Opportunities are coming out of adverse lockdowns in the Philippines, the world’s longest.
And now it’s back, a strict, two-week version from August 6 to 20 in the National Capital Region and elsewhere in the country.
A better normal is possible, according to a United Nations report on the Philippines.
Food and beverage could pave the way, led by women who own and manage most micro, small and medium enterprises (MSMEs). After all, small businesses form a big chunk of the economy and thus its recovery, the report said.
MSMEs comprise 99.5 percent of all business enterprises, 60 percent of all exporters, 25 percent of total export revenue and 35 percent of total value added, it said, citing Department of Trade and Industry (DTI) figures. Over half or 53 percent of MSMEs in the Philippines are led by women.
MSMEs account for around 62 percent of total employment, with 75 percent of MSMEs reporting to have temporarily stopped operations during the 2020 lockdown, the policy paper said.
The paper was produced by the UN Industry Development Organization, UN Entity for Gender Equality and the Empowerment of Women and the International Labor Organization.
It will guide the UN’s updated blueprint for supporting the country to recover from the pandemic, said Gustavo Gonzalez, UN resident coordinator in the Philippines.
The paper draws heavily on the March to May 2020 lockdown when Metro Manila was placed under enhanced community quarantine, the strictest quarantine level.
For two months, most business operations stopped. The economy slowed down as the National Capital Region contributes 38 percent of the country’s gross domestic product (GDP).
Massive shutdowns resulted in temporary or permanent loss of employment, reduced working hours and income, and weakened household consumption.
Market disruptions worsened pre-pandemic challenges to women-owned MSMEs like access to financial services and capital, banking and business support and market-matching activities.
Food processing and manufacturing, one of the few essential industries allowed to operate throughout the lockdown, could lead to a better new normal, the policy paper said.
Agriculture, food and beverage (F&B) manufacturing and distribution comprise 30 percent of the total GDP and accounts for 43 percent of the total employment, it said, citing “The Economic Impact of Agri Food Sector in South East Asia” 2021 report by Oxford Economics.
F&B manufacturing makes up 46 percent of agri-food’s GDP contribution and about 4 million jobs — figures significantly larger compared to Thailand, Viet Nam and Indonesia.
Food manufacturing and processing even outweigh agricultural production and food distribution, covering almost half (46 percent) of agri-food’s contribution to GDP.
Seven in 10 agri-food enterprises are led by women, making it strategic in economic recovery and an ideal place to put gender alongside business strategy.
This did not happen. Financial institutions were given incentives to lend to MSMEs. Instead, they tightened credit because of perceived business uncertainty.
Food processing and manufacturing, while considered essential to continue operating, were overlooked in the Bayanihan Act series.
In contrast, logistics, transportation, education and tourism were prioritized and funded.
Most MSMEs adopted coping strategies such as e-commerce to sell products. They diversified products based on supply and distribution.
They also cut costs, enhanced collections and negotiated for supplier credit.
It wasn’t easy. MSMEs needed to learn how to compete in the unfamiliar e-platform.
MSMEs require multiple types of support such as the DTI’s Kapatid Mentor Me Program. It is a training program that refers MSMEs to outlets that help, including the Department of Science and Technology and the Food and Drug Administration, government banks and industry organizations.
Given that there are more potential sellers than buyers, it is understandable that banks would be less confident with MSMEs.
If banks could consider MSMEs as part of a value chain linked to a larger company, however, then the stability of the larger company could serve as a guarantee, the policy paper observed.
The mandatory requirement for banks to set aside10 percent of their loan portfolios to MSMEs expired in 2018. The policy paper recommends its reinstatement.
