Stimulating economic activity and having consistent guidelines are needed for the Philippine economy to recover from the impact of the coronavirus disease 2019 (Covid-19) pandemic, an economist and the business sector said on Monday.
“The key is to have economic activity so that small businesses can have demand on their side in order to survive and, in my view, the ones that are actually greatly hit are the daily wage earners and we need to put in a lot of effort in trying to stimulate infrastructure, real estate sector to get the daily wage earners moving,” said BDO President and Chief Executive Officer Nestor Tan during the “A Year of Covid-Gloom or Boom” forum organized by the Management Association of the Philippines (MAP).
“We need to find a way to bring back public transportation because this is mobility. We need to find a way to create consistency among the LGU (local government unit) guidelines and mandates because we are a mobile country. We need a lot of the people that work in the city, go to provinces on weekends or sometimes they commute to several LGUs, so we need to be able to find a way to get the economy moving by addressing that transition,” he added.
The quarantine restrictions imposed since mid-March this year caused the Philippine economy to plunge into recession.
Year-to-date, domestic output slid by 10 percent as the lockdowns severely impacted businesses’ operations.
Peter Lee, vice dean of the school of economics of the University of Asia and the Pacific (UA&P) said that based on a study commissioned by MAP and conducted by UA&P researchers, the lockdowns imposed severely impacted the food manufacturing, accommodation and food service, construction, wholesale and retail trade, and transport sectors.
UA&P conducted an online survey of pre-selected 33 representatives from key priority sectors of the economy and stakeholder interviews with more than 10 firms to validate the survey results.
Lee said that survey results revealed that those in hotel and accommodation, restaurant and food activities, arts and entertainment and recreation reported more than 50-percent decline in sales while those in manufacturing of non-food and construction saw a 10- to 50-percent decline in sales.
He said that strict mobility restrictions, cancellation of projects, drop in volume of customers order also significantly hampered production.
“A number sought direct financial relief through loans for additional working capital, service existing loans, and allocate resources to comply with health and safety protocols,” said Lee.
He said that based on the survey, financial stimulus policies needed by firms include tax incentives and relief to support business operations, facilitating access to new financing, and subsidy for utility expenses and added costs.
Non-financial stimulus policies needed, meanwhile, include clear, consistent health and safety protocols; the help of the Department of Trade and Industry in facilitating mobility of goods; easing restrictions and allowing more access to raw materials; providing relief from the tedious permits, license process; financial advice in reporting due to supply chain disruptions; training on business digitalization and transformation; government intervention to improve information and communication and technology (ICT) infrastructure; and streamlining labor regulations.
Lee said the government is urged to cushion the shock and get people to spend again by stimulating economic activity.
He said there is also a need to restore mobility to the extent that protocols allow and for the government to build confidence in a safe health environment by investing in facilities and informing the public on vaccine procurement efforts.