Everybody Must Join In The Recovery Effort
We Filipinos should not depend solely on the government to solve all the ills besetting our economy. We must contribute in our own little way to revive the economy.
Many Filipinos, for one, are keeping their money in the banks. Many entrepreneurs remain hesitant to invest and spend amid the concerns related to the prolonged pandemic. While this is understandable given the quarantine restrictions that continue to impede the opening of business establishments, we should prepare for opportunities that will be available once the vaccination program rolls out at full steam.
Data from the Bangko Sentral ng Pilipinas (BSP) show that while outstanding bank loans declined 0.7 percent year-on-year in 2020, bank deposits actually grew 9 percent in the same period. What this tells us is that while we have enough money in the banks, they are not fully utilized to support domestic investments and spending. No wonder, our gross domestic product contracted 9.6 percent in 2020, the worst among Southeast Asian economies.
Bank deposits last year reached P14.9 trillion, accounting for around 83 percent of our gross domestic product of P17.9 trillion at current prices. Total deposits rose 9 percent, or P1.2 trillion, from P13.6 trillion in 2019, according to Philippine Deposit Insurance Corp. Meanwhile, outstanding loans of universal and commercial banks, net of reverse repurchase placements with the BSP, declined 0.7 percent to P9.18 trillion as of end-2020.
More people placed their money in the banks despite the pandemic, as shown by the 8.7-percent increase in the number of deposit accounts to 80.1 million in 2020 from 73.7 million in 2019. These included large accounts, or deposits with balances above P500,000, which expanded to 2.7 million in 2020 from 2.5 million in 2019. The combined assets of these large depositors increased to P13.1 trillion from P12 trillion.
The PDIC looks at the deposit growth as an indication of improved depositor confidence in the banking system despite the pandemic. However, it may also mean Filipinos were shying away from purchasing big-ticket items, such as houses and cars, and were parking their money in banks, to the detriment of the real estate and automotive sectors.
Such reluctance among consumers to spend actually hit most segments of the economy, which heavily relies on personal consumption expenditures. The Philippines, according to the World Bank, experienced the sharpest contraction of output among the largest economies in Southeast Asia, reflecting the impact of the pandemic, combined with strict nationwide lockdowns and mobility restrictions.
This is why it is important that we encourage entrepreneurs and consumers to support recovery efforts, while continuing to observe the health protocols mandated by the government.
I am impressed by recent data from the Department of Trade and Industry showing that 432,962 business names were registered in the first quarter of 2021.
The figures followed the 44-percent increase in business name registrations to 916,163 in 2020 from 637,580 in 2019. The DTI expects business name registrations to top 1 million this year on the back of the growing e-commerce in the country. Over 80,000 online sellers last year registered their business names, up from just around 6,000 in 2019.
I believe many entrepreneurs registered their business names in preparation for the full reopening of the economy once we bring the health crisis under control. Hopefully, the one-month ECQ and MECQ in Metro Manila, Bulacan, Rizal, Cavite and Laguna will lead to a more manageable situation that will allow the gradual reopening of businesses.
WE hope that the new hospitals being put up by the government, through the Department of Public Works and Highways, will increase the capacity of our health-care sector and subsequently ease the pressure to keep the strict quarantine measures that are shackling the economy.
The DPWH under the leadership of Secretary Mark Villar is building modular hospitals, temporary treatment and monitoring facilities nationwide to accommodate the rising number of people suffering from the disease. The agency is building off-site medical facilities with hundreds of beds for moderate, severe and critical patients. In Manila, government officials broke ground on the Manila Mega Covid Field Hospital at Rizal Park that can accommodate at least 500 patients once completed.
The truth is we need more hospitals to attend to the needs of every Filipino suffering from Covid-19. Our business sector should take this as a hint to invest in medical facilities, as the government cannot do it alone.
With indications showing that the pandemic may not be resolved anytime soon, we have to rebuild our healthcare infrastructure to make it more responsive and better equipped to handle the situation so that the government will not be forced to declare economic restrictions again.
The construction of more hospitals, along with the vaccination program, will help us reopen the economy and allow our entrepreneurs to support recovery efforts. Israel has shown that it could be achieved, when it recently lifted the mandatory face mask policy as the country’s mass vaccination showed dramatic results. The country reported that more than 80 percent of its population over the age of 16 received two doses of Pfizer/BioNTech vaccines, resulting in a sharp decline in hospitalizations.
While it may take us more than a year to have 70 million Filipinos inoculated, the example of Israel shows us that with the right approach, we can get through the challenges of the pandemic to restore our economy and support the creation of jobs for millions of Filipinos.