Local factories tightening belts on Mideast risk

Domestic manufacturers are intensifying cost-cutting measures as the escalating conflict in the Middle East threatens to drive up fuel prices and further weaken the peso, potentially raising consumer prices and jeopardizing employment.

- By DEXTER BARRO II

Federation of Philippine Industries (FPI) chairperson Elizabeth Lee said manufacturing companies are working to make their operations more efficient, especially with uncertainty over how long the conflict might continue.

“Right now, I think it's already part of the business strategy to really tighten your belts because this was not expected,” Lee told reporters on the sidelines of an FPI forum.

Since the war broke out in late February, fuel prices have surged to unprecedented levels due to supply disruptions in the Middle East, where the Philippines sources most of its oil needs.

Beyond its potential to trigger higher inflation, increases in fuel prices are putting pressure on the peso, which slid past the 60-per-dollar mark early Thursday, March 19.

For manufacturers, a weaker peso would increase the cost of critical inputs for their products, particularly those imported from abroad, which are paid for in United States (US) dollars.