The economic crisis created by the Covid-19 pandemic calls for urgent policy responses from the government to support households and businesses trying to stay afloat.
The government needs to help a lot of Filipinos keep their jobs and put food on their tables. It has to make its stimulus packages matter most to the people who are barely eking out a living, as well as those who are downright desperate.
The Philippine economy contracted by 9.5 percent in 2020, the worst performance in our country’s post-war history.
The Labor department estimates unemployment to have risen to a record-high 10.2% in 2020, which is likely understated, as real unemployment could even be higher.
An Asian Development Bank study also showed that 70.6% of micro, small, and medium enterprises (MSMEs) in the Philippines were forced to temporarily close due to Covid-19.
The government is pinning its hopes of a job rebound on the implementation of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.
Trade Secretary Ramon M. Lopez said the new law could encourage multinationals to locate in the Philippines, and their investments should, in turn, create employment opportunities.
The CREATE Act brings down corporate income tax (CIT) charged on firms to 25 percent, from 30 percent, the highest rate among Southeast Asian nations. It also introduces new fiscal incentives to replace those already enjoyed by investors and institutes deductions on operational costs depending on the preference of the firm. The measure would grant new investments up to seven years of tax breaks, and investors can apply for five years of extension for incentives based on the industry they belong to.
Lopez said CREATE can bring in over P200 billion of new investments that can generate 1.4 million to 2 million incremental jobs.
Another measure that can help economic recovery is the third installment of the Bayanihan Law, which would provide a P420-billion fund for sustainable recovery, including subsidies to small business for wages and other worker-related expenses, aid to businesses in critically impacted sectors, additional social amelioration to impacted households, assistance to farmers, livestock producers and fishermen, unemployment assistance and cash-for-work programs, internet allowances to students and teachers in public and private schools, rehabilitation fund for typhoon-affected areas, and more money for vaccines.
Indeed, the House of Representatives would do better to focus on the CREATE Act and the Bayanihan 3 law instead of ramming Charter change down people’s throats.
It should also look into the unreleased and unutilized appropriations under the previous Bayanihan law. The latest Executive report on Bayanihan 2 issued last January showed only 73.74 percent of the authorized appropriations have been released by the Department of Budget and Management (DBM).
The House also recently endorsed for Senate approval the Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery (Guide) Act.
Transparency in these government support packages is critical for public trust. The administration must foster accountability, especially amid this crisis, to enable relief aid to benefit most families who can barely eke out a living and stimulate economic activity in the country.
At a time when jobs are being lost and businesses are closing, the government must step in and make a difference.
Providing funding to micro, small- and medium-sized enterprises or MSMEs’, which account for 97 percent of all registered businesses in the Philippines and employ about two-thirds of the country’s labor force, would be a sure way to get people back their jobs.
The best solution to poverty is to help poor people find a decent way of earning a living, either by giving them jobs or helping them start small businesses.
In the long term, dole-outs cannot solve poverty and they will not help much in this pandemic. They may alleviate hunger for a day or even just a few months but after that what? Sure, the government needs short-term measures to address hunger and poverty. But cash dole-outs are palliative measures at best.
Helping businesses recover would bring back jobs and put money in the pockets of workers to help them cope with this crippling pandemic. And the money they earn would be spent on goods and services thereby boosting the economy.
The government must also provide safe, efficient mass transportation to get workers to their workplaces, and make sure that our streets and roads are not plagued with pollution, standstill traffic, accidents, floods and crime.
The government needs to guarantee these basic things a government should provide its citizens.
Changing the 1987 Constitution cannot prevent a catastrophic economic collapse that would have dire consequences for our people. There is no compelling reason and no public clamor for it. It will not do wonders for the economy. So the government should cease and desist from pursuing it.
Image credits: Jimbo Albano
