Ladies and gentlemen, magandang umaga sa inyong lahat!
First off, I want to congratulate the Philippine Franchise Association for spearheading the Franchise Asia Philippines 2021 and successfully utilizing the virtual platform for the Virtual Franchise Expo.
Let me begin on a very encouraging note by saying that our country’s latest available economic data confirm that we are indeed “Igniting Recovery,” as your theme declares.
For example, the quarterly growth rates of Industry, Services, and Agriculture, which dipped in the first quarter of 2020 due to the start of the pandemic and tight community quarantine restrictions, have already inched upwards beginning the third quarter of 2020, into a very strong recovery of 11.8% for the second quarter of 2021, with industry rebounding to 21% and services to +9.6%, keeping us on track towards a V-shaped recovery.
The concerted efforts of the government and the private sector have allowed us to gradually rebuild the economy as evidenced by the increasing percentage of fully operational micro, small and medium enterprises (MSMEs) from just 19.8% around June 2020 to a peak of 58.6% around June 2021.
However, this reminds us in the government to be very discerning with the policies we put in place, as the surge in COVID-19 cases and the eventual imposition of stricter community quarantine restrictions toward the end of the first quarter of 2021 have led to a significant decrease in fully operational micro, small and medium enterprises (MSMEs).
The improvement in the economy is reflected in the labor market as well, with employment registering significant gains month-on-month in the first quarter with an additional 2.2 million Filipinos back in the workforce in March. After quarantine restrictions were relaxed in May, 1.4 million were added, and further in June with about 0.4 million or 400,000 workers back in the labor market.
Likewise, July recorded the lowest unemployment rate since the start of the pandemic at 6.9%. This figure reflects around 3.8 million jobless persons, lower by 0.7 million or 700,000 in the recorded number in June. However, if we look at the diagram, the total number of employed persons are visibly lower than those recorded in June because of the larger labor force participation rate of 65% in that month, compared to the 59.8% in July.
Simply put, the significant difference can be traced to less people looking for jobs for the period, thus, resulting in a lower number of recorded employed persons.
Our unemployment rate has also steadily decreased from its peak of 17.6% in April 2020, equivalent to 7.23 million unemployed individuals, to its current rate of 6.9% in July, or down to 3.8 million jobless Filipinos. This is the lowest recorded since the start of the pandemic. Through our Economic Recovery Cluster, we are working doubly hard to decrease the unemployment rate further and achieve pre-pandemic levels at an average of 5.0%-5.5%.
The increase in employment is of course a major component of our agenda on economic recovery, which will boost consumption and result in a more vibrant business sector. All of these are hinged on the support of the government in terms of the efficient rollout of the vaccination program, ease of doing business, and provision of incentives, especially to key employment generating sectors.
Department of Trade and Industry (DTI) has been implementing the REBUILD Strategy—or “Revitalizing Businesses, Investments, Livelihoods, and Domestic Demand”—to ensure the country’s economic recovery. Our broad strategies under REBUILD include: revitalizing consumption to boost demand; and, empowering production capacities such as those in agriculture, industry and services to meet the recovery in demand, which in turn will encourage further increase in production, leading into a virtuous cycle.
The REBUILD PH provides interventions in the demand and supply sides of the economy, targeting consumers, industries, MSMEs, and individual entrepreneurs.
The framework of the REBUILD PH is anchored on a whole-of-society approach towards creating and sustaining a virtuous cycle of economic stimulus wherein government supports businesses to retain and even generate jobs, thus strengthening demand with preserved household incomes and spending behaviors, along with even more government interventions to further boost consumption. The revitalized domestic demand ultimately cycles back to support and buoy businesses through the pandemic, which may even entice them to expand. Expansion mean more investments and jobs, creating more income and business opportunities for everyone.
MSMEs are the prime focus for government support as more than 99% of businesses fall under this category. MSMEs provide more than 70% of jobs in the country. Hence, we are making sure that MSMEs can cope and survive in the pandemic so that more people can retain their jobs and livelihoods, and they can continue spending with their preserved household income.
Exports continued to rebound, recover, and accelerate in July with a 12.7% growth rate, or equivalent to USD6.42-B, which is higher than the pre-pandemic value of USD6.25-B in 2019. Meanwhile, year-to-date (YTD) exports from January to July is also recorded at 19.5% or USD42.39-B, also higher than the recorded USD40.82-B in 2019. This shows that there is indeed substantial and real growth in our exports.
Our sustained export growth rate can be attributed to the recovery in the global markets, coupled with our efforts in ensuring that the exports manufacturing sector operate at 100% capacity even during strict community quarantine measures.
Notably, our Filipino exporters excelled by not just demonstrating resilience but also expansion during such difficult times. Exporters and the private sector in general are helping the government in the economic and employment recovery of the Philippines by actively finding ways to cope with the pandemic as well as sustain and generate livelihood. This emphasizes that we, in the government, must augment our efforts as our exporters’ continued productivity will translate to more economic activities, exports, and jobs.
Meanwhile, Foreign Direct Investments (FDI) net inflows in June 2021 reached USD832.95-M, the highest since January this year. This reflects a huge increase of 60.4% from last year’s USD519.26-M net FDI. Comparing it to pre-pandemic levels, this year’s net FDI shows real growth, as it posts almost double the recorded USD449.28-M in June of 2019.
Government expenditure is also a tool for stimulating the economy. This is why we are advocating for efficient use of government funds for various programs and initiatives under the recovery strategies. The continuation of the Build, Build, Build program would also be a huge boost in the pandemic as it would preserve jobs through the contractors and suppliers involved in the projects. To this end, we are pushing for government projects, especially in infrastructure, to prioritize buying local construction supplies. The passage of the Corporate Recovery and Tax Incentives for Enterprises or the CREATE Act, which leads to the reduction of the corporate income tax rate would also be beneficial to our private sector, especially MSMEs. With CREATE, our Corporate Income Tax Rate (or CIT) will be brought down to 25%—and 20% for MSMEs.
We also expect further boost from the passage of the amendments to the Public Service Act, Retail Trade Liberalization Act, and Foreign Investments Act. These would make the Philippines a more attractive FDI destination, thus enabling more businesses and job generation. These would also lay the foundations of a highly liberalized, competitive, and strong economic structure for the future.
Given the signs we have seen so far, we are looking at very good prospects for the whole of 2021 that may continue to next year if government remains focused and stay the course. If we do, we can expect to hit the target 4% to 5% growth for the full year.
In order to maintain and accelerate the economic recovery trend, four general recommendations have been identified.
First, we will continue to expedite the implementation of the vaccination program, which is already being done.
It is noted that vaccination capacity has reached 500,000/day, with
the highest recorded jabs in a single day reaching
710,482 recorded last month. Ensuring
supply and expediting the vaccine roll-out
through our focused
and expanded strategy
and following the priority list is expected to bring
about maximum protection and benefits to our
economy.
As of Sunday, September 19, over 41.4 million doses have already been administered, with 22.85 million individuals done with the first dose and 18.56 million individuals fully vaccinated.
These numbers are indeed very hopeful and we urge more people to get vaccinated. We thank and laud the hard work of our health workers in accelerating the vaccination program.
Intensifying vaccination efforts, which remains a central component of our recovery program, boosts economic activity as it provides confidence and relief to our businesses and consumers. Simply put, a fast-tracked vaccination will allow gradual reopening of the economy.
Similar to what we have already been seeing, we are continuously encouraging our partners in the private sector to allow their own employees to be vaccinated within company premises and during working days by partnering up with the government. This would be a huge benefit to workers who are unable to line up in public vaccination sites as they rely on daily wages and therefore cannot afford to skip work or take leaves.
Second, in sustaining our economic recovery, we have empowered the private sector to adjust and recover. Some of the listed initiatives in the slide presented are already in effect.
For example, telecommuting, work-from-home (WFH), or other flexible work arrangements, have proven that they work not just in a pandemic scenario but even in the post-pandemic given that these have eased traffic congestion in Metro Manila and allowed for digital solutions and online platforms to boom. Moreover, cashless transactions, e-commerce, and digitalization have increased during the pandemic with more and more companies adopting them into their regular business processes and methodologies. Such gains will be sustained and are not viewed as merely temporary solutions amidst the pandemic. Instead, these are long-lasting innovative technologies and techniques to make our work more streamlined, efficient, and productive.
We are also committed to the intensified adoption of ease of doing business (EODB) measures in government regulatory processes, and public-facing transactions. Online solutions and platforms are beneficial to the EODB initiative. As we always say, the ultimate form of ease of doing business is being able to transact with your government with a simple touch of a button on our smartphones. This is also the realization of President Duterte’s declaration to eradicate long lines and to make all possible services online.
Our recent shift into the Alert Levels System for COVID-19 Response in the National Capital Region is a further move towards the gradual and safe reopening of the economy. Granular lockdowns are being recommended for adoption instead of the community quarantine classifications that are currently imposed on a regional and provincial scale. This favors the economy as the lockdown is focused on smaller pockets of areas, to allow the other parts to reopen. We have also recently adjusted the sectors to be allowed under Alert Level 4 to bring back the dine-in and the personal care. We are currently studying how to tighten the safety protocols for gyms, so that we can also include them as essential services, recognizing the importance of exercise in boosting immunity levels against the virus. As you know, we have allowed outdoor exercise activities.
Eventually, vaccinated individuals will have more freedoms in mobility and participation in the economy, at high alert levels, especially in engaging with economic activities/sectors that are restricted or in the negative list such as personal care services, tourism, restaurants, etc.
However, as we have continuously stressed, our fellow consumers must strictly comply with minimum public health standards (or MPHS) and social distancing measures, as well as sector-specific guidelines set by the IATF and concerned national government agencies, such as the Department of Trade and Industry (DTI) and Department of Tourism (DOT). It is very critical to have a proper ventilation in any business establishment. We also require having a safety/health officer that will ensure the store’s compliance with the basic health protocols.
Businesses’ compliance with our MPHS and adoption of COVID-proofing systems will eventually result in less restrictions on business activities and operating capacities. Enhanced implementation of the Safety Seal Certification program, especially once we enter Alert Level 3 or lower, and adoption of digital/online payment solutions and transaction are recommended. With this, we recommend our MSMEs, especially in the National Capital Region, to already apply for the Safety Seal if you haven’t yet before we are brought down to Alert Level 3. The Seal will certify to your customers that your business has complied with MPHS and guidelines set by the IATF and various government agencies. Likewise, this will also add ten percentage points to the allowed operational capacity once we are in Alert Levels 1 to 3.
On the other hand, with domestic tourism as a main strategy, there should also be the gradual reopening of various local sites with the safe travel campaign of “Have a Safe Trip, ‘Pinas” and simultaneous vaccination of our tourism frontliners (A1) and workers (A4).
In parallel, we need to rebuild the confidence of our customers and ensure their safety when we restore access to malls, dining places, and tourism areas.
In strengthening our food resiliency, we aim to take steps that include the provision of efficient transport and logistic systems like reefer vans, rendering trucks, food terminal, warehouses and cold storage facilities. This will also include intensified promotion of digital options for sourcing/selling agri-inputs/produce as well as the provision of credit with low or zero interest and flexible terms for farmers, fisherfolks, MSMEs, young entrepreneurs and cooperatives.
We in the government will continue to implement key recovery programs and reforms that will help our nation get back on its feet. These policies and initiatives will not only revitalize our economy but also empower the business sector to adjust and recover so that they can seize opportunities from the changing domestic and global demands.
We also continue to support our MSMEs and consumers to enable them to recover as the economy fully opens. We recognize that continuity is key to successful delivery of services to our people, especially the marginalized sectors, as we boost government’s assistance to MSMEs thru programs such as the wage subsidy program, Livelihood Seeding Program, Pondo sa Pagbabago at Pag-Asenso (P3), and the initiatives under the REBUILD PH strategy and National Employment Recovery Strategy (NERS), among others.
As directed by our President Rodrigo Roa Duterte, we have also been working with your Franchising group to finalize the draft executive order that hopefully will further strengthen and increase the confidence in franchising business models, by having a clear template of franchise terms and conditions and a registry system.
In conclusion, the Philippines is already displaying signs of recovery. However, while the road is still full of challenges, we believe we cannot wait for the time when we totally eradicate COVID-19 before we go full blast on our economy. We must manage risks, not avoid them. That’s why—even as we sustain our momentum—President Rodrigo Roa Duterte has already directed us to boost our all-out support for the business sector to help in its rehabilitation so that you can become stronger and more resilient in the post- pandemic future.
While there is still much work to be done, we are confident that—through a whole-of- society approach—we can build back a better Philippines where all our people can achieve a more comfortable and greater quality of life. Maraming salamat po at mabuhay tayong lahat. ♦
Date of Release: 21 September 2021