June 5, 2020 | 12:30-1:30pm via Zoom

 

Colleagues in government, friends from the media, fellow countrymen, good afternoon.

 

Recent developments

Today, the Philippine Statistics Authority (PSA) released the latest data on three economic indicators: consumer price inflation, manufacturing performance, and the employment statistics.

The May 2020 inflation of 2.1 percent shows that prices have remained low and stable.  A number of reasons explain this. These include the continued implementation of the Rice Tariffication Law, which has brought down the price of rice by around 10 pesos per kilo from the 2018 peak.  In fact, rice inflation in May was negative 2.7 percent.

Moreover, efforts of the government to improve the supply chain of essential goods, notably food, during the ECQ also helped significantly. The price freeze order to make sure that no unscrupulous trader would take advantage of the crisis also contributed to low inflation.

In all these, it was not the government that made this happen. Producers worked hard to supply goods continuously despite initial challenges, businesses supported the price freeze order, and consumers cooperated and purchased only what they needed. This is the kind of whole-nation-approach that will help the country recover faster.

Manufacturing and employment numbers are also reported today. Not surprisingly, both figures show the impact of the enhanced community quarantine or ECQ. But let us remember that we made the difficult decision to implement the ECQ because we resolved to save lives and prioritize the health of our fellow Filipinos, including our family and friends.

This decision is proving to be a prudent one. In the May 2020 survey of the SWS, 84 percent of Filipinos say staying at home to fight COVID-19 is worth it. In June, most areas of the country have transitioned to general community quarantine or GCQ and are on track to see the quarantine lifted in the coming weeks.

The preliminary results of the April 2020 Monthly Integrated Survey of Selected Industries or MISSI show that manufacturing – both volume and value indices – fell significantly. All manufacturing subsectors posted double-digit negative growth rates in April 2020 given the imposition of community quarantines. As we shift from ECQ to GCQ, we will be seeing improvements in the succeeding months.

The results of the April round of the Labor Force Survey (LFS) shows the impact of ECQ on employment. In April 2020, some 7.254 million workers were unemployed, or 4.987 million more compared to April 2019. As a result, the unemployment rate rose from 5.1 to 17.7 percent in the same period.

On the other hand, the underemployment rate, which measures the number of workers who want more work to earn more, also increased from 13.4 to 18.9 percent. This relatively smaller increase suggests that government support to the people, such as the social amelioration program or SAP, the conditional cash transfer program, the rice subsidy program, and the unconditional cash transfer program under the TRAIN law, are working and reaching the people.

 

Emergency response

The economic cost of the quarantines, that buy us time to prepare the health sector to contain the spread of COVID-19, is expectedly large. This is why the government has provided and continues to develop measures to enable our health sector to address the pandemic and to help the people and the economy recover and adapt to a new and hopefully better normal.

Under Pillars 1 and 2 of the government’s strategy to respond to the COVID-19 crisis, some 596 billion pesos have been given or allocated to help the people cope with the crisis, while some 59 billion pesos have been provided to the health sector to fight the virus. The recovery program we are preparing with Congress will provide up to 847 billion pesos more from a combination of fiscal, monetary, and regulatory measures.

To mitigate the impact of COVID-19 during the quarantine period, flexible work arrangements, emergency employment programs, and various forms of subsidies have been implemented.

For instance, the government has spent around 100 billion pesos for the social amelioration program. As of June 4, 2020, the first tranche of the SAP is 97.1 percent complete with around 17.5 million families receiving the emergency subsidy of 5,000 to 8,000 pesos per family per month.

Meanwhile, more than 337,000 informal sector workers have benefitted from the TUPAD or Tulong Panghanapbuhay sa Ating Disadvantaged/Displaced Workers. Moreover, the CAMP or COVID-19 Adjustment Measures Program has served 680,000 affected workers. The Rice Farmer Assistance Program seeks to reach 600,000 beneficiaries.

The government has also helped save millions of jobs by providing a wage subsidy for some 3.1 million eligible employees of small businesses under the Small Business Wage Subsidy (SBWS) program. These employees have already received between 5,000 to 8,000 pesos in early May, and over 2.5 million employees have also availed of the subsidy for the second tranche.

 

Recovery program

In our work to prepare the recovery program, we have been listening to the people and businesses through our three surveys for consumers, Micro Small Medium Enterprises, and farmers. In particular, some 44,000 MSMEs who responded told us that they need help in this order: first, deferred payment schemes for taxes, rentals, and utilities; second, tax discounts and credits; and third, low-interest loans. 

All these are important inputs that we take seriously and as we prepare the PH-PROGRESO or the Philippine Program for Recovery with Equity and Solidarity. This recovery program includes the CREATE or the Corporate Recovery and Tax Incentives for Enterprises Act, which will address the second most pressing need of MSMEs.

We will continue to listen to the people and businesses through regular surveys.  We are processing the May survey round and will be fielding a third survey in the coming weeks. We ask all businesses and households to take time to answer the survey and share with the government how we can help you.

As the government prepares the recovery program, we would like to express our sincerest gratitude to all government workers, businesses, workers, and families who have contributed to our recovery program in their own ways, such as staying at home to keep the virus from spreading, delivering the cash subsidy, ensuring food products and other essentials arrive in the market on time, and taking care and paying workers while ensuring their safety during this very difficult time. 

The recovery program we are preparing with Congress seeks to improve confidence, raise consumer demand, and increase liquidity for firms. We will prioritize the healthcare sector, the entire food value chain, and restart the most impactful Build, Build, Build program.  All these will contribute to job creation, including some 136,000 contact tracers that DOH intends to have.

If people are confident that they are less likely to get sick or can be taken care of when they become sick, they will go out and work. If food supply is sufficient and they can affordably feed their family, they will be able to buy other goods and raise domestic demand. Finally, as we restart the BBB program, we expect more job opportunities, directly and indirectly. This can provide an opportunity to help thousands of OFWs who have come home and will need work and our help. Their sacrifices and remittance contribution through the years so that their families and our country can have a better future are most appreciated.

As domestic demand increase, we will be able to help firms recover more sustainably.  Our recovery program also includes a combination of liquidity infusion to the banking sector so that they can lend more to firms at lower interest rate, credit guarantees by the government to lower risks, wholesale lending by GFIs to help small banks and microfinance help the informal sector, and targeted and conditional equity contribution to strategic enterprises.

 

Resiliency program

As the economy gradually settles in the new normal, we will also be preparing our resiliency program to insulate us from future similar crises. Some of the key programs that we are considering to further protect the people are i) unemployment insurance or savings account, ii) pension portability, iii) digital delivery of all social protection programs and subsidies through the national ID, and iv) active labor market programs, job matching, and skills upgrading through TESDA, leveraging on digital technology.

To facilitate our response to the COVID-19 pandemic, NEDA has recently released the We Recover as One report, outlining strategies for transition to a new and better normal. We will also release a resiliency plan that will serve as the updated Philippine Development Plan. Usec. Edillon will be giving the details of this later.

In all these, it is very clear that we cannot do this alone. We are counting on our fellow Filipinos to act in the spirit of bayanihan where we are able to think beyond our own interests and concerns. This is an unprecedented global crisis threatening every nation and all humanity.

We may not all be in the same boat, but we are in the same storm. More than ever, now is the time for us to work together. Through our collective efforts, I believe that we will be able to weather this storm, come out stronger, more resilient, and better prepared to face the future.

Thank you and take care always.

 

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