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.