For years, the prevailing narrative surrounding the Philippine economy has been fixated on two primary levers: the exchange rate and trade liberalization. The conventional wisdom suggested that a weaker peso was the golden ticket to boosting exports, while opening our markets was the surest path to industrialization. However, Bangko Sentral ng Pilipinas Governor Eli M. Remolona has injected a much-needed dose of reality into this debate, challenging us to confront the structural rot that truly stifles our economic potential. (Read the BusinessMirror story: ‘Licking corruption, better EODB should get priority’, August 3, 2026).
Governor Remolona’s recent pronouncement is a refreshing departure from the monetary tunnel vision that often grips policymakers. By urging the nation to prioritize our Corruption Perception Index and Ease of Doing Business rankings over the fixation on a ‘stronger peso’ or trade deals, he is effectively drawing a line between short-term tactical moves and long-term strategic survival.
The Governor is right: we suffer from a ‘money illusion.’ We obsess over the daily fluctuations of the peso against the dollar, believing that a weaker currency is a panacea for our manufacturing ills. Yet, as he astutely pointed out, the exodus of Intel to Penang and our car manufacturers to Thailand had nothing to do with the exchange rate. These were not decisions made on the trading floor; they were decisions made in boardrooms where investors weighed the predictability of the rule of law, the efficiency of logistics, and the integrity of the bureaucracy.
The data, or lack thereof, is damning. We are ‘near the bottom’ of the Corruption Perception Index. To foreign investors, we are perceived as a high-risk environment not because of market volatility, but because of red tape and rent-seeking. We are ‘in the middle of the pack’ for Ease of Doing Business, a mediocre ranking that signals to global capital that establishing a foothold in the Philippines will be an exercise in patience and frustration rather than seamless efficiency.
The message is clear: Trade liberalization is insufficient. Tariff walls are irrelevant if the cost of corruption and bureaucratic delay is higher than the cost of the tariff itself.
Governor Remolona’s statement acknowledges a crucial macroeconomic reality: monetary policy cannot operate in a vacuum. The effectiveness of our monetary tools is fundamentally constrained by the frictions of governance. If the cost of importing raw materials rises due to a weaker peso, as noted by the DTI’s Export Marketing Bureau, the ‘advantage’ of depreciation is eroded. A cheap peso cannot compensate for expensive inefficiency.
Furthermore, the De La Salle University economists have correctly identified the path forward. We cannot compete in the global arena by being the cheapest; we must compete by being the best. Currency depreciation is not a ‘sensible’ development strategy. It is a crutch that allows us to avoid the painful, but necessary, work of industrial upgrading. We cannot simply dump more of the same low-value goods into the market; we must diversify and export more complex, knowledge-intensive products.
This requires a seismic shift in our national priorities. Governor Remolona has given us the roadmap. The goal is not just a stronger peso, but a stronger institution. The target is not just trade balance, but bureaucratic integrity. The true driver of manufacturing competitiveness is not the exchange rate, but the rate at which we can get things done-ethically, efficiently, and predictably.
It is time to stop tinkering with the value of our currency and start transforming the value of our governance. The BSP has sounded the alarm; it is now up to the Executive and Legislative branches to respond. We must dismantle the barriers to entry, crush the culture of ‘grease money,’ and build a bureaucracy that serves, rather than stifles, the entrepreneur. Only then will the Philippines graduate from being a ‘middle of the pack’ economy to a true tiger in the region.