By Beting Laygo Dolor, Contributing Editor
The government is preparing an additional US$3-billion stimulus package to help local businesses get back on their feet once the coronavirus pandemic ends.
A key part of the package is the “Philippine Economic Stimulus Act of 2020” which would provide immediate help to micro, small and medium enterprises (MSMEs) which export their products.
The Philippine Exporters Confederation, Inc. (Philexport, the umbrella organization of the country’s exporters), in a position paper released last week, asked the Duterte administration to make sure that the bill “be passed in a month’s time, especially for the benefit of our MSMEs and their stockholders.”
The boost to exports is part of the government’s larger US$160-billion infrastructure plan — referred to as the administration’s Build, Build, Build program – to revive an economy pushed to recession by the Covid-19 outbreak.
The Philippine economy officially shrank by 0.2 percent in the first quarter and, while the second quarter is not yet over, it is already a given that the contraction will continue as large parts of the economy remain closed midway through the second quarter.
The ambitious infrastructure program was seen to have fallen behind last year, necessitating a revision of some of its larger targets, the Philippine export sector was still doing well until the pandemic affected the global supply chain.
Sec. Vince Dizon, presidential adviser on key projects, said an economic stimulus package is being finalized that will target such areas as infrastructure, manufacturing and exports, among others.
“There is a greater sense of urgency in getting the economy back on track,” he told media in a recent interview.
The Duterte administration is egging the private sector to step up, said Dizon, as “we’re all facing this crisis together anyway.”
Finance Sec. Carlos Dominguez III does not see the proposed stimulus bill being passed by Congress immediately and is instead pinning his hopes on the Corporate Income Tax and Incentives Rationalization Act (Citira) to provide the needed boost to businesses shaken by the extended lockdown.
Dominguez noted that bills still had to be subjected to hearings, both at the House and the Senate.
He said he would push “very hard” for Citira to be passed into law. In Dominguez’s view, the reduction in corporate income taxes provided by the bill would be a “good stimulus” to the economy.
Dominguez expressed his frustration at the bill, which he said has been “sitting in the Senate for the last six months.”
Critics of Citira point out that while it would be popular with the business community, the bill would immediately result in a drop in tax collections, which are already sure to fall because of the effects of coronavirus on many businesses.
The Finance secretary countered by saying that so many companies had been receiving tax incentives for decades, some of which did not deserve tax incentives in the first place.
“If you’re sucking on the tit after 40 years, maybe you should grow up,” Dominguez said.
While there is general agreement within the Duterte administration that a stimulus package is necessary to lessen the effects of the pandemic, Dominguez has been adamant in refusing to bail out private companies that are in dire financial straits.
“We do not plan to bail out anybody,” he said, “to invest taxpayers’ money in companies that have gotten into trouble.”
Like their US counterparts, the country’s airlines have been bleeding since the lockdown, with air travel down to a trickle and little chance of a recovery in the foreseeable future.
Thus, Philippine Airlines, Cebu Pacific and Air Asia will have to count on the Department of Tourism, which recently announced that there will be a re-focus on local tourism to revive the travel and tourism sector, which includes hotels and resorts.
Airlines, hotels and resorts will have to depend on the country’s banks for loans to tide them over, Dominguez said.