The coronavirus pandemic has struck down various sectors, and small businesses all over the Philippines have taken the brunt of its impact.
Although micro, small, and medium enterprises (MSMEs) expected to receive aid from government to cushion the blow from their huge financial losses, 5 months have passed since the start of the lockdown and little to no support has been felt by these businesses.
In Calabarzon, a printing shop at the University of the Philippines-Los Baños decided to cease its operations on August 1 after 14 years of providing services to students.
Called Iskulmeyts, the printing shop suffered from a huge loss in income after the shift of universities to distance learning forced them to halt their operations.
“Since the lockdown was too long, there was no mode of transportation, people were not allowed to go out, our main market, the students of UPLB, shifted from physical classes to online classes; we really had no chance to acquire an income,” said Henry Ramirez, Iskulmeyts proprietor.
Worried about the fate of their business, Iskulmeyts sought financial assistance from the Department of Trade and Industry (DTI) by applying for a capital loan.
Their hope to recover from the storm was wiped out when they received unfortunate news from DTI – their loan application was declined as government funds were “running out”.
The denial of Iskulmeyts’ loan application took place despite the P1 billion budget allocation to finance MSMEs affected by the pandemic through a program called Pondo sa Pagbabago at Pag-asenso (P3).
The amount was part of the P27.1 billion package rolled out by the Duterte administration on March 16 to address the impact of the pandemic. (READ: ‘Sariling diskarte: The heavy impact of lockdown on micro, small businesses)
As of July 30, the DTI Pondo sa Pagbabago microfinance program has accepted 21,982 applications and denied 1,638 accounts. According to Small Business Corporation, a DTI-attached agency, applications were denied due to the “less than 1 year business track record per loan application document.”
However, after its P1-billion fund fell short of meeting demand, the DTI announced on July 25 that they will temporarily stop accepting loan applications from MSMEs.
Call for tax exemptions amid pandemic
Even after suffering from huge financial losses and receiving zero subsidy from the government, Iskulmeyts said that they were forced to continue to pay taxes.
In March, the Bureau of Internal Revenue (BIR) amended an order to extend the deadline of tax payments until May 23 in light of the pandemic.
However, several business owners have called for general tax amnesty and not just an extension on tax payments, as the health crisis hinders them from generating income.
“(We) appeal to temporarily cease the taxes and permits. Wala na ngang income, patuloy pa rin kaming nagbabayad,” Ramirez said. (We already suffered from loss of income, yet we are still paying taxes.)
Due to the incurred losses for 5 months, absence of government subsidy, and continued tax payments amid the pandemic, Iskulmeyts was forced to close down even if it felt like “losing a loved one.”
Ramirez also expressed his uncertainty in bouncing back even when the pandemic is over, as it is difficult to predict the feasibility of operating their business in the post-crisis scenario.
“The government has no concrete plan now, hence, we are also having a hard time to plan for our future. How can we plan for our future if we do not know if we’re gonna survive the present?” Ramirez said.
Subsidy ‘not enough’ to protect business
Even in Metro Manila, prominent businesses have not been spared by the economic impact of the pandemic and lack of financial assistance from government.
One of them is the Chocolate Kiss Café, a 23-year-old iconic restaurant and café at the University of the Philippines (UP) Bahay ng Alumni. It announced recently its decision to close its doors beginning August 23.
In an interview with Rappler, Ina Flores-Pahati, the daughter of co-founder Maline Flores, shared how the NCR lockdown brought a lot of uncertainty for Chocolate Kiss.
President Rodrigo Duterte had enforced a 3-month enhanced community quarantine (ECQ) in the whole of Luzon last March as a response to the coronavirus outbreak. The ECQ restricted movement of the population, and mandated the temporary closure of non-essential shops and businesses.
For 2 months, business operations at The Chocolate Kiss Café were completely halted. It was only in May that they were able to temporarily reopen. But with lockdown restrictions still in place, Pahati said the cafe’s regular customers were afraid to venture out.
Due to the slow operations of the store and the unforeseeable future with the pandemic, Pahati’s family made the decision to permanently close down the café’s UP Diliman branch.
“It’s really sad right now but we feel that it’s best for the long term. We decided to bite the bullet now before the losses are too big,” Pahati said.
She also shared how the strict quarantine measures left a particularly devastating impact on the café’s employees, who were unable to work for 2 months.
Although the café was able to apply for the small business wage subsidy (SBWS), Pahati shared that it only helped their employees for a very limited time.
The SBWS is a salary subsidy given by the government, through the Social Security System to assist affected businesses retain their employees during the quarantine period.
“The subsidy given was P8,000 per employee – that is less than [the] minimum wage for 1 month! It is not enough to protect the business, especially in this kind of extended quarantine,” Pahati said.
It was also difficult for the café’s employees to go to work, as there was no reliable public transportation during the months-long lockdown.
“It was really frustrating for us because they wanted to work, and we wanted to let them work, but they had no means of getting to the café,” Pahati added.
To aid their employees, Pahati hoped that the government could have provided a higher wage subsidy, public transportation for them to get to work, or even an alternative source of income during the quarantine period.
As the Philippine economy dives into recession, Filipinos are hoping for stronger government efforts to provide aid for thousands of small businesses affected by the pandemic.
On July 28, the House of Representatives Defeat COVID-19 committee approved a bill seeking to equip government banks to grant more loans to MSMEs that were heavily affected by the health crisis.
The bill would provide P55 billion to 3 financial government institutions to address the needs of affected MSMEs. – Rappler.com
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