‘Virus may cost 95,000 jobs in tourism sector’

By BusinessMirror, 13 Feb 2020

A nurse at the Ospital ng Parañaque checks on her protective suit and basic equipment as she prepares to receive persons seeking examination for symptoms of COVID-19. The hospital is using a tent loaned by the Department of Health to Parañaque as a makeshift receiving area.

By Cai U. Ordinario & Jovee Marie N. dela Cruz

THE new coronavirus (COVID-19) could cause the tourism sector to lose as much as P22.7 billion a month and shed 95,000 jobs, the National Economic and Development Authority (Neda) told lawmakers in a hearing on Wednesday.

During the joint hearing of the House Committees on Tourism and Economic Affairs, Neda Undersecretary Rosemarie G. Edillon said the reduction in tourist arrivals due to travel bans would result in the loss of 30,000 to 95,000 jobs.

Despite the problems created by COVID-19, however, Socioeconomic Planning Secretary Ernesto M. Pernia told reporters the country’s economy still has a “fighting chance” to expand by around 6 percent in the first quarter.

“With respect to international estimates, they also forecast that the Philippines, which is not that dependent on tourism and also not that dependent on external trade, will be in some ways insulated,” Edillon said at the House hearing.

“[However], applying the multiplier effect of tourism, we expect that per month, together with domestic airline receipts which will also be affected, we think [the losses are] in the order of P22.7 billion per month,” she added.

Edillon said the tourism sector contributes 12.7 percent to total GDP, including allied services.

The Neda said its estimates take into consideration the travel ban imposed by the Philippines on countries like China to prevent the virus from spreading.

Edillon added that the estimates include the assumption that about 10 percent of tourists from other countries will also not push through with their travel plans to the country.

For the month of February alone, or during the start of the travel ban, Tourism Secretary Bernadette Romulo Puyat said foregone revenue from COVID-19 could reach P16.8 billion.

“[In total] we expect foregone revenue of P42.9 billion forgone from February to April [based on] forecast arrivals of 678,102 tourists from China, 22,584 from Hong Kong, and 2,194 Macau, 92,370 from Taiwan during the said three months,” said Romulo Puyat.

She said flight cancellations from China, Hong Kong, Macau and Taiwan due to COVID-19 have reached 465 per week, or an estimated 101,452 seats.

Affected businesses

During the same hearing, Air Carriers Association of the Philippines (Acap) Executive Director Alberto Lim said for the next two months the foregone revenue of the airline industry is expected to reach P3 billion affecting more than 5,000 flights.

Acap members include Cebu Pacific, CebGo, Philippine Airlines, PAL Express and AirAsia.

Besides China, Hong Kong and Macau, Tourism Congress of the Philippines President Jose Clemente III said arrivals from South Korea are declining due mainly to flight cancellations.

Aside from airlines, Clemente said hotels are already losing money. He noted that hotels in Cebu alone have recorded some P100 million in losses since the start of the travel ban.

“This will affect the local employment because there are 5.7 million workers in the tourism industry,” he said.

Romulo Puyat said the cruise tourism industry will also be affected. For 2020, she said there were 101 expected cruise calls from January to November with 203,000 expected cruise passengers.

“As of February 7, there were 11 canceled cruise calls to various Philippine port with estimated passenger loss of 14,211,” she added.

Remedies

Clemente urged the national government to lift the travel ban on Taiwan. He also said the ban should have been imposed on Singapore.

“We are urging the government to reconsider this [ban on Taiwan]. There are more significant infections in Singapore than in Taiwan. For the sake of the [tourism] industry, we should lift the ban on Taiwan,” he said.

Minority Leader Bienvenido Abante Jr. urged the national government to implement the travel bans “consistently.”

“One issue I raised during the hearing was the inconsistency in the travel bans now imposed on various countries, particularly why a travel ban now covers Taiwan but excludes Singapore, even if the latter has more cases,” said Abante.

As for workers who could lose their jobs, Edillon said the Technical Education and Skills Development Authority (Tesda) may train them so they can upgrade their skills while they wait for the COVID-19 to pass.

Training and retraining these workers will cost around P278 million to P855 million, according to Edillon. However, she said the government does not yet have the supplemental budget to cover this.

If the government will not have the resources to foot the bill through internal budgets, Edillon said the government can tap a Quick Response Fund (QRF) for this or government line agencies could front-load their spending for 2020.

She said the government may also secure the help of the private sector so they will pay a portion of the salaries of their employees in training.

‘Fighting chance’

Despite the problems created by COVID-19, Socioeconomic Planning Secretary Ernesto M. Pernia told reporters that the country’s economy still has a “fighting chance” to expand by around 6 percent in the first quarter.

“Maybe domestic tourism will pick up, so we’ll kind of compensate for international tourism. People are now beginning to be less worried,” Pernia said.

Pernia said infrastructure will also play a key role in boosting economic growth, thanks to the recent approval, and signing of the 2020 national budget.

He said government spending will increase, as “many projects” have already taken off. Pernia said the government has already approved 72 of the 100 flagship projects.

This means, Pernia said, there are only about 25 remaining projects that need approval. Other projects, he said, do not require Neda Board approval.

The Asean+3 Macroeconomic Research Office (Amro) projects that a 1 percentage point decline in China’s economic activity would affect Hong Kong and Singapore “disproportionately.”

Amro said, however, that the hit to Thailand’s economic growth would be almost as large as China’s. The negative effects on Malaysia, Japan, Korea and the Philippines will also be of a similar magnitude, while Indonesia appears to be the least exposed.