German-linked companies in the Philippines are holding steady operations but are scaling back expansion plans as global risks and rising costs weigh on business decisions.
A survey by the German-Philippine Chamber of Commerce and Industry (GPCCI) found that while most firms report stable conditions, expectations for the next 12 months have turned more cautious, with over half anticipating no significant change in business performance.
The shift reflects growing concern over both global and domestic economic conditions, prompting companies to adopt a more measured approach to investments and hiring. Around a third of respondents said they may adjust local investments, while a majority expect employment levels to remain unchanged.
“German companies continue to demonstrate resilience in the Philippines, maintaining stable operations despite a more complex global environment,” said GPCCI president Christian Scheld. “In times like these, it is essential to reinforce policy predictability. A clear and reliable business environment remains a key factor in maintaining investor confidence in a crisis scenario.”
Energy costs have emerged as the top risk, cited by 65 percent of firms, more than double previous levels. Supply chain disruptions and rising raw material prices also ranked among the main concerns, driven in part by geopolitical tensions, including the ongoing conflict in the Middle East.
Businesses said these pressures are translating into higher operating costs, with many also pointing to trade-related expenses such as tariffs, logistics, and compliance requirements as key challenges.
“While business operations in the Philippines remain stable for our member companies, our latest survey shows that strategically, companies are becoming more cautious on investments and hiring amid rising global uncertainties and cost pressures,” said GPCCI Policy and Advocacy Committee Chairperson Dr. Marian Norbert Majer. “At this critical time, it is essential that government prioritizes easing administrative processes and reducing regulatory friction, ensuring transparency, consistency, and accountability, to help businesses sustain their resilience amid evolving global conditions.”
To adapt, firms are exploring new markets and diversifying supply chains rather than making large structural changes. Most respondents said they have no plans to relocate operations, signaling continued long-term commitment to the Philippines despite near-term uncertainties.
“German businesses in the Philippines have consistently demonstrated their long-term commitment to this country, and we continue to see that reflected in today’s results,” said
GPCCI Policy and Advocacy Committee Co- Chairperson Marie Antoniette Mariano. “Sustaining that commitment requires more than intent. It calls for a governance environment that is transparent, consistent, and truly responsive, one that meets businesses halfway and enables those who are here for the long term to grow with confidence.”
The findings highlight a business environment that remains stable but increasingly sensitive to external shocks, underscoring the need for policy support to sustain investor confidence and growth.