News

Luzon-wide lockdown extended until end-April

April 15, 2020 News

THE Philippine government on Tuesday announced the extension of the lockdown on Luzon island until the end of April, as the country has yet to contain the spread of the coronavirus disease 2019 (COVID-19) that has infected over 3,000 and killed nearly 200.

Cabinet Secretary Karlo Alexei B. Nograles said President Rodrigo R. Duterte approved the recommendation of the Inter-Agency Task Force for the Management of Emerging Infectious Diseases (IATF-EID) to extend the enhanced community quarantine (ECQ) until 11:59 p.m. of April 30, 2020.

“Provided, that all exemptions granted by the Office of the President or the IATF shall continue to be in effect for the duration of the extended ECQ. Provided, further that such extension of the ECQ shall be without prejudice to the discretion of the President to relax the implementation of the ECQ in some local jurisdictions, or the granting of exemptions in favor of certain sectors, as public health considerations and food security may warrant,” he said in a video conference on Tuesday morning.

This comes after Mr. Duterte on Monday evening said he is inclined to extend the ECQ, which imposed strict home quarantine measures and restricted most economic activities in Luzon. The month-long ECQ was due to end on April 12.

Mr. Nograles said an extension was needed to see if the Luzon lockdown was effective in containing the spread of COVID-19, and to boost the health care capacity in the country.

As of Tuesday, the Department of Health reported a total number of COVID-19 infections at 3,764, with 177 deaths and 84 recoveries.

“Sinasabi ng experto para talagang ma-manage ng husto ang COVID-19, kailangan iakyat pa ang testing capacity ng bansa na abot 8,000 to 10,000 tests per day (Experts have said that in order to manage COVID-19, we need to raise the testing capacity to 8,000-10,000 tests per day),” Mr. Nograles said.

The government plans to increase testing capacity by maximizing existing sub-national laboratories, certify more sub-national labs and to establish big testing centers in strategic areas. Mr. Nograles said if these are achieved, testing capacity will rise to 13,000-20,000 tests a day by April 27.

IMPACT ON ECONOMY
However, the extension of the Luzon-wide ECQ may further drag economic growth this year. Luzon, which is home to 57 million, accounts for 73% of gross domestic product.

The National Economic and Development Authority (NEDA) on March 24 said the low-end of its growth estimate for this year, a contraction of 0.6%, is “still too high” if the ECQ is extended beyond one month “or if the spread of COVID-19 is unabated even after the ECQ.”

“The decision to extend, modify or end ECQ will be based on science, on study of relevant data, and not on the pandemic’s potential impact on the economy,” Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno said in a text message.

He assured that the central bank continues to have “ample monetary and fiscal space to overcome whatever adverse impact the pandemic has on the Philippine economy.”

For Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort, businesses need to brace for further impact of the extended ECQ on their production and sales.

“For the most adversely affected businesses by the ECQ in terms of complete shutdown of production/operations, every month of closure is equivalent to about 8% of total annual production or sales/income foregone. Thus, 1.5 months for the ECQ is equivalent to about 12% of yearly output,” he said in an e-mailed response.

Robert Dan J. Roces, chief economist at Security Bank Corp. said businesses had already factored in the ECQ extension, so there is “not much of an impact preparation-wise.”

At this time, extraordinary measures, including a realignment of budget priorities should be taken into consideration, according to UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion.

“In a practical sense, the Duterte government has to probably resort to rethink budgetary priorities for 2020 to help address pressing issues especially if current reserves are low and eventually be used up,” he said in an e-mailed response.

“However, these may have critical implications on the government’s longer-term plans for infrastructure development, in particular,” he added.

Prior to Malacañang’s announcement, Socioeconomic Planning Secretary Ernesto M. Pernia said he would recommend a modified lockdown wherein restrictions on movement of goods would be lifted, and manufacturing and agricultural activities be resumed.

“We need to ramp up our agricultural supply. Also, some manufacturing industries need to come back to life in terms of production and other retail business that would be useful in this time of limited consumption… Manufacturing for export, we have to revive that sector,” Mr. Pernia said in an interview with ABS-CBN News Channel.

BUSINESS GROUPS BACK EXTENSION
Business groups expressed support for the extension of the ECQ, but pushed for the efficient distribution of financial assistance for workers and mass testing for COVID-19.

“We have to prepare in giving financial assistance to employees,” Philippine Chamber of Commerce and Industry (PCCI) President Emeritus George T. Barcelon said in a phone interview on Tuesday.

He added that many companies are still waiting for the implementation of financial assistance from the labor and social welfare departments.

Nabil Francis, president of the European Chamber of Commerce of the Philippines (ECCP), said in a mobile phone message that the extension is an integral part of mitigating measures against COVID-19.

“At this point, it is critical to immediately release guidelines in close consultation with businesses and various stakeholders,” he said.

Mr. Francis said that the government must enact a stimulus package to affected sectors, offer tax breaks for businesses, harmonize various government policies dealing with COVID-19, offer loan programs and subsidies for import and export enterprises, grant incentives for upskilling programs, and place a moratorium on rent for commercial tenants.

The Trade department on April 4 issued a memorandum granting a 30-day grace period on residential and commercial rent due during the ECQ.

Makati Business Club Executive Director Francisco Alcuaz, Jr. in a mobile message on Tuesday said the extension means more time to address the pandemic and gauge the effectiveness of the lockdown. He said it also helps the government and private sector prepare for a modified lockdown, which gradually allows operations of certain business sectors.

“(The extension) does put more pressure on all of us to provide for workers who aren’t getting paid and support businesses that are paying their workers, first of all the SMEs, because we will need small and big companies in the recovery,” he said.

LOGISTICS
Mr. Francis also said that the chamber hopes the government would address issues surrounding the movement of goods and workers.

Business groups at the start of the ECQ said that the movement of goods was hampered at checkpoints due to a failure to disseminate unified policies on movement exemptions, with some local governments enforcing their own rules.

Joint Foreign Chambers of Commerce of the Philippines (JFC) Senior Adviser John Forbes also said that the chambers support the extension to stop the spread of the virus, but are “concerned that logistics flows have been impaired by LGUs (local government units) and bureaucrats.”

In contrast, PCCI’s Mr. Barcelon said the movement of cargo through checkpoints has improved, but noted that the lack of public transport resulted in bottlenecks as employees cannot go to work.

“It’s a balancing act. We don’t want our workers’ health to be compromised,” he said, and called for mass testing to contain the virus.

ENSURING SAFETY
Mr. Barcelon said that the government must have the data on COVID-19 cases before the public becomes confident in leaving their homes even after the ECQ is lifted.

Semiconductors and Electronics Industries in the Philippines, Inc. (SEIPI) President Danilo C. Lachica in a mobile message said the exporters are still waiting for feedback on whether demand-driven manufacturing would be allowed during the extension.

“One big problem is the lack of rapid testing capacity to determine if the COVID case curve is flattening.”

Economic zones are, meanwhile, using the lockdown extension to prepare for a shift from the ECQ.

“We’re okay with extension at least up to April 30 lang so we can also simultaneously do the disinfection of all the ecozone premises and every company’s facilities,” Philippine Economic Zone Authority (PEZA) Director General Charito B. Plaza said.

She said PEZA is now preparing for post-COVID rehabilitation and business continuity, including offering rental fee extensions and discounts or amnesty for overdue accounts payables.

RECOVERY PLAN
The next four weeks will be crucial to ensuring the country will recover from the COVID-19 pandemic, according to a discussion paper from professors of the University of the Philippines School of Economics.

The UP economists backed a gradual lifting of the lockdown restrictions, saying “the prudent approach, buying more time for the health system to prepare and brace itself for the flow of cases that is bound to come for some time.”

They also urged the government to employ targeting parameters for aid which will allow help to reach even those that are not qualified under regular poverty alleviation programs before the lockdown, including wage workers and transport workers.

The UP economists said aid in kind will be better than cash transfers in some circumstances especially under mandatory home quarantine conditions.

The government should also look to prioritize spending program in the near-term to address the weakness in the public health system, logistic capabilities, research and development, financial system, and social safety nets.

“Ignoring these weaknesses and assuming that the economy can simply start where it left off would be as foolish as rebuilding a fallen structure in the same hazardous location, using the same plans and materials, and thinking that the structure will not collapse the next time around,” the UP economists said.

By Jenina P. Ibañez and Luz Wendy T. Noble, Reporters — with inputs from Beatrice M. Laforga and G.M. Cortez

Source: Business World Online