MANILA - Firms in the Philippines were forced to reduce payments, suspend operations and experienced "deep reduction" in revenues due to the measures imposed to stem the coronavirus pandemic, according to a World Bank survey.
At least 40 percent of firms said they have suspended their operations, 20 percent due to government restrictions and 20 percent voluntarily while 15 percent closed permanently, the World Bank, Department of Finance and National Economic and Development Authority's "Impacts of COVID-19 on firms in the Philippines" survey showed.
"This indicates that COVID-19 community quarantine measures had a significant temporary and permanent impact on firms’ operations," the World Bank said in the survey conducted with 74,031 firms carried out between July 7 to 14.
Seventy percent of firms surveyed reported that their operations were affected by a decrease in availability of inputs and raw materials.
Firms also reported "a deep reduction in sales revenue" despite the easing of community quarantine in June, the survey showed.
Reported sales revenue has gone down by 64 percent on average between April and June 2020, with 89 percent of firms reporting "continued reduction in sales," according to the survey.
The World Bank said at least 75 percent of firms reported reduction in sales in February and 65 percent in March.
The Philippines imposed a lockdown in mid-March, which has since been gradually reduced. The country has seen one of the world's longest lockdowns with Metro Manila and other areas still in general community quarantine until Oct. 31.
One in two firms reduced payments to employees while 48 percent cut their workforce, data showed.
At least 23 percent of firms invested in digital solutions for sales, marketing and payments, it said.
Fifty eight percent of SMEs and large firms and 63 percent of micro-sized turned to digital solutions to adapt to the new normal, the survey showed.
Sales of e-commerce and delivery services have surged during the pandemic and resulting lockdowns as millions were holed up in their homes. Filipinos also turned to digital for their basic needs as well as online transactions for banking.
"Firms expressed a high degree of uncertainty and general pessimism about their operations, sales and employees for the next three months. Such lack of confidence will likely limit additional
investment and employment, restraining firms’ growth. These suggest that business activities are expected to stay subdued for an extended period," the World Bank said.
Government support needed to improve liquidity include cash transfers, subsidized interest rates, deferral of loan, rent or utility payments, tax exemptions or reductions, firms surveyed showed.
The Bayanihan to Recover as One law has provisions to help cushion the impact of COVID-19 on businesses including a 60-day loan reprieve. [60-DAY LOAN REPRIEVE LINK: https://news.abs-cbn.com/business/09/18/20/bangko-sentral-tells-banks-regulated-firms-comply-with-60-day-grace-period-under-bayanihan-2]
Economic managers are also pushing for stimulus packages such as the CITIRA bill which aims to reduce corporate income taxes.