Now that we are adapting to the “next normal” as required by the COVID-19 pandemic, assessing the opportunities for our economy to recover is imperative. However, there are many challenges to surmount in our bid to recover and move forward from the pandemic.
In the recent COVID-19 Response Report by the Oxford Business Group and their research partner, Reyes Tacondong & Co., the Philippines and Malaysia were projected to have the strongest economic rebounds in the ASEAN come 2021, each moving forward with a 6.50% GDP growth. This is all the more encouraging, as while Malaysia is projected to suffer a 5% drop in its GDP this 2020, thanks to the pandemic, the Philippines is currently projected to have a 7.3% drop in the same time frame.
The report also shows data that Filipinos are currently embracing online spending and digital payment services: digital transaction users are projected to rise from 38.9 million to 53.6 million by 2024. In fact, the Philippines is expected to perform better than the global average in certain metrics. For example, according to a survey the report cites, up to 70 percent of Filipino respondents expect to continue using digital payment platforms after the pandemic—slightly higher than the average of 68 percent. Meanwhile up to 73 percent of respondents said that they will most likely increase or sustain their current level of online shopping—where the global average is 72 percent. Interestingly, despite these figures, only 42 percent of Filipino respondents said they prefer paying with cashless methods, compared to the global average of 59 percent.
Meanwhile, the Asian Development Bank also released in July the results of their enterprise survey concerning the impact of COVID-19 on the Philippine economy. The survey was conducted from April 28 to May 15, and spanned 2,481 enterprises, 92.4% of which were MSMEs. Two-two thirds of the businesses surveyed closed temporarily due to the quarantine, with the remaining 29% having reduced operations. Of those still in operation, 78% operated at half capacity or less, while only 4% had full operational strength.
When it came to liquidity, one-third of the respondents had already exhausted their monetary resources when the survey was done; another third expected to be in the same situation in about three months after. Wages and social security payments for employees was the biggest payment issue for 37% of the enterprises. Of the surveyed enterprises, 57% supported the idea of a government wage subsidy, followed by deferment on tax payments (52%), and then low-interest or subsidized loans (36%). Only 14% of the enterprises sold products or services online.
Based on the survey, a three-phase process was suggested for economic recovery. The first phase is relief and support; access to financing and wage subsidies should be made easier, businesses should be assisted in setting up online platforms, and tax filing deferrals should be considered. The second phase is for re-opening and bounce-back initiatives; aside from continuing first-phase actions, easing mobility restrictions for those who cannot work from home, and support for companies that emphasize local employment should be prioritized. The third phase is for recovery programs and policies; this is where debt restructuring, digitization, online business transaction services, technological advancements, and the reskilling and upskilling of the workforce come into play.
All these papers and reports point out that contrary to what some people may think, the aftermath of the COVID-19 pandemic is one that offers many opportunities for our country not only to recover, but also to improve in terms of global economic standing. At the same time, though, they also show that we must address many issues so our country’s economic recovery will take off sooner, rather than later.
We have already seen a glimpse of how an economy with digital transactions and online services and platforms looks like, thanks to the need for social distancing. Now that we are coming out the other side of this turning point in world history, it is up to us to take the right and proper steps to a better future.
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Senator Sonny Angara has been in public service for 16 years—9 years as Representative of the Lone District of Aurora, and 7 as Senator. He has authored and sponsored more than 200 laws. He is currently serving his second term in the Senate.