ECONOMIC zone locators are facing a serious risk of funding shortage that could suspend their operations, as they are unable to receive foreign currency from their headquarters overseas with the stoppage of peso-dollar trading.
For one, an electronics firm based in Tanza, Cavite could temporarily halt its assembly of parts, as it might fail to pay its workers soon due to financial issues. The firm’s parent unit is located in China and was prohibited on Tuesday from remitting dollars to the Philippines.
Transactions for peso-dollar trading and government securities are called off, according to the Banking Association of the Philippines, as the state on Monday placed the entire Luzon under community quarantine to arrest the spread of the coronavirus disease (Covid-19).
“Our operations mainly rely on remittance from our headquarters in China,” an executive of the Cavite-based electronics firm told the BusinessMirror. “We were informed just this morning [of Tuesday] that US dollar trading is suspended.”
As with many locators doing business in economic zones, the electronics firm is exporting 100 percent of its output parts and units—in this case, to the United States.
As such, the firm has to maintain a healthy account of dollars in its treasury. Failure to do so, its executive explained, could result in the delayed payment of its workers’ salaries, as well as the suspension of factory operations in a worst-case scenario.
“At first, the Peza [Philippine Economic Zone Authority] gave an assurance that banking won’t be affected by this community quarantine. However, it’s different on the ground. I think this will be a big [problem for] manufacturing if left unresolved,” the executive said.
All of the electronics firm’s workers went to the factory on Tuesday to complete the two rotational shifts they run on a daily basis. However, the executive said locators are coordinating with the Peza on how employees will be able to get to work over the next days, with mass transportation suspended until April 14.
“We are just recovering from the disaster that hit us early this year and our operations are only starting to normalize, but then this community quarantine was implemented and this could put a dent on the operations of many manufacturers,” the executive added.
Image credits: Nonoy Lacza