50% of capacity not enough to pay for rent, utilities, salaries

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The Philippine Chamber of Commerce and Industry (PCCI), the country’s largest business organization, has strongly urged the government to open businesses to full capacity, stressing that prolonged lockdown is doing more harm to the economy and lives than the dreaded coronavirus disease (COVID-19).

“Government needs to be more sensible and rational in its decision on the lockdowns,” PCCI president Ambassador Benedicto Yujuico said in a strongly worded statement.

The Duterte administration, through the Department of Trade and Industry (DTI), has already opened up 95 percent of businesses but at limited capacities.

For instance, dine-in restaurants and salons and barbershops in areas under General Community Quarantine (GCQ) are only allowed up to 50 percent capacity.

“You cannot open a business and limit it to only 30 percent-50 percent because they will only lose money and would rather close; you cannot tell a restaurant to open 50 percent because 50 percent is not enough to pay the rent, utilities, and employees; you cannot tell a manufacturing company to operate at below capacity and still require it to provide accommodation and/or shuttle services for its workers; and you cannot open businesses, even at phases, without allowing public transportation,” Yujuico explained.

Earlier, Albay Rep. Joey Sarte Salceda, an economist-congressman, called the extended lockdowns in the country "OA" or overacting.

Presidential Adviser for Entrepreneurship Joey Concepcion has also advocated against lockdowns but urged for mass rapid testing to ensure visibility that the government is in control of the health issue because only then that consumer confidence is restored.

The Philippines has the record of having the longest lockdowns globally, longer than Wuhan, the epicenter of the coronavirus disease.

Even then, the Philippines COVID cases have been climbing and transmission has no sign of easing and has alsready topped 70,000 as of July 21.

“The almost five months of lockdowns have put more firms at greater risks of permanent closure,” Yujuico said, observing that even the most optimistic projections could fail if the lockdowns will continue for even a month or two more.

Allow full operation

Instead of continuing lockdowns, PCCI said government should start allowing the full operation of businesses and corresponding services to enable the economy to recover and avoid falling into a situation where it may be impossible for business and livelihoods to survive. In the first quarter of the year alone, Yujuico pointed out that the country’s gross domestic product (GDP) already contracted by 0.2 percent.

While some economic activity continued under the enhanced community quarantine (ECQ), data emerging for the second quarter show industrial production falling to a record low of 43.6 percent in April, followed by 40.3 percent year-on-year in May. Exports and imports plunged at more than 50 percent.

Meanwhile, there has been an exodus of returning overseas Filipino workers.

“Obviously, we don’t need economists to tell us there could be faster slide and steeper decline in GDP during the second quarter when economic activity was reduced to a minimum. Extending the lockdown further could already spell disaster for the country,” Yujuico said.

Yujuico pointed out with a sense of urgency that it is no longer a choice between health and the economy because it is not just jobs and livelihood at stake.

“Business closures mean drop in taxes and budgetary income, putting at risk the sustainability of public finances and the ability to fund public services, including health and education,” Yujuico explained.

Yujuico noted the alarming figures raised by its members following a series of dialogues with PCCI’s local chambers from Mindanao and North and South Luzon.

More than 50 percent have closed down and of those remaining in operation, employment is down to 25-30 percent.

The most badly hit are areas that rely on tourism and the services industries, and those which mostly host MSMEs.

For instance, PCCI’s members in Palawan (El Nido and Puerto Princesa) report that more than 800 hotels and tourism businesses have closed.

PCCI Taytay, which members rely on the garments industry operated mostly by micro-enterprises, reported that over 8,000 businesses have ceased to operate and only some 1,000 are in limited operation.

While its members in Mindanao appear to be less affected, understandably because many are in agriculture, the situation is no less difficult because of the limited mobility of workers and even cargoes.

Members in the three areas report that even with border passes, authorized persons outside residence (APOR) have had difficulty going to their places of work that are outside their localities because of strict health and safety protocols and quarantine measures, and the lack of public transportation.

Preventing spread of COVID-19

There is a way to fully reopen the economy and prevent the spread of COVID-19, Yujuico said. He cited European countries, Vietnam, Thailand, Taiwan, and South Korea which reopened their economies while relying on social distancing, widespread testing, a network of contract tracing to identify and contain new outbreaks, and lockdown on specific communities with COVID-19 cases.

“These countries are not only seeing economic recovery, but have likewise contained the spread of the virus,” he said.

Yujuico further said that businesses have a good understanding of COVID-19 and are smart enough to decide whether they should and can operate at full capacity, and employers and employees to act with more responsibility in practicing social distancing, wearing of mask, and observing basic hygiene.

While many of PCCI’s members are optimistic, they have said that the lockdowns should be eased and full economy activity will resume soonest to allow them to recover.

“Prolonging the lockdown could harm the country’s long-term economic future and social stability with people out of jobs and families out of money to put food on the table,” he said.

Ease travel restrictions

To open the economy, PCCI known as the voice of Philippine business had earlier urged government to ease business travel restrictions, citing its adverse impact on micro enterprises.

PCCI urged the Inter-Agency Task Force on Emerging Infectious Diseases (IATF) and the Cabinet Economic Cluster to heed the petition of the Air Carriers Association of the Philippines (ACAP) to gradually phase out the quota for international passenger arrival, resume scheduled international flights for business travel, allow selected local air travel, explore the possibility of entering into bilateral arrangements with selected countries to fast track processing of non-leisure travels, and re-open select tourist destinations in the country to international tourism.

In explaining their support, Yujuico said, “A status quo could prove fatal not only to the airline operators but to airline suppliers and the whole air transport supply reliant on continuing to deliver new equipment and supplying spare parts and maintenance services, as well as enterprises, a number of which are small and medium-sized enterprises (SMEs) that provision each flight – manufacturers and/or suppliers of food products, cutlery, sanitary paper, water, blankets, cleaning and maintenance services, etc. These SME suppliers of goods and services are dependent on the operation of the aircrafts to remain in business.”

Yujuico said it may be instructive for the IATF to ease restrictions on business travelers subject to health, safety and documentary protocols and other considerations.

“We understand a sufficient number of testing and quarantine facilities have been set up in international airports. At the same time, the IATF-EID is also looking at allowing passengers to take their COVID-19 test abroad one to two days before their departure. As an active member of the Confederation of Asia-Pacific Chambers of Commerce and Industry (CACCI) and the International Chamber of Commerce (ICC), PCCI can assist in the proposal to secure a letter of invitation to establish the nature of travel of business people,” Yujuico explained.

To support the continued operation of local airlines, PCCI endorsed the proposal of ACAP for the IATF to extend a preferential policy for Philippine carriers undertaking direct or connecting flights in international airports in the country in the allocation of quota for non-leisure travelers.

“This Philippine air carriers-first allocation should be extended to foreign business travelers once restriction on business travel is lifted,” Yujuico added.

Yujuico pointed out that in considering health and safety in the resumption of economic activities, it is in the aviation industry that the implementation and monitoring of protocols is simplest and most straightforward simply because the movement of travelers and even workers is easy to monitor – from the purchase of tickets to the passengers’ entry into airports, embarkation and disembarkation from the aircraft to leaving the airport.

The aviation industry is among the hardest hit by the more than three months of various stages of community quarantines declared all over the country.

The International Air Transport Association (IATA) has estimated the combined losses of Philippine carriers and tourism at US$ 4.48 billion, with job losses potentially reaching 548,300 this year alone.

Already, the Philippine Airlines, Cebu Pacific, and AirAsia Philippines have laid off an estimated 760 workers, a figure that reflects only those that are directly working with these airlines.