In this critical moment of our history, it is crucial that we support the President’s call for unity and cooperation. Both the public and private sector are doing their best to combat the spread of the coronavirus disease 2019 or COVID-19 and help our countrymen.
Aid from other countries is pouring in, a sign that “bayanihan” is practiced across the globe. Our private sector also continues to produce food and other essentials that are needed by our people. Our greatest challenge is still ahead of us, this includes getting the workers back to the plants and their office.
What concerns me most is the state of our micro, small, and medium enterprises (MSMEs) as not all financial institutions are able to lend the additional funding required for them to bounce back. No collection is being asked, but additional lending becomes a problem as fear sets in and self-preservation dictates decisions.
Since the imposition of the enhanced community quarantine, we have seen immediate action especially on the economic front. There’s been improvement, because Trade Secretary Ramon Lopez and many others are getting the essential sectors to operate.
The entire world economy is being affected. Cities around the globe are on lockdown; even exports and BPOs are affected. The government should focus on getting the production of essential goods back on track and in operation. In my mind, anybody that has a market should be allowed to operate, and why is that? We are seeing that consumers, not only in the Philippines, need essential items.
While some companies have deferred payments for the time being – offering great relief for some – MSMEs are getting hurt at this point, because they are exposed.
One problem is that re-lending has stopped, especially to microfinance institutions (MFIs). Bigger banks are becoming more careful, from the thrift banks to the rural banks, down to the MFIs. Everybody is holding back in fear of their ability to survive the crisis.
The emergency power that was granted to the President is a good sign. Finance Secretary Sonny Dominguez has made the right judgement so far, as seen from his previous works as well as the credit rating of the country. He may be able to realign the budget and focus it towards those people who are at the bottom of the pyramid – our micro, small entrepreneurs, and all our Filipino workers who have been laid off. They will need the help to buy food and medicine.
That is a good thing, and moving forward, I think the greatest challenge is how do we get the money flowing again? The longer businesses don’t operate, the longer they will bleed money – paying salaries, rent and the like. We have to stop the bleeding.
Some employees are covered by their emergency, sick, and vacation leaves, but contractual workers are exposed. I don’t think they have one month; maybe two weeks at the most. Few would be lucky to have enough to tide them over for one month, so this is the sector that is really challenged. The ones greatly hit by this crisis are the working class and the micro and small businesses.
I’m certain that banks are going to restructure the loans and work out something beyond 30-days, because people will not be able to pay. More than just restructuring the loans, they will have to provide additional lending, because businesses need money to refinance their working capital for the four-week loss. This crisis is not going to end in four weeks. Its effects will be felt for months.
We are past the first week of lockdown and the second week is critical. I think we will see the number of confirmed cases increase to 1,500. Because of the lack of testing facilities and kits, the numbers are not clear.
On a positive note, once more comprehensive data is provided and we get a clearer picture of the situation, we can strategize better and regain confidence. This is why I am a firm advocate of getting more testing done. We’ve seen countries that were able to challenge the virus by ramping up testing capacity quickly. I urge Health Secretary Francisco Duque III to consider testing kits that deliver faster results.
After four weeks, we should look at the possibility of a partial lockdown, not a full lockdown. We can still suspend the public transportation system, but we should allow manufacturing companies to operate, provided that they have testing done on their people, and that they have a market. Jobs will be back if manufacturing can come back.
We will need a huge stimulus package as well, and the government is working out the details of this. The Finance Secretary has probably planned this as part of its second phase. The first phase entails making sure that the people have enough food to eat. Now, we are challenged on how to revive the economy, and that entails massive lending. Even the big corporations who are in the airline industry, tourism, real estate and retail, all of them are affected. The big rescue, for me, is the future stimulus plan, and that is where the executive branch will have to make the decision of when is the right timing.
Right now, the focus is on quarantine, but the longer we keep businesses on hold - two months to three months down the line - the economy will further dive. We have to find the right balance. We have to have clear visibility. Interior Secretary Eduardo Año believes that we have to test all barangays and see at what level the virus is at, and from that strategize a plan.
We have to be vigilant in our war against the virus, but we must also move forward to ensure that the economy stays afloat, so that people are able to eat, buy medicine, and survive.