House panel OKs stimulus package

A House panel yesterday approved the proposed P1.3-trillion economic stimulus measure to address the impact of the coronavirus disease 2019 (COVID-19) crisis.

The Defeat COVID-19 Committee (DCC) passed on first reading the substitute bill for the proposed Philippine Economic Stimulus Act (PESA) prepared by the economic stimulus sub-committee.

In a virtual hearing, members of the panel led by Majority Leader Martin Romualdez approved the consolidated version of 10 PESA bills by proponents led by Albay Rep. Joey Salceda and Marikina Rep. Stella Quimbo.

“We have to jumpstart our economic activities while keeping our people healthy, the soonest time possible to ensure our survival as a nation,” Romualdez said.

The Leyte representative said the chamber is set to take up this bill in the plenary this week for second reading.

Panel members voted to approve the committee report following just about 30 minutes of discussions and clarifications and after 250 House members or 83 percent of the plenary signed up for authorship.

In the plenary, the PESA bill is expected to be consolidated with House Bill 6709, or the proposed COVID-19 Unemployment Reduction Economic Stimulus (CURES) Act filed by Speaker Alan Peter Cayetano and other House leaders that sets a P1.5trillion stimulus program.

The House is expected to pass the economic stimulus measure before Congress adjourns sine die on June 3.

The CURES bill seeks the allocation of

P500 billion for three years starting this year until 2022 for programs anchored on infrastructure spending and job creations, especially in provinces, to address the impact of the community quarantine measures implemented by the government to combat the disease.

On the other hand, the PESA bill seeks to provide P155 billion this year to a wage subsidy program for workers of private companies affected by the crisis, particularly by the two-month lockdown and cash for work and student loan programs.

Through the Department of Labor and Employment, the wage subsidy program would cover payroll costs of non-essential companies severely affected by the quarantine period through wage subsidies with a range of 25 percent to 75 percent from two months.

The bill also seeks an allocation of P140 billion this year for a zero and negative interest loan program to be implemented by the Land Bank of the Philippines and Development Bank of the Philippines, as well as loans for micro, small and medium enterprises through the Small Business Corp. and Philippine Guarantee Corp.

Companies will be given a maximum loan amount equivalent to 50 percent of their labor costs payable in three to five years.

Salceda explained that the loan program would offer a negative interest package as a condition for companies to retain workforces.

“Our negative interest loan proposal is an incentive to retain employees and sustain the size of a firm’s operation. The negative interest benefit serves essentially as the government’s co-pay for whatever investment the firm will make,” the House ways and means committee chairman explained.

Under the proposed negative interest loan program, it will be the LandBank and DBP that would pay the borrower to access credit by seeking a payment that is lower than the amount lent.

But Salceda assured that the loans would be off-balance-sheet, which means they will not affect the overall financial position of LBP and DBP.

“We believe that a negative interest rate loan is a fiscally viable economic stimulus program primarily because while it fulfills a liquidity-expanding function, most of its upfront costs are recoverable, and the only real net fiscal cost to government will be loan administration costs and the negative-interest benefit,” he explained.

On the other hand, P238 billion would be allotted this year for sectoral assistance programs for specific industries to be implemented by the Department of Trade and Industry, Department of Tourism, Board of Investments and Department of Transportation.

Lastly, a P50-billion fund would also be appropriated for capitalization to be implemented by the National Development Corp.

The PESA bill also seeks the appropriation of P650 billion to enhance the administration’s Build Build Build program in period of three years starting in 2021.

The enhanced BBB is expected to create 1.5 billion jobs.

The PESA bill also covers funding of P20 billion for mass testing nationwide.

Quimbo cited the importance of mass testing in reopening the economy after the community quarantine measures.

“The lockdown costs P18 billion per day. We’re on lockdown because we don’t know who’s carrying the virus. That’s why mass testing is very crucial. The benefits of mass testing outweighs its cost. Bottomline is we will lose bigger money if we don’t do it,” the economist - lawmaker stressed.

PESA would also encourage banks and other nonbank financial institutions under the supervision of the Bangko Sentral ng Pilipinas (BSP) to extend the term or agree to the restructuring of existing consumer loans and commercial loans of nonessential businesses.

The measure would also “facilitate the registration of micro, small and medium enterprises plus startups (MSMEs+) by mandating the Bureau of Internal Revenue (BIR) to waive registration and other related fees of MSMEs+ for a certain period, and the secretary of trade and industry to provide special accommodation for MSME+.”

The Department of Trade and Industry (DTI) is supporting the speedy passage of PESA to help businesses get back on their feet and allow the economy to recover from the adverse impact of COVID-19.

“We affirm the need to help sustain the income of workers and businesses adversely impacted by the pandemic as we gradually reopen our economy,” Trade Secretary Ramon Lopez said yesterday.

“By providing working capital assistance, technical and entrepreneurial education, and financial management, among others, we will be able to protect Filipinos by ensuring businesses will continue operating post-lockdown and help turn the tide for businesses and workers affected by the health crisis,” he added.

Lopez is pushing for the PESA as many businesses have incurred losses amid challenges faced during the lockdown imposed by government to curb the spread of the virus.

While the quarantine restrictions are gradually being lifted and more businesses are being allowed to resume operations, he said enterprises would be operating at lower capacities due to limited capital resources.

Businesses would also need working capital loans as they have to implement strict health measures as a condition to be allowed to operate.