By MICHAEL JOE T. DELIZO
BRITAIN’S controversial exit from the European Union (EU), the so-called Brexit, is a source of uncertainty for the Philippines and its financial markets, but should not have an immediate or significantly negative effect, the UK’s envoy to the Philippines said.
In a press briefing on Monday, British Ambassador to Manila Asif Ahmad said the Philippines is naturally not immune from the possible effects of business uncertainties, but that there is no indication as of now that investments and trade between the two countries will be adversely affected.
The UK, Ahmad said, will continue as the largest investor in the Philippines from EU and will remain committed to global free trade notwithstanding the fallout.
He said there is no indication that investment in the Philippines will diminish. If anything, new investment by British companies in the region is anticipated in the next few months
“Majority of companies in the Philippines, which are listed on the Philippine Stock Exchange, have significant UK shareholdings through investment portfolios. That will continue.
“So there is no sudden flight of capital coming in and out of the Philippines. The Philippines itself is not heavily exposed, if at all, to the pound sterling as a way of managing its debt. Most of it is dollar denominated,” he said.
“There is no immediate impact in terms of financial [markets]in this country, but British financial institutions in the British market as a place for liquidity in government and corporate stocks will continue and I see no change in that arrangement,” the ambassador noted.
Ahmad said the UK would continue to welcome overseas workers, tourists, and scholars from the Philippines.
Late last week, currencies traded in volatile markets as Britons voted to leave the EU.
The pound suffered its biggest one-day fall in history, plunging as much as 10 percent against the dollar on Friday to hit levels last seen in 1985, while world stocks saw more than $2 trillion wiped off their value.
Philippine stocks and the peso fell when the Leave camp scored a victory.
“If we look at the economic feature, of course, there is short-term uncertainty. That’s very natural,” Ahmad told reporters.
Does it affect us? Of course, it does. Financial markets and businesses don’t like uncertainty whether domestic or international.”
Nonetheless, the effect on the country’s financial market is relatively short-term, the envoy clarified.
The Bangko Sentral ng Pilipinas (BSP) earlier expressed confidence that the Philippine economy can withstand any negative impact of the Brexit vote. This is because of the country’s solid macroeconomic fundamentals and sufficient foreign exchange reserves.
“From our perspective, while Great Britain is also an important trading and investment partner, considering the magnitude, the power of economic relationship with Great Britain, I think we have sufficient buffers to be able to absorb any negative consequence of Brexit,” BSP Deputy Governor Diwa Guinigundo said.