MANILA - European companies operating in the Philippines are putting expansion plans on hold, with some withdrawing altogether new investments, a study released Thursday showed as the coronavirus pandemic impact operations.
According to the Business Impact Survey done by the European Chamber of Commerce in the Philippines (ECCP) and the European Union, the COVID-19 pandemic affected investment strategies and decisions at varying degrees with 29 percent of the companies surveyed putting on hold additional investments.
At least 28.2 percent are delaying investment decisions, 10.9 percent are cancelling or withdrawing initial investment decisions, 10.5 percent modifying investment strategies, and 3.4 percent considering relocation of some economic activities.
It said only 1.3 percent are increasing investments in the Philippines while 16.8 percent will have no changes in its current strategies.
Travel restrictions, reduced demand and business cash flow are among the key concerns for companies surveyed with majority expressing dissatisfaction over current measures done to curb the spread of the virus and the government's economic stimulus program.
Metro Manila and Calabarzon, with the rest of Luzon, were placed under strict quarantine after cases of COVID-19 rapidly rose in March.
Metro Manila, home to roughly a tenth of the Philippines' 100 million population, accounts for a third of the country's gross domestic product while neighboring Southern Tagalog region serves as home to several economic zones and industrial plants.
The Philippines fell into recession following a steep contraction in second quarter GDP due to the impact of COVID-19 and resulting lockdowns.
Metro Manila, Rizal, Bulacan, Cavite and Laguna are back under modified enhanced community quarantine until Aug. 18 following an appeal from medical frontliners for "breathing space" due to a spike in COVID-19 cases.
ECCP said the "economy cannot afford" extending further the MECQ in Metro Manila and other provinces, citing a rise in unemployment.
"Our economy cannot afford it anymore… Business, they need to grow, people they (need) work. As I said, 17.7 percent is the unemployment rate, so people are jobless. They don’t have savings anymore so we have no choice,” said ECCP president Nabil Francis.
It is important for the economy to restart, Nabil said as the strategy cannot be based on the hope of getting a vaccine while people remain in confinement.
The Business Impact Survey was done from May 22 to July 22 and collected responses from 203 companies.
Almost half of the respondents represent large businesses, while 52.2 percent come from micro, small and medium-sized enterprises, it said.