The Philippines risks losing ground in global supply chains unless it addresses high energy costs and unresolved corruption issues surrounding infrastructure projects, which continue to weigh on investor sentiment.
According to a UK-based risk intelligence firm, high energy costs, exacerbated by the global oil crisis, are a major challenge for the Philippines. The country sources at least 90% of its oil supply from the Middle East, making it one of the most affected by the crisis.
Last year's corruption scandal, which linked state officials and contractors in substandard or nonexistent flood control projects, may deter companies seeking to diversify their supply chains from investing in the Philippines. High-profile governance issues, particularly corruption allegations, are a major factor leading to investor hesitation.
In its 2026 Supply Chain Risk Outlook, the risk intelligence firm identified the Philippines, Thailand, Argentina, Chile, and Uruguay as "rising stars" in the global supply chain. However, these markets are vulnerable to disruption amid ongoing geopolitical conflicts, environmental challenges, and domestic security threats.
The firm noted that the closing of the Strait of Hormuz has created near-term headwinds for the Philippines and Thailand. Despite this, procurement teams willing to take a longer-term view will find these markets worth their attention.
The Philippines has strong potential in the global supply chain due to improvements in its market openness, competitive labor costs, and young, English-fluent workforce. The country performs second-best across Southeast Asian economies analyzed due to significant improvement in its market openness pillar.
Despite governance challenges and corruption scandals, the Philippines shows notable opportunities in sectors like electronics, auto parts, and food manufacturing. The government's efforts to broaden its trade relationships, attract investments, and reduce the regulatory burden in key sectors are seen as positive steps.
The need for more renewable energy projects to boost the Philippines' competitiveness as a supply chain hub is also emphasized by experts. Recent government efforts to attract more investment in energy infrastructure may help in the longer term.
Investor confidence in the Philippines will also depend on the government's commitment to investigating the corruption scandal, easing the regulatory burden, and enforcing labor rights. Robust and credible investigations with clear follow-through may help allow investors to look more toward future potential.
