and radical fluctuations in the currency.

Considering that many business transactions are negotiated with contracts, an unpredictable peso deters investors from coming to us.
After all, who wants to invest in a country when that investment could become worthless overnight?

On one hand, a campaign to boycott the banks with remittances on a certain number of days has its drawbacks and is doomed to fail.

The measure could do more harm to OFWs than serve its noble purpose. Certainly, OFW’s could not hold their dollars for the longest period of time, lest to the suffering of their own families back home.

Logically, a sudden avalanche of dollars going into the Philippine coffers will result to further strengthening of the peso and push the dollar exchange further down.

So while we cannot stop the migration of Filipinos abroad, there are creative and useful ways to mitigate if not totally alter for the better the effect of this dollar accumulation.
All we have to do is believe once again, come up with a well-thought plan, and start realizing that nobody will help our own country but us.(S)

Editorial: Some thoughts this Christmas

Christmas is coming. While this should be a cause for excitement and anticipation of good family times, there’s something less pleasurable on our minds at this time of year.

Today more than ever, we feel, and sometimes get sick at the thought, that the holiday season gets even more expensive.

And for most of us Pinoys abroad whose money is already tight in the light of appreciation (but with less purchasing power) of peso, we worry about how our finances will cope.

For all of its pomp and occasion, Christmas can come at a heavy price to bear. Due to immense marketing and advertising during the season, the true meaning of Christmas is often lost.

I am not to talk about the true meaning of Christmas. We all have different reasons and outlook of the holiday season. But what is undeniable is that people nowadays equate the holidays as a time of gift giving and receiving.

While this is not a bad thing, it is this materialistic point of view which usually leaves us painstakingly trying to make both ends meet, month after month, year after year.

But rather than be won over by commercial frenzies of the event or sulk at loneliness of being away from home this season, arming oneself with financial literacy will probably give us different perspectives on how we shall control our finances.

For the last two weeks I buried myself reading the book “Why We Want You To Be Rich”. It is a collaboration of two best-selling authors in the field of Financial Management, multi-billionaire Donald Trump and author of Rich Dad Poor Dad book series Robert Kiyosaki. It summarizes their fears about the seemingly brewing collapse of the middle class of America. Accordingly, the key to be free from this debilitating situation lies in financial education which is lacking in the present system.

I see our country, being predominantly patterned after American systems, to be heading in the same direction. Our thinking that the government should provide for us has already started to fireback leaving us inept and incapable to stand on our own.

In succeeding months, it is my wild guess that Filipino dailies, e-zines, and blogs will start featuring stories of how money is never really a problem.

Ms. Habito in her Oct 27 Inquirer column has already started with “pump-priming” efforts of the government. It is a scheme of unleashing cash to stimulate economic activity in the hope of building and promoting more trades and investment.

Furthermore, business sections do not fail to report on the staggering amount of OFW remittances.

We’ve got lots of money, so to speak.

It is our own fear and inaction to conduct business in the country that is the real culprit behind the collapse of our economy (see page 1). Our inability to look beyond our purses in putting our hard-earned money for good use, and loss of confidence in the system are the principal factors that slowly kill our dreams to ensure the future of our nation.
This Christmas, let us all light up our trees and wish for a more watchful eyes that we may rather see opportunity than resources. Let us wish for courage that we find freedom to pursue our dream; self-respect that we may realize that we deserve even better; and love that makes life more meaningful.
Merry Christmas!

Jatropha: Viable Source of Biofuel

Its seeds contain oil that can be blended with coventional gasoline or diesel to make ‘biodiesel’, an eco-friendly alternative to fossil fuels. In its pure state, the oil can be used for cooking, lighting or generating electricity. And the range of by-products includes ‘glycerin’ - used in cosmetics - and ‘seed cake’, which is re-processed and used as an organic fertilizer. Moreover, its waste can be turned into charcoal briquettes.



Jatropha, locally known as tuba-tuba, is considered to be the “green gold”, a cash crop that can boost rural incomes in poor countries while helping adress issues ranging from climate change to soil erosion..


As per study, Jatropha trees can produce seeds for more than 30 years. Each tree produces between five to fiteen kilograms of seeds, three times a year.
Nowadays the most talked about development in the biodiesel industry is the breakthrough on jatropha curcas as potential source of biodiesel.


Jatropha biodiesel was produced for the first time in the United Kingdom by D1 Oils using its D1 20 refinery.

The biodiesel produced from the process meets the European EN14214 and the American ASTM D6571 standards.

Moreover, analysis of jatropha crude oil shows that is is comparable to bunker fuel.
Because of these breakthroughs, D1 Oils, a UK biodiesel producer, continues its worldwide research-production expanding interest in the Philippines.

Biogreen Energy, a Malaysian firm, is preparing to sign an agreement with Philippine National Oil Company - Alternative Fuels Corp (PNOC-AFC) on the establishment of jatropha nursery and plantation in two different locations in the country.

While details are still on the process, discussion would include the land, seeding supply, crude oil processing for both local and export consumption, and biodiesel pricing.

Under the MOU, Biogreen should be able to produce about 30 million seedlings within two years in each of the two locations that would be agreed upon by the two parties. This should be enought to supply for PNOC-AFC’s planned 700,000 hectares jatropha plantation all over the country.

In a study entitled Biodiesel 2020: A Global Market Survey, it states that “the global market for biodiesel is poised for explosive growth in the next ten years.”

Currently, Europe represents 90% of global biodiesel consumption and production, but the US is now ramping up production at a faster rate. Brazil, however is expected to surpass US and European production by the year 2015.”

The International Energy Agency (IEA) in its 5-year outlook report, estimates that the world biofuel production will nearly double in 2011 to 1.2 million barrerls per day from the 2005 level of 650,000 barrels.

The report also said that Brazil, the US and European Union will account for the biggest share of biofuel production increases; and, that Malaysia, the Philippines and Thailand are looking at Europe and the US as potential biofuel export markets.

With the ever increasing interest in biodiesel fuels, we may one day get used to the idea that fuel for our vehicles was harvested from our local plantations, instead of using imported oil from fossil fuel producing countries.(S)