Philippine manufacturers are left with no choice but to put expansion plans on hold as they face a delicate balancing act between raising prices to offset mounting costs and preserving consumer demand, according to the country’s umbrella group of producers.
Federation of Philippine Industries (FPI) chair Elizabeth Lee said manufacturers were grappling with the peso’s depreciation, which has driven up the cost of imported raw materials, alongside higher operating expenses stemming from the Middle East crisis and growing diplomatic tensions with China, a major source of production inputs.
Lee said these mounting pressures have prompted manufacturers to defer expansion plans and focus instead on sustaining their existing operations in the country.
‘In terms of expansion, that will have to be shelved for now,’ Lee told reporters last week. ‘It doesn’t mean [that there will be no more additional investments], but they will have to be shelved for now.’
Among manufacturers’ biggest concerns is the peso’s depreciation, with the local currency sliding past 64 against the US dollar last week, prompting President Marcos to urge Filipinos not to ‘panic.’
Already, Lee said some manufacturers were using an exchange-rate assumption of P65 to the dollar to prepare for further currency volatility following the peso’s series of record lows.
Manufacturers are also renegotiating supplier contracts and hedging their foreign exchange exposure to manage rising costs.
But Lee warned that passing these increases directly to consumers would be difficult, particularly as household purchasing power remains under pressure.