Major manufacturers under the Federation of Philippine Industries (FPI) said a possible depreciation of the peso to P60 against the dollar is expected amid ongoing tensions in the Middle East.
FPI chairperson Elizabeth Lee said global uncertainty typically drives investors toward the US dollar, putting pressure on the peso.
“That is expected. But I am sure that the Bangko Sentral ng Pilipinas is doing what needs to be done to mitigate that. Of course, if there is a war going on, people flock to the dollar,” Lee said on the sidelines of the FPI 2.0 forum in Taguig City.
Lee said member companies are adopting cost-cutting measures to manage rising fuel and logistics costs but have so far avoided layoffs.
However, she warned that prolonged conflict could strain the sector.
“But if the war continues for 6 months to a year, we might be in trouble already. But I think it would not last that long. The government itself is doing what it needs to do to safeguard us from these high oil prices. For now, the business strategy is to really tighten our belts and be more efficient because this (war) is not expected. This happened on 28 February, and the world was shocked,” she said.
Asked how long companies can sustain these measures, Lee said the situation remains uncertain.
“But right now, kaya pa (we still can endure). But with the words from our speakers in the forum, they say that the war could probably not last long, also based on the information we have right now,” she added.
Lee said rising oil prices have already increased transportation and logistics costs but expressed confidence in the sector’s resilience.
“The increase in oil prices, transportation, and logistics was the effect. But we will be resilient to come up from the other end of this,” she said.
To cope, manufacturers are cutting travel expenses, conserving energy, encouraging carpooling among workers, and maintaining their workforce.
Lee also urged faster adoption of renewable energy and a shift toward higher-value manufacturing.
“Also, we need to move up the value chain for higher value manufacturing so we can absorb more local labor instead of Filipinos going outside the country,” she said.
She added that diversifying fuel sources beyond the Middle East could help cushion the impact of supply disruptions.
“And it opens up the opportunity to negotiate with other friendly nations to get imports, and not only limited to the Middle East. We have to be more cognizant that we can actually source some of our fuel, not only from the Middle East, but from other countries also,” Lee said.
The Department of Trade and Industry earlier said manufacturers of basic and prime commodities can maintain current prices for at least 30 days, with some able to sustain pricing for up to 60 days.
The assurance followed a 16 March meeting led by Trade Secretary Ma. Cristina Roque with 21 manufacturers of essential goods, including canned sardines, bread, bottled water, instant noodles, coffee, canned meat, soap and candles.