(March 9): Philippine companies are bracing for higher costs as oil’s spike above US$100 a barrel drags the peso to a record low, heightening the risks for an economy heavily reliant on fuel imports from the Middle East.
“I can’t imagine anyone not being afraid of what we’ve been reading,” Sergio Ortiz-Luis Jr, head of the Philippine Exporters Confederation Inc, said on Monday. The group, comprised of about 4,000 exporters and service providers, was already dealing with the uncertainty on US tariffs before fuel costs climbed, though members have not indicated plans to reduce output, he added.
While a weaker currency bodes well for exporters, it inflates the import cost of manufacturers in the Southeast Asian nation. Many Philippine producers buy their raw materials and components overseas to ship out finished goods such as electronic products which comprise about half of the country’s shipments.
The Philippines imports nearly all of its oil needs and the commodity’s surge past US$100 a barrel stoked inflation fears in the country and across the region, many of them also net oil importers. Exacerbated by the dollar’s haven appeal, currencies in emerging Asia retreated, with the peso touching a record low.
The Philippine Chamber of Commerce and Industry warned that a sharp jump in pump prices would be difficult to absorb. A 20-peso per litre increase, set to take effect this week, would cause fuel, logistics and transport costs to surge, and businesses may have to pass those on to consumers, Ferdinand Ferrer, head of the chamber, told GMA News TV.
Other companies are looking to absorb the extra cost. Miner Global Ferronickel Holdings Inc plans to adjust rates for its contractors to cover higher fuel prices, according to Dante Bravo, president of the company. “We are still able to get some fuel supply at the moment,” he said.
See also: Southeast Asia faces sweltering heat as war limits energy supply
2GO Group Inc, one of the country’s largest logistics operators controlled by conglomerate SM Investments Corp, said it has measures in place to help manage volatility in fuel prices.
President Ferdinand Marcos Jr is seeking emergency authority from Congress to slash taxes on petroleum products and has enforced a four-day work week from Monday for government offices to save on energy.
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