Coronavirus: Hard road ahead for businesses in the Philippines even as lockdown restrictions are eased

Markers to keep social distancing are placed on the floor and the seats inside the almost empty SM Mall of Asia, on May 27, 2020. PHOTO: REUTERS

MANILA - When President Rodrigo Duterte effectively placed the whole of the Philippines under lockdown on March 16, Mr Jason Bonzon's towing business was hit hard.

With Metro Manila shutting its borders and people told to stay home, the country sought to contain the spread of Covid-19 by implementing one of the strictest lockdowns in the region.

But for Mr Bonzon, that meant burning through his capital and even his personal savings.

Now, with lockdown measures about to be further eased, he is understandably eager to get his business up and running.

But he is facing a steep climb out of the hole he finds himself in.

"I'm at the end of my rope. I had to send at least one of my (two) trucks out," said Mr Bonzon, 51.

He sent his employees home for about two months but gave them a small sum each week to help tide them over the lockdown.

They are back working for him now, "but the money is not yet coming in", he said.

"Most are still receivables, but it's better than having no income at all," he added. His clients include local distributors of Harley-Davidson and BMW.

Businesses, both big and small, are in the same hole.

Philippine Airlines is near bankruptcy and fast-food giant Jollibee may have to shut down many of its restaurants abroad.

But the situation is even more dire for over a million micro, small and medium-size businesses (MSMEs). By one estimate, most have just two to three months worth of cash left.

Even after curbs are eased, they will likely be operating at a loss.

Social distancing rules will still be in place. This means foot traffic at malls will continue to be very lean.

An SM mall in Molino town, Cavite province, south of Manila, used to draw from 20,000 to 60,000 mall goers each day. Now, its sprawling department store sees just seven shoppers at times.

Mr Jonvic Remulla, the governor of the province, has ordered malls in his jurisdiction to admit just 50 shoppers at any given time. To make sure they do not linger and form a crowd, they are issued a time card that limits their stay to just an hour.

With so few customers, many of the mall's core tenants and smaller locators have decided not to reopen.

A store supervisor told The Straits Times the mall has issued notices to its staff that it may have to let them go once their contracts end if sales do not pick up soon.

He said he himself has been side-hustling by delivering parcels for courier firm Lalamove, to secure a source of income just in case he gets laid off.

"People are spending less because they are not sure whether they will still have jobs by year's end," said one researcher at the National Economic and Development Authority (Neda).

According to a Neda survey, seven in 10 of some 390,000 respondents lost their jobs during the lockdown, which has lasted for more than two months.

Consequently, family income shrank by nearly half. About 60 per cent of respondents said they spent less money on food and some 13 per cent said they had to borrow money from friends and family.

Small firms like Mr Bonzon's towing service will have to reckon with the "new normal".

Besides the meagre income, they also have to absorb the added cost of protecting their workers from the virus.

This means paying for their masks, which now cost 1,100 pesos (S$31) per box of 50 pieces, and having their employees tested for the Covid-19 every two weeks. Right now, a test kit costs anywhere from 1,000 pesos to 4,000 pesos.

Mr Bonzon said he is giving his workers washable masks and face shields, but he is foregoing the testing.

"That would wipe me out," he said.

Philippine Chamber of Commerce and Industry chief Benedicto Yujuico said MSMEs will just have to figure out how to stay afloat till a vaccine is found.

"This is not an overnight process. This is not a switch that we turn on and everything will go back to normal," he said.

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