A STRONG yen benefits the Philippines economy, says Robert de Ocampo, the country's finance secretary. 'What is happening with the yen is that the Japanese are going to invest abroad, and they have shown their eagerness to invest in the Philippines,' he said. Mr de Ocampo said he had talked to a group of businessman from Japan's Chamber of Commerce, most of whom had expressed interest in investing in the Philippines. Currency market pressures had played a large part in the decision to move more of their manufacturing to the Philippines. The strong yen makes manufacturing in Japan too expensive for many Japanese industries. Mr de Ocampo's positive approach to the yen's rapid rise against the US dollar contrasts sharply with the usual complaints from the region about the strong yen's potentially dire impact on the economies of Southeast Asia. Most economists and regional leaders have predicted that the yen's rise will create mayhem in regional economies by increasing the cost of Japanese imports and yen-denominated loan repayments. Mr de Ocampo also sought to reassure the investment community about the stability of the peso. 'Only a third of our debt is yen-denominated, and most of our loans are long term and from multilateral institutions,' he said. In the wake of the Mexican peso devaluation in December last year, the Philippines, along with Thailand and Malaysia, was marked as one of the countries in the region most vulnerable to a similar devaluation. The Philippines' large current account deficit - mainly a result of imported capital goods for investment - has alarmed some economists as to country's ability to fund the deficit. Mexico got into trouble by relying on short-term speculative income flows to fund its deficit. 'We have learned not to rely on short-term finance, and to take any measures possible to prolong debt structures,' said Mexico's Undersecretary for Finance, Jose Julian Sidaoui. Ironically for the Philippines, before the Mexican peso crisis there was consensus among economists that the Philippine peso was too highly valued against the dollar and needed to come down. 'The peso's steady appreciation threatens to squeeze exporters and has dampened short-term prospects,' said the Asian Development Bank (ADB) in its end-of-year report on the Philippine economy. The ADB report said strong export growth was essential to fund the country's current account deficits. However, a strong peso would inevitably cut into exports to the United States and other economies with dollar-linked currencies. That the peso's over-valuation was partially caused by a near quadrupling of foreign direct investment last year - just the type of long-term investment needed to maintain economic stability - only added to the irony of later fears that the Philippines would be subject to a Mexican-style crisis. In a report last October, Jardine Fleming regional economist Ranjan Pal said: 'The peso keeps going up. What's a good central banker to do? In the case of central bank governor Gabriel Singson, the answer is not much.'