Bernardo M. Villegas
Articles  >> more topics
What Lies Ahead After COVID-19 (Part 2)

          How many households are there in the Philippines today?  A quick calculation can be based on the estimated total population of the Philippines today which is 110 million people.  At about 5 persons per household, that would yield a total of 22 million households.  That is why I question the oft-quoted number of households that are purported to  be the beneficiaries of the Bayanhihan to Heal as One Act .  Again and again there is reference to 18 million households who are the poor to be targeted for subsidies of five to eight thousand pesos per household.  There must have been a mistake since there are only 22 million households in the country  The poorest of the poor could not possibly include  18 million families.  It is possible that someone was thinking of 18 million individuals who fall below the poverty line (since the poverty incidence has dropped to 16.1% by 2019, 16.1% of 110 million is close to 18 million individuals). Using the data from the PIDS study cited above, of the 22 million households in 2020, 22% or 4.8 million are poor; 37 % or 8.1 million are low-income but not poor; 26% or 5.8 million are low-middle-income; 10% or 2.2 million are mid-middle income; 4% or 880,000 are upper middle income and the remaining 1% or 220,000 are the upper income and rich households.

       To put some flesh into the figures cited above, those who are really poor or fall below the poverty line are landless farm workers, coconut farmers, sustenance fisher folks, many informal settlers in urban centers, and indigenous people.  These might not have been directly affected by the lockdown. They have been the target of the Conditional Cash Transfer Program that has been in place for more than five years. Those who belong to the next two categories, i.e. low income but not poor and the low-middle-income are usually the micro entrepreneurs, sari-sari store owners, tricycle and cab drivers, service workers, construction workers, hospitality workers, and restaurant workers.  These are the ones most adversely affected by the lockdown and must be given an opportunity to be employed again as soon as possible. We cannot endanger the future lives of 13.9 million households or some 70 million individuals because of our inability to assume a calculated risk that we may reignite infection by the Coronavirus  if we introduce, not a total lockdown but a “modified community quarantine

       The calculated risk of new outbreaks of the Coronavirus can be significantly mitigated if we follow the advice given by the different groups advocating for a modified quarantine in place of a total lockdown.  For example, the Foundation for Economic Freedom has suggested the following measures:

         -Make social distancing and the use of masks while in public mandatory.

         -Allow public transport but with disinfection measures before and after every trip. 

         -Remove checkpoints between LGUs and allow free movement of all goods, with disinfection before and after every trip

         -Prohibit car sharing except of passengers from the same origin.

         -Encourage work-from-home arrangements and staggered working hours.

         -Sustain  hard lockdown for certain barangays or neighbourhoods  verified as COVID-19 hotspots.

         -Continue the quarantine of seniors and immune-compromised individuals

         -Continue the ban on mass gatherings, such as classes and public events ( I personally would allow religious services as long as every one wears a

       mask and a minimum of social distancing is still maintained.  My reason is that for most Filipinos, prayer performed in religious ceremonies is still

       an effective weapon to fight pandemics, in addition to the human means).

         -Allow factories and offices to reopen but continue the ban on congregations (other than religious)  of more than ten.

         -Stagger working hours when appropriate.

         -Allow the operation of essential stores  like hardware stores, supermarkets, restaurants,  groceries and the like.

         Given these measures to be implemented after April 30 or whenever the Government decides to replace the total lockdown with a modified quarantine, I foresee the gradual recovery of economic activity in most of the consumer-oriented industries, both products and services, with the exception of travel and tourism that can be expected to normalise at the earliest  in 2021.   Agribusiness (defined as the whole supply chain from farming to post-harvest to storage to wholesale to manufacturing to retail) will be the first to recover because of the large domestic market for food which has enjoyed high demand even during the worst period of the total lockdown. The removal of checkpoints from one LGU to another will resolve the logistics problem faced in the first weeks of the lockdown.  The surge in take-outs from restaurants and other food retail outlets partly compensated for the prohibition of dine-ins in restaurants.  There have been large increases in sales in the supermarkets and public markets, especially of fresh vegetables and fruits as well as a variety of canned goods, many of which were also bought in bulk by LGUs and other government agencies for distribution to the poorest households.  In fact, the U.P. economists strongly recommended that the LGUs take the lead in targeting and distributing food and other basic items while the National Government should manage the supply chain and bulk procurement.  At least from the Consumption Expenditures side, food and beverage—together with medicine and health-related products—can be expected to grow at above-average rates even during the second and third quarters of 2020.  Food and beverage account for over 30 per cent of total manufacturing output in the Philippines.  If we consider that agriculture accounts for some 20 percent of total GDP, the leading role of agribusiness during the COVIDd-19 crisis augurs well for a quick recovery once things normalise.

         Leading export products  of the Philippines, especially to our East Asian neighbours like China, Japan and South Korea, come from the plantation sector, especially of bananas and pineapples from Mindanao.  Both on the supply side and on the demand side, there have no serious obstacles to continuing the export of these commodities.  There is no problem with social distancing among the workers in these plantations, since each farm worker is responsible for a hectare of farming.  Thankfully, there have been no weather-related calamities during the ECQ to disrupt the supply.  It is also fortunate that the first ones to recover from the pandemic are our largest buyers of bananas and pineapples, i.e. China, South Korea and Japan.  The only fly in the ointment was the unreasonable interference of some LGU units in Mindanao who obstructed the free movement of trucks from the farms to the ports.  That is why we must give the highest importance to the recommendation of the various business groups to dismantle the checkpoints that some LGUs put up that disrupt the transport of food products, not only in Mindanao but especially in Luzon.  Not infrequently, these checkpoints have also been the occasion for corruption.

         Part of the food business is obviously the largest of the Micro, Small and Medium-Scale Enterprises (MSME) sector which consists of restaurants and other food retail outlets.  A group of entrepreneurs organised  BounceBackPH.  In a recent teleconference, the restauranteurs of the group came out with what they would like to see from the various stakeholders of the restaurant business.  They would like their insurance companies to honour business interruption coverage.  They expect the government to channel part of the subsidy to MSME enterprises for tax breaks and direct financial support, especially to cover the salaries of the restaurant workers during the lockdown.  From the malls in which they operate, they expect clear guidance and assistance (variable scheme and security deposit).  On their part, the restaurant operators commit to rethinking and redesigning the restaurant concept to incorporate social distancing.  They intend to gain the confidence of their customers by adopting the appropriate safety protocols.  Location planning may result in more outdoor and open areas.  They are considering “cloud kitchens” which involve shared kitchen space.  They will redefine their business model, identifying new revenue streams, replacing dining in with delivery of their products to final consumers.  These new business models could result in a  significant increase in turnover.  They may require the reconfiguration of the kitchen. Most importantly, the industry must build credibility on health and safety.  Given these organised forms of preparing for the new normal in the restaurant business, it is highly recommended that the modified quarantine after April 30, 2020 should include the partial opening, even of dining in, of restaurants that can comply with safety protocols, which may include, among others,  temperature check, obligatory wearing of masks when not dining and social distancing. To be continued.