The ‘economics’ of nCoV

Identified as the epicenter of the deadly 2019 novel coronavirus acute respiratory disease, or nCoV for short, China reported to the World Health Organization (WHO) that there are currently 42,638 total cases of infection and this includes the 1,016 people who died from the virus. That was the situation as of this writing and the latest number of new cases is not encouraging. 

While new reported cases tapered off a bit last Sunday, the latest number of nCoV infection, however, doused initial positive prognosis that the containment measures so far implemented in China are succeeding. This, despite the Chinese government locking down travel and transport to and from Hubei province in China in a bid to contain the spread of this highly infectious disease. The source of the nCoV infection was first traced in a marketplace of animals in Wuhan City, the capital of the province of Hubei, major agriculture and electronics centers in China.

To date, at least 24 of China’s 31 provinces, municipalities and autonomous regions, including Beijing and Shanghai, have reportedly ordered all business establishments not to reopen before Feb. 10 at the earliest. Latest reports have it, this has been extended until Feb. 15 following a resurgence of nCoV cases being admitted to hospitals in China.

The global spread of the nCoV has caused severe disruptions, not only here in the Philippines but in other countries as well, and more so  particularly in China. After all, China is currently recognized as the world’s second largest economy and a major trading hub for many of the countries around the globe. 

Finance Secretary Carlos Dominguez was quoted a few days ago as having assuaged the business sector that  the government was “ready to implement monetary and fiscal tools to counter potentially adverse economic fallout” of the nCoV impact to the Philippine economy as a whole.  In his testimony last week before the Senate committee on health public hearing on the nCoV, Dominguez admitted frankly the hardest hit of the global infection would be the Philippine tourism sector. The Lower House is set to conduct today its own inquiry into the impact of nCoV to our country's tourism and travel industry.

It is roughly estimated by a local tour operators’ group that as much as P10 billion of potential revenues were being lost as the Philippine government continues to impose a travel ban to and from China, the second largest tourism market of the Philippines. About 50 percent of reservations in Boracay, Bohol, Cebu, and Palawan have been canceled as of last week, according to Philippine Tour Operators Association president Cesar Cruz.

“Both for inbound and outbound [travel], it would really have a very big effect,” Cruz cited. The nCoV infection and the consequent travel ban heavily impacted the Philippine tourism sector because it came at a time “during the peakest of the peak, which is the Chinese New Year,” Cruz bewailed.

Department of Tourism (DOT) Secretary Berna Romulo-Puyat could not agree more. But Puyat is one who does not blink to challenges thrown her way. Last Monday night, Puyat organized a meeting with President Rodrigo Duterte along with the major stakeholders and players led by the Tourism Congress of the Philippines (TCP).

“To mitigate the economic impact of the nCov crisis, the tourism sector has agreed to roll-out a tactical program that will offer more value-added tour packages, discounted accommodation rates and marked-down prices for domestic flights,” Puyat laid down this to me a day before the meeting. Even before temporary ban to trips in China and subsequently to include Taiwan were implemented, Puyat added, the DOT has already this “roll-out tactical program” in place together with the TCP-led private sector tourism sector.

Attending that meeting were, namely,  Lance Gokongwei, president and chief executive officer (CEO) of Cebu Pacific; Ricardo Isla, CEO of Air Asia along with Deputy Speaker Michael Odylon Romero whose family has stakeholdings in Air Asia; Gilbert Santamaria, president of Philippine Airlines; Jose Clemente, president of TCP and CEO of his family-owned Rajah Tours; and Arthur Lopez, president of Philippine Hotel Owners Association. Ubiquitously present also in that meeting was Senator Christopher “Bong” Go and concurrently special assistant to the President.

After the decision of the Inter-Agency Task Force on coronavirus to add Taiwan to the travel ban under the country’s “one-China policy,” PAL, Cebu Pacific, and Air Asia immediately complied the cancelation of flights between Manila and Taipei until further notice.

But the WHO reiterates it does not recommend any travel ban or restrictions in connection with nCoV.

During that meeting, Puyat thanked all the top decision-makers of the tourism industry “for making travel within the country more accessible and affordable,” especially to benefit more the Filipinos.

She posted the next day on her Facebook account photos and video of the meeting with President Duterte who promised to join them if need be, in a caravan to promote domestic tourism across the Philippines.

“I’m so happy with the support from the tourism sector to lower travel rates in accommodation and airline tickets. This is true Bayanihan sprit at work to sustain tourism growth in these challenging times. And now, the President is going to travel with us!,” Puyat announced.

The 74-year old President Duterte, who is turning a year older next month, has publicly declared being oblivious of the dangers of him contracting nCoV. With his supposed air purifier hanging on his chest, traveling around the country for President Duterte amid the nCoV infection scare will not stop him to join the DOT caravan. 

“Mabuhay ang Pilipino, mabuhay ang turismo ng Pilipinas!” President Duterte vowed with his patented closed-fist raised up in the air.

An economics professor before she joined the Cabinet of President Duterte, the DOT Secretary could hold her fort amid the dire projections of the nCoV impact to the tourism prospects as painted by the economic team headed by Dominguez. As far as the DOT tactics, Puyat noted opportunities and emerging markets that cover Western Europe, the Middle East, Russia and the Commonwealth of Independent States, and neighboring Southeast Asian countries.

Likewise, she added, the DOT will intensify its marketing and promotions domestically and internationally in key traditional markets such as South Korea, the United States and Japan, although the same countries have confirmed nCoV contamination and infection. 

But she reassured stringent measures are in place in all ports of entry in the Philippines from quarantine checks of body temperature and vigilance for any signs and symptoms of all arriving guests are being checked from whatever countries they originated.

So talking about the economics of nCoV, yes it has its downside.  But it is not an all-doomsday event but there are new opportunities that wait to be discovered and tapped. So take it from our DOT Secretary: #ItsSTILLMoreFunInThePhilippines.