Gov’t unveils rescue plan for virus-plagued industries
The government may inject badly needed, albeit limited, capital into corporations and industries devastated by the new coronavirus disease pandemic, the country’s chief economist said Friday.
Under the proposed Philippine Program for Recovery with Equity and Solidarity or “PH-Progreso” pitched by the economic team to Congress, large firms would be granted “targeted equity support to match bank lending, with conditions,” Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua said.
“I remind everyone and the industries who are asking for help the two economic principles: number one, nothing is free from heaven; number two, there’s a trade-off—and we will apply them,” Chua told members of the Financial Executives Institute of the Philippines during their general membership meeting.
In an earlier interview with Bloomberg TV, Chua said the tourism and travel sectors were the worst hit by weak global demand. Airlines, which believe a recovery will take years, have already asked lawmakers for a stimulus bill covering a financial aid of about P8.6 billion per month.
Chua, who was plucked off from the Department of Finance to head the agency left by National Economic Development Authority Director General Ernesto Pernia following disagreements with some officials over the opening of the economy, said the government was open to helping “many more” industries.
“We are concerned about the plight of the tourism and the airline industries, especially because they were affected as early as January when Taal Volcano erupted. And we think there are multiple ways of supporting them,” Chua said.
“To some extent, the problem is temporary, and so liquidity would be the way to help them. Some have problems beyond liquidity; that is why we have a program to infuse capital also,” said Chua.
He said, however, equity infusion must be “very targeted, time-bound, and with conditions,” adding that “we are in discussion with Congress about the mechanism to have that.”
Despite the government’s plan to step in, industries themselves should “rethink their business strategy,” Chua said, citing for instance that “hotels, motels or hostels that rely on tourists will have to rely probably on workers who need to be closer to their work or office” under a new normal of doing things.
“New business models are also important” so that affected companies and sectors could recover, Chua added.