LOCKDOWNS and mobility restrictions prevent small and medium enterprises (SMEs) from accessing financing and this makes it more difficult for them to sustain their operations, according to the National Economic and Development Authority (Neda).
At the Neda budget hearing at the Senate on Wednesday, Socioeconomic Planning Secretary Karl Kendrick T. Chua said this is one of the primary reasons for his recommendation to reopen the economy albeit safely, taking into consideration health and safety protocols.
Chua explained that as the country continues to restrict movement and limit economic activities, the more difficult it is for banks to be less risk averse and lend funds to SMEs that need it to continue operating at this time.
“If we continue to have heightened quarantine, the lender has a lot of hesitation and uncertainty. That is why the more sustainable way to help businesses is to first open the economy,” Chua said on Wednesday.
Chua said businesses have been restricted for 18 months, which not only limited the consumption of their goods and services but also their access to financing.
But if they will finally be allowed to open, Chua said, banks would be more assured that the businesses will be able to repay their loans.
Chua said a restricted economy limits business operation, lowers tax revenues, and limits the resources of the government to help those in need.
Providing ayuda can be done, Chua said, provided that the reopening of the economy becomes an “underlying condition.”
“Yes, we will provide the support but I think the underlying condition is the opening up [of the economy] otherwise we will just be lending money to firms and people that cannot turn around that money around and become productive,” Chua said.
Food packs over cash
Meanwhile, Neda Undersecretary for Policy and Planning Rosemarie G. Edillon said the assistance advocated by the oversight agency was to provide food packs rather than cash.
Edillon said this is a safer way to provide assistance since providing households with food packs—for example those who tested positive for Covid-19—prevents them from stepping out and do the transactions themselves, keeping their communities safe.
She added that apart from the food packs, the government has promoted the various trainings and webinars that Filipinos can attend while on lockdown. This will help workers, especially those who lost their jobs, to face a new world of work after the pandemic.
Further, Edillon said that based on the government’s National Action Plan Phase 4, the government places emphasis on Covid-proofing businesses.
Much of this, she said, had to do with retrofitting businesses particularly to address ventilation and digitization issues. Edillon said the Neda is in close coordination with the Department of Trade and Industry (DTI) in helping businesses in this regard.
“We are in close coordination with the DTI on providing assistance to businesses that are actually going to reconfigure their business spaces so that there will be proper ventilation or if they can have outdoor venues, so much the better and of course for the digitalization,” Edillon said.
Neda reorganization
In order to better address the country’s socioeconomic challenges, Chua said the Neda is pushing for the reorganization of the Neda Secretariat under the proposed Neda Bill now pending in Congress.
Chua said this entails adding three more groups to Neda: the Strategy and Results Group; Monitoring and Evaluation Group; and Legislative, Legal and Institutions Group.
This will mean the number of groups in the Neda Secretariat will become seven from the current four—Policy and Planning; Regional Development; Investment Programming; and Corporate Affairs.
These changes will include the creation of Innovation and Strategic Foresight Staffs under the proposed Strategy and Results Group while Monitoring and Evaluation will be divided into two staffs, Monitoring and Evaluation.
Under the Investment Programming Group, the current Infrastructure Staff will be divided into two—Connectivity Infrastructure Staff and Social Infrastructure Staff.
The current Legal and Governance Staff of Neda will be lumped under the proposed Legislative, Legal and Institutions Group together with a new staff, the Legislative Liaison Staff.
“All of these, we will propose as amendments to the Neda bill. And it is not necessarily that we will ask for a big budget. We will try our best to do efficiency and internal reorganization so that we try to live within our means. I think that is what we will do first before asking for more budget. We will also do scrap and build,” Chua said.
The Neda also aims to review the structural integrity, and retrofit if needed, of its 45-year-old building in Pasig City. The Neda has another building in Makati which is currently closed due to structural issues.
The oversight agency will also focus on using data science to improve their internal service delivery, as well as institutionalize knowledge management.
This will help Neda and the government to have a single source of truth for all data so that the agency will have no problems with different data from different sources.