Two industry groups – aerospace and chemicals – have called for the inclusion of the manufacturing in the Bayanihan to Recover as One or Bayanihan 2 economic stimulus stressing that doing so will mitigate the economic recession and reinvigorate the economy through revitalizing consumption and enhancing production capacity.
Aerospace Industries Association of the Philippines (AIAP) and Samahan sa Pilipinas ng mga Industriya Kimika (SPIK) have submitted their position papers in support of the proposals of the Department of Trade and Industry to include the manufacturing and construction sectors in the Bayanihan 2.
Photo credit: https://www.spik.com.ph
In the case of the AIAP, their letter addressed to Senator Juan Edgardo "Sonny" Manalang Angara and Rep. Lray Villafuerte has proposed that the Bayanihan 2 bicameral committee considers the grant of incentives to investors, moratorium on loan payments and for mandating government procurement to prioritize locally produced products over imported ones.
“We at the Aerospace Industries Association of the Philippines support the Bayanihan 2 and hopefully be given the immediate attention to mitigate the economic recession and reinvigorate the economy through revitalizing consumption and enhancing production capacity. It will surely help a lot of aerospace industries that are badly affected by the pandemic,” stated a letter signed by AIAP President Dennis Chan.
In particular, AIAP cited the proposed joint venture between Land Bank of the Philippines and Development Bank of the Philippines to invest or enter into a joint venture agreement to incorporate a special holding company, to be known as Accelerating Recovery to Intensify Solidarity and Equity Inc or ARISE Inc. that is a stock corporation to be organized under Republic Act No 11232 otherwise known as The Revised Corporation Code of the Philippines within 6 months beginning from the date of effectivity of the rules and regulations of this Section, or effectivity of applicable revenue regulations, whichever is later, subject to the following:
Under the proposal, the purpose of ARISE, Inc. is to assist strategically important companies affected by COVID19 pandemic to address solvency issues, such as those with considerable impact on the economy including companies from the agriculture, infrastructure, service and manufacturing industries and other industries to be identified in the implementing rules and regulations.
AIAP cited this provision as critical for the recovery of the airline industry stressing that “As of now, most airline associated supply chain are greatly affected and this provision can maintain and sustain the industry so it will be able to get back on track if there is a need for government to be part of that company to ensure the survival of certain companies deemed strategic.”
AIAP also said that the provision to grant 365-day loan payment moratorium to businesses will certainly help the sector in order for the industry to be given time for the market to return. Principals of loans extension of 1 year can alleviate a lot of cash flow problems most companies are facing now. There is a need for a clear and understanding to implement this since most right now are in a critical situation.
The group noted that other ASEAN countries like Thailand has initiated a one year extension of all loan principals thereby reducing all the documentation needed and for the companies to be sustainable when the businesses affected are reduction from 40 percent to 90 percent of the business.
AIAP further cited the proposal to encouraging the Bangko Sentral ng Pilipinas and Securities and Exchange Commission to adopt measures, including the relaxation of regulatory and statutory restrictions and requirements for a period of not more than 10 years from their date of effectivity to encourage the banking industry and other financial institutions to extend loans and other forms of financial accommodation to help business recover from the economic effects of COVID19 crisis and to enable the banking industry to manage appropriately its risks and potential losses.
“It will surely help companies in ensuring that their obligations are given 10 years to help businesses recover. The period hopefully is ample time for the solution for a vaccine and return to the skies,” said AIAP.
Meantime, SPIK Executive Director Jeffrey G. Mijares said in a letter to DTI Secretary Ramon M. Lopez that “the inclusion of the Manufacturing Sector and the Construction Industry in the funding allocations provided for in the consolidated bill that will be deliberated on by the Bicameral Committee of the Philippine Congress.”
Other DTI recommendations for the bicam committee include domestic preference for government purchases, subject to availability of price competitive products of internationally-accepted and certified quality standards. This will cover, among other Personal Protective Equipment (PPE) and other Health-related products; BUILD, BUILD, BUILD and other Infrastructure projects of the National and Local Governments; Modernization of PUVs and making them COVID-ready; and, modernizing and expanding telecommunication infrastructure to better support Blended Learning and Work-from-Home (WFH) arrangements.
The DTI also calls for the granting of incentives for those deepening the domestic value chain, including development of agri-industry and large corporation-MSME supply-network linkages; and adoption of Inclusive Business models such as but not limited to sourcing from MSMEs and marginalized communities.
The DTI has also proposed the relaxation of the nationality requirement for foreign investments under Executive Order 226 or the Omnibus Investments Code for companies relocating to the country during this pandemic period and its effects.
It also urged to liberalize the use of satellite services for those facilitating shift to work from home arrangements of enterprises; and for those servicing Blended Learning requirements of educational institutions, and enhance the incentives for businesses locating or relocating to areas outside of the National Capital Region.
In addition, the DTI has urged to facilitate land conversion and liberalize requirements for Export Zone proclamations for industrial and service facilities directly employing more than 500 people and located near (e.g. 1km) a toll road or a BUILD, BUILD, BUILD Project, or a project that is duly-approved by the NEDA ICC; provided further that all incremental taxes (excluding import duties) collected from such activities.
Aerospace Industries Association of the Philippines projects, for next 10 years from conversion, will be allocated solely for Agricultural modernization programs to be implemented by the Department of Agriculture (DA).
Additional income tax incentives should be granted to companies that do not retrench workers was also pushed by the DTI.
Moreover, government-owned Export / Freeport / Industrial zones are empowered to provide reprieve from lease payments to locators which have not laid-off 90 percent of their workers.
To enable the industrial sectors to better respond and adapt to COVID-19, the DTI would like to
propose a modest (P5 million) budget allocation to support investors’ COVID-19 testing.
The DTI has also proposed to direct the Small Business Corporation to expand its existing loan programs for micro small and medium enterprises.