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MSMEs declined the income almost 50% due to pandemic and made different strategies to survive

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By Romnick Arellano

LIPA City – Last 2020, The Inter-Agency Task Force implemented the Enhanced Community Quarantine (ECQ) and General Community Quarantine (GCQ) in the areas with higher cases to control the spreading of coronavirus and the Department of Trade and Industry (DTI) recommended the reopening of several sectors. Based on the Memorandum Circular No. 20-22 signed last May 05, 2020 by DTI Secretary Ramon Lopez, business establishments are labelled in four categories according to their activities.

Due to CoVid-19 pandemic and strict restrictions implemented of Philippine government, many businesses got affected and it hits the most are the Micro, Small and Medium Enterprises (MSMEs) in the country, especially in the NCR and CALABARZON areas.

Last year, the Department of Trade and Industry Secretary Ramon Lopez said that the number of enterprises that closed their operations amid of COVID-19 pandemic went down to 10% in June 2020.

Fully operational in June 2020 were about 44%, while the partially opened but not yet in full capacity was at 46%.

In the study of Asian Development Bank in September 16, 2020 shows over 70% of Philippine MSMEs had cash flow problems, forcing owners to borrow from friends and family to keep their business afloat. ADB financial sector specialist Shigehiro Shinozaki showed that this 70% of micro, small and medium enterprises in the Philippines were forced to temporarily close due to the COVID-19 outbreak.

“The effect of COVID -19 pandemic is very huge, our income is very low. Before when there is no pandemic, much better, much stable income, but when the pandemic hits it is like automatic almost few percent and most likely not reach 10% of income compared before. We closed for 3 months when there is an ECQ and we reopen this store when the GCQ starts. Before, we earned over Php10,000 but now, we’re earning only Php3,000 and it depends on how many people visited the store, because of the pandemic many people are not allowed to go outside, aside from buying a necessary items or important matters,” Imelda Marisol Store Manager of RCloset-Peramax Lipa said.

Food establishments are among the businesses greatly affected by the pandemic.

Some Micro, Small and Medium Enterprises told that the effect of this pandemic is the flow of customers as their main source of income.

According to Rico Atienza store owner of Gina’s Sari-Sari Store, the effect of Covid-19 in their store was very big, because the daily income became too low. We’re earning Php1,500, sometimes Php1,000 before, but now we earned only Php500 sometimes none, even the Lipa Community Park is open, there is also nothing added in our income.

Lipa City Mayor Eric Africa in the interview said that the time of ECQ and GCQ, it is quite strict but right now it become more relaxed and many people can go outside, the children, the senior citizen and they enjoy somehow a little freedom while the COVID cases are low.

In order to survive and regain the lost income of MSMEs, they applied different strategies. More of the traditional businesses shifted to digital, bring their products and services online.

“We come up with a different strategy to continue the business. Since there are a curfew hour before and many people cannot go outside for a long time, we think a new services and solutions. As part of this, we registered at food panda, grab food and ala-eh express deli-very. You need have a something that can persuade the people to buy because many restaurants reopened again and we introduced a new food variant aside from drinks. We also converted our KTV rooms for different events like bridal shower, conference meeting, birthdays and more. Right now, we have an unlimited shrimp, combo meals and we offer also a promo not only for food but also in drinks, as part of our marketing strategies,” Maria Ysmaela Ricafrente Operation Manager of Bistro Restaurant and KTV Lounge said.

With the social media platforms and the boom of different delivery services, many businessmen used these to become more easier to advertise, market, serve, order and deliver their products to their customers.

According to Jessica C. Alogria, a kakanin vendor, her income is less than a half compared before but during pandemic, she saves money and budgeted their income just to survive and buy essential needs for their home and for her children.

The DTI, the Department of Labor and Employment, Local Government Units, different organizations, and banks took actions by providing projects, programs, loans, equipment and services to help the MSMEs.

“We have a moratorium in payment of taxes in our market and here around the city hall. In the mean time we did not require them to get a mayor’s permit specially in small and medium enterprises.  We also lowered the computation of their taxes. Many businessmen reached out help, like in the cooperatives we give an assistance, that is our help so that their businesses avoided closure. In small businesses we helped them by giving a capital. Some of them got Php5,000, Php10,000 and the others got up to a Php300,000 specially the big cooperatives,” Mayor Africa shared.

The Land Bank of the Philippines supports the SMEs through its lending program. The 81 provinces nationwide, entrepreneurs were given the support they need to start or expand their existing business wherever they are in the country. One of the loans provided was the Term Loan Facility. Said loan covers the finance business expansions, purchase of additional machinery and equipment/ fixed asset acquisition, finance permanent working capital arising from expanded operations and project financing. These eligible borrowers may either be Single Proprietorship, Partnership, and Corporation, while the eligible projects are divided into different category like Agri-Business, Manufacturing, Trading and Services.

“We give loan for MSME but it depends in appraised value, total project cost, and capacity to pay. If it is start -up business, the basic needed is business plan while if the business is existing, we ask for financial statement for the last three years, then the portion of collateral, photocopy of titles, tax revenue and lot plans.  In terms of loan payment, it also depends in the cash flow of the business,” Land bank of the Philippines- Batangas Area added.

TUPAD or Tulong Panghanapbuhay sa ating Disadvantaged/ Displaced Workers is a program of Department of Labor and Employment with the cooperation of Local Government Units, Party List, Senators which provides a temporary wage employment to the workers of informal sectors who lost their jobs and whose earnings were affected by COVID-19 Pandemic. It includes community and social activities like cleaning of public areas, public school, roads, beautifications of public market and mostly planting trees. Beneficiaries work for 4 hours a day minimum of 10 days and they will be received Php100 in each day with the total of Php4,000. The total of beneficiaries of this program in Lipa City was about 20,830.

The DTI has many projects and programs to help the MSMEs before and during the pandemic. The Negosyo Center Program which is responsible in promoting, training, coaching and facilitating services for Micro, Small and Medium Enterprises in the country. Under the Bayanihan Cares program with the cooperation and attached agency SB Corporation of DTI, the MSMEs can loan of Php10,000 up to Php5.0 million, with the period of 12 months or one year, no collateral required and no interest. Aside from this, DTI also a Livelihood Seeding Program – Negosyo Serbisyo sa Barangay (LSP-NSB) which the priority assistance shall be given to MSMEs affected by natural calamities including health disasters like pandemics.

DTI – Batangas Provincial Office added some program they have like OTOP Next Gen. Product Development which have total of 39 beneficiaries, Kapatid Mentor Me a capability building training with 20 total beneficiaries and the Pangka-buhayan sa Pagbangon at Ginhawa that will going to launched in the year 2022.

Based on the statement of National Economic and Development Authority (NEDA) said that the government’s economic recovery package must be accelerated to support businesses to retain or employ new workers. As added the recovery package was consisted of a combination of fiscal, monetary and financial instruments totaling about Php 2.8 trillion or 15.4 percent of the country’s gross domestic product. In the specific reforms that was enacted in Corporate Recovery and Tax Incentives for Enterprises or CREATE Act provides the largest-ever fiscal stimulus package for micro, small and medium enterprises (MSMEs)in the history, through a 5 or 10 percentage-point reduction in the regular corporate income tax-rate.

The new COVID-19 alert level system released by Inter Agency Task Force for the Management of the Emerging Infectious Diseases where the businesses establishments in Alert Level 1 can operate at full capacity provided that needed to follow public health standards, Alert Level 2 are allowed to operate 50 percent while at Alert Level 3 are allowed up to 30 percent and in Alert Level 4 are not allowed to operate.

In the situation of MSMEs and businesses in Lipa, many establishments reopen and continue their operation since the city is under Alert Level 2.

“In our business industry, we continuous and still followed the protocols. We let businessmen to self-regulate their establishment. The important is the balanced between the business and the safety of our people are always maintain,” message of Lipa City Mayor Eric Africa.|

[This story is supported by a grant from the Philippine Press Institute (PPI) and the Hans Seidel Foundation (HSF).]

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