MOST exporters are willing to reopen as the lockdowns ease but only half their capacity.
This developed as the Philippine Exporters Confederation Inc. (Philexport) backed proposals to reduce the corporate income tax rate to 25 percent and swiftly pass the Corporate Income Tax and Incentives Reform Act (CITIRA) to provide relief to business micro, small and medium enterprises (MSMEs) from the pandemic.
An online survey among Philexport members nationwide showed 88.4 percent of the total respondents are willing to restart or resume operations after the lifting of the enhanced community quarantine (ECQ).
Most of the respondents came from the food, holiday decor, gifts and premiums, garments, and housewares sectors.
The survey, which asked MSMEs their plans after the lockdown, found that more than half (51.2 percent) are currently under total shutdown. The rest are on work slowdown and employing various flexible working arrangements (e.g. skeletal workforce, work-from-home scheme, or reduced working hours).
The survey showed many on slowed work maintain administrative operations, and others are still doing manufacturing, albeit very minimally. Some companies also have finance and marketing operations.
However, when the ECQ is removed, most of the MSMEs said they may operate only at 50 percent of their capacity or even less of between 25 and 40 percent.
They said operating at total capacity may not be possible until certain conditions are present. These include mass testing for the coronavirus, establishment of quarantine facilities, provision of public transportation, availability of loan or financial assistance, smooth logistics operations, sufficient raw material supply, and product demand.
Majority or nearly 84 percent of respondents said they plan to apply for loans to support their operational expenses, pay salaries and expand technological capacity after the ECQ.
If no loans are obtained, however, most firms said they will have to reduce operating capacity and limit manpower, while a few might suspend operations temporarily until they secure a loan or simply close shop altogether.
A small number of those polled said they are mulling shifting to other product lines or services. This involves moving to health-related products like disinfectants and personal protective equipment, essential food products, basic commodities, and online services.
Majority or 55.8 percent of respondents are planning to focus on both domestic and export markets.
About 76.7 percent are eyeing making changes and improvements to adapt to the “new normal” after the ECQ. These changes include improving their online marketing and going into e-commerce.
Other plans mentioned are embarking on research and development and market research (62.8 percent), automating and acquiring new technologies to improve manufacturing efficiency (51.2 percent), and upskilling or reskilling employees (60.5 percent).
Several companies also announced they will impose stricter health-related measures such as social distancing once operations are resumed.
Income tax
Meanwhile, Philexport president Sergio. Ortiz-Luis Jr. said the five-percentage point drastic reduction in CIT is consistent with the group’s position and is seen to attract investors, increase the country’s competitiveness and help address particularly the cash flow issue of MSMEs.
Philexport also supports the CITIRA recommendation of the electronics industry for the status quo for the existing incentives for the next two to three years, allow indirect exporters to avail of the same incentives such as value-added tax exemption as direct exporters, and incentivize training especially in the light of the shift to digital operations.
In its New Normal Export Roadmap, Philexport also called for the removal or reduction to 50 percent of the export threshold so that more companies will be able to enjoy incentives.
