Category: Business Mirror

THE Commission on Elections (Comelec) welcomed debates among candidates in the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM), saying campaigns should focus on substance and principles instead of personalities and crowd-pulling.

Comelec Chairman George Erwin M. Garcia said debates could help bring campaigns back to issues that matter to voters, particularly by giving candidates an opportunity to explain their positions and qualifications.

‘At least, we can bring back campaigns that are based on substance. Campaigns that are based on principles,’ he said.

Garcia urged candidates who join debates to avoid personal attacks and heated exchanges, saying they should instead explain why voters should choose them.

He said the Comelec is also considering its approach to debates for the 2028 elections, but stressed that the poll body should not be the one to finance such events.

Comelec cited the 2016 elections, when a media entity served as sponsor while the Comelec participated only as an observer and guest.

‘The sponsor should be like in 2016, a media entity. The Comelec should only be an observer, a guest there,’ Garcia said.

He further explained that the poll body would not spend public funds for debates, but would encourage media organizations to organize them.

Comelec would support media-led debates as a way to promote more substantive campaigns and avoid a repeat of the issues that emerged during the conduct of debates in 2022.

‘We will definitely encourage media entities to hold debates. We will support that,’ Garcia said.

He said debates are particularly useful in allowing voters to see how prepared candidates are and what they stand for on issues affecting the country.

Rather than limiting debates to presidential candidates, Garcia said the same platform should be available to other candidates so voters can assess their preparedness and positions.

‘It is better to participate, so our fellow citizens can see the preparedness of those running,’ Garcia said.

‘Not only for the presidency, but so they can see our preparedness and views on issues that are important to the country,’ he added.

The Philippine Statistics Authority’s release of the Multidimensional Poverty Index (MPI) offers a sobering reality check that extends far beyond the headline figure of 12.8 percent- or 14.4 million Filipinos-living in multidimensional poverty in 2024. While the percentage may seem modest when compared to income-based poverty metrics, the MPI reveals something far more insidious: poverty in the Philippines is not merely about the absence of money, but about the systematic denial of basic human capabilities. (Read the BusinessMirror story: ‘New PSA index goes beyond income in measuring poverty,’ August 27, 2026).

The MPI’s methodology, which examines deprivations across education, health and nutrition, housing, water and sanitation, and employment, exposes the interconnected nature of disadvantage in ways that income statistics cannot. When 40.7 percent of multidimensional poverty stems from educational deprivation-the largest single contributor-we are forced to confront an uncomfortable truth: the country is failing to equip its citizens with the most fundamental tool for social mobility.

This is not a new problem, but the MPI’s granular data makes it impossible to ignore. The fact that educational attainment and housing materials each register a 10.7 percent censored headcount ratio-the highest among all 17 indicators-suggests that the foundations of dignified life remain out of reach for millions. A family without adequate shelter and without educated members faces compounding disadvantages that perpetuate poverty across generations.

Yet perhaps the most alarming finding is not confined to those officially classified as multidimensional poor. The uncensored deprivation rates reveal that certain forms of deprivation have become normalized across Philippine society. When 38.7 percent of all Filipinos-regardless of income status-suffer from housing-material deprivation, and 26.4 percent lack internet access, we are looking at structural failures that transcend traditional poverty lines. The 24.1 percent without proper sanitation facilities and 20.2 percent facing educational-attainment deprivation represent millions of Filipinos who may earn enough to avoid income poverty classifications but remain excluded from basic standards of modern life.

This ‘hidden deprivation’ poses a particular policy challenge. As De La Salle University economist Ma. Ella C. Oplas correctly observes, ‘being poor based on income should not necessarily mean being deprived of basic services.’ The inverse, however, is equally troubling: millions who earn above poverty thresholds are nevertheless deprived of the building blocks of human development. The government’s responsibility extends beyond cash transfers and income support to ensuring universal access to quality education, adequate housing, sanitation, and digital connectivity.

The MPI’s value lies precisely in its ability to illuminate these blind spots. With a national MPI of 0.045 and an average deprivation intensity of 34.7 percent among the poor, policymakers now have quantitative evidence of where interventions are most urgently needed. The data suggests that even among the multidimensionally poor, the average individual is deprived in more than one-third of weighted indicators-meaning poverty is rarely singular but rather a cluster of interconnected disadvantages.

For a nation that has achieved upper-middle-income status, these numbers represent both a milestone and a mandate. Every child still deprived of education, every family living in substandard housing, every household without sanitation remains a drag on national productivity and a reminder that economic classification must translate into tangible human dignity.

The MPI is not merely a measurement tool-it is a mirror held up to Philippine society. What it reflects is a nation where millions remain trapped not just by low incomes, but by systemic deprivation that limits their very humanity. The government’s response must match the scale of this revelation: targeted, multi-sectoral interventions that recognize poverty for the multidimensional crisis it truly is. Anything less betrays the 14.4 million Filipinos whose deprivation has finally been counted, and the millions more whose struggles remain hidden in plain sight.

THE country’s growing farm tourism industry takes on higher ground, quite literally, as it goes to Baguio for the 9th International Farm Tourism Conference. This was how the International School of Sustainable Tourism (ISST) introduced for the first time the conference in Baguio with the theme ‘Highland Harvest: Cultivating Sustainable Agriculture and Tourism. ISST held its first farm tourism conference in 2014 in Daet, Camarines Norte and has since gone around in the lowlands and coastal areas like Tagaytay, Iloilo, Cebu, Bohol and General Santos.

Farm tourism has been the mission of ISST and its president Mina Gabor has since been indefatigably pushing for its promotion. Farm tourism is defined as the practice of drawing visitors and tourists to working farms or fishing areas for production, educational and recreational purposes, that can provide both farm and community some income.

In a press conference, she said what was important is the creation of a knowledge base for those involved in agriculture to be able to create a solid program that is not wasteful.

The conference in March covered the status and potential of agricultural industries like coffee, fishery, ornamental flowers and systems needed to upscale farm tourism like branding, cultural heritage, marketing and exporting. Included also were talks on climate change and biodiversity.

But it was the tangible responses farm tourism offers to prevailing woes in agriculture Gabor discussed in a press conference that felt meaningful and most relevant. On this, Gabor and ISST movers brought in experiences and best practices from other places that may also work on the local level.

Among these main threats is the ageing population of farmers. Cordillera tourism regional director, Jovy Ganongan said the average age of the country’s farmers is 57 years old, even younger in Cordillera, at 55 years old. And will the young ones take over? That’s a hard question.

On a road trip to Benguet farms, this writer also heard and observed farmers encouraging their children to pursue what to their minds were more lucrative courses. And there are the young themselves immersed in an internet generation where progress equates to the speed of digital information and tilling the land is seen as backward and bereft of economic opportunities.

Gabor sees the solution in starting them young. She prodded the education department to promote the interest of young students in agriculture through farm tourism. Agriculture must be part of the curriculum, to include field trips to farms, so that the young will become aware that farming is not just about planting and harvesting, but also about enterprise and product development, which is enticing to the young.

The older generation need not fade away, too. In interviews she made among farmers living near the Kinatabangan River in Sabah, Gabor found that older farmers acted as historians because they could even predict the weather. ‘Old experience makes the link between the old and young important,’ she said.

Another aspect the young find exciting is edible landscaping, which is now in some schools. ‘We have reached up to the Visayas and by the last count, one part of Southern Luzon,’ said Gabor

Asked about the intrusion of agriculture into forest land which is a serious concern in the region, Gabor cites a practice in Costa Rica which she has already communicated to the Department of Environment and Natural Resources.

All around the huge rainforest reservation in Costa Rica are farmlands the government gives free and farmers can keep the income they derive from tilling the land. In return they act as stewards of the forest so no hunting nor destruction occurs in the protected area. She believes this can be a way to protect Sierra Madre while also helping farmers.

Places can also be designated as sacred where elders call a ceremony and declare the place sacred, with rules like being clean when entering the place. She cites a place in Indonesia where a spot has been protected and treated as sacred for the last 15 years through this practice.

ISST dedication to farm tourism

THE establishment of the ISST is by itself a significant move in strengthening farm tourism. The school started offering only a certificate program with three courses: Farm Tourism 101, Marketing and Finance, Marketing and Promotion. ‘Today we have 16 courses, one of which is the edible landscape,’ she said.

‘Edible landscaping, designing areas instead of the usual horizontal plots, brings out the passion and creative side of the students, so it is passion complemented by action,’ she explained.

ISST Board Director Dr. Jose ‘Jojo’ Bernardo brought his experiences from his leadership roles at the Tokyo, Japan-based Asian Productivity Organiztion (APO) to the ISST.

He was director of the APO agricultural department where he spearheaded initiatives in sustainable agriculture, and one of his key projects was promoting rural ecotourim. Together with a colleague, he developed a farm tourism program, which he brought home with him after retiring from ATO.

‘I’m bringing to ISST my experiences in Japan, Taiwan, Malaysia, Indonesia where I conducted training on farm tourism. We have been giving ecotourism courses at ISST and holding conferences for more than a decade to promote farm tourism,’ he said.

ISST is the only school in Asia-Pacific that offers courses in sustainable ecotourism.

The good news is that ISST is now coordinating with CHED for the development of a four-year Bachelor of Science for Sustainable Tourism Management course. They are completing the documents and looking at places to hopefully get it off the ground and have the first batch by next year.

Urban farm tourism, Gabor said, is one of the most important trainings they have. She cites Paranaque where after the ‘riles ng train’ portion was fixed, there are now farms and they have produce given to school children.

In fact, in urban agriculture where space is a concern, this may not demand a large area. In Manila, she cited three mushroom producers occupying only about 50 sqm who earn some P65 thousand a month. They are not just in production but also in processing, and people watch the process. ‘The important thing is to get started, even in small ways, and people will follow,’ she said.

Farm tourism also brings people to the product, which costs less rather than bringing the product to the market. Gabor’s relentless enthusiasm and persuasive passion has also earned government support for farm tourism.

In 2015, she met with then Senator Cynthia Villar to convince her that farm tourism is the answer to the problem of ageing farmers and farmers who give up and turn to more reliable sources of income like carpentry or construction work.

In November of that year, Villar called for a public hearing where Gabor brought all the supporting documents and some 20 people who were into farming to join her. On May 16, 2016, six months after the hearing, the late then President Benigno ‘Noynoy’ Aquino 111 signed into law RA 10816 or the Farm Tourism Development Act. This RA offers tax privileges and support programs for accredited tourism farms.

More recently, on February 16 of this year, the agriculture, trade and tourism departments launched the Strategic Action Plan for Farm Tourism 2016-2031 which expands agritourism from policy into execution.

This six-year roadmap links farming directly with tourism and gastronomy and encourages hotels and restaurants to buy directly from local farmers. It also aims to make the country a top farm and food destination across Asia.

Already, Gabor says that 30 percent of tourists go to farms with about 100,000 visitors at the peak of summer. Despite the potential, by 2023, only 231 farms have been accredited by the Department of Tourism (DOT). ISST, meanwhile, has identified 800 good farming sites. To boost the number, ISST organizes farms for organic agriculture training, a requirement for accreditation.

The Cordillera region, which fills 80 percent of the country’s demand for high- value crops, ironically has only 25 farms accredited for farm tourism.

Farmers here can take inspiration from the success stories of Northern Blossoms, a must-go destination in Benguet; the Cosmic Farm of Rogel Marzan, now a Tesda- accredited training center for organic farming; and the Living Gifts Nursery that has the biggest collection of cacti specie in the country, for they all started in simple and small ways

For the love of it

DESPITE over a decade of tireless pursuit of farm tourism, Gabor thinks of it as always exciting as every step of the way, every story heard gives a new learning. She has her own story to tell on how old wisdom can be steeped in superstition.

As children at her grandmother’s house, they used to throw slippers at a bees’ nest to drive them away, and her grandmother would scold them as the nest brings good luck, although she could not say how. In time, Gabor understood the sound science behind it-where bees build their colony indicate a balanced ecology. ‘Every province has their own anecdotes to tell. We learn from them more than what we teach them,’ Gabor said.

Farm tourism promises economic and environmental gains, but its real charm and allure seems to lie in nostalgia,

Gabor said that when people were asked why they go to farms, visitors would say it’s because they miss the old and simple ways. With all the stress and complexities of modern life, farms offer the refreshing simple needs of life-fresh air, clean food and the joys of sharing and storytelling.

A SOLON has looked into the status of the murder case filed against a former military colonel in connection with the 2017 killing of farmer Enrique Manas Sr. in Sta. Margarita, Samar.

In a letter addressed to the DOJ Secretary Fredderick A. Vida, Samar First District Congressman Stephen James T. Tan asked for clarification on the status of the DOJ proceedings involving accused Emilio Zosa’s motion for reconsideration (MR).

The MR seeks to set aside the DOJ’s January 2025 resolution recommending the filing of murder charges against Zosa and his co-accused Arturo Deborborn and Ricky Calagos.

Specifically, the solon asked the DOJ whether the MR has already been submitted for resolution or there are other remaining procedural requirements or submissions pending before the agency and whether the counsel representing the victims and the Manas family had been furnished a copy of the MR and given an opportunity to submit their comment, opposition or position.

Tan noted that the case had been pending through various stages of proceedings and review before the DOJ for several years, with nearly nine years having passed since the ambush.

Manas was gunned down in Barangay Bahay in Sta. Margarita town in 2017.

It may be recalled that on January 16, 2025, then Justice Secretary Jesus Crispin Remulla ordered the filing of murder charges against the accused after finding prima facie evidence with reasonable certainty of conviction.

The criminal information was received by the Regional Trial Court on March 19, 2026.

Zosa subsequently filed a an appeal before the DOJ.

Tan clarified that the inquiry was not intended to interfere with the DOJ’s independent evaluation of the case or suggest how the pending MR should be resolved.

‘The inquiry is prompted by the continuing concern of the victim’s family given the extraordinary length of time that the case has remained pending. The family endured nearly nine years of uncertainty since the death of Enrique Manas Sr.,’ the letter read.

‘They are not asking for special treatment or for the Department to prejudge the rights of any party, but simply seek to know where the case now stands and what procedural steps remain before the matter can proceed in accordance with law,’ it added.

THE preneed industry suffered a decline in total net income in the first half of 2026, dragged by weaker investment income as external factors dampened financial markets, according to the Insurance Commission (IC).

The IC said last Saturday first-half net income of companies that sell contracts for future service or benefit at the time of actual need or agreed maturity date dropped by 52.89 percent to P2.506 billion from P5.321 billion in the same period last year.

This comes despite the nearly 10-percent increase in total sales after 466,834 preneed plans were sold in the first half of the year, the insurance regulator said.

Of the total plans sold, 466,437 were accounted for by life plans, 358 were pension and 39 were education plans.

The industry’s premium income likewise rose by 11.43 percent to P12.799 billion in the first half from P11.489 billion a year earlier.

Meanwhile, first-half benefits payment fell by 9.18 percent year-on-year to P3.341 billion from P3.679 billion.

Despite the drop in earnings, the IC said the pre-need industry ‘remains well-positioned to support the continued development of the market and to meet its obligations to plan holders.’

The industry’s total assets increased by 8.87 percent to P183.301 billion in the first half from P168.361 billion a year earlier.

This growth was mainly driven by the 8.50 percent increase in investments in trust funds, from P145.607 billion in the first half to P157.980 billion a year ago. Investments in trust funds remain the industry’s largest asset component, accounting for 86.19 percent of its total assets, the IC noted.

Total liabilities also went up by 7.96 percent to P147.664 billion from P136.780 billion after preneed reserves increased and comprised 91.74 percent of the industry’s total liabilities.

Total net worth of the industry likewise grew by 12.84 percent year-on-year, reaching P35.636 billion as of the first half of 2026, supported by the 10.96-percent growth in capital stock and 16.52-percent increase in retained earnings.

‘The industry’s continued growth reflects both its resilience and the importance of sustained prudential supervision,’ the IC said.

The preneed industry has been under the supervision of the IC since 2019, pursuant to Republic Act No. 9829, or the Pre-Need Code of the Philippines.

Camarines Sur Governor Luis Raymund ‘Lay’ F. Villafuerte Jr. delivers an investment presentation during the launch of Camsur Uptown at a hotel in Taguig City on Friday night, August 28, 2026.

The development is envisioned to promote sustainable growth, investment, tourism, and economic opportunities in the province of Camarines Sur. A 200-hectare master- plan smart global city rising in Pili, its development is envisioned to promote sustainable growth, investment, tourism, and economic opportunities in the province of Camarines Sur, CamSur Uptown is planned as Southern Luzon’s center of government, business, finance, education, wellness, retail,events, and innovation.

It fronts the Maharlika highway, which carries more than one million vehicle’ past the site,and sits beside the world-famous CamSur Watersports Complex and Lego del Rey, Governor Villafuerte added.

GROSS borrowings by the national government grew by three-fourths in July due to a swollen budget deficit that required additional funding from local and foreign financiers.

The government borrowed P291.375 billion in July, an increase of 75.41 percent from P166.107 billion in the same month last year, latest data from the Bureau of the Treasury showed.

During the month, both domestic and external borrowings surged to plug the P106.263-billion budget deficit, which expanded by more than fivefold as the money spent by the government outpaced the revenues it collected.

Domestic borrowings jumped by 77.86 percent to P271.321 billion in July from P152.540 billion a year earlier. Some P138.121 billion was borrowed through fixed-rate Treasury bonds (T-bonds), while P133.2 billion was through net Treasury bills (T-bills).

On the other hand, external borrowings rose by 47.81 percent year-on-year to P20.054 billion from P13.567 billion.

Sources of foreign borrowings include program loans worth P1.413 billion and project loans amounting to P18.641 billion.

From January to July this year, gross borrowings totaled P2.112 trillion, up by 20.21 percent from P1.757 trillion in the same period in the previous year.

This already makes up 77.27 percent of the government’s borrowing target of P2.733 trillion for the year. Of the amount, P1.918 trillion will come from local lenders, while P815.505 billion will be sourced from foreign financiers.

Broken down, seven-month domestic borrowings grew by 15.37 percent year-on-year to P1.547 trillion from P1.341 trillion. This comprised P133.2 billion in net T-bills and P138.121 billion in T-bonds.

Offshore borrowings likewise climbed by 35.80 percent to P564.856 billion as of end-July from P415.918 billion a year ago.

The government has borrowed P92.878 billion in project loans and P157.607 billion in program loans from multilateral development banks, including the Asian Development Bank and World Bank, among others.

About P314.371 billion was also raised by the Treasury through the issuance of triple-tenor US dollar bonds in January and another foray in June.-July budget deficit widened to P893.077 billion after expenditures of P3.763 trillion outpaced revenue collections of P2.870 trillion.

The government projects the budget deficit to reach P1.658 trillion, or 5.4 percent of gross domestic product, this year, and P1.694 trillion, or 5.1 percent of GDP, in 2027.

Last week, the Monetary Board, the highest policy-making body of the Bangko Sentral ng Pilipinas (BSP), raised its key interest rate by 25 basis points, bringing the Target Reverse Repurchase Rate to 5 percent and the interest rates on the overnight deposit and lending facilities to 4.5 percent and 5.5 percent, respectively.

BSP Governor Eli M. Remolona Jr. acknowledged that the move will make borrowing costs more expensive for the government and further squeeze the fiscal space.

For this year, the government has allotted a total of P2.045 trillion for debt servicing, which includes interest payments and debt amortization. Interest payments alone would account for 15.47 percent of next year’s proposed P7.2-trillion national budget.

The government programmed its gross borrowings for next year at P3.304 trillion, of which P2.389 trillion will be sourced locally, while P925.12 billion will come from foreign lenders.

Outstanding debt of the national government is projected to swell to P19.765 trillion at the end of 2026 and P21.479 trillion at the end of 2027.

THE Department of Energy (DOE) will soon come up with a coal transition policy to manage the shift toward renewable energy (RE) while prioritizing energy security and avoiding power brownouts.

‘Our transition from coal must likewise be deliberate and supported by timely replacement capacity. We must reduce emissions without compromising reliability and affordability, while ensuring that affected communities and workers are part of the transition,’ Energy Secretary Sharon Garin said during the 15th Energy Smart Forum organized by the European Chamber of Commerce of the Philippines (ECCP) last week.

When sought for more details, Energy Undersecretary Rowena Guevarra said during the panel discussion that there are coal power plants currently operating below full capacity, triggering the rollout of a coal transition policy.

She pointed out that in order to stabilize power supply, there is an urgent need to construct new facilities that are legally exempt from the current coal moratorium policy. However, their compliance is inconsistent across the industry, noting that while some companies are moving forward with construction, others are failing to build despite being permitted to do so.

The DOE ban on new greenfield coal power plants took effect in 2000, but the projects that secured certificates of non-coverage or met substantial completion milestones prior to the ban are allowed to proceed.

‘We have the coal moratorium policy. We are coming up with coal transition policy,’ said Guevarra.

‘You see, our existing coal plants are breaking down or are derated – they can’t operate at 100 percent capacity. Because of that, we need to build the plants that aren’t covered by the moratorium. They aren’t covered by the ban, yet they still are not building. That is why a coal transition policy is being rolled out. Some are obedient and are already building, but others are not,’ she said.

The potential capacity for these coal power projects that are not covered by the moratorium could reach anywhere from three to five gigawatts (GW). Gueverra said these projects were approved and endorsed to the Energy Regulatory Commission (ERC) prior to the ban, have secured permits, have reached financial closure, and some under construction.

‘It involves about three to five GW-a significant amount. But the issue is, we don’t see them actually building,’ Guevarra said.

To prevent constant brownouts, the DOE proposed a contract termination mechanism for fossil fuel power plants, similar to existing renewable energy policies. Instead of monetary fines, failing to meet the committed work plan will result in project cancellation.

‘At the end of the day, we can’t just have constant brownouts. Is there a penalty for those who haven’t built yet despite having made a commitment? That’s the difference-as I mentioned, RE has a clear work plan.

‘If they don’t comply, the contract is terminated. But for our fossil fuel power plants, there isn’t a mechanism like that. It’s not a monetary penalty; the ultimate penalty is contract termination. That’s the worst-case scenario because the project won’t push through. So, they will have a work plan too,’ Guevarra said.

The DOE will hold a series of consultations with industry players to tackle the proposed coal transition policy. ‘We have to fulfill our RE targets. But at the same time, energy security is on top of that,’ she said.

McDonald’s Philippines said its chicken business is a major contributor to overall sales, with the category posting ‘incremental sales growth’ as annual volumes reach several million servings.

During a press briefing on Friday at the company’s head office in Makati City, Celina Lagandaon, marketing and menu director of McDonald’s Philippines, said the company has continued to invest in improving its Chicken McDo offering, particularly its bone-in chicken product.

The company began rolling out a larger bone-in chicken offering in 2023, followed by further changes to its preparation procedures in 2025 aimed at improving the product’s taste and texture. Lagandaon said the changes focused on factors that influence consumer preference, including chicken size, juiciness, crispiness and taste.

In 2026, the company introduced another iteration of the product. Although Lagandaon did not disclose specific sales figures, she said the changes had ‘made a positive dent’ not only in sales but also in consumer perceptions, including scores in evaluations of the chicken’s taste.

The company said affordability has also been considered in developing the offering.

As demand for its chicken offerings grows, McDonald’s Philippines said it is working closely with established poultry suppliers to ensure consistent product specifications across its restaurant network, its quality assurance director Alvin Marcelo said.

He added that all chicken used for its chicken offerings, as well as the rice served with them, are sourced locally.

‘We don’t have commissaries. We highly depend on suppliers. We work closely with the top management, making sure that we’re assured of the volumes.’

He said the company coordinates with suppliers on volume requirements as it expands into regional markets, with suppliers likewise scaling their capacity to support the chain’s growth.

Marcelo said the company is also accrediting additional facilities of existing suppliers across the country and broadening its supplier base to meet rising chicken requirements. Its network now includes about five major local poultry suppliers, up from three previously, although their names were not disclosed.

McDonald’s Philippines currently has more than 860 stores nationwide and is targeting 900 locations by yearend.

THE peso’s record slide past P62 to the dollar may boost the peso value of export earnings, but manufacturers say the gain is being offset by the higher cost of imported materials, machinery and fuel needed to produce those exports.

The peso closed at P62.265 against the US dollar on August 28, the weakest level on record, after opening at P62.05 and touching an intraday low of P62.27, per the Bankers Association of the Philippines.

The Federation of Philippine Industries (FPI) said the weaker currency is adding to cost pressures across manufacturing, particularly because much of the country’s export production remains tied to imported inputs.

‘With the peso breaching P62 to $1, industry is navigating multilayered pressures,’ the group said in a statement on Friday.

Electronics, which account for more than 58 percent of Philippine exports, illustrate the problem, FPI Chairperson Elizabeth Lee said.

‘Every chip we ship depends on costly foreign inputs. At P62 to the dollar, any FX (foreign exchange) gain is erased by the inflated peso cost of semifinished parts. Exporters are left with volume, but no real windfall,’ Lee said.

The same exchange-rate pressure is affecting companies planning to expand or upgrade their production capacity.

Data from the Philippine Statistics Authority (PSA) showed that machinery and equipment accounted for 27.9 percent of imports in the first seven months, meaning a weaker peso also raises the peso cost of factory upgrades and other capital spending.

‘Firms face a stark choice-delay upgrades or borrow at higher cost. Yet industry remains committed to modernization, provided relief measures are in place,’ Lee said.

Fuel adds another layer to manufacturers’ costs. Mineral fuels, including crude oil, coke and coal, made up 19.4 percent of imports during the period, exposing businesses to both global energy prices and exchange-rate movements. ‘Unfortunately, we are a price taker here-but we can act to reduce inefficiencies at home,’ Lee said.

The exposure is reflected in the country’s widening trade gap. Government statistics data showed that imports reached $92.26 billion from January to July, compared with $54.92 billion in exports, resulting in a $37.34-billion trade deficit.

Both export and import values were the highest recorded for the period since the PSA’s trade series began in 1991.

The ‘winner’ does not take it all

THE weaker peso may be handing some businesses a win, but at P62 to the dollar, the broader business sector is also absorbing higher costs, according to the Management Association of the Philippines (MAP).

MAP President Donald Patrick Lim said exporters, business process outsourcing (BPO) firms, tourism businesses and dollar earners benefit from higher peso returns on foreign-currency revenues, while Overseas Filipino worker (OFW) remittances gain purchasing power. ‘But for a large part of the domestic economy, the other side of the equation is becoming more important,’ Lim told BusinessMirror in a message. More than 85 percent of imports consisted of raw materials and intermediate goods, capital equipment and mineral fuels, based on PSA data.

For Lee, this dependence could also push up consumer prices as businesses absorb higher landed costs. ‘With raw materials and energy as essential imports, the peso’s slide past P62 can fuel cost-push inflation. Rising input costs will cascade from wholesale eventually into retail prices, even as rate hikes attempt to slow demand,’ she said.

The Bangko Sentral ng Pilipinas (BSP), meanwhile, projected August inflation at 5.5 percent to 6.5 percent.

Lim said imported fuel, machinery, technology, raw materials and intermediate goods raise operating and replacement costs when the peso weakens, compounding pressure from already elevated inflation.

‘Businesses can absorb higher costs only for so long. Eventually, companies either have to raise prices, accept lower margins, find cheaper inputs, or postpone certain expenditures,’ Lim said. ‘For MSMEs with limited ability to hedge foreign-exchange exposure or negotiate better supplier terms, the pressure can be even greater,’ he added.

Needed adjustments

RATHER than relying solely on the exchange rate to absorb the shock, the government could reduce domestic costs that add to manufacturers’ expenses, the FPI said.

The group proposed easing nontariff barriers during periods of exchange-rate volatility, including faster clearance of manufacturing inputs and fewer administrative delays.

‘Expedited clearance for manufacturing inputs and removing administrative delays can reduce demurrage, storage, and port handling fees-directly offsetting foreign exchange landing cost increases,’ Lee said.

If the peso remains at around P62 or weakens further, MAP expects businesses to become more cautious in both pricing and investment decisions.

Companies may stagger price increases rather than make one large adjustment, intensify efforts to source locally, renegotiate contracts, and defer dollar-denominated equipment purchases or expansion plans where possible. Businesses with significant foreign-currency obligations will also have to pay much closer attention to their balance sheets and currency exposure.

From MAP’s perspective, what businesses need most is not necessarily a particular peso-dollar level but stability and predictability.

‘Companies can plan around P60, P61 or even P62 if movements are orderly and economic policy remains credible,’ Lim told this newspaper. ‘What is much more damaging is rapid and sustained depreciation because it makes costing, pricing, investment and financial planning much more difficult,’ he added.

Lim also pointed to a longer-term structural challenge: strengthening domestic production and reducing unnecessary dependence on imported inputs, particularly in energy, food and other strategic sectors.

‘A competitive economy cannot permanently rely on a favorable exchange rate. Our objective should be stronger productivity, deeper domestic supply chains and businesses that can compete regardless of where the peso trades,’ he explained.