"The Philippines needs to recover from the pandemic, dramatically and fast."
That is how early Albay 2nd District Rep. Joey Salceda sees the beginning of an uptick in the Philippine economy. It is also the month when the global economy begins to shift its focus on recovery, he says.
Everything, it seems, is anchored on vaccination, specifically when major regions like North America, Europe, and East Asia, if not the world itself, nears what is called herd immunity—the point when the COVID-19 virus stops from jumping from one person to another and withers away unable to replicate itself.
Optimists in the Duterte cabinet now think herd immunity, or 70 percent of the population, could be achieved, before the middle of 2022, at the latest. By July this year, the government expects to secure up to 30 million doses of vaccines—good for 15 million Filipinos.
With recovery this year a good possibility, Salceda thinks the government should now prepare for the start of an economic boom.
Two actions must be done: One, release the rules and regulations for the CREATE Law, which Salceda principally authored; and two, open up the economy by removing restrictions or limits on the entry of foreign investments in crucial sectors of the economy.
Opening up the economy includes amending three major measures –the Public Service Act (PSA), the Foreign Investments Act (FIA), and the Retail Trade Liberalization Act. The three bills to amend the three laws are all authored by Salceda.
Amending the PSA redefines what is a utility to enable foreigners to own majority of a utility franchise. At present, ownership is limited to Filipinos or 60 percent majority Filipino companies.
Salceda’s House Bill 1221 seeks to delete the provisions in the FIA relating to the “practice of professions” from among the items listed under the Foreign Investment Negative List (FINL). It will lower the minimum employment required to 15 direct employees for a $100,000 foreign investment in small and medium-sized domestic market industries.
In seeking to amend the Retail Trade Liberalization Law of 2000, Salceda’s HB 1222 sets the minimum paid-up capital and locally produced stock inventory requirements for foreign retail business enterprises.
The 2000 Retail Trade Lib law allows a foreign investor, with a minimum $2.5 million to fully own a retail establishment. Under 1180, enacted in 1954, a foreigner could not go into retail.
Meanwhile, the national capital or NCR should power an economic upturn. NCR currently accounts for half of COVID cases. But with increased vaccinations, the region looks set to be the first to show an economic upturn.
The country’s three principal regions, Metro Manila and Calabarzon, could achieve immunity ahead of the country’s 15 other regions. NCR produces 32.2 percent of total economic output; Calabarzon 14.3 percent; and Central Luzon, 10.4 percent.
Usually, herd immunity is when 50 percent of a country’s population is vaccinated. But America’s infectious disease expert, Dr. Anthony Fauci, thinks 70 percent is a better benchmark to target.
The old threshold of 50 percent could still work, however, for NCR. It counts only the vaccinated population. That threshold does not reckon with the number of people who have contracted the disease and survived it. Those people now have natural immunity.
Metro Manila, or National Capital Region (NCR) produces 32.2 percent of the country’s total economic production.
NCR accounts for 39.59 percent of total COVID cases—512,000 out of 1.293 million reported so far. Since actual COVID cases are 3x to 4x the reported number, there could be as many two million (4x 512,000) who already have immunity from the virus in Metro Manila. That 2.0 million is 15 percent of the capital region’s 12.87 million.
To achieve herd immunity for NCR, at 50 percent, the government needs to inoculate only 6.4 million. If you subtract 2 million from that, a more realistic vaccination target for Metro Manila is only 4.43 million. At the current rate of 150,000 vaccinations per day, the government can inoculate all the 4.43 million Metro Manilans in just one month. This means by August, life, for the people and for business, could be back to normal.
About 65 percent of the vaccines are allocated for Metro Manila—which means an inoculation rate of 97,500 per day. At that rate, to vaccinate 4.43 million Metro Manilans, government needs just 45 days—or end July 2021 at the latest. The OCTA Research Group has urged the government to allocate 90 percent of the total vaccine supply to Metro Manila.
“Simply by increasing the volume of vaccines we send to the NCR, we will be able to decrease the overall caseload of the pandemic,” explained OCTA research fellow Fr. Nicanor Austriaco, OP, last May 2021.
This June and July as many as 10 million vaccine doses will arrive in the Philippines. If half of that, or 5 million, are deployed in Metro Manila, then the national capital can look forward to an unprecedented boom.
Metro Manila, after all, is the biggest contributor to economic production, the biggest employer and is the center for the services sector—which contributes 57.7 percent of total GDP (or economic production), and the hub for SMEs, which are 98 percent of all businesses.
There are signs COVID is weakening in the country. From a peak of 10,686 cases in April 16, 2021, daily cases have dropped sharply to below 5,000 a day by early June. As of June 12, there were 6,583 daily cases. Total deaths were more than 22,000.
The Philippines needs to recover from the pandemic, dramatically and fast.
In the whole of 2020, the economy contracted by a record 9.6 percent negative growth, the deepest in history. In the first quarter of 2021, the recession continued, with the economy declining by 4.2 percent.
According to the World Bank, the Philippines registered the worst growth performance among peers in the region such as Thailand (-2.6 percent), Indonesia (-0.7), Malaysia (-0.5), and Vietnam (4.5).
“The growth contraction was fueled by weak domestic demand, driven by the combination of containment measures, weak confidence, and rising inflation,” said the bank’s June 2021 economic update. “Tepid external demand was driven by the sharp contraction in services exports amid lingering restrictions and weak demand for international tourism while goods exports recovered. The public sector was the main driver of growth with an expansionary budget.”
Weighed down by the COVID-19 pandemic, the Philippine economy is forecast to grow at 4.7 percent this year before accelerating to 5.9 percent in 2022 and 6 percent in 2023, the World Bank has forecast.