Top Philippine conglomerates are signaling a strategic shift, bracing for higher operating costs amid the war in the Middle East and ongoing supply chain instability, even as they remain optimistic about long-term growth.
鈥淎t this time, with all of this conflict in the Middle East, I guess maybe there鈥檚 still a lot of fear in all of us. But having said that, I guess the lights go on, business goes on, capex (capital expenditure) goes on. Of course, there are more risks, and maybe the thing that will be higher is the opex (operating expenses). So, we just have to make our business more efficient, lower our margins, to survive these temporary hiccups,鈥 SM Investments Corp. Vice-Chairperson Teresita T. Sy-Coson said during a panel discussion at the Philippine Stock Exchange鈥檚 InvestPH conference on Mar. 17.
She also expressed hope that the current volatility would be short-lived, noting that the broader business community remains hopeful.
鈥淚鈥檇 like to think that it鈥檚 temporary, and as I can see from the survey, I think most of us are optimistic that it鈥檚 not going to take very long. And I think that we need prayers for that,鈥 she added.
Jaime Augusto Zobel de Ayala, chairman of Ayala Corp., said that the current environment serves as a reminder of how 鈥渋ntertwined鈥 global economies have become, regardless of isolationist trends.聽
鈥淚t鈥檚 a reminder to all of us that as a community of businessmen, a community of countries, I think we all have to take the extra step to continue building good relations with each other from both an economic and political point of view… I think it鈥檚 a credit to our President this time that he鈥檚 actually a person who enjoys building linkages with the world, and we鈥檙e lucky to have that,鈥 he said.
He added that these linkages are just as vital within the domestic market. 鈥淎 day doesn鈥檛 go by鈥攅ven in our local environment鈥攚here we in our group don鈥檛 understand that all of our businesses are really linked up to each other. We all have to make that effort.鈥
Addressing the specific nature of the current crisis, he said that his primary concern is the physical availability of resources rather than just fluctuating costs.
鈥淢y concern is less price volatility of what鈥檚 happening to the energy sector. I think that鈥檚 just the reality of the world we鈥檙e facing. My concern is a drying up of supply… If we go back to something that happened in the 70s, which was really a drying up of supply to a larger system, that would really have a big effect on all of us.鈥
To navigate these risks, he called for a dual-track management style that addresses immediate supply threats while protecting future commitments. 鈥淲hen you have a crisis of this magnitude, you have two frames of mind. One is the crisis frame of mind which is the now and the other one is the longer term… we can鈥檛 escape from the fact that we need a short-term plan to handle it. And I think all of us are faced with a situation where we have to have our brains work on those two fronts,鈥 he said.
Francisco C. Sebastian, chairman of GT Capital Holdings, Inc., noted that the financial system remains robust, characterized by solid income, healthy cash flows, and significant bank capital buffers. He specifically credited the role of national regulators in maintaining this stability.
鈥淚 think the banks are very healthy thanks to our BSP (Bangkok Sentral ng Pilipinas) and financial regulators to start with. Our financial system is strong and over the years we have built up income and cash flows that allow us to be strong… Our banks, I think no complaints here, we鈥檙e doing quite well. Good capital buffers and good income, good returns and good dividends too,鈥 he said.
Mr. Sebastian added that the group鈥檚 core businesses have been well-positioned to ride the wave of the country鈥檚 improving economic fundamentals.
鈥淲e have been one beneficiary of these demographics. Toyota has been a beneficiary of the rising income and demographics… I think I will [not] forget that EV cars will also benefit from the current drivers,鈥 he said. 鈥 A.G.C.Magno
