Philippine manufacturers are putting 2027 expansion plans on the shelf and using P65 to the US dollar as a working hedge against further peso weakness, as rising import, energy and logistics costs squeeze already-thin margins.
Elizabeth Lee, chair of the Federation of Philippine Industries, said companies are putting business continuity and worker retention ahead of new investments as the peso’s depreciation raises the cost of imported raw materials and equipment.
“But in terms of expansion, that will be on the shelf muna. It doesn’t mean na no, pero on the shelf muna,” Lee said.
Manufacturers are already negotiating with foreign suppliers and adjusting their currency exposure around P65 per dollar. Lee stressed that the level is a defensive assumption, not a forecast of where the peso will trade.
“Kami, 65. Nag-hedge na talaga kayo, 65. Hindi pwedeng hindi,” she said.
The peso’s roughly 10 percent to 11 percent depreciation has pushed up import costs, but manufacturers have limited room to pass the increases on to consumers without further weakening demand.
The squeeze is compounded by higher logistics expenses and port congestion. Lee pointed to the buildup of empty shipping containers as another bottleneck slowing cargo movements and adding to costs.
For now, manufacturers are choosing to protect capacity rather than expand it. Keeping trained workers also remains a priority, reflecting the cost and time companies have already invested in building factory skills.
The industry is counting on Christmas spending and overseas Filipino remittances to keep factory activity moving through the end of the year. But that may provide only a temporary lift unless the broader cost pressures ease.
Lee said the pace of recovery in 2027 will depend on greater exchange-rate stability, easing geopolitical tensions and government action to bring down electricity costs, unclog ports and rebuild investor confidence.
For manufacturers, the P65 hedge is therefore less a bet on the peso than a sign of how little room businesses feel they have left for surprises.
