PHL losses from tourism standstill could reach $22.6B

By Jenina P. Ibañez, Reporter

THE Philippines could lose up to $22.64 billion (P1.13 trillion) or seven percent of GDP if the tourism standstill caused by the pandemic extends to 12 months, the United Nations Conference on Trade and Development (UNCTAD) said in a report.

The country is already facing a loss of $7.7 billion (P383.7 billion) or two percent of the country’s GDP after the tourism industry was forced to shut down for four months so far this year. If the standstill extends to eight months, the Philippines could lose $15.19 billion (P792.3 billion) or five percent of GDP.

In its COVID-19 and Tourism: Assessing the Economic Consequences report released on July 1, UNCTAD said the world tourism sector’s losses may reach at least $1.2 trillion or 1.5% of the global gross domestic product over the four-month standstill.

UNCTAD said the coronavirus disease 2019 (COVID-19) pandemic has brought to a halt an industry that has tripled in value to $1.6 trillion in the last two decades.

“These numbers are a clear reminder of something we often seem to forget: the economic importance of the sector and its role as a lifeline for millions of people all around the world,” UNCTAD Director of International Trade Pamela Coke-Hamilton said.

An eight-month international tourism break spells a $2.2-trillion loss or 2.8% of world GDP, while a 12-month break increases this to $3.3 trillion or 4.2% of global GDP.

The Department of Tourism said revenues declined by 55% in the first four months of 2020 to P79.8 billion from P180.5 billion in the same period a year ago. Last year, tourism contributed 12.7% to the country’s GDP and employed 5.7 million people.

The decline in tourism arrivals has caused countless job losses. A 12-month standstill is expected to translate to an eight percent decline in skilled wages and a 10% drop in unskilled employment.

A four-month pause is seen to have already caused a three percent drop in skilled wages, and caused unskilled employment to slide by four percent.

The Philippines is the 14^th most-affected country in terms of unskilled employment in the report looking at 65 countries and regions, and the third-most affected among Southeast Asian countries after Thailand and Malaysia.

The Philippines is currently under the longest and strictest lockdowns in the world.

But the Tourism department in a press release said that it expects the reopening of the industry as more areas shift to a relaxed lockdown or a modified general community quarantine (MGCQ).

Areas under MGCQ can have tourism activities up to 50% operational capacity.

“The anticipated resumption of business operations will bring about many opportunities for our kababayans, but we would like to remind our tourism stakeholders that the implementation of health protocols in the new normal should always be a priority because it is only by ensuring the safety of our guests can we regain the confidence of our traveling public,” Tourism Secretary Bernadette Romulo-Puyat said.

The government has, however, placed Cebu City under a stricter lockdown after a spike in COVID-19 cases. Cebu province was reported to have attracted the second-highest number of tourist arrivals in the country last year, after Boracay.

Tourism Congress of the Philippines (TCP) President Jose C. Clemente III in a mobile message said the projected losses would mean a catastrophic year for the tourism industry and the Philippine economy.

“It is near catastrophic already for the industry stakeholders with many companies already ceasing operations or seriously contemplating on doing so. Many in the industry, mostly MSMEs (micro, small, and medium enterprises), cannot survive longer without further assistance from the government,” he said.

Mr. Clemente said recovery will take time as the anticipated shift to domestic travel will depend on local governments, as some are still hesitant to reopen borders until they have adequate facilities and testing for visitors. TCP for now expects limited resumption of domestic travel in September.

“We have asked for the deferment of taxes, possible waiving of rentals and utilities, wage subsidies and more,” he added, noting that TCP expects 12-24 months before a return to “normalcy.”

Rizal Commercial Banking Corp. Economist Michael L. Ricafort in a mobile message said he expects tourism recovery after the pandemic to take longer than other industries.

While most industries may recover in 18 months, he cited the International Air Transport Association’s estimation that global air travel could return to its pre-pandemic levels in 2023. He said the decline in global tourism led to the repatriation of overseas Filipino workers.

“Some job losses and business closures around the world could also slow the recovery of the tourism industry locally and worldwide, on top of health considerations,” he said.

“Tourism accounts for at least 10%-20% of the local economy and could remain a drag on GDP amid social-distancing measures, travel restrictions/constraints, and other stringent measures as the risk of new COVID-19 cases remain, until a cure/vaccine is developed. Thus, recovery in tourism could be relatively slower and would take longer,” Mr. Ricafort added.

Governments should help protect workers, including offering wage subsidies for workers in enterprises that are not likely to recover, UNCTAD said.

The report also recommended offering low interest loans for tourism enterprises and applying quarantine procedures for travelers in a post-pandemic scenario.

But in the medium and long term, UNCTAD is suggesting that governments decrease reliance on a single industry.

“Governments should support economic diversification where possible. A high dependence on one sector increases vulnerability,” the report said.

“For some countries diversification away from tourism may be difficult. Avenues for economic diversification may include increased regional integration, education and training programs in targeted economic sectors to boost resilience and mitigate the cost of shocks.”

Mr. Clemente of the Tourism Congress said he believes the recovery of tourism can be “tremendous.”

“People are looking to travel after months of isolation and lockdowns. They want to go. It all depends on how we control our COVID-19 situation and how effective our protocols and guidelines are,” he said.