House Economic Stimulus Response Package Cluster co-chair Rep. Joey Sarte Salceda (Albay, 2nd District) has unveiled a strategy for a strong “structural response and economic reforms to shape the country’s socio-economic prospects” and keep consumer, labor and business confidence up under the threat of the Covid-19 pandemic.
Salceda, who also chairs the House Ways and Means Committee, presented his Economic Stimulus Act version last week before an online audience of 812 businessmen, analysts, scientists, and academic experts in a ‘Webinar’ teleconferencing forum through the ZOOM app. The event was hosted by the Shareholders’ Association of the Philippines.
Salceda’s economic stimulus version aims to primarily “keep everyone in the boat,” keep firms from falling out for no fault of their own, lift the economy from recessionary shock due to domestic and global lockdowns, and restore the economy to full employment.
The proposal, which now forms part of the Philippine Economic Stimulus Act package soon to be endorsed by the House’s Stimulus Response Cluster, lays out a series of structural responses from the possible easing up of the Enhance Community Quarantine starting May 2020 until an anti-Covid 19 vaccine is discovered towards 2023.
“We assume the Philippines will make inroads starting May 2020, but with no cure and no vaccine yet, it will be mass testing that would enable the gradual return of business operations and societal functions,” Salceda said.
“Without testing, a modified CQ [community quarantine] will allow labor participation to increase from 23 percent to 50 percent, but keep consumer, labor and business confidence stuck in a cave, while risking a second wave that would compel another lockdown which both the economy and the government can no longer afford,” he said.
The PESA draft proposes to inject about P1.3 trillion to P1.4 trillion in the first year of the intervention period of 2020–2022 to help workers and businesses deal with the effects of COVID-19. Salceda estimates the projected growth of the stimulus on the gross domestic product from 2.6 percent in 2020 to 5.3 percent in 2023.
The proposal has a P20-billion budget component for the procurement of test kits to help build consumer and business confidence after the lockdown, a sense of normalcy in many public areas like businesses, and airports and help restart the economy.
Salceda said he primarily proposed the test kits “as the first step” to a stimulus. “Any reopening must start with the protection of consumers and workers …. we test you before check in, we check you before going to work, until we get an effective vaccine,” he said.
The testing must be massive and even local government units will be supplied with kits, until a vaccine is introduced, to build up consumer and business confidences. It is a stimulus because it will encourage people to go out, and be tested anywhere they wish to go, he said.
Salceda said the discovery of the vaccine is the most critical determinant of recovery, seen between 2021 and 2023 but the “minimum health standards” starting with proper hand washing, PPEs, social distancing and testing should be observed carried out.
Given the country’s “fiscal, monetary and external balances, it is actually the agility and strength of the structural response and economic reforms that would shape the complexion and direction of Philippine socioeconomic prospects, Salceda said.
Under his proposal, Salceda also recommends an enhanced “Build-Build-Build” Program, as the “economic multiplier of infrastructure can be as high as 3.66, while its Year I multiplier can be as high as 1.02, which suggests that for every peso spent for infrastructure an additional peso is generated in consumption and investment.”
The proposal also calls for the organization of the National Emergency Investment Corporation among others to consolidate troubled businesses and decide simultaneously how these would be resolved in a common procedure and offer loans in exchange for equity of the same value in corporations that would otherwise have continued operation but now at risk of bankruptcy.
The agency would also assume in exchange for equity of the same value the financial obligations of these corporations, evaluate the performance and ensure good corporate governance and perform due diligence inherent in its nature as capital allocation firm of the government.