If nothing else, save our negociantes

In a dialogue with the Philippine STAR, Presidential Spokesman Harry Roque said in the vernacular, “we have come to a point where it is the people, not the government, who will make the decisions on what will happen to our lives and our country in as far as the spread of the Wuhan virus is concerned. Individuals and communities should accept responsibility for the outcomes, not solely the government.”

The statements made by Malacañang says a lot about its state of mind.

This statement tells me four things: One, that Malacañang realizes that its militaristic prescription is not working as envisaged. That despite imposing the harshest quarantine on the planet, it failed to flatten the infection curve, and worse, it needlessly destroyed many parts of the economy. Two, that Malacañang is washing its hands of responsibility for the catastrophe. Three, that it is positioning to blame the people for the consequences of its policies. Four, that government is on the cusp of giving up and is preparing to pass the responsibility to the people.

Malacañang handled this pandemic with a heavy hand and made numerous uninformed decisions along the way. It was the Palace that decided not to impose a travel ban on Chinese tourists earlier this year, including those originating from Wuhan. It was the Palace who said, last March, that mass testing was not needed. It was the Palace who panicked when its community quarantine imposed last March 12 caused mass confusion and as a knee-jerk reaction, decided to impose a militaristic ECQ. It was the Palace who dilly-dallied on contact tracing and only started doing it in earnest in mid-April. It was the Palace who insists on retaining Sec. Duque as head of the IATF despite his incompetence. All these, taken collectively, are the reasons why it is losing the COVID war.

Make no mistake, the bad decisions of the IATF, duly approved by the President, put us in this unfavorable position today. This is why it is grossly unfair for Malacañang to wash its hands of this mess. Instead of passing responsibility to the people, it should do the adult thing and admit its mistake, shift strategies and mitigate the damage. What do I mean by “unfavorable position”? Despite assurances that the economy is strong, truth is, the full impact of government’s harsh quarantine is still unraveling. We still don’t know the extent of the damage.

It will be recalled that in the early days of the ECQ, the Department of Finance announced that the economy could still eke-out growth of .08%. A month later, it adjusted its forecast to a contraction of -3.4. Last week, Moody’s Analytics said that the economy will likely contract more acutely at -4.5%. Many economists believe the contraction will go as deep as seven percent due to the spillover of the quarantine to the third quarter.

Government hopes for a V-shaped recovery but this is impossible now as the very backbone of the economy, our negociantes, are closing shop by the thousands.

We are past the stage of trying to avoid business downsizing to save jobs. Businesses have already downsized and more than five million Filipinos have been consigned to unemployment. For most, the name of the game is to stave-off permanent closure.

Just because Bayanihan 1 provided two-month relief from rent, amortization and interest doesn’t mean that our negociantes are out of the woods. Remember, Bayanihan 1 only offered a deferment of obligations, not a subsidy.

Now that the period of protection of Bayanihan 1 has lapsed, past obligations have caught up. Bills are piling and local companies are unable to generate enough sales to meet their obligations due to the continued quarantine. The combination of low sales and mounting bills are driving many businesses to bankruptcies. These days, insolvencies are no longer confined to the micro and small level, even medium and large scale businesses are falling on the wayside.

With local companies closing left and right, there will be fewer businesses able to re-hire the five million unemployed when conditions improve. Our recovery will be longer and slower and this will prolong the hunger, anguish and desperation of our people. This is why saving our negociantes should be the priority of government at this juncture. If they are allowed to die as collateral damage of this war, the entire economy will die along with it in a domino fashion.

Although government appropriated billions in liquidity for businesses in distress, it mistakenly relegated the disbursement of these loans to the banking system. Problem is, banks lend selectively and shy away from SMEs and high-risk industries – the very sectors that need financial assistance most. They grant the lion’s share of available funds to the conglomerates, particularly those who owe them billions. It serves the bank’s best interest to keep these conglomerates alive.

Like I said, the adult thing to do is to admit that the present strategy is not working and change course. From the point of view of businessmen, these are what needs to be done:

Intensify contact tracing so that lockdowns can be confined to barangays only, not whole regions. Metro Manila, Calabarzon and Central Luzon, which constitute two-thirds of the economy, should be opened up for commerce immediately. Financial lifelines should be extended to our negociantes. The Land Bank and DBP should be the disbursing banks with relaxed loan requirements. Businesses should not be assessed based on their financial performance in 2020 nor the industry they belong to. Banks must be made to accept corporate assets (whatever they may be) as collateral, not just real estate.

We are a consumer-driven economy for which the majority of businesses are involved in dry goods retail, food retail and touristic activities. Severe policies that curb consumption must be relaxed (e.g. 26 degree airconditioning in malls). The citizenry must be trusted to practice social distancing. This is the policy successfully adopted in Japan and the EU.

While domestic and international travel was recently permitted, the two-week quarantine upon arrival serves as a disincentive. Tourism-related establishments need their lifeline badly so travel must be allowed without the quarantine caveat. Again, citizens must be trusted to practice social distancing.

Corporate income tax reduction and carry-over of net losses for five years offered by the CREATE Law will be a big relief. Congress must pass CREATE.

Sorry to say but the act of washing hands, after all the damage wrought to the economy, is an indication of failure in leadership. If government is really passing the responsibility to the people, the least it can do is save our negociantes first.