An attempt to divert the P10-B tourism fund
THE CORNER ORACLE - Andrew J. Masigan (The Philippine Star) - August 12, 2020 - 12:00am

Let’s be honest. The Philippine economy has always been fragile. A whopping 72 percent of the economy is attributed to private consumption. In other words, it is the people’s purchases of food, housing, energy, clothing, healthcare, leisure, education, communication, durable goods, transport as well as hotels and restaurant services that make the economy tick. This is why a militaristic quarantine, where people were precluded from going out to purchase goods and services, caused an  Armageddon-like impact on the economy.

NEDA reported that the economy contracted by a massive 16.5 percent in the second quarter. To put context to this, it is equivalent to one-sixth of our gross domestic product (GDP) being shaved off. The contraction is the worse in Philippine recorded history and the worst in Asia. It is so severe that it will cause the economy to contract by a massive 9.6 percent this year, according to the estimates of British banking giant HSBC. The year 2020 will negate the cumulative economic growth achieved in 2018 and 2019. What stings acerbically is that despite the steep consequences of its harsh quarantine, government has failed to curb infection rates.

The tourism sector is one of the bright spots of the economy since it contributes to both private consumption (money spent on hotels, restaurants and transport, etc.) as well as foreign exchange earnings. It affects both the demand and supply side. Its effect on the economy is like steroids, wherein its trickle down effect is long and deep.

Before the Wuhan virus struck, the tourism industry accounted for 12.7 percent of GDP or approximately $45 billion worth of economic activity. The foreign exchange it pumped into the system was second only to the semiconductor industry. Tourism was flying high, clocking in 9.9 percent annual growth despite the closure of Boracay. And because tourism is labor intensive, it provided jobs for 13.5 percent of the workforce or 5.7 million of our countrymen. There are approximately 1.03 million business enterprises operating in the Philippines and out of this number, at least 145,000 are in some way connected to the tourism industry.

The harsh quarantine coupled with the international travel bans and restricted movement between provinces brought the tourism industry to its knees. With no foreign visitors and local travelers, hotels, resorts, restaurants and entertainment facilities began hemorrhaging cash. They struggled to cope with fixed overhead expenses like payroll and amortization without the revenues to back it up. Many have turned insolvent and closed permanently. Those that are still operational fight to stay alive on a daily basis.

There have been millions of waiters, bellboys and cooks laid off already. Small entrepreneurs like spa owners, tour guides and souvenir vendors lost their livelihoods too. As of the end of June, 7.991 million have become unemployed, the majority of them from the tourism sector.

For tourism-related establishments still operational, they are further burdened by the need to re-invest in COVID-proofing their establishments. This includes renovating their facilities to comply with new safety standards and re-training their staff. All these entail funds…. funds these beleaguered tourism entrepreneurs are bereft of.

The tourism industry is in desperate need of a lifeline from government. Without it, they will fall into insolvency, en masse, and we will be left with no industry to speak of when this pandemic is over.

The Senate was responsive to the needs of the tourism industry. Senate Bill 1564 was passed and it allocated P10 billion to the Department of Tourism to save tourism-related establishments. The ten billion was to be used to provide soft loans and/or loan guarantees to affected establishments; provide credit facilities to establishments that need to renovate or modernize their facilities; provide funds for re-training on COVID protocols; provide funds for marketing and promotions; assist in digital transformation especially for tourist tracking and emergency response, among others.

Ten billion pesos is hardly sufficient to save the industry – but it will be enough to make a difference.

Following the lead of the Senate, Congressmen L-Ray Villafuerte Jr., Ferdinand Martin Romualdez, Mike Defensor and Jose Antonio Sy-Alvarado authored their own version of the bill, otherwise known as House Bill 6953.

The Congress version also allocated P10 billion but not to save tourism related establishments. Instead, it channeled the funds to tourism infrastructure under the Tourism Infrastructure Enterprise Authority (TIEZA). It also allocated P100 million for training and various subsidies.  House Bill 6953 was passed on third reading.

Congress’ version of the bill should alarm us all because it channels funds not to where it is needed most (to save tourism-related establishments) but to finance infrastructure. Infrastructure is not the pressing need at the moment  and to use it for this purpose robs the tourism sector of the lifeline they need. And more alarmingly, to channel the funds towards infrastructure is like  giving congressmen more pork barrel funds at their disposal. It is a potential avenue for corruption but this time,  using funds meant to save small and beleaguered business owners. It is an insidious proposal.

Since both the Senate and House versions have passed their respective chambers, it boils down to the Bicameral Conference Committee to come up with the final version to be enacted.

Our hope is that the Bicameral Committee mandates the DOT to use the funds for its true and noble purpose, which is to save critically impacted tourism enterprises from insolvency. We hope it rejects Congress’ intention to use it for infrastructure.

In President Duterte’s last State of the Nation Address, he condemned  government officials who steal, squander or divert funds that are otherwise meant to save people’s lives and livelihoods under the Bayanihan Act. Diverting this P10 billion to infrastructure opens countless possibilities for corruption. It goes against the very directive of the President. How it passed the Speaker and the other members of the House raises suspicion.

This moment of crisis is not the time to be opportunistic and possibly engage in graft. It is the time to unite and lift each other up. The idea that certain members of Congress are willing to divert funds meant to save a whole industry towards  a dubious purpose leaves a putrid taste in the mouth. It obliterates whatever credibility is left of Congress.

This is taxpayers’ money we are talking about. Money that hard-working Filipinos pay the government. I will not be alone in raising a howl if the Bicameral Committee adopts the congressional version.

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