ADB think tank: PH MSMEs need targeted support to survive prolonged pandemic | Inquirer Business

ADB think tank: PH MSMEs need targeted support to survive prolonged pandemic

By: - Reporter / @bendeveraINQ
/ 06:51 PM February 09, 2021

MANILA, Philippines—Tokyo-based Asian Development Bank Institute (ADBI) has urged the Philippine government to give small businesses targeted financial support and help in shifting to digital operations if they were to survive a prolonged pandemic.

At the height of the most stringent level of COVID lockdown in 2020, micro, small and medium enterprises (MSMEs) in the sectors of accommodation and food services, construction, education, manufacturing, and tourism were hurt the most by measures that  froze 75 percent of the economy at that time, according to an ADBI paper published on Tuesday (Feb. 9).


Citing the same survey conducted from March to April 2020, ADB senior economist Shigehiro Shinozaki and statistician Lakshman N. Rao noted that some sectors benefited and “coped better” with the pandemic. These information and communication technology (ICT), power and energy and real estate.

“Toward the year 2021, Asian economies gradually shifted to the recovery stage,” the ADBI paper said.


“However, the overall business environment has yet to adjust,” it said. “There is a continued sharp drop in demand and revenue according to the follow-up survey in the Philippines covering August and September 2020,” the ADBI said.

As the pandemic continued to rage and weaken business and consumer confidence, the ADBI said “there is increased need among MSMEs for further financial assistance from the government,” especially as later survey rounds found that “working capital shortages are continuing to rise.”

“COVID-19 containment will continue into 2021,” the paper said.

“Given the different abilities of MSMEs to adjust by firm size, the government could pay more attention to a phased approach and differentiate policy measures by firm size and sector,” it said.

“Now is the time to consider an optimal approach that offers targeted assistance yet ensures fiscal sustainability in a post-COVID-19 environment,” the paper read.

The prolonged quarantine already forced MSMEs to evolve and adjust goods and services offerings to “a new normal that requires a more contactless society,” the ADBI said.

In view of this, ADBI said “assistance for MSMEs to shift their business to digital transactions is another policy priority given that their traditional business model requires physical and personal contact.”

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TAGS: ADBI, assistance, Business, consumer confidence, digital, economy, msmes, pandemic
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