Business group urges banks to extend loan maturities

MANILA, Philippines — The country’s largest business organization is calling on banks and non-bank financial institutions (NBFIs) to give at least one year extension on loan maturities due from March 16 until Dec. 31 to help firms struggling to survive amid the government imposed lockdown to slow the spread of the coronavirus disease 2019 or COVID-19. 

In a statement, Philippine Chamber of Commerce and Industry (PCCI) president Benedicto Yujuico said the group is seeking a longer extension on loan maturities as there is growing concern among members on deteriorating cash positions and diminishing ability to avoid massive layoffs due to the implementation of the enhanced community quarantine (ECQ).

“The ECQ has brought substantially all businesses to a sudden and unexpected stop. Many are now facing economic distress, forcing them to resort to drastic cost-cutting, layoffs and pay cuts.  Even as the government slowly relaxes the quarantine measures, we expect that the effects of this crisis will continue to be felt and that businesses will continue to struggle through the end of 2020,” he said. 

The National Capital Region (NCR) has been under ECQ since March 17. 

Apart from NCR, Central Luzon except Aurora province, Calabarzon, Pangasinan, Benguet, Albay, Iloilo including Iloilo City, Cebu including Cebu City, Bacolod City, Zamboanga City, and Davao City would continue to be under ECQ until May 15.

Yujuico said restructuring loans would be a big help not just in preserving jobs, but also in avoiding permanent closures of businesses that are long time clients of banks. 

“Without the support of Philippine banks and other NBFIs, many businesses will likely be forced to shut down,” he said. 

PCCI said many industries are at risk with business operations affected by the lockdown.

Among those at risk are businesses engaged in the transportation, logistics and storage sectors given restrictions imposed on flights or trips. 

Also at risk are retailers like department stores, those involved in repair of motor vehicles and motorcycles and other stores not classified as essential as these businesses are likely to be restricted even after the quarantine is lifted. 

“Sales would likely be subdued as consumers will prioritize essential items and many restrictions might be imposed by the government post-lockdown.  Many consumers are likely to choose to continue to quarantine themselves,” PCCI said. 

Retail petroleum is also at risk due to the collapse in oil prices and lower demand.

PCCI said leisure related businesses such as gambling and betting activities, sports activities and amusement and recreation, as well as hotels, resorts and other types of accommodation and food service activities, are likewise at risk as current restrictions may continue even after the ECQ. 

Other industries at risk due to the COVID-19 crisis are real estate activities particularly those engaged in leisure related sectors and targeting the low-income segment; mining and quarrying; manufacturing of textiles, apparel, leather, coke and refined petroleum, motor vehicles, trailers and transport equipment; construction; financial and insurance activities; professional, scientific and technical activities like architecture and engineering, and advertising and market research; administrative and support services including travel agency, tour operator, and reservation service; as well as other community, social and personal activities.