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Business decline, debt top list of small-firm worries – UNDP

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Some 77% of small firms said their top worries during the lockdown were the decline in overall economic activity and their capacity to service debt going forward, the United Nations Development Programme (UNDP) said.

Citing the results of a survey, the UNDP said Thursday that most small businesses, which in the Philippines are known as the Micro, Small, and Medium-sized Enterprise (MSME) sector, cited the decline in business as the “major constraint” to their operations, “closely followed by concerns about unpaid loans, reduced demand, and supply chain disruptions.”

“Overall, the results of the rapid response survey confirmed the significant disruptions caused by COVID-19 pandemic and the consequent community quarantine in the day-to-day operations of MSMEs, with their income and cash flow affected most,” the UNDP said in the first part of its MSME Value Chain survey.

It said most business owners attributed the decline in business to restrictions imposed by the government to curb the spread of the virus, which forced them to suspend operations or reduce working hours starting late March.

The survey indicates that 71% closed their businesses due to the lockdown, 53.3% reported reduced demand and 49.5% experienced transportation snags or disruptions in the delivery of goods

The survey was carried out in the first half of May with 315 respondents, 66.7% of which were micro firms, 22.9% small businesses, 7.9% medium-sized enterprises and 1.2% large companies.

It said 60% of the respondents’ businesses were based in Metro Manila and the CALABARZON region, while 14 out of the 17 participating regions only had less than 16 respondents.

MSMEs in the processing or manufacturing business consider themselves to be the most challenged by the lockdown. They accounted for 36.5% of all respondents.

The UNDP said firms in the raw material business reported the most closures and transportation issues. It said farming or production businesses were most likely to cite weak demand, cancelled orders, and reduced workforces and access to funding.

The survey found that 56.8% of respondents reported disruptions in the flow of raw materials for production due to supplier shutdowns.

Some 56% said they have no domestic alternative to their international suppliers, while 80% said they received no financial assistance from the government. — Beatrice M. Laforga





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