Due to insufficiency of funds, the Department of Trade and Industry (DTI) has put on hold the processing of loan applications of micro and small businesses.
The P1-billion fund it earlier allocated to lend interest-free and payable up to 30 months to help the businesses recover from the adverse effects of the new coronavirus disease (COVID-19) pandemic has fallen short of the demand. Loan applications have already reached P3.3 billion.
The magnitude of the pleas for help exceeded the DTI’s expectations. This prompted Trade and Industry Secretary Ramon Lopez to request additional funding from the Land Bank of the Philippines and Development Bank of the Philippines.Requests for financial assistance or bailout have also been made by other businesses, e.g., airline companies, land transportation operators, tourism-related companies and the entertainment industry, that have seen their bottom line go south as a result of the lockdown and the measures the government has put in place to prevent the spread of COVID-19.
The requests consist of, among others, monetary subsidy, suspension of tax payments, reduction of business fees, relaxation of regulatory requirements and debt moratorium.
These have put additional stress on the government’s economic managers who must be having sleepless nights looking for ways and means to fund the programs to flatten the COVID-19 curve without sacrificing other aspects of governance that have financing needs, too.Borrowing from abroad or international credit institutions may provide financial relief in the short term, but that also means the next generation of Filipinos will have to pay those loans on top of existing foreign debt obligations.
Obviously, the government cannot grant the bailout requests of all businesses severely affected by the pandemic. And there is no assurance the stimulus bills filed in Congress (assuming they are enacted into law) would provide substantial relief.There is no question some businesses have to be helped back to financial health by the government. Left to their own devices, they may go bankrupt and add to the already serious unemployment problem of the country.
In deciding which business should be given priority, the “greatest good for the greatest number” should be the guiding mantra of the decision makers.
With only so much taxpayers’ money available, the government has to make sure it goes to businesses really in need of financial help without consideration of their affiliation or identification (perceived or otherwise) with the political leaders in their area of operation.
Pragmatic business factors, not glamorous or emotional reasons, should be the measure in deciding which business should be extended financial assistance.
If on the basis of careful analysis a business activity does not have strong prospects of continued profitability due to changes caused by the pandemic, then it makes no sense to throw it a financial lifeline.
That would be like throwing good money after bad.
The number of employees a business employs should also be taken into account in deciding whether or not it deserves a bailout. Between a business that gives livelihood only to a handful and one that does so to a hundred, the latter should, hands down, be given priority.
It must be made clear to the recipients of financial assistance that the money they will be getting is not a dole-out or a freebie from the government they can spend for their personal needs.
The liberal terms of payment of the bailout is not a license for them not to efficiently manage their resources. They have to pay back the government as the debts fall due.
The government office tasked with giving that assistance must put in place and implement strict rules on transparency and accountability in the management of those funds.The people who will decide which business should or should not be extended financial help ought to remember they’re handling the people’s money and should therefore not squander it. INQ
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