The National Economic and Development Authority (NEDA) expressed the need for the government to continue to support SMEs and the agriculture sector even after the COVID-19 pandemic for they will continue to struggle to restore their livelihood. NEDA proposes a guarantee fund of about P800 billion for these affected sectors as well as adjusted credit programs for these sectors to be stimulated again and for them to reach their markets.
The resumption of operations in the LRT-2 Santolan, Katipunan, and Anonas stations have been moved to September due to the disruption of their power system repair brought about by COVID-19. The East Extension of the LRT-2, which includes Emerald Station in Marikina and Masinag Station in Antipolo, are expected to be done by December. This extension is expected to increase the daily ridership of the train by 80,000 passengers and will be able to cut down the travel time from Recto to Masinag to only 40 minutes instead of around 3 hours.
According to Agriculture Secretary William Dar, an agriculture-centered stimulus program may be best to revive the Philippine economy. He says that the P66-billion budget for the "Plant, Plant, Plant" program, a component of the Philippine Economic Stimulus Act (PESA), will be able to improve overall food supply, farm logistics, and food prices. Further, this can help alleviate poverty by providing more jobs and empowering the rural communities. Sec. Dar also calls for more public-private partnerships in line with this vision.
It has been mentioned that the lockdown in Metro Manila and nearby cities may be eased into a general community quarantine by June 1 to restart the country's economy after being at a standstill. There has been a proposal to classify areas into zones, which allows some places to keep stricter measures in place as compared to others. The need for easing is reinforced by a study conducted in De La Salle University stating that the impact of the lockdown so far may have reached P740.35 billion. Looking ahead, it was also advised that the country should strengthen its healthcare system.
The Philippine Economic Stimulus Act (PESA) that aims to aid the country's economy in terms of its growth, employment, and productivity has been approved by the House Defeat COVID-19 Committee (DCC). This bill authorizes immediate mass testing, wage subsidies for those most affected by the pandemic, and loans for various sectors including SMEs to name a few. Further, this bill will enhance the "Build, Build, Build" program of the government that is worth P650 billion in three years starting 2021.
The government is looking at charging an additional 5% tariff on all imported products to earn as much as P245 billion in revenue within the year. It was mentioned that this tariff will only be employed if the Finance department deems it needed to respond to the effects of COVID-19. The Finance department, however, has stated that this measure is not needed at this time.
Infrastructure spending by the government dropped by 12.4% in the first quarter of 2020 due to the ECQ measures in place that halted construction activities. The Department of Budget and Management mentioned that continued delays are expected, but they are hopeful that once strict lockdown measures are eased, infrastructure spending will restart again. Infrastructure projects are important in getting the Philippine economy back on track, and the government hopes to do so in the second half of the year.
According to Benjamin Diokno, Governor of the Bangko Sentral ng Pilipinas (BSP), the central bank is ready to employ other monetary tools to boost the liquidity in the country when the need arises. A specific measure he cited was to lower bank reserve requirements further; however, he says that there is ample liquidity in the country right now so this is not yet needed. Chief economists from leading banks in the country had differing opinions on the actions taken by the BSP - one suggesting that a pause is needed with all the measures being done, and another suggesting to engage in "warlike" monetary responses to name a few.
The Philippines may have lost P1.1 trillion, or 5.56% of economic output, in the first 45 days of a Luzon-wide lockdown according to the National Economic and Development Authority (NEDA).The services sector suffered the biggest revenue losses at P589.72 billion; this is followed by the industry and agriculture sectors at P537.72 billion and P94.3 billion respectively. It is expected that the economy could shrink by 3.4% by the end of the year given the restrictions to travel, deterioration in business confidence, and the lockdown measures in place.
There is an opportunity for the Philippines to benefit from the tensions between the US and China escalating, where global supply chains are looking to relocate their production sites. The main reason as to why the Philippines isn't affected by those tensions is because of its low participation in global trade and global value chains. Chief Economist of the UnionBank of the Philippines suggests that the country should work on its weaknesses first, citing lack of infrastructure specifically, for it to attract more investors. Further, he said that the country must decide what it wants to be - a "manufacturing hub, a financial services center, or a digital valley of sorts."
The Board of Investments (BoI) recorded an overall decrease in pledges by 71% in the first quarter of 2020 as the COVID-19 pandemic disrupted economic activity in the country. In particular, domestic investments decreased by 68% while foreign investments dropped by 80%. France tops the list of foreign investors in the Philippines, contributing P1.5 billion, while around P1.6 billion worth of investments were from investment projects that relocated from China in late 2019. Some of the initiatives being promoted to foreign investors are the following: expansion of business, engaging with target companies, and developing digital marketing initiatives.
The ERC has re-adjusted guidelines on the settling of bill payments for power utilities especially for poor households in areas under lockdown. An advisory is to be issued on the extension of the moratorium period to 6 months for households that consume 200 kilowatts per hour a month. For areas under MECQ, the four-month suspension of bill payments remain. Additionally, Senate Bill No. 1473 known as the "Three-Gives Law" is currently being tackled, where provisions are given for a moratorium period on the payment of electricity, water, and telephone bills when an area is placed under a state of calamity.
Finance Secretary Carlos Dominguez III has been pushing for the approval of the PESA bill as well as the accompanying Financial Institutions Strategic Transfer (FIST) bill for he deems it both urgent for the Philippine economy. The FIST bill transfers a bank's bad loans to an asset management company (AMC) to keep the bank's balance sheets healthy. Along with these, Sec. Dominguez has also pushed for the urgent passing of the CREATE bill, another component of the country's plans to stimulate the economy post-COVID-19.
Sec. Dominguez urges for the passing of the CREATE bill, one of the largest economic stimulus programs of the country, before Congress adjourns in order for it to get started by July this year. This bill, which cuts CIT down to 25% in an instant and continues to do so by 1% until 2023, can free up P42 billion pesos in business capitals in 2020 alone; and up to P625 billion in the next 5 years. Dominguez ensures that implementing this will attract foreign investors to the country to diversify their supply chains which will be beneficial for our economy. Further, he assures that current investors will continue to enjoy their incentives in the short-medium term.
The government has expressed its openness to more public-private partnerships (PPP) for infrastructure building; and this is seen as the answer to the government's limited funds for massive infrastructure projects. According to the PPP Center, there is still a need to carefully assess which areas the private sector can contribute best while still balancing the risks they can absorb given their current unstable condition. PPPs with regards to infrastructure will hopefully help the economy recover in the second half of the year.
A shift to a digital economy through financial technology players (fintechs) was recommended by BSP Governor Benjamin Diokno to boost services for MSMEs who have become most vulnerable because of the COVID-19 pandemic. According to him, fintechs can offer digital solutions to MSMEs, who make up 99% of total businesses in the country, and even bring the government's lending programs to the public. Fintech players can also help achieve the BSP's target of 50% of transactions being done digitally and having 70% of Filipinos included in the formal financial system.
Companies that rely on face-to-face interactions between service providers and consumers, like food services, tourism-related industries, and outpatient healthcare, are highly likely to be more negatively affected by physical distancing measures as compared to other sectors. Further, some of these firms offer non-essential services which makes them even more vulnerable given that consumers will probably making these purchases. It was also seen that people avoid availing of these services due to a fear of infection. A credible signaling instrument, that ensures consumers are safe from infection, could mitigate this fear but it may not be enough; government assistance is ultimately needed for this.
A warning against unchecked price controls and "rescue mergers" was specified by the Philippine Competition Commission (PCC) for this could encourage less competition among companies during the COVID-19 pandemic. They warn that the government must use price control with caution since these may deter the entry of other firms to produce more goods that may be essential. Consequently, there is a high risk of price or output fixing where prices are higher and outputs are lower if these measures are continued in the long-term. The PCC also mentioned that the government's policy measures like subsidies and bailouts must be based on objective criteria and transparent rules to avoid distorted markets.
Finance Secretary Carlos Dominguez III has urged the Senate to pass the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE), formerly the CITIRA, which is one of the largest economic stimulus packages in Philippine History. This act decreases the corporate income tax from 30% to 25% in July the sooner it is passed. Dominguez states that this measure will free up around P42 billion in business capital for the year, and P625 billion in the next five years to be used by companies to recover from the pandemic. Further, this tax cut sends a message to foreign investors that the Philippines is a viable option for their supply chains.
Poor families had to shell out more money despite a lot of them losing their jobs because of the faster food price inflation in April. According to the PSA, the inflation rate for the bottom 30% income households went up by 2.9% in April, the highest it has been in 10 months. This increase in prices was mainly because of the disruptions in supply chains given the lockdown measures in place to contain COVID-19.
Despite the decrease in tax collection due to the extension of payment deadline, Finance Secretary Carlos G. Dominguez III assured the public that there will be no implementation of new taxes. In line with this, the payment for income tax has been moved four times and is now set for June 14. With the quarantine measures in place, halting the operations of many businesses, VAT and excise tax collections are also expected to decrease. Spending for infrastructure in 2020 is also projected to decrease to P725.1 billion, which is lower than their initial projection.
The "Digital Economy Taxation Act", which imposes a 12% VAT on digital advertisements, internet-based subscriptions, and transactions made on e-commerce platforms has been filed by Rep. Salceda. This includes transactions done through popular apps like Grab, Angkas, and other services that link customers and providers; "network orchestrators" for leasing services like Airbnb; e-commerce platforms like Lazada and Shopee; digital advertising on Google and Facebook; and subscription services like Spotify and Netflix. Should this measure be implemented, there is an estimated P29.1 billion in annual revenues for the government.
The Department of Trade and Industry is studying tariff measures when it comes to imported products to boost government revenues. Currently, a survey is being conducted to determine what the costs are for suppliers abroad and local manufacturers, not specifying which goods are considered. The guideline being worked towards will enjoin the contractors who won the contract for the Build, Build, Build program of the government to prioritize locally made products or inputs. An estimated P6.78 billion in revenues is estimated from the increased import duty in 2020.
Guidelines have been set for bus operations once Metro Manila is placed under GCQ. All buses are to operate at 50% capacity only where all commuters, conductors, and drivers are required to wear face masks. Conductors are required to check the temperature of all passengers, not allowing those who would go above 38 degrees centigrade. For contact tracing, all passengers are also required to accomplish a form where they state their name and contact number. A total of 4,600 slots will be opened for buses to operate in 31 rationalized routes across Metro Manila.
According to an economic adviser to President Duterte, combining both PCR tests and rapid tests is best for the nation to manage the pandemic as lockdown measures ease. By utilizing both types of tests, it was mentioned that the government will be able to achieve their goal of 30,000 daily tests and will be able to test both those who show symptoms and don't. Lastly, it was mentioned that it is highly likely that Metro Manila will move to general quarantine by June 1 with more efforts towards testing being put in place.
After reviewing their forecasts for the country for 2020 and 2021, the International Monetary Fund (IMF) stated that the impacts of COVID-19 to the economy is larger than expected. The IMF warns that the adverse effects of the pandemic will be most felt in the 2nd quarter data for the Philippines given the lockdown measures in place. They also warn that export demand, especially for tourism and remittances will remain weak. However, it was also mentioned that the country's macroeconomic fundamentals have remained strong, and this provides the cushion the country needs to propel the economy back to life slowly. The IMF's updated growth forecast for the Philippines is to be expected in late June.
In the case of a resurgence of COVID-19, Benjamin Diokno from the BSP said that there will be a 'W-shaped' recovery which would be worse than the revised forecasts for contraction in the Philippine economy. The 'W-shape' means that after the economy recovers, it will suffer another sharp drop before full recovery. Other economists from leading banks in the country also mentioned how detrimental a 'W-shape' recovery will be to the Philippine economy, stating a slower recovery and the need for more fiscal and stimulus measures to address it. Further, this second wave could affect the country until 2023. To avoid this threat, it is suggested for the government to put a premium on the healthcare sector.
The 30-day deferral for residential and commercial rents should still be applied to areas under MECQ and GCQ, not just areas under ECQ, according to the DTI. This grace period is applied to MSMEs; the cumulative rent due within quarantine can be paid over a six-month installment after the lifting of the lockdown. For lessors who do not follow this grace period, there is a threat of imprisonment of at least 2 months and/or a fine of at least 10,000. As for spaces in malls, according to the Philippine Retailers Association, there is no singular policy implemented for all malls - with some slashing rent prices in half or charging it based on percentage of sales.
SB Corp, the financing arm of DTI, has started to accept loans for micro and small enterprises who have assets of up to P15 million and are in areas under GCQ. Micro enterprises with assets that do not exceed P3 million may borrow between P10,000 - P200,000 while the others may borrow up to P500,000. Loan interest rates are at 0.5% and have a grace period of six months for its principal payments. Interested applicants can go to the SB Corp. office or Negosyo Centers in GCQ areas.
Presidential Spokesman Harry Roque has clarified that the government is aiming to conduct "targeted testing" - which tests 1.5-2% of the country's population for COVID-19. For wider reach of testing as well as building more laboratories, Roque states that the government has been in a partnership with the private sector to achieve their goals. The root of the testing problem is the supply of testing kits, not the lack of funding, according to Roque. He also specified that President Duterte has authorized the use of antibody testing which is both cheaper and faster as compared to PCR testing.
The Philippine Economic Stimulus Act (PESA) has already made it past committee level according to a senior legislator. The PESA consists of 10 House bills that aim to help the Philippine economy recover from the effects of COVID-19. Aside from mass testing, the PESA also puts forward economic interventions classified into transitional, financial, sectoral, and structural actions. Transitional intervention is to be implemented immediately once lockdown is lifted and is primarily concerned with preventing permanent damage to the country's economy. Financial intervention focuses on improving the economic performance of the country as a whole. Sectoral intervention are relief measures for those most affected by the pandemic - the MSMEs, tourism sector, and agriculture sector. Finally, the structural intervention aims to strengthen the resiliency of all businesses in the country.
The Department of Health has released guidelines on coming back to work under modified quarantines. Generally, the guidelines mentioned ensures that employees who go to work are healthy and that their workspaces are kept sanitized. Workers who are symptomatic and have been exposed to the virus are not allowed to return to work and need to seek advice from their company's care provider. Meanwhile, those who have experienced symptoms in the last 14 days must present a certification of quarantine completion. Employers may choose to test a representative sample of their workers; where the PhilHealth only covers PCR tests and the company covers the rapid antibody tests.
According to the Asian Development Bank (ADB), the Philippines could potentially lose $12.9 to $23.9 billion, depending on how long the government can contain the virus in the country. Globally, it has been forecasted that the economy might suffer $5.8 to $8.8 trillion losses because of the effects of the pandemic. In comparison to the rest of the ASEAN, the Philippines is the fourth hardest-hit country — following Indonesia, Thailand, and Singapore for most losses. According to the Chief Economist at ADB, containing the virus is the key to lessening the negative impacts of the pandemic.
Micro, small, and medium enterprises (MSMEs) who have made up a majority of the business establishments in the Philippines are at risk of shutting down due to the circumstances that surround the COVID-19 pandemic. Mainly, a lot of these MSMEs lack traditional banking relationships, making it difficult for them to receive financial assistance from those who offer it. Others specified that they simply haven't received the benefits the government has promised to give them. Some of the measures that have been proposed or are currently being done to help MSMEs include the waiving of rental fees and payments to government agencies like SSS, and ease in borrowing money from banks as advised by the BSP. MSMEs are encouraged to utilize technology so that they could continue to operate despite the challenging circumstances and to adjust to the "new normal".
After a 90% congestion in April, yard utilization in both the Manila International Container Port and the Port of Manila fell by 48.84% and 66% respectively. However, the Bureau of Customs (BoC) explained that the overall utilization may be low, but the utilization with regards to essential goods is high. According to preliminary data, the collection of BoC declined by 31% in the first half of April - bringing the year-to-date total to P160.98 billion, below last year's collection. The budget deficit is forecasted to increase to 8.1% of GDP this year until eventually easing to 5% in 2022.
As of May 12, the government has provided the Small Business Wage Subsidy to 2.1 million workers, releasing a total of P16.4 billion of the entire P25.5 billion budget for the first tranche. This subsidy is given to employees of small businesses affected by the lockdown and ranges from P5000-P8000. Overall, 86% of the targeted beneficiaries had their applications approved thus, can expect their subsidies; however, payouts through both SSS and MLhuillier branches will have to be claimed by June 10 or else these are forfeited. The second tranche of payments is to be expected from May 16-30.
According to NEDA, the unemployment rate in the Philippines is highly likely to reach a double digit based on the surveys conducted so far. It was specified that the Philippine Statistics Authority will release the official data on June 5. To address this concern, the government has allotted P200-billion for a cash-aid program and P51 billion on wage subsidies for those affected. They remain hopeful that the economy would recover slowly by the second half of the year - given that quarantine measures are slowly easing, allowing more businesses to operate again, and that the government has a recovery plan that includes a time-bound, equity infusion to firms who need it.
A second wave of COVID-19 infections must be expected now that the lockdown has relaxed in certain areas of the country. To lessen the effects of this, measures to be followed have been released which includes the conversion to work from home arrangements, monitoring the health of those who have to go to the workplace, and check for travel history or exposure to the virus. Additionally, it was specified that employers who choose to test their employees for the virus can do so in a "representative sample" of those back to work or those who are at high-risk of getting infected.
According to Presidential Spokesperson Harry Roque, the government leaves the efforts for mass testing to the private sector. The government previously issued a "progressive" COVID-19 testing program, however these only tests those who are highly likely to be infected by the virus. According to them, PCR tests are the best tests to execute for these will actually detect the presence of the virus in the swab samples. The government is aiming to conduct 30,000 tests a day until the end of May despite not being able to meet its goal of 8,000 tests per day in April. Further, the country's 30 testing laboratories can only process 14,500 samples per day, which is barely half of the target number of tests to be executed.
Agriculture Committee Meeting - 18 May 2020 (Please use photo here)
Agriculture Committee members held a virtual meeting earlier today to exchange insights on the impact of COVID-19 on Philippine agriculture and programs of the Department of Agriculture to assist stakeholders. The meeting also featured a presentation of the government’s economic stimulus package. Members expressed support of the government’s thrust towards food security during the pandemic and also identified areas of improvement to fully achieve its overall development objectives in the sector.
Please be informed that the Department of Tourism (DOT) Central Office, Regional Office National Capital Region (NCR), and Regional Office IV-B are implementing a “Work from Home” work arrangement starting 16 March 2020 until further notice. For any immediate or urgent concern, you email the following:
|Administration and Finance||Office of the Undersecretary for Administration and Financefirstname.lastname@example.org|
|Budget and Accounting Concerns||Office of the Assistant Secretary for Administration and Financeemail@example.com|
|Biddings, Procurement/Purchasing, General Services, Maintenance, Motorpool/Vehicle, Cash Section, Property, and Supply Concerns||Office of the Director for Administrative Service and Procurement Managementfirstname.lastname@example.org|
|HR Concerns||Human Resource Divisionemail@example.com|
|Contract preparation and other concerns||Legal Affairs Servicefirstname.lastname@example.org; email@example.com|
|Work and Financial Plans (WFP) concerns (for internal stakeholders)||Planning Servicefirstname.lastname@example.org; email@example.com|
|For Product and Market Development Concerns (Overseas travel and trade fairs, business/selling missions, concerns on Cruises, English as Second Language courses/schools, Dive Resorts/Programs, Medical and Health Tourism)||Office of Product and Market Developmentfirstname.lastname@example.org email@example.com firstname.lastname@example.org|
PRESCRIBING IMPLEMENTING GUIDELINES FOR IATF RESOLUTION NO. 12 ISSUED BY THE INTER-AGENCY TASK FORCE FOR THE MANAGEMENT OF EMERGING INFECTIOUS DISEASES ON SOCIAL DISTANCING AND BUSINESS OPERATIONS | Click here to download Source: Department of Trade and Industry | Infographics: ECCP
TRACK COVID-19 CASES IN THE PHILIPPINES THROUGH DEPARTMENT OF HEALTH'S NCOVTRACKER | Click here
Source: Department of Trade and Industry | Infographics: ECCP