The economic crisis caused by the COVID-19 pandemic is slowly reverting Cagayan de Oro its 1970s version, when it looked more like a town than a city, a councilor said on Tuesday, May 11.
George Goking, chairman of the city council’s trade and commerce committee, painted the gloomy scenario for Cagayan de Oro where the pandemic continues to wreak havoc on the local economy.
Hotels either closed down temporarily or became isolation facilities of the local government. Popular fastfood and convenience stores shut down one after the other in the first few months of the pandemic, and the remaining ones are struggling to survive in the city that once took pride in its vibrant economy.
Goking said at least two of the city’s biggest malls were on the brink of shutting down in December 2020, but decided to hang on a little longer despite heavy losses.
He and Irene Floro, former president of the Cagayan de Oro Chamber of Commerce and Industry (Oro Chamber), said a mall owner – one of the biggest groups of companies in Cagayan de Oro – reportedly filed for bankruptcy as early as last year.
“Back to the ’70s is exactly where the city is headed if this crisis continues,” Goking told Rappler. “I am very worried because more and more establishments are closing shop in the city, and there’s so much frustration and desperation now. People are going hungry.”
A ’70s era Cagayan de Oro means no malls, no hotels with a rating above one star by today’s standards, and no commercial center exclusive only to commerce. It was when the area surrounding a park near the Jesuit-run Xavier University in downtown Cagayan de Oro was the closest the city had to a commercial complex.
In 2014, the United Nations cited Cagayan de Oro as an “emerging city of tomorrow.” The Department of Trade and Industry ranked it as the fifth most competitive highly urbanized city in the country in 2018. But the pandemic threatens to further shrink the city’s economy, and significantly weaken its position as a major business leader in Mindanao.
Running on empty
Floro said big businesses in the city can sustain their operations despite losses for a year; mid-sized companies can subsidize theirs for six months; and smaller enterprises can last for only one to three months.
Cagayan de Oro’s food sector alone, she said, suffered losses of about 30% to 40% in 2020, and then it slowly picked up when the government eased restrictions.
Local officials and business leaders said the surge in COVID-19 cases in the city in recent days, and the government response to the threat could hurt local businesses further.
Goking said many businessmen in the city have used up their savings in 2020, the first year of the pandemic.
“Now, on the second year, they’re faced with debt problems. The situation is very difficult that even power and water bills are giving them headaches,” he said.
Despite requests for information, neither Mayor Oscar Moreno nor City Treasurer Jasmine Maagad could say how much taxes city hall collected from business establishments in 2020.
Moreno had anticipated, however, a significant drop in the city’s annual income as he submitted to the City Council in late 2020 a reduced budget of P7.25 billion for 2021, due to what he referred to as “economic setbacks.”
The budget, subsequently approved, was P250 million lower than 2020’s P7.5 billion. It was the first time in recent years for a Cagayan de Oro mayor to seek the approval of a reduced annual budget.
City hall has sought a P1-billion loan from the Land Bank of the Philippines (LBP) so it could carry out infrastructure projects in 2021 amid the pandemic and the financial crisis it has caused. – Rappler.com