Arise... Create Cures!

DEMAND AND SUPPLY - Boo Chanco (The Philippine Star) - July 15, 2020 - 12:00am

Magic mambo jumbo to get us out of our miseries? No. Those are three different economic stimulus plans. ARISE: Accelerated Recovery and Investment. CREATE: Corporate Recovery and Tax Incentives for Enterprises. CURES: COVID-19 Unemployment Reduction and Economic Stimulus

It is almost as if our bureaucrats and legislators are in a contest and having a fun time over beer trying to come up with the best acronyms to win over an increasingly exasperated and skeptical citizenry.

Actually, there is no agreement on what an ideal stimulus program should look like. The big problem is that our National Treasury is empty.

While we have the capacity to borrow to finance an economic stimulus program, the Constitution prevents us from funding a supplemental budget out of borrowings, only through savings… something we don’t have.

We, taxpayers, wish we can get back to business. The economy can’t wait too long to get revived.

The situation on the ground is dire as we common folks know. Local unemployment is on the rise. OFWs are coming home in droves. Small and medium size enterprises are closing down or downsizing staff.

Many industries, like tourism, do not see a future this year, and next year is still in doubt. Travel agencies must have laid off their staff by now. The only calls they get are from angry clients who want refunds on their airline tickets.

BPOs are struggling with new work rules, including the need to work from home. Their office buildings are constantly shut down with every reported COVID case.

Manufacturing is down. Schools and colleges are confused on whether they can hold classes this year or not.

The transportation industry is as befuddled as others while waiting for government to promulgate or clarify new rules. The DOTr doesn’t seem to be in a big hurry to solve very obvious transport problems within NCR and the country.

The airlines are keeping busy doing special flights to ferry home stranded Filipino workers in foreign ports. They are eager to get back to normal flights, or as close to it as they can, but it is an elusive goal.

Forget the entertainment industry. Movie houses remain closed. No concerts can be held. Performing artists have been idled. The only really significant entertainment company for most of our people that is providing food for the table for over 11,000 souls has been closed down out of political vendetta.

The only segment of the economy that seems to be doing really well are supermarkets and drugstores. But they have their problems too as new rules keep on coming on how they can do business.

Also busy are government offices issuing all sorts of new permits required to get around the country. It may now be easier to get a visa from a foreign embassy than a permit to go home to your province.

Hospitals seem to be doing good business, but not in a way that makes them happy. Several major hospitals issued notices last Monday their COVID facilities are full. Also busy are the funeral parlors. They have more dead people than they can handle.

The dying and the dead just about sum up the situation out there. People are being patient. Some are desperate. Everyone needs help.

The pandemic and the lockdown shocked us. We no longer want to spend money for anything beyond the absolute necessities. But we need to create more demand. Otherwise, there is no work and people go hungry.

The drop in consumer demand has been sharp. Shorter mall hours and all sorts of conflicting, nonsensical restrictions on operations are killing the retail industry, and the impact goes down to the factories like those producing clothing for the local market.

An industry source told me close to half of their workers have been furloughed. More people continue to lose more jobs this way, depressing demand further.

But we are a resourceful people. In this pandemic era, out of work people discovered the online selling business and just as fast, the BIR required them to register and pay taxes, past and present.

Online selling by housewives would have helped families earn some income while the main wage earner is on furlough from his company. The BIR should have more empathy, more sympathy, as Joey Concepcion repeatedly urged in a Zoom session I attended.

Looking at our ailing economy at street level makes me wonder how all these alphabet soup stimulus plans can provide quick relief for families with a nasty habit of eating three meals a day.

Maybe fixing the rules by which we are to live by in this new normal is a faster way of waking the economy up. It should be easy to get IATF, cities and provinces to agree on common rules governing malls, supermarkets and other retail establishments.

But clarity is anathema to this administration. The bureaucracy thrives in confusion as this creates opportunities for corruption.

In the meantime, while policy makers and legislators argue what kind of assistance the economy needs, we can ruminate on the large numbers they are throwing around.

Wage subsidy: P110-billion. DOLE cash for Work Program: P25 billion. Education (P42 billion), small business (P75 billion) and agri-fishery loans (P50 billion), loan guarantee (P40 billion). Tourism (P58 billion), Transportation (P70 billion). Manufacturing, exports, services (P44 billion).

There are proposals to reduce the Corporate Income Tax (CIT) and provide all sorts of incentives to private corporations in the hope corporations will reinvest these savings, create multiplier in jobs and income.

But to cover the deficit, there will be increased or new taxes on beverages, e-business, junk food and cigarettes that will all have a negative impact on consumer demand. Yet, corporations may not even invest all the largesse they will get from government.

In a free-falling economy or anemic recovery, corporations batten their hatches: pay down debts, buy back shares, but not invest. Rep. Stella Quimbo noted that corporates invest tax savings only when the economy is growing.

Yet we waste money on silly programs like Balik Probinsya: (P66 billion),National Emergency Investment Vehicle (NEIV) (P100 billion) for recovery of businesses.

We are a mess. Hopefully we find our way soon.

Boo Chanco’s e-mail address is Follow him on Twitter @boochanco.

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