Reopening: PH Economy On The Mend Special Report Part 2
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MONDAY, OCTOBER 25, 2021 extrastory2000@gmail.com
Green shoots emerge in PH as vaccination rate picks up
REEN shoots are beginning to emerge despite the lingering risks posed by the COVID-19 pandemic to the global economy and people’s health. The sustained strength of the manufacturing sector, manageable inflation and unemployment rate, stable banking system, continued investors’ confidence and resilient remittances from overseas Filipino workers are some of the positive indicators that economic managers are trying to highlight in their reports. The gross domestic product began to rebound in the second quarter this year, when it expanded 11.8 percent, although Bangko Sentral ng Pilipinas Governor Benjamin Diokno said he saw green shoots of economic recovery “as early as the third quarter last year.” MANUFACTURING AND EXPORTS Latest data from the Philippine Statistics Authority showed that the manufacturing sector posted a three-digit rate of increase both in terms of volume and value in August. The volume of production index grew 534.6 percent, after dropping -82.2 percent at the height of strictest lockdowns in August last year. The value of production index also showed an annual increment of 523.3 percent in August. The proportion of establishments that operated at full capacity (90 percent to 100 percent) was 22.2 percent of the total number of responding establishments. Meanwhile, 36.6 percent operated at 70 to 89 percent capacity, while 41.2 percent operated below 70-percent capacity. Meanwhile, merchandise imports jumped 30.8 percent in August to $10.04 billion from a year ago, and exports increased 17.6 percent to $6.47 billion. The growth in imports reflected improved supply and demand conditions as the economy gradually recovered from the COVID-induced recession last year. Data showed that from January to August, imports reached $74.18 billion, up by 31.1 percent from $56.59 billion in the same period last year. Export earnings in the first eight months reached $48.93 billion, up by 19.6 percent from a year ago. JOBLESS RATE If not for the stricter quarantines imposed in August in Metro Manila and adjacent provinces to contain the spread of the more virulent Delta variant, unemployment rate could have been lower in the same month. Unemployment rate in August increased to a four-month high of 8.1 percent from 6.9 percent in July. The unemployment rate in August was still lower than those reported in January, February and April this year but was higher than the rates in March 2021 (7.1 percent) May and June 2021 (7.7 percent), and in July 2021 (6.9 percent). The total number of unemployed persons in August was estimated at 3.88 million individuals 15 years old and over. Economic managers said in a joint statement that the increase in jobless rate in August was expected, “given the stricter quarantine imposed to curb the spread of the delta variant.” ING Bank Manila senior economist Nicholas Mapa said the September labor market figures should look relatively similar to the August figures with a slight improvement.
“We could see unemployment dip while underemployment will likely rise with mobility curbs and the overall downbeat economic outlook capping labor hours and wages,” Mapa said. EASING INFLATION Inflation in September slightly eased to 4.8 percent from 4.9 percent in August, on lower annual increases in transport and food prices. The latest print was contrary to projections of some analysts that the annual increases in consumer prices for the month might breach the 5-percent level. But the September inflation was still faster than 2.3 percent a year ago. This brought the average inflation from January to September to 4.5 percent, above the target range of 2 percent to 4 percent for the year. Food inflation decreased to 6.5 percent in September from 6.9 percent in August, on slower inflation rates in rice, fish and meat. Rice inflation recorded zero growth, following the issuance of Executive Order No. 135. Likewise, fish inflation decelerated to 10.2 percent from 12.4 percent. In an online media briefing, BSP Department of Economic Research managing director Zeno Ronald Abenoja said inflation was expected to return within the target range in the last two months of the year after posting higher numbers in the previous months. STABLE BANKING SYSTEM Local banks remain stable amid the COVID-19 crisis and in a strong position to service the financing requirements of the recovering economy, Diokno said in an online briefing. The positive performance of the Philippine banking system is evidenced by sustained growth in its assets, deposits and capital as well as ample capital and liquidity buffers and loan loss reserves, said Diokno. Based on end-July 2021 preliminary data, banks’ total assets grew by 5.4 percent year-on-year to P19.8 trillion. Bank assets were primarily in the form of loans (52.6 percent) and portfolio
investments (26.6 percent). Funding was sourced largely from deposits, which grew by 7.2 percent to P15.4 trillion, indicating the public’s continued trust and confidence in the banking system. As of end-July 2021, total loans declined by a slower rate of 0.4 percent year-on-year to P10.8 trillion as of end-July 2021 compared to the 5.0 percent decline a year ago. “Credit activity is expected to improve in the coming months amid the accommodative policy stance of the BSP, the national government’s accelerated vaccination program, as well as implementation of safety measures and granular lockdowns in the National Capital Region,” Diokno said. INVESTORS’ CONFIDENCE Net inflows of foreign direct investments jumped 52 percent in July to $1.3 billion from $831 million a year ago, as the country remained attractive to investors despite the health crisis. This brought the cumulative FDI net inflows in the first seven months to $5.6 billion, up by 43.1 percent from $3.9-billion net inflow in the first seven months of 2020. This was mainly on account of the 78.7-percent expansion in non-residents’ net investments in debt instruments to $3.9 billion from $2.2 billion.
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Reopening: PH Economy On The Mend Special Report Part 2
extrastory2000@gmail.com
Economic reopening allows firms to absorb more workers By Othel V. Campos
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MID a slow and painful journey to recovery, the government is optimistic about building back what it lost to the health crisis and regain pre-pandemic levels in the coming months.
The adoption of alert level system, initially in Metro Manila and then in other parts of the country, is expected to encourage more businesses to reopen and rehire workers. Trade Secretary Ramon Lopez said the remaining 800,000 displaced workers may soon return to work with the reopening of the provincial economies placed under alert levels 2 and 3. Metro Manila, which recently graduated from alert level 4, was allowed to reopen economic activities that require physical contact such as massage parlors, spas, nail salons, beauty salons, barbershops and cosmetic/aesthetic procedures. Dine-in establishments are also allowed to operate at up to 30 percent for indoor dining and 50 percent for outdoor dining. “If the area is over 70-percent vaccinated, then there’s an additional 20 percentage points more,” said Lopez. For fitness studios, gyms and venues for individual non-contact exercise and sports, clients and crews are required to wear mask at all times while group activities are still prohibited. In-person religious gatherings for necrological services, wakes, inurnment and funerals have also been allowed. Other permitted activities are venues for social events like par-
ties, wedding receptions, engagement parties, wedding anniversaries, debut, birthday parties, family reunions and bridal or baby showers; meetings, incentives, conferences and exhibitions; visitor and tourist attractions like libraries, museums, galleries, exhibits, parks, plazas, public gardens and scenic viewpoints; amusement or theme parks; recreational venues like internet cafes, billiard halls, arcades, bowling alleys, skating rinks, archery halls and swimming pools. Creative activities like film, music and TV production subject to the joint guidelines as maybe issued by the Department of Trade, Department of Labor and Employment, and Department to Health as well as cinemas and movie houses are all permitted activities. The government also allowed licensure examinations and entrance or qualifying exams to resume. CONTINUOUS OPERATIONS “Now businesses are guaranteed of continuity to operate. Outdoor activities are open for both vaccinated
and unvaccinated patrons, but only vaccinated clients are allowed for indoor activities like in the gyms and indoor dining. Establishment workers are required to be vaccinated, whether the business activity is indoor or outdoor,” Lopez said. “The only remaining activities that are yet to be reopened are those involving kids’ amusement, karaoke and other forms of entertainment. Practically all establishments are opened,” he said. More than the opening of businesses, the youth may start going back to physical classes as the government initiates the preliminaries to pilot face-to-face classes in selected schools and colleges. Based on the updates released by the Inter-Agency Task Force on Emerging Infectious Diseases, more than 1,500 children aged 12 and up have been vaccinated. This signals the start of phased face-to-phase interaction in schools in areas where 70 percent of the population have received COVID-19 immunization. The IATF said some 6 million doses of COVID-19 vaccines are bound
to arrive within the fourth quarter, adding to the 90.4 million doses that arrived in the Philippines. Vaccination in NCR already hit 70 percent. SAFETY SEAL In its latest announcement, the DTI said business establishments with safety seal will be granted an increase of 10 percentage points in operational or venue capacity. The latest directive is contained in the “Supplemental Guidelines Relative to the Implementing Guidelines of the Safety Seal Certification Program” signed by different agencies. Lopez said the increase in allowable occupancy was meant to encourage businesses to apply for the safety seal and strengthen health protocols in establishments and workplaces. “This seal is one of the government’s measures to restart the economy under the new normal and increase employment opportunities by making the reopening of business more viable for operation,” he said. Local government units’ contact tracing applications will be considered in lieu of the StaySafe.PH while DILG is working on the integration of StaySafe.PH with other contract tracing applications. DILG Secretary Eduardo Año said that in the absence of the StaySafe. ph digital contact tracing application for those establishments or offices applying for the Safety Seal Certification, the LGU-mandated applications they are currently using will be considered. “The DILG is in the process of integrating the StaySafe.ph application with other existing applications initiated by the local government units to effectively contain the spread of COVID-19,” Año Said. The supplemental guidelines also designated DOLE and LGUs as the
issuing authority for the safety seal for information technology and business process management and for dental clinics. In addition, the supplemental guidelines require establishments and workplaces to designate safety officers who will be in-charge of enforcing public health standards in their areas. “Our safety officers play a key role in boosting the overall economic productivity of our firms. When workers are assured of their safety and health at their respective workplaces, work quality and productivity are also enhanced,” said Labor Secretary Silvestre Bello III. Safety officers who have not yet undergone the required occupational safety and health training may avail of the free OSH training offered at DOLE or at any DOLE-accredited training organizations. The safety seal of tourism-oriented businesses and venues, on top of the DOT accreditation, strengthens the government’s effort to revive the tourism industry, one of the hardesthit sectors during the pandemic, said Tourism Secretary Berna RomuloPuyat. “These new guidelines in the Safety Seal certification program heighten the confidence of the public to patronize compliant tourist-oriented establishments while ensuring the health and safety of everyone concerned,” Secretary Puyat added. The supplemental guidelines also list some health protocols such as the promotion of proper disposal of face masks through signages in designated facilities. Proprietors of airconditioned indoor establishments and workplaces are also encouraged to procure carbon dioxide detectors to better monitor the adequacy of ventilation.
Sustainable recovery hinges on critical government response ACCELERATING the COVID-19 vaccination rollout, subsidizing booster shots, managing risks better and implementing the economic recovery program will all help the Philippine economy bounce back from the devastating impact of the pandemic. Economic Planning Secretary Karl Kendrick Chua said even though economic growth contracted in the second quarter last year to as low as 17 percent at the height of the strictest quarantines to curb the further spread of the virus, it gradually recovered and posted an 11.8-percent expansion in the second quarter this year. Chua added while prospects for the country’s economic recovery remain promising, its sustainability depends on the actions the government takes in dealing with the virus. “We can get back up to 4 to 5 percent growth this year and 7 to 9 percent next year by doing three important things,” Chua said in an online briefing in Malacañang. “First is accelerating the vaccination program. By next month (October), this will be opened to the general population and will also include teenagers ages 12 years old and up. This is the most important thing we need to do as soon as the [vaccine] supply comes in. We have seen that our vaccine rollout has been fast,
reaching half a million per day at its peak,” Chua said. The second strategy is better risk management and the safe reopening of the economy. It involves lowering the age restrictions for those allowed to go out to enable more family activities, allowing limited face-to-face schooling in low-risk areas and imposing granular lockdowns in areas with higher risk. Chua said the final strategy is implementing the economic recovery program that includes the timely use of the 2021 budget by addressing the gaps in education, health and human capital development. Finance Secretary Carlos Dominguez III believes the government must subsidize COVID-19 booster shots for the entire population in the long run for the economy to recover faster from the five-quarter technical recession it experienced since the first quarter of 2020. Dominguez said giving booster shots to those fully vaccinated is an investment in Filipino people’s health. “... Without booster shots, I don’t think the economy can safely open. If we don’t have booster shots, we will have ups and downs in our economic recovery program. So it is really mandatory that we provide vaccines,” Dominguez said. He said booster shots might get
Economic Planning Secretary Karl Kendrick Chua
regular budget allocation from the government. “I cannot say beyond 2022, but I am sure that the succeeding administration will keep that in mind that these vaccines are really insurance and a necessary input now into the economy,” he said. Early this month, Dominguez said the government was was planning to borrow around P45.3 billion ($900 million) from multilateral agencies—Asian Development Bank, the Asian Infrastructure Investment Bank and the World Bank—to fund the purchase of booster shots against the COVID-19 virus.
Dominguez cited an allocation of P45.3 billion for the procurement of COVID-19 vaccine booster shots under unprogrammed appropriations in the national government’s 2022 National Expenditure Program. “The NTF, DOH and DoF have initially identified multilateral and bilateral financial institutions as possible sources of funding for this allocation,” Dominguez said. “In fact, exploratory discussions with the Asian Development Bank, the Asian Infrastructure Investment Bank and the World Bank have been initiated to help determine possible funding sources for additional vaccine requirements in 2022,” he said. “We expect to execute loan agreements towards the end of the year,” Dominguez said. Government data showed that foreign financing to fund its COVID-19 response efforts already hit $22.51 billion (equivalent to more than P1.1 trillion). COST OF PANDEMIC The pandemic has taken a great toll on the Philippine economy. Chua said the estimated long-run total cost of the COVID-19 pandemic and quarantines for present and future generations of Filipinos is estimated at P41.4 trillion. Over the past six months, he said the National Economic and
Development Authority NEDA, with assistance from its development partners and attached agencies, has been estimating the total cost of COVID-19 and the quarantines. The present and future costs are estimated at P41.4 trillion in net present value terms. “Broken down, in 2020, we lost P4.3 trillion; in the next 10 to 40 years, we estimate that we will lose up to P37 trillion,” Chua said. Chua said consumption and investments were likely to be lower in the next 10 years due to the reduced demand in sectors that require social distancing, such as tourism, restaurants, and public transportation. Consequently, tax revenues will be lower if businesses cannot operate at 100 percent. According to him, the estimated total loss due to lower consumption is P4.5 trillion. Meanwhile, the loss in private investment and returns in the same period is around P21.3 trillion. “We expect the economy to converge to the pre-pandemic growth path by the tenth year. While we will recover to the pre-pandemic level by the end of 2022 or early 2023, it will take several more years before we converge to our original growth path,” Chua said.
Reopening: PH Economy On The Mend Special Report Part 2
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MONDAY, OCTOBER 25, 2021 extrastory2000@gmail.com
PH economy now ready for full reopening despite virus By Othel V. Campos
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FULL-SCALE reopening of the the economy while battling the pandemic at the same time is the right formula for recovery.
A worker in personal protective equipment sprays disenfectant. Inset shows workers placing signage to block off seats inside a cinema in Manila ahead of the reopening of movie houses following a sharp fall in the daily number of coronavirus infections and increased vaccinations. AFP
Macro-economic fundamentals provide shield THE Philippine economy is far from collapsing despite the onslaught of COVID-19. The past restrictive lockdown measures may have taken away millions of Filipino jobs and shut down many establishments, but they have not made a dent on the economy so far. Economic activities admittedly have considerably slowed down in some sectors, especially in tourism, retail and personal services. The poverty level obviously has worsened because of the number of jobless persons, and yet the overall economy is functioning and nowhere near a crisis level. Bangko Sentral ng Pilipinas Governor Benjamin Diokno assured financial services group and global investment bank Nomura of Japan that the macro-economic fundamentals of the Philippines had remained intact and that this Southeast Asian nation was poised for a strong economic recovery in the post-COVID-19 era.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno
Macro-economic fundamentals are a summary of the country’s economic health. They serve as guide to investors, creditor banks and traders doing business in the Philippines. A runaway inflation and volatile exchange rate, for instance, will discourage investors and watchers of the Philippine economy because it will impact on production cost and borrowing rate and, ultimately, on
one’s return on revenue. The gross international reserves of the Philippines stood at $108.05 billion at the end of August, or higher than the foreign debt of $97 billion as of end March. The healthy level of international reserves stabilizes the exchange rate and shields the Philippine economy from a potential foreign exchange crisis. Solid macro-economic fundamentals such as higher international reserves, flexible exchange rate, low inflation and interest rates, and a stable banking system provide a conducive business environment that, in turn, create jobs and attract both local and foreign investments. The same solid macro-economic fundamentals will ensure recovery in the long-term period and the post-COVID era, and help keep the economic effects of the pandemic temporary. The economy bounced back with an 11.8-percent expansion in the second quarter and will likely overcome bumps in the road.
Businessmen believe the Philippine economy will fully recover and grow if the government allows a 100-percent operational capacity to key economic sectors, such as retail and services. The Employers Confederation of the Philippines, thus, has called for the full-blast reopening of all business toward the tailend of the last quarter. “Even before, and that was last year, there was a consensus to live with the virus. This consensus is even more pronounced today, now that we have the vaccines, and with the aggressive vaccination efforts and us maintaining the minimum health protocol,” said ECOP president Sergio Ortiz-Luis. He said with 70 percent of the population in Metro Manila now vaccinated, it is more logical to allow full-blast reopening so that the business community, especially the micro companies, may “start their own tales of recovery.” Many micro enterprises, for one, have been anticipating the rollout of loans to tide them over their responsibility to provide the mandatory bonus for workers. ECOP recently met with the Department of Labor to discuss the extent of the special loan program, how many micro firms will be allowed to avail of the credit assistance and the possible requirements these firms may need to qualify for the facility. Small Business Corp., the financing arm of the Department of Trade and Industry will start accepting applications starting November 2, 2021. The company is preparing loan packages of about P50,000 to P200,000 for micro and small enterprises “Similar to what we did last year, we see no reason to defer the 13th month pay for this year as the government stands ready to support businesses amid the pandemic. We already reached out to SBCorp to develop a facility that will provide zero-interest loans to companies needing 13th month funding,” said DTI Secretary Ramon Lopez. The DTI in 2020 lent out funds from SBCorp.’s CAREs program to help micro and small enterprises provide the 13th month pay of their workers. The CAREs program aims to assist enterprises affected by the pandemic. The funding comes from an P8-billion allocation from the Bayanihan Recover As One Act (Bayanihan 2). In addition to the DTI’s continued rollout of the COVID-19 Assistance to Restart Enterprises (CARES) Program, Lopez said a more sustainable solution for businesses would be the reopening of more activities, even on Alert Levels 4 and 3. “The idea here is that we allow more business continuity and simply adjust operating capacities at different Alert Levels to safely increase mobility,” Lopez said. Employers, meanwhile, reminded the government that safe business continuity was possible if workers are given access to a reliable and safe transport system. “Why not bring back the pre-pandemic flow of public transport. If we want our employees to come to the office or to our stores, shops or restaurants, I believe they have a right to decent access to transportation. But the government should be able not only to address transportation issues but ensure that the long queues in passenger terminals will not start another super spreader event,” Ortiz-Luis said. “We hope that the government will stop all these experiments on lockdown measures, transportation schemes and on all types of COVID responses,” he added.
Tourism sees recovery as gov’t lifts ban on interzonal travel THE easing of travel restrictions is one of the most encouraging developments that could help revive the tourism sector, according to Tourism Secretary Berna Romulo-Puyat. Tourism stakeholders were the most impacted sector amid the pandemic. Total losses in the sector reportedly exceeded P200 billion, including revenue losses of airlines and hotels. Puyat said that under alert level 3, eligible individuals can now travel more easily to local destinations that have reopened. “We welcome the opportunities that this new scheme allows for tourism, especially on traveling to areas with ample outdoor space, fresh air and minimal crowds. Specifically, the IATF has decided to permit interzonal leisure travel for children and fully-vaccinated seniors following a proposal from the Department of Tourism that those who are below
18 years old, as well as those above 65 years of age may now take trips on a point-to-point basis to GCQ or MGCQ areas as long as they are fully vaccinated, subject to the guidelines of the DOT and the regulations of the concerned LGUs,” she said. Puyat said the DOT ramped up efforts to vaccinate A1 and A4 tourism workers, particularly in major tourism destinations, both as a preventive measure and as a way to boost travelers’ confidence. In the NCR, 99 percent of the tourism workers employed in hotels across Metro Manila, were already fully vaccinated. Nationwide, vaccination rate in the tourism sector reached 65.53 percent. This represented about 276,262 fully-vaccinated tourism workers as of Oct. 15. Vaccination in key destinations is also picking up. Vaccination rate among tourism workers in Coron,
reached 91.22 percent; followed by Boracay, with 90.62 percent; and Bohol, 76.73 percent. Other destinations like San Vicente, Palawan and Baguio City reported vaccination rate of 100 percent among target tourism workers. Tourism initiatives “We have also put attention to building other domestic tourism initiatives that would hasten the recovery of the industry. Among the key undertakings by our regional offices are the recalibration of our current offerings and the creation of new products and tourism circuits,” said Puyat. Beginning 2020, the DOT identified 44 tourism circuits around the country, including cross and bike trails, heritage tours and historical caravans. About 71 more circuits are in the pipeline for development. These are awhat the travelers want during the new normal, Puyat said.
On the promotion of safe tourism, the DOT issued guidelines on the operation of tourism enterprises. The agency noted a rise in tourism accreditation applications since the pandemic began. From 9,942 accredited tourism enterprises in 2019, there are now 11,868 accredited facilities, representing an increase of 25 percent. Accredited businesses comply with safety standards, raising consumer or traveler confidence in the process. Local tourism establishments can also show that they have met global health and safety standards through the use of the World Travel and Tourism Council Safe travels. The WTTC gave the DOT the authority to issue this stamp to eligible stakeholders. By displaying the safe travel stamp, establishments can help rebuild confidence among travelers. Three premier destinations already
received the stamp—Baguio City, Boracay Island and Ilocos Norte. Another positive development for stakeholders involved in food and beverage operation is the IATF decision to expand the seating capacity of restaurants in the National Capital Region. “To keep the momentum going, we will continue our push for vaccination, the promotion of safe domestic travels, the creation of new or updated guidelines when necessary and the development of tourism products and circuits that reflect the changing preferences of the ‘new normal, traveler,” Puyat said. “The DOT advocates that travel and tourism can be safe, but fun, even during the pandemic, and that as a major pillar of the Philippine economy and a provider of millions of jobs, we will continue to find possible ways for tourism operations to resume across the country,” she said.