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Philippines: Lockdown may result in closure of MSMEs
MANILA, Philippines — Micro, small and medium enterprises (MSMEs) may be left with no choice but to permanently shut down business should the government reimpose lockdowns to address the recent surge in COVID-19 cases, the country’s largest tourism network has cautioned.
The Tourism Congress of the Philippines (TCP) said reintroducing enhanced community quarantine (ECQ) this summer could drive tourism enterprises out of business.
TCP president Jose Clemente III said the travel sector can no longer afford a return to lockdown similar to what was imposed in April and May of last year.
“If another ECQ is declared for the summer, it may prove to be catastrophic for a number of the stakeholders in the industry,” Clemente told The STAR.
“Most of us basically suspended operations for the past year and had no revenues. Domestic tourism has helped to a certain extent, but that’s enough,” Clemente said.
If the government finds it necessary to reimpose ECQ in selected areas to contain the spread of the virus, Clemente said it should adjust the guidelines in accessing the loan program instituted by the second Bayanihan to Recover as One Act.
According to Clemente, MSMEs in the sector want to receive the highest possible amount they can get from the government’s credit facility. However, most of them procure just about half of the maximum allowable loan due to the criteria set by the Small Business (SB) Corp.
“Another ECQ will mean the end for some stakeholders, not unless the guidelines for financial assistance provided by Bayanihan 2 to the industry are modified to enable more stakeholders to avail of it or get the appropriate amount needed to survive,” Clemente said.
The Bayanihan 2 allocated P10 billion to finance recovery efforts for tourism, of which P6 billion was directed to loans for MSMEs. The program, handled by SB Corp., extends zero interest, no collateral loans to MSMEs in tourism, payable for up to four years.
Based on the financial statement filed with SB Corp., medium enterprises can avail loans of not more than P1 million, while small and micro enterprises can obtain a maximum of P500,000 and P200,000, respectively.
In most scenarios, the borrowing MSME only gets half of the loan ceiling, Clemente said. Proof to this, he said the program has a utilization rate of just five percent as of last week, citing records from the SB Corp.
Clemente asked the government to loosen the guidelines for the loan program to entice MSMEs to borrow, especially that they will need funding in the event of a return to lockdown.
He said MSMEs in the sector also hesitate to borrow from SB Corp. on uncertainties brought about by the travel restrictions in place. As much as they need extra capital, they doubt they can generate the income to pay for the loan with the slowdown in travel activities.
The Department of Trade and Industry on Friday ordered museums, cultural centers and tourist attractions in areas under general community quarantine, including Metro Manila, to cease their operations until April 4.
Venues where business gatherings are held were instructed to scale down capacity to 30 percent, while restaurants and cafes were also directed to reduce operations to 50 percent.
The order was issued as the government is struggling to combat the recent spike in COVID-19 cases nationwide.
The Philippines on Saturday recorded 7,999 new infections to register its highest daily increase since the COVID-19 pandemic started last year.
Source: https://www.philstar.com/business/2021/03/22/2085971/lockdown-may-result-closure-msmes