Pandemic pushing 9 pct of PH firms to consider permanent closure: survey

Nika Lazo, ABS-CBN News

Posted at Nov 18 2020 09:33 PM

A stall in Quezon City utilizes various online platforms to sell various Christmas decor on September 1, 2020, the start of the 'ber' months where the country celebrates the longest Christmas season. The stall has turned to online selling to cope with the low physical store sales due to the pandemic. Mark Demayo, ABS-CBN News


MANILA - The COVID-19 pandemic is pushing around 9 percent of Philippine companies to consider permanent closure, according to a study launched on Wednesday.

Small and medium enterprises (SMEs) were also twice as likely as large firms to predict their own closure within three months, based on 
Philippine SMEs Competitiveness Report and ITC COVID-19 Business Impact Survey.

The studies were conducted by the International Trade Centre (ITC) which is a joint agency of the World Trade Organization and the United Nations, and the Department of Trade and Industry (DTI).

The study showed that 99 percent of businesses in the Philippines were affected by the pandemic, with 68 percent of the firms saying they were strongly affected.

"The COVID-19 severely affected the economy and the pandemic is expected to have serious negative implications for GDP (gross domestic product) growth as well as for employment. ITC data show that virtually all companies have been impacted by the pandemic. Effects were from lower sales to difficulty in access and inputs, and clients not paying bills," ITC Executive Director Pamela Coke-Hamilton said.

The SME report surveyed 515 Filipino firms from November to December last year and got back to them through telephone interviews from April to May to form the COVID impact survey.

Though around 88 percent of companies saw year-on-year declines in sales, only a third of Filipino firms adopted a resilient strategy to cope with the pandemic crisis.

Tax waivers, temporary tax breaks, and cash transfers were seen as the most helpful government efforts for them, but 58 percent of firms find it hard to access information on government assistance packages related to COVID-19.

The report looked at how high firms scored in productivity, timeliness, and cash flow, which are measures of competitiveness. 

It found that half of the Filipino firms were able to deliver products and services on time yet also half struggled to maintain cash flow.

Companies that invested in research and development (R&D) before the pandemic were found to be more resilient as they were less affected and adopted strategies to cope with the new normal.

Women-led firms however invested less in R&D but managed to adapt more to the effects of the pandemic compared to their counterparts.

Survey authors Sarah Mohan and Valentina Rollo of ITC both recommended that the government should provide more incentives to firms for R&D investment and revisit government procurement plans to facilitate timely payments to SMEs.

They also suggested providing more customized skills training, enhanced outreach to SMEs, and shifting of government support from business to SMEs who needed it the most.

The DTI said it is offering support programs for SMEs such as zero-interest loans, the Go Lokal program, and the Shared Service Facilities program, among others.

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