Foundation of Economic Recovery
Health experts are optimistic that a vaccine against the Covid-19 will become available later this year or in early 2021. As we wait for the cure, let us use the time that we have to improve our infrastructure as the foundation of our economic revival while carefully observing the health protocols spelled out by the government.
By proceeding with infrastructure projects, we will lay the foundation for a strong economic rebound and, at the same time, continuously provide income to thousands of construction workers. This is also timely as road traffic remains lighter today compared to last year’s.
But, first things first. We must ensure that our population is healthy and safe from Covid-19 before re-opening the economy. Conglomerates and smaller companies have agreed to comply with the rigorous security and safety protocols to prevent the spread of coronavirus. Such protocols include temperature checks, validation of ID or quarantine pass, hand and foot sanitation, wearing of face mask at all times, and physical distancing.
The Villar Group of Companies, which I head, is doing its share in re-starting the economy. It has started conducting rapid tests on employees as part of its return-to-work protocol in Metro Manila.
The tests are free of charge and will ensure the safety of the employees and their families. The Villar Group uses FDA-approved rapid testing strictly in accordance with all the guidelines and issuances of the Department of Health. Before the rapid testing, all offices of the Villar Group were disinfected and sanitized.
My company earlier completed the installation of disinfecting apparatus in nine hospitals and health institutions across Metro Manila. These are the Research Institute for Tropical Medicine in Alabang, Las Piñas General Hospital, Don Jose N. Rodriguez Memorial Hospital in Caloocan, Rizal Medical Center in Pasig, Quirino Medical Center, Philippine Heart Center and Lung Center of the Philippines in Quezon City, and San Lazaro Hospital and Santa Ana Hospital in Manila.
Disinfecting tunnels will help health-care workers, staff and everyone visiting the hospital get cleansed as they go in and out of the facility to curb the spread of the coronavirus.
Some conglomerates are doing the same to protect their workers. We need the cooperation of everyone to revive the economy.
We can only move forward once we have secured the safety and well-being of our workers.
The government, for its part, is making sure it remains focused on the macroeconomic fundamentals and the backbone of growth—infrastructure. I share the government’s optimism that the implementation of the recovery program, with the support of the private sector, will enable our economy to bounce back on a solid path to growth.
For instance, infrastructure projects under the government’s “Build, Build, Build” program can now resume in areas under general community quarantine.
The Department of Public Works and Highways has also given the go-signal in areas under enhanced community quarantine. Construction workers accredited by the DPWH will now be allowed to work on quarantine and isolation facilities, health facilities, emergency and maintenance works, flood control, and other disaster risk reduction and rehabilitation work.
In areas under the general community quarantine directive, the DPWH headed by my son, Public Works Secretary Mark Villar, allowed private and public construction projects to resume following compliance to safety guidelines prescribed for the implementation of infrastructure projects during the Covid-19 crisis.
The resumption of public works and private sector-led infrastructure projects is leading me to believe that our economy is in a position to grow by at least 7 percent in 2021. This forecast is supported by many institutions such as the International Monetary Fund. The Development Budget Coordination Committee, composed of government economic managers, believes the timely implementation of a well-targeted recovery program, alongside efforts of the private sector, will help the economy regain confidence and achieve a growth of 7.1 percent to 8.1 percent by 2021. Of course, this will depend on the availability of an effective vaccine against Covid-19.
To make sure we will get our hands on that vaccine, President Duterte’s administration is raising funds for such a purpose. Once a vaccine becomes available, the government will purchase doses of the vaccine right away. Reports said dozens of vaccines had started clinical trials, with many of them showing promising results. Let us hope that one of them will become commercially available this year.
Infrastructure development, meanwhile, is part of the Duterte administration’s economic recovery plan to create jobs and sustain growth. The government is in fact spending P1.74 trillion, or 9.1 percent of the gross domestic product, this year to respond to the health crisis and support the economy.
The Department of Finance also proposed priority action plans for economic recovery, including the continuation of “Build, Build, Build” projects, subject to minimum health standards; hiring of contact tracers to ease the viral transmission; and the passage of the proposed Corporate Recovery and Tax Incentives for Enterprises Act, or CREATE, the repackaged Corporate Income Tax and Incentives Rationalization Act, or Citira.
Aside from these action plans, our economic landscape is supportive of a strong rebound next year. The 0.2-percent contraction in our GDP in the first quarter was one of the least worrisome among Asian countries. The first-quarter figure was better compared to those of developed countries, whose contractions were anywhere from 4 percent to 7 percent. Trade Secretary Ramon Lopez said while the risk of global recession is real, “we are making sure that this is only transitory and we are already laying the foundation for our recovery.”
The inflation rate was steady at 2.2 percent in April, while the peso was hovering at 50.60 to 50.70 against the US dollar, which marked an improvement from the previous months.
Because of the strong peso backed by our external position, the gross international reserves hit a record $89 billion in March 2020, up by $5.38 billion or 6.4 percent from $83.61 billion a year ago. This, to me, is an indication that we have ample dollar reserves to service our foreign debt.
Remittances from Filipinos working overseas, another source of liquidity in the country, remained steady in the first two months of 2020, although figures for March and April may reflect the impact of the pandemic. Data show cash remittances coursed through banks increased 4.6 percent in the first two months of 2020 to $5 billion from $4.8 billion in the same period last year.
These funds will support household spending in the country and provide a lifeline to many small and medium enterprises that were allowed to reopen by the government.