Survey shows extent of COVID-19 damage to corporate sector
The COVID-19 pandemic has hurt the majority of businesses in the country, with more than half temporarily halting their operations or worse, closing up shop, a recent survey showed.
Results of the Philippines COVID-19 Firm Survey jointly conducted by the World Bank, the Department of Finance and the National Economic and Development Authority (Neda) in July showed that despite the gradual easing of quarantine restrictions on movement of people and goods, 40 percent of companies surveyed said they temporarily suspended operations.
Half of those that temporarily halted their businesses said they did it voluntarily, while the remaining half were obliged by the government’s COVID-19 guidelines mandating social distancing at work, the World Bank said in a report released on Tuesday.
Worse, 15 percent of the firms polled said they altogether closed up shop.
“This indicates that COVID-19 community quarantine measures had a significant temporary and permanent impact on firms’ operations,” the World Bank said, specifically on sales revenues, employment as well as investments and future plans.
Across the 74,031 firms nationwide surveyed last July 7 to 14, the World Bank said the reported sales revenue has gone down by 64 percent on average between April and July, with 89 percent of firms reporting a continued reduction in sales.
“This was in addition to already significant loss by 65 percent experienced in March compared to February, with 75 percent of firms reporting reduction in sales,” the World Bank said.
Workers also suffered as half of the firms surveyed inflicted pay cuts, while 48 percent slashed their workforce. Just 1 percent hired additional employees amid the pandemic-induced recession.
To better adapt to the COVID-19 new normal, the World Bank said about two-thirds of local firms turned to digital solutions for sales, marketing, and payment methods.
“A sizable share of firms also invested in digital solutions (23 percent) or repackaged their product mix (40 percent),” the World Bank added.
Looking forward to the future, the World Bank said firms expressed a high degree of uncertainty and general pessimism about their operations, sales and employees for the next three months.
“Such lack of confidence will likely limit additional investment and employment, restraining firms’ growth. These suggest that business activities are expected to stay subdued for an extended period,” according to the World Bank.
To bounce back from the pandemic’s impact, “firms say the most useful form of government support are those that would improve their liquidity such as cash transfers, subsidized interest rates, deferral of loan, rent or utility payments, and tax exemptions or reductions,” the World Bank said, noting that these were aligned with the government’s proposed legislative interventions to reduce the corporate income tax rates and improve the liquidity in the financial sector. —Ben O. de Vera INQ
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