‘Philippines can withstand impact of new US tariffs’

JAZA confident Ayala Group resilient enough to weather volatility

MANILA, Philippines — Jaime Augusto Zobel de Ayala, chairman of the country’s oldest conglomerate Ayala Corp., has expressed confidence that the Philippine economy as well as his group would be able to weather the market volatility related to the recent tariff actions by the US.

Zobel said the Philippine economy remained resilient last year despite heightened uncertainties and geopolitical tensions, registering one of the fastest growth in the region at 5.6 percent.

He said fueling the country’s growth and economic resiliency were favorable demographics, strong OFW remittances, robust revenues from the business processing outsourcing sector and historically low unemployment.

Looking ahead, Zobel said domestic consumption, which comprises around 72 percent of gross domestic product, would continue to provide a buffer against external shocks.

“We think this will also reduce our vulnerability to shifts in trade and tariffs, including those recently announced by the United States, which is an important trading partner of the Philippines,” he said last Friday during the company’s annual stockholders’ meeting.

However, the business titan said the country must be watchful and mindful of the ongoing market volatility.

“We may need to make some adjustments to our economic forecasts, as the United States’ reciprocal tariffs could weaken our exports and industrial output, as well as raise agricultural prices,” Zobel said.

“It remains unclear, however, whether these repercussions are a short-term phenomenon that could gradually reverse itself or a sign of a more significant structural change in the global economic order. On a net-net basis, I still believe that the overall impact to the Philippine economy will be minimal,” he said.

Within the Ayala Group, Zobel said Integrated Micro-Electronics Inc. (IMI) has the most exposure to the US market.

“While US tariffs will bring industry-wide implications, we think that IMI can mitigate the impact due to its wide geographical footprint, which allows it to cater to more regionalized supply chains,” Zobel said.

“IMI has a strong relationship with its customers, enabling it to effectively adjust its strategies and allocate demand between its Asian, European and North American markets,” he said.

Ayala president and CEO Cezar Consing, for his part, said while the group is not completely insulated from market volatility related to the US tariff actions, it “is positioned OK” on a relative basis.

Consing said Ayala’s main engines of value and growth such as BPI are starting the year strong, while Ayala Land is growing its cash-yielding businesses, ACEN is expanding its capacity considerably, and Globe Telecom continues to grow in a market where there is very little growth.

“So you’re seeing our main engines of growth doing very well despite the volatility we see in the market. And we talked about our younger, smaller businesses. We think we’ve positioned them a lot better over the last two to three years,” Consing said.

“We would have a lot more challenges if our big businesses didn’t make their growth moves earlier – and they did. And if our smaller businesses didn’t go into rationalization mode earlier – and they did. So with everything that’s happening in the market, all things considered, I think we’re in reasonable shape,” he said.

US President Donald Trump earlier this month slapped a 17-percent reciprocal tariff on all Philippine goods, lower than those imposed on the country’s Southeast Asian neighbors with Cambodia at 49 percent, Vietnam at 46 percent, Thailand at 36 percent, Indonesia at 32 percent and Malaysia at 24 percent.

However, after several countries asked to negotiate with the US on the tariffs, Trump decided to temporarily pause most reciprocal tariffs, including those on the Philippines.

Trump authorized a 90-day pause and substantially lowered the reciprocal tariffs to 10 percent for most countries, including the Philippines.