House to fast-track stimulus bill to mitigate virus impact

FILE: Alan Peter Cayetano in Malacañan on Oct. 28, 2016 KING RODRIGUEZ/Presidential Photo

MANILA – Speaker Alan Peter Cayetano on Tuesday vowed to fast-track the approval of a stimulus bill seeking to mitigate the impact of the coronavirus disease (Covid-19) pandemic to the Philippine economy.

“While waiting for the administration version of the stimulus package, we are already hearing through this TWG (technical working group) the draft bill. We will fast-track all of this, much better if the Palace will certify this [as urgent] like the Bayanihan to Heal as One Act,” Cayetano said during the virtual meeting of the House Defeat Covid-19 Committee.

The draft consolidated bill called Philippine Economic Recovery Act proposes a total allocation of PHP613 billion to fund the economic interventions aimed at protecting Filipino families and jobs; assisting workers and business entities facing hardship due to the pandemic; and preserving the country’s trajectory to economic prosperity.

The bill is a consolidation of the Economy Moving Forward as One bill by Marikina City Rep. Stella Quimbo and the Philippine National Stimulus Strategy by Albay Rep. Joey Salceda.

Under Quimbo’s bill, she proposed PHP370-billion fiscal stimulus package that is geared toward labor retention to ensure business continuity.

Quimbo noted that the pandemic could potentially cost the country a total of PHP1.08 trillion.

Transitional interventions

The merged measure provides transitional interventions which refer to economic relief that shall be implemented immediately after the enhanced community quarantine is lifted to mitigate permanent damage to the economy and maintain employment levels of the corresponding sector or industry.

Wage subsidies amounting to PHP110 billion shall be provided to critical businesses, freelancers, self-employed, and repatriated overseas Filipino workers (OFWs).

For critical businesses, the wage subsidy shall amount to at least 25 percent but not more than 75 percent of actual payroll costs for two months for the purpose of employment retention.

Around 75 percent of the applicable minimum wage rate shall be provided to freelancers and self-employed, while 75 percent of the average foreign wage of OFWs shall be provided for a period of two months.

The Social Security System (SSS) and Government Service Insurance System (GSIS) shall grant employee compensation, amounting to PHP120,000 per individual, in the form of paid sick leaves for workers who contracted Covid-19.

The SSS and GSIS shall be allotted with PHP500 million each to finance their respective employee compensation programs.

Other transitional relief interventions include regulatory relief for business entities through the suspension, reduction, or waiving the imposition of fees and charges for licensing, registration, permitting, and inspection; as well as regulatory relief for micro, small, and medium enterprises (MSMEs) through the relaxing of revenue regulations and waiving of applicable registration and similar fees.

Sectoral interventions

The bill has also sectoral interventions, providing economic relief intended for specific sector or industries such as MSMEs, tourism, agriculture, and any other critical businesses.

The Department of Trade and Industry shall offer grants for the education, training, and advising of MSMEs on how to cope with the new norms amid the Covid-19 pandemic. PHP10 billion shall be appropriated for the implementation of the sectoral interventions.

A total of PHP25 billion will also be allocated for the loan programs for MSMEs; PHP10 billion for the loan programs for agri-fishery enterprises; PHP43 billion for assistance to the tourism industry; and PHP66 billion for assistance to trade industries.

For trade policy measures, an immediate adoption of zero tariff rates on essential imported raw materials and temporary suspension of the export percentage requirements for export enterprises shall be proposed to allow domestic sales of selected manufacture goods while export markets are in the process of recovery.

Structural interventions

The House also proposes structural interventions designed to accommodate any sector or industry through institutionalized mechanism or entity. A structural intervention aims to reinforce resilience of the economy as well as the business entities in the event of future crisis or recession

The proposed bill includes zero-negative loans or a PHP300-billion loan package that will be administered by the Land Bank of the Philippines and the Development Bank of the Philippines to encourage critical businesses to continue investing in their businesses.

The maximum loanable amount shall be 50 percent of the company’s direct labor costs and the loan shall be payable for three to five years. A labor-conditional penalty shall be imposed in the event that the business entity terminates employees within 12 months from incurring the loan.

A total of PHP20 billion shall be allocated to the Credit Mediation and Refinancing Service (CMRS) to ensure that critical businesses are able to fulfill obligations under more favorable terms of credit and to strengthen their liquidity and financial position.

The Philippine Guarantee Corp. shall have an amount of PHP28 billion in paid up capital to provide government guarantees to critical businesses.

A National Emergency Investment Corporation (NEIC) shall be established to bail out firms going bankrupt. It can purchase equity and take over firms.

The bill proposes enhancements to the government’s infrastructure program, Build Build Build, particularly in universal health care, education and food security.

Other interventions proposed in the bill include building an economic resilience plan to withstand future shocks, as well as the creation of an Economic Stimulus Board to identify the specific contents of the fiscal stimulus package and specific government program to implement the delivery of each intervention.