Reimagined mindset

The tax therefore on online activities should be reconsidered to allow such economic activities to thrive in the short run, adjusting further to the movements of products and services as we get the ecosystems to mature and as we return to traditional or integrate the traditional to the new norm.

Note: This column originally appeared in The Manila Times on August 25, 2020.

The pandemic may have led to a contraction of the economy by 16.5 percent, and the trajectory in terms of growth has been compromised, as in any country, globally. Critics have been blaming this administration for the recession because of early lockdowns. I really do not understand where the critics are coming from. Looks like the herd moves like the pendulum, depending on who is pushing, and these days, people just pick on things for the heck of hitting at this administration without much concern for the fight against the unknown.

There are some making an issue of not calling it early, using the China card as an attack on the administration when in fact, it was because of the early lockdown that our response has been a lot better than the rest of the world. But then again, attacks are a dime a dozen and “facts” are recklessly made just to create the framing that the Duterte administration has been a total failure, and nothing whatsoever has effectively been done by the government. Others need to be relevant with a very executive response approach on the pandemic fight. Public health and the economy are the two drivers of the collective noise raising the ante towards arrows and slingshots against any and all, from the civilian to the military, devoid of logic and reason. Worse, no solutions are being offered as if these crowds are from another country and not the Philippines.

What the critics are not seeing is the shift in the behavior of sellers and consumers. Big malls may be suffering with the buying public not going out, but smaller groceries are raking it in because people will just go to a single-purpose place, buy and leave; unlike in malls where you go around and check other stores and spend a lot of time mingling with others. What the critics are missing is the fact that economic activities are felt online. The reimagined future is here with us today. Sellers are thinking big but acting small in the new norm. Digital transformation is the key to survive and thrive. E-commerce is on an upswing and applications such as Facebook, Viber and Instagram are also being used by name brands in tandem with delivery groups or their own delivery teams.

Reimagining the future is a reality because the country has a huge base of millennials and Gen Z. The digital natives will save the day for the economy. “Around 40 percent of Filipinos have a smartphone, and according to a recent study, they rank in the top 10 mobile internet users globally, spending an average of 4.58 hours a day on their phones.” The study further showed that digital account opening is rapidly becoming the norm in the Philippines with 76 percent of consumers saying they would open some kind of financial account online. Of those that would open a financial account online, 40 percent would consider doing so for an everyday transaction account, 38 percent for a credit card and 33 percent for a personal loan.

It would be interesting to see what the data is during the months of the Covid-19 pandemic when everyone had all the time to be online and do business using various platforms. What is a black eye though remains the inability of telcos to respond with stable and reliable connectivity. If the Duterte administration is able to address this problem, we will have a nation that is poised to rebound online, ensuring traditional modes are assisted to fully recover.

The micro, small and medium enterprises (MSMEs) per data from the Department of Trade and Industry (DTI), based on the Philippine Statistics Authority, “recorded a total of 1,003,111 business enterprises operating in the country. Of these, 998,342 (99.52 percent) are MSMEs and 4,769 (0.48 percent) are large enterprises. Micro enterprises constitute 88.45 percent (887,272 of total MSME establishments, followed by small enterprises at 10.58 percent (106,175) and medium enterprises at 0.49 percent (4,895).” In terms of sectoral distribution, “the top five industry sectors according to the number of MSMEs in 2018 were: 1) wholesale and retail trade; repair of motor vehicles and motorcycles (461,765); 2) accommodation and food service activities (144,535); 3) manufacturing (116,335); 4) other service activities (66,162); and 5) financial and insurance activities (46,033). These industries accounted for about 83.62 percent of the total number of MSME establishments.”

The geographical spread of MSMEs shows that “majority of the MSMEs can be found in the National Capital Region (NCR) with 203,312 (20.36 percent) business establishments, Region 4-A (Calabarzon) with 148,196 (14.84 percent), Region 3 (Central Luzon) with 116,073 (11.63 percent), Region 7 (Central Visayas) with 70,395 (7.05percent) and Region 6 (Western Visayas) with 61,590 (6.17 percent). These top five locations accounted for about 60.05 percent of the total number of MSME establishments in the country. Regional concentration of MSMEs is largely associated with economic activity and population size.” Hence, when NCR is hit by Covid-19, the economy falls. It is a good thing that connectivity in Metro Manila is the best in any of the urban centers in the country, and yet the hiccups come frequently because of sheer volume of users.

The tax therefore on online activities should be reconsidered to allow such economic activities to thrive in the short run, adjusting further to the movements of products and services as we get the ecosystems to mature and as we return to traditional or integrate the traditional to the new norm.

The MSMEs will save the day for the nation. But one thing that will always carry Filipinos to better days is our resiliency that’s built-in. With recession and all, we will be able to bounce back and win the war against Covid-19 because of that DNA. It will not be back to the usual, but we will have a better economic turnaround aided by social enterprises truly run by locals. Think big, act local and all of us win.

About the Author
Malou Tiqiua is the Founder/General Manager of PUBLiCUS Asia Inc. A noted political management expert in the Philippines and Asia, she brings over 20 years of professional experience in public, private and the academe combined. Author of the comprehensive book on electoral campaigns in the Philippines, "Campaign Politics", Malou is a graduate of the University of the Philippines with a Political Science degree and a Master of Public Administration. She completed her second master's degree (MA in Political Management) from the Graduate School of Political Management, George Washington University.
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