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Speaker says gov’t can look for other fund sources for COVID-19 response

HOUSE Speaker Alan Peter S. Cayetano said the executive branch can find other sources of funds if the budget for the cash aid program under the coronavirus disease 2019 (COVID-19) emergency response is insufficient.

“The Bayanihan to Heal as One (law) does not limit to P275 billion. The Executive can find other sources but it’s not easy, it’s quite tricky,” he said in a virtual briefing on Monday.

Mr. Cayetano said the administration’s economic team is “working hard” to ensure that these other sources of funds will not further upset the economy.

“The economic team is working hard na ‘yung mga kukunin na budget, hindi makakaapekto sa ating ekonomiya once na under control o matalo na natin itong (to ensure that the budget that will be redirected will not affect the economy once we have put under control or defeated this) COVID-19,” he said.

Meanwhile, Mr. Cayetano, who is one of the members of the Joint Congressional Oversight Committee on the implementation of Republic Act (RA) 11469 or the Bayanihan to Heal as One law, said that they are still waiting for the second weekly report of President Rodrigo R. Duterte.

“We’re not being very technical and (we are on) 24/7 naman po tayo,” he said.

Section 5 of RA 11469 mandates the President to submit every Monday a report to Congress on the implementation of the law, including the amount of funds used, realigned, and reallocated. — Genshen L. Espedido

BSP cuts outlook for remittance growth to 2%

GROWTH in cash remittances from Overseas Filipino Workers (OFWs) is likely to slow to 2% in 2020 as the coronavirus disease 2019 (COVID-19) outbreak affects countries where OFWs are deployed, though remittances have tended to remain relatively steady even in past crises, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said.

“Our forecast before this crisis is that OFW remittances will increase by 3% (in 2020). Now that has been downgraded to 2%,” Mr. Diokno said on ABS-CBN News Channel Sunday.

In 2019, cash remittances rose 4.1% to a record $30.133 billion after coming in at $28.943 billion in 2018, according to the central bank data. This growth rate exceeded the 3% projection set by the BSP.

Mr. Diokno said based on behavior observed in previous global crises, workers will continue to send money home, and speculated that they might be tapping their overseas savings.

“Of course this crisis is like no other crisis in the past but if you go by our experience, crisis or no crisis, overseas Filipino remittances has been steady,” Mr. Diokno said.

“I think Overseas Filipino Workers (OFWs) recognize the needs of their families here, (and) continue to send remittances. Maybe they have extra savings abroad,” he added.

Money sent home by OFWs drives the consumer economy by boosting household spending, which accounts for about 70% of gross domestic product (GDP).

The reduced outlook for cash remittance growth will have a major impact on economic growth, according to Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort.

“Every 1 percentage point decline in OFW remittances growth is equivalent to about $300 million or roughly about 0.1% of GDP, which could be (a substantial hit to) economic growth,” he said in an e-mail.

The National Economic and Development Authority (NEDA) has said economic growth could come in between -0.6% and 4.3% this year under a range of scenarios after the 5.9% gain seen in 2019. NEDA’s estimate is a major downgrade from the 6.5% to 7.5% target set by the government when the outbreak was still not factored in.

Citing data from McKinsey and Co., Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, Inc., said that the impact on remittance inflows of COVID-19 could be “bigger than what is expected by the BSP.”

The McKinsey analysis, which includes data from the BSP and the World Health Organization, indicates that cash remittances from the most-affected economies during the SARS (Severe Acute Respiratory Syndrome) outbreak, including Hong Kong, Singapore, Taiwan, and Canada, saw a combined 18% drop between 2002 and 2003.

“For COVID-19, aside from Taiwan and Canada, additional countries such as the US and Italy may have decreased inflows,” Mr. Asuncion said in an e-mail.

The major decline in oil prices could also affect cash remittances, he said.

“Aside from COVID-19 with much fluidity and uncertainties, the collapse of global oil prices may also negatively impact remittance inflows particularly in Middle East countries, where a lot of Filipino foreign workers are deployed,” he said.

Mr. Asuncion sees OFW remittance growth titled more to the downside this year, with a recovery in the near term to depend on developments in containing the pandemic.

The biggest remittance source in 2019 was the US, which accounted for 37.6% of total inflows. Inflows from the US, Saudi Arabia, Singapore, Japan, United Arab Emirates, the United Kingdom, Canada, Hong Kong, Germany, and Kuwait accounted for 78.4% of cash remittances for the year, according to the BSP.

Globally, COVID-19 cases topped 1.2 million as of Monday, with the US accounting for more than 330,000 cases.

Mr. Ricafort said that OFWs working for certain sectors will likely be more affected by the impact of the epidemic and the lockdowns it has caused in many economies.

“OFWs employed in tourism, travel, hotel/accommodation, leisure, restaurants, retail, and other related industries that were hardly hit by lockdown and even COVID-19 infections such as those in the cruise ship industries could experience some decline in remittances in the coming months, until lockdowns are lifted and COVID-19 cases are better contained and controlled,” Mr. Ricafort said.

One possible upside in remittance growth is the deployment of more OFWs working in essential sectors like health care, he said.

“Some OFWs worldwide are also part of essential services (last-to-go), such as health care/medical professionals and support staff,” Mr. Ricafort said. — Luz Wendy T. Noble

DoLE to need more funds in event of NEDA worst-case 1.8 million job losses

The Department of Labor and Employment (DoLE) is gearing up for the worst-case scenario of 1.8 million workers whose job status will be affected in some way by the coronavirus disease 2019 (COVID-19) outbreak and signalled the need for additional funding for its relief programs.

In a briefing Monday, Labor Secretary Silvestre H. Bello III said the worst-case scenario is based on the National Economic Development Authority’s (NEDA) estimate that job losses due to the Luzon-wide enhanced community quarantine (ECQ) could lead to 116,000 to 1.8 million jobs lost.

“We are expecting 1.8 million workers na maaapektuhan kaya siguro (which is why I think) consequently we will have to ask for additional budget allotment from the national government,” he said.

The DoLE has said it will need an additional P5 billion to help aid workers affected by the outbreak and ECQ. On Sunday, DoLE said based on its own monitoring, more than 600,000 workers have had their employment status affected in various ways.

The current budget for supporting workers who may have been affected by the outbreak is P2 billion.

With the government currently weighing an extension of ECQ, Mr. Bello said that he will also recommend the extension of the validity of the COVID-19 Adjustment Measures Program (CAMP).

CAMP is a cash assistance program for formal-sector employees affected by the lockdown. The program allows employers to apply for P5,000 worth of relief for their workers.

The DoLE also has the Tulong Panghanapbuhay sa Ating Disadvantaged/Displaced Workers (TUPAD) program which provides workers from the informal sector emergency employment at the prevailing minimum wage.

As of Sunday, DoLE said 102,895 workers have availed of CAMP assistance while 72,703 have been assisted by TUPAD. DoLE said it can still process CAMP applications for 115,000 formal workers and TUPAD applications for 235,000 informal workers until April 14. — Gillian M. Cortez

Garment industry making PPEs for use by PGH

THE garment industry has been tapped to produce coveralls for health care workers dealing with the coronavirus disease 2019 (COVID-19) amid a global shortage of medical supplies, including Personal Protective Equipment (PPE).

The Confederation of Wearable Exporters of the Philippines (CONWEP) is working with the health department and Philippine General Hospital (PGH) to develop a medical-grade prototype for use in high-risk hospital situations, the Board of Investments (BoI) said in a statement Monday.

BoI said the Philippines had not been a producer of medical-grade PPEs. Production of the new PPEs, which has been set a target of 10,000 per day, begins after Easter.

“We need to protect our health care workers as they are in the frontline of our fight against COVID-19. With PPEs in short supply, the government and private sector have collaborated closely to locally-produce these critical items needed to protect those who are protecting us against this virus,” trade secretary and BoI Chairman Ramon M. Lopez said.

The World Health Organization’s Philippine representative in March urged the private sector to help procure PPEs for health care workers.

BoI said that raw materials were unavailable, as medical-grade fluid impermeable textiles have to be imported. CONWEP sourced medical-grade materials that will be air shipped on April 9.

The government exempted from import duties the supplies and raw materials needed to manufacture urgently-needed medical products, and streamlined the import process for such goods.

San Miguel Corp. (SMC) said it will procure the initial 10,000 PPE coveralls and donate them to PGH.

The company last week said it will buy P500 million worth of PPEs for health workers.

“Our goal was primarily to boost supply of protective gear. But we also felt this is one way we can help reduce the impact of COVID-19 on our SMEs (small and medium enterprises). Now more than ever, we need local manufacturers to produce not just food and other necessities, but the very tools we need to fight this pandemic,” SMC President Ramon S. Ang said.

Mr. Lopez said that the garments sector was supported by the financial resources of other private firms.

“So while they employ a significant number of workers and are able to export Philippine-made wearables globally, they are not among the biggest Filipino companies in terms of financial resources,” he was quoted as saying.

Dr. Regina Berna, who heads the PGH Hospital Infection Control Unit, said the unit has tested the PPEs provided by the industry.

“Its material and design meet our strict requirements for PPEs to be used by our health force,” she said. — Jenina P. Ibañez

Small rice farmers to start receiving P5,000 cash transfer this week

RICE farmers tilling one hectare or less in 24 provinces will receive P5,000 worth of cash transfers to help them buy inputs or feed their families during the Luzon enhanced community quarantine (ECQ), the Department of Agriculture (DA) said.

Agriculture Secretary William D. Dar said the subsidies will go to eligible farmers in 24 provinces not covered by the Rice Farmers Financial Assistance (RFFA) program, part of measures to mitigate the impact of coronavirus disease 2019 (COVID-19).

“Our rice farmers will receive it as a direct cash transfer that they can use to buy either farm inputs, food for their families or anything they need,” Mr. Dar said.

The transfers fall under a program known as the Financial Subsidy to Rice Farmers (FSRF).

The DA will start distributing the subsidy to an estimated 600,000 farmers via the Land Bank of the Philippines (LANDBANK) this week.

The FSRF funds are earmarked under the 2020 General Appropriations Act.

“We vow to continue helping our small rice farmers, by implementing not only the FSRF and RFFA, but also other major programs such as the Rice Competitiveness Enhancement Fund (RCEF), the SURE Aid loan assistance program, and continuous palay-buying through the National Food Authority — to boost farmers’ productivity and incomes,” Mr. Dar said. — Revin Mikhael D. Ochave

Supply-chain professionals want role in improving gov’t logistics plan

AN extended lockdown will provide an opportunity to smooth out the logistics snags encountered during the first 30 days of enhanced community quarantine (ECQ), a business school expert said.

In a webinar Monday, Thames International Business School lecturer Norman H. Adriano said the logistics and supply chain industries can help the government improve the flow of critical goods during the coronavirus disease 2019 (COVID-19) outbreak.

“This must include all stakeholders outside Metro Manila, such as VisMin (Visayas and Mindanao) because they are a food source for Luzon.”

He added that policies and rules set by the Inter-Agency Task Force for the Management of Emerging Infectious Diseases (IATF) must be communicated to enforcers manning the checkpoints.

Business groups have said that the movement of goods was hampered at checkpoints due to a failure to disseminate unified policies on movement exemptions, with some local governments enforcing their own rules.

Mr. Adriano also said companies have suffered disruptions to their operations due to challenges in procuring raw materials since the beginning of the ECQ.

He added that the ban on public transport also affects the supply chain as workers are unable to report for duty.

Trade Secretary Ramon M. Lopez supports a two-week ECQ extension and then a gradual lifting of movement restrictions.

Mr. Lopez told reporters Monday that he does not want to lose the gains made during the ECQ.

“Need to see the flattening of the curve, and more health and isolation facilities. Then followed by gradual lifting of (restrictions on) other essential and job-generating sectors.”

He said last week that the easing of the lockdown should come in phases, noting that some sectors such as manufacturing may resume operations, with frequent health checks and social distancing still enforced.

The government’s decision points for lifting or extending ECQ include various considerations such as the trend in COVID-19 cases, the capacity of the health care system, and social, economic, and security factors.

Roger Lee, Director of the Singapore Institute of Materials Management, said in the webinar that to address limitations in company resources, businesses must band together.

“Through their associations, individual companies will talk to the government… to negotiate with the government in terms of the impact… in terms of unemployment within the company.”

He proposed resilience packages from the government to help fund wages, and resource sharing, including the sharing of trucks. — Jenina P. Ibañez

Pre-project advisory support approved for Kennon Road rehab, Mariveles Wellness Center

THE Kennon Road rehabilitation and the Mariveles Wellness Center projects have been granted approval for project advisory services by the Project Development and Monitoring Facility (PDMF) Committee, the Public-Private Partnership (PPP) Center said.

The PPP Center, which acts as the secretariat of the PDMF Committee, said in a statement Monday that the committee approved on March 11 “the project preparation and transaction advisory support through the PDMF for two (2) potential public-private partnership (PPP) projects.”

The Kennon Road project, the PPP Center said, will be implemented by the Department of Public Works and Highways (DPWH), while the Mariveles Wellness Center project will be implemented by the Department of Health (DoH). Both projects include an operation and maintenance (O&M) component.

The center also said the projects are being evaluated for implementation as PPPs under the Amended BOT Law or Republic Act No. 7718.

“Detailed studies will be conducted to determine if these projects will indeed be delivered as PPP projects,” it added.

The center manages and administers the PDMF, a revolving fund with initial funding from the governments of the Philippines and Australia through the Asian Development Bank (ADB).

According to the guidelines published on the official website of the PPP Center, the PDMF is made available for the preparation of pre-investment studies, project documentation, guidance and assistance in the tendering process of PPP projects of implementing agencies or local government units.

The center said the rehabilitation of Kennon Road is aimed at preventing slope deterioration along the length of the road, which is often closed by landslides.

“DPWH would like to tap the private sector expertise in finding long-term solutions to effectively prevent slope disasters along the road, maintain its quality and structural integrity, and minimize, if not totally prevent, road closures. The project will result in reduced travel time to Baguio City and surrounding areas, expand the tourism industry and related business activities even in remote communities along Kennon Road, and help address the worsening traffic conditions of traveling to Baguio City. On January 31, 2020, a preliminary market sounding exercise was conducted for this project,” it said.

The Mariveles Wellness Center Project, the center said, “involves the construction, operation, and maintenance (O&M) of a mental wellness center and ancillary facilities in the Mariveles Mental Health and General Hospital (MMHGH) compound.”

“The Wellness Center is envisioned to operate as a facility offering holistic mental wellness services, including therapeutic services and complementary and alternative medicine or CAM. It aims to close the gap in the provision of health care services with the private sector partner bringing in the expertise, innovative strategies, and efficiencies to MMHGH in providing safe, quality, and complementary health care services,” it added. — Arjay L. Balinbin

DSWD explains Social Amelioration Package

By Michaela Tangan
Features Writer, The Philippine STAR

On March 25, the government passed into law the Bayanihan to Heal as One Act (RA 11469). One of the provisions mandates the Department of Social Welfare and Development (DWSD) to implement nationwide social amelioration measures to aid the vulnerable sectors throughout the enhanced community quarantine (ECQ) period. DSWD Secretary Rolando Bautista said that the Social Amelioration Program will prioritize 18 million poor Filipino households.
Here’s what you need to know:

1. The following will receive P5,000 to P8,000 (cash and/or in kind) depending on the regions’ minimum wage rate: 4Ps beneficiaries, informal economy workers (directly hired or occasional workers), subcontracted workers, home workers, house helpers, public transportation drivers (pedicab, tricycle, PUVs, TNVS), micro-entrepreneurs and producers, family enterprise owners, sub-minimum wage owners, farmers, employees affected by the no-work, no-pay policy, stranded workers, other household members belonging to the vulnerable sectors (senior citizens, PWDs, pregnant and lactating women, solo parents, distressed OFWs, indigent IPs and homeless individuals).

2. Local government units (LGUs), through the barangays, will do house-to-house distribution of the Social Amelioration Cards (SAC) to be filled out by the household head. DSWD will validate the submitted SACs.

3. While the LGUs are tasked to distribute cash assistance and other aid, the national government — DSWD, DILG, AFP and PNP — will ensure proper distribution.

4. The ECQ in Luzon is up to April 12 while the strict social distancing in NCR is up to April 18. Before the said dates, the Inter-Agency Task Force (IATF) will issue new guidelines on transition mechanisms, depending on the recommendation of IATF’s technical working groups.

5. Under the law’s implementing rules and regulations (IRR), electric, utility, and telecommunication service providers, as well as lenders, will grant a 30-day grace period or extension for the payment to its customers.

For more #COVID19WATCH contents, visit www.bworldonline.com/covid19watch.

Muslim beneficiaries, frontliners need halal kitchens

This week marks the fourth week since President Rodrigo R. Duterte announced the Enhanced Community Quarantine (ECQ) in light of the coronavirus disease 2019 (COVID-19) outbreak. For the past few weeks, the nation has seen numerous acts of charity and empathy to numerous Filipinos affected by the ECQ.

The virus doesn’t discriminate. No matter the age, race, economic background, and religion, anyone can get infected. Time and time again, the spirit of bayanihan has been proven stronger than any calamity and has brought people together despite their differences.

NOT FORGETTING THE MUSLIM BROTHERS AND SISTERS

There are more than 10 million Muslim Filipinos in the country, and in order to facilitate their nutritional needs while respecting their religious beliefs, several groups are now seeking halal kitchens to accommodate them.

Halal is the Arabic word for “permitted” or “lawful.” In Islamic practices, a food product becomes halal-certified when it is in full compliance with the Shari’ah Law, principles and standards, and if it adheres to the practices of preparing food or meat as defined in the Quran. This same standard also applies to kitchens.

This means that the presence of pork or pork by-products is not allowed in the kitchen and in the meals prepared. Giving or using alcohol or any intoxicant content in the meal preparation is also prohibited. The same goes with animal blood or najis (ritually impure things).

The ECQ has forced many food establishments to close, limiting the food options. And if the bayanihan spirit has taught us anything over the years, it is that helping others does not stop because of one’s race, religion or beliefs.

TAKING CARE OF FRONTLINERS

Since the start of the ECQ, Frontline Feeders PH has been sending hot meals to medical frontliners. It is an organized group of individuals composed of doctors, restaurant owners, non-government organizations (NGOs) and volunteers that has been mobilizing and distributing prepared meals to different hospitals in Metro Manila and neighboring cities.

From catering one hospital, the organization has now serviced 41 hospitals in 17 cities, delivering more than 50,000 meals so far. The effort was accomplished through careful planning with generous donors, kitchen owners and coordinators.

For inquiries, visit www.frontlinefeedersph.com or Frontline Feeders PH’s social media pages.

For more #COVID19WATCH contents, visit www.bworldonline.com/covid19watch.

– ALIYYA SAWADJAAN

 

Figuring out the ‘new normal’ for PHL through NEDA surveys

By Adrian Paul B. Conoza
Special Features Writer, BusinessWorld

The crisis caused by the coronavirus disease 2019 (COVID-19) has drastically altered economic activity both globally and locally that the country’s economic planning office expect things to go back to a “new normal”.

As the National Economic and Development Authority (NEDA) braces for the long-term impacts brought about by COVID-19, it is now exerting its efforts to help the country respond to this public health crisis, rebuild confidence, and redefine the “new normal” the economy will resume in.

NEDA’s report on the impact of the pandemic published last March 19 assessed that the Philippine economy could contract by as much as 0.6% this year. It estimates that the month-long enhanced community quarantine (ECQ) could cost between P428.7 billion to P1.355.6 trillion in foregone gross value added (GVA), with significant losses in transport and tourism, household consumption, exports, and remittances.

In response to these projected outcomes, NEDA plans to implement measures based on three phases. The first one involves clinical/medical response, public health response, and short-term augmentation of the health system. The next phase focuses on rebuilding consumer and business confidence. The third phase involves redefining and resuming a “new normal state of economic activity that is more prepared for a possible pandemic”.

Chaired by NEDA, the Technical Working Group for Anticipatory and Forward Planning (TWG-AFP) of the Inter-agency Task Force for Management of Emerging Infectious Diseases is taking the lead in identifying policies to help the country’s economy adjust to this “new normal”.

“As this pandemic affects various sectors, it is important for us to be able to characterize what this new normal would mean to each and every segment of the population. We are currently crowdsourcing for inputs on how the whole of government can address the challenges the country is facing,” Socioeconomic Planning Secretary Ernesto M. Pernia said in a statement.

Part of the group’s crowdsourcing efforts is conducting online surveys for different sectors such as consumers, business owners, agriculture and fisheries. The public and other concerned citizens are encouraged to answer the surveys which can be accessed either at www.neda.gov.ph or at NEDA’s Facebook page.

The Online Public Consultation on Defining and Preparing for the “New Normal” and Consumer Rapid Assessment surveys are targeted at consumers.

The Online Public Consultation asks respondents on their perception of the new normal after the pandemic as well as suggestions for the next steps the government should take (i.e., policies, strategies, laws). Interested participants are encouraged to answer before 12:00 noon on April 7, Tuesday.

The Consumer Rapid Assessment, meanwhile, asks participants about their personal situation as well as that of their families before and during the ECQ in terms of accessing goods and services as well as coping with meeting such needs, among other factors.

Both surveys are available in English and Filipino.

The TWG-AFP is also conducting a separate survey for micro, small, and medium enterprises (MSMEs) in order to understand the experiences and needs of business owners under ECQ. It asks business owners about the status and financial situation of their businesses, as well as the impact of the pandemic on their company’s sales and employment, among others.

“Your inputs to this survey will enable us to recommend appropriate policies and programs to mitigate loss and help the Philippine economy recover,” the online survey assured.

This survey for MSMEs is available in English, Tagalog, and Bisaya; and can be answered as well until April 7, Tuesday, at 12:00 noon.

In order to assess the impact of COVID-19 and the ECQ on farmers and fisherfolk, an online business rapid assessment for the agriculture and fisheries sector seeks to get responses which will guide the development of appropriate policy measures and support programs that will help citizens under the sector cope with the impacts of ECQ and continue their activities and livelihood. The survey have English and Filipino versions.

NEDA assures the public that in accordance with the Data Privacy Act of 2012, responses from participants of these surveys will be treated with utmost confidentiality.

PSEi climbs as virus cases abroad peak

THE MAIN INDEX continued its climb on Monday as investors hope for some stability in the coronavirus disease 2019 (COVID-19) pandemic.

The benchmark Philippine Stock Exchange index (PSEi) rose 223.84 points or 4.18% to end at 5,570.81. The broader all shares index added 101.09 points or 3.10% to close at 3,360.75.

“With the…coronavirus death toll appearing to be peaking in the hardest hit nations such as New York and Italy, most of the regional markets including the Philippines rebounded,” Diversified Securities, Inc. Equity Trader Aniceto K. Pangan said in a text message yesterday.

Italy and France started seeing fewer deaths due to COVID-19 in the previous week: France recorded 357 deaths marking its lowest daily increase in a week, and Italy had 525 deaths marking its lowest in more than two weeks, Al Jazeera reported yesterday.

“Local shares climbed as the Eurozone epicenter cases declined, signaling the possibility of some stability in the spread of the disease,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said via Viber.

Spain has become the country with most COVID-19 cases in Europe with more than 131,600 as of yesterday. It is now second in the world next to the United States which has more than 337,600 cases.

COVID-19 has sickened about 1.28 million across the globe and has killed more than 69,000 as of Monday afternoon.
In the Philippines, the COVID-19 tally has reached 3,246 cases, 152 deaths and 64 recoveries as of Sunday night.

“The market went up especially during the last minute of trading as investors rushed to hunt for bargain issues,” Timson Securities, Inc. Trader Darren T. Pangan said in a text message.

All sectoral indices closed higher: industrials by 432.36 points or 6.72% to 6,866.33; services by 72.52 points or 6.10% to 1,261.42; holding firms by 215.76 points or 4.09% to 5,481.28; property by 73.70 points or 2.61% to 2,897.86; financials by 20.53 points or 1.73% to 1,204.31; and mining and oil by 36.36 points or 0.85% to 4,298.23.

Value turnover climbed to P4.86 billion with 757 million issues switching hands from Friday’s P4.03 billion with 293.3 million issues.

Advancers beat decliners, 119 against 76, while 41 names ended unchanged.
Net foreign selling stood at P470.75 million, down from Friday’s P570.32 million. — Denise A. Valdez

PHL office sector to benefit when BPOs bounce back after virus

By Denise A. Valdez, Reporter

THE office space sector is seen to show some resilience amid the coronavirus disease 2019 (COVID-19) pandemic, as the business process outsourcing (BPO) industry is expected to grow once more after the crisis ends.

Real estate service provider Santos Knight Frank, Inc. sees the Philippines benefiting when foreign companies turn to outsourcing to reduce costs post-COVID-19.

“Global companies will be outsourcing more as a way of cutting down on costs. This will spur demand for the BPO industry in the Philippines, which continues to be attractive because of the country’s competitive costs and young talent,” Santos Knight Frank Chairman and Chief Executive Officer Rick M. Santos said in an online media briefing on Monday.

He noted it is difficult to rely on Philippine Offshore Gaming Operators (POGOs) to drive up demand in the office segment for now, as the POGO sector, which is largely powered by Chinese workers, takes a hit from the suspension of flights between the Philippines and China.

Santos Knight Frank expects new office buildings in Metro Manila to fall to 810,00 square meters (sq.m.) this year from its initial projection of 1.18 million sq.m. Vacancy is also seen to rise to 10% from 5% in 2019.

Once the situation normalizes, the firm said tenants will start “value-hunting,” or searching for attractive lease terms across the Philippines.

“We saw examples of that with call centers from India post-Global Financial Crisis… So we do expect to see that, and we do forecast that there will be an adequate amount of office space either currently on the market or under construction now,” said Morgan McGilvray, Santos Knight Frank senior director for Occupier Services & Commercial Agency.

“As we all know, for the BPO sector, the lower the cost, the better for this market. So if rents are going down, if operating costs are going down, that’s actually an opportunity to have bigger, better presences in the Philippines as opposed to other BPO sectors around the world,” he added.

Aside from the office segment, the industrial and logistics sectors are also seen to be resilient both during and after the virus outbreak, as the production and delivery of goods are continue during the lockdown period.

The growth of e-commerce, as heightened by the lockdown period, is also expected to drive up the need for industrial and logistics spaces to support an increase in demand from online customers.

Health care-related properties are likewise seen to attract new investors once the crisis is over, as people all over the world are expected to be more health-conscious after the COVID-19 pandemic.

And overall, property owners across all real estate segments are expected to provide higher importance to property and facility management given the increased expectations from buyers and tenants.

“Landlords and developers should implement sustainable and wellness-oriented developments and international best practices as tenants become more conscious of the impact of real estate on the health of their employees,” Mr. Santos said.

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