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Nearly two-thirds of SMEs ‘strongly’ affected by pandemic — survey

Most small and medium enterprises said they were affected by the strict lockdown measures implemented from mid-March to May. — REUTERS

By Jenina P. Ibañez, Reporter

AROUND 68% of mostly small and medium Philippine enterprises have been strongly affected by the coronavirus pandemic, according to a combined survey of around 500 Filipino firms.

The International Trade Centre conducted an SME (Small and Medium Enterprise) Competitiveness Survey on 18,000 companies in 46 countries.

In the Philippines, ITC surveyed 515 Filipino firms for the competitiveness survey in November to December 2019. ITC then conducted a COVID-19 (coronavirus disease 2019) Business Impact Survey on 454 firms from the same sample size in April and May 2020, at the height of the strict lockdown in Luzon.

Half of the survey respondents were medium-sized, while 24% were micro and 18% were small.

The survey found that the pandemic affected 99% of Filipino businesses, while 68% said they were strongly affected. In turn, 19% said they were moderately affected and 13% were slightly affected.

“Companies that were smaller or led by youth, and those involved in international trade, were more likely to be strongly affected,” the report said. Around 88% of companies reported sales declines.

The degree of the pandemic’s impact depended on the firms’ sector and strategies, as 79% of manufacturing firms said they were strongly affected. Meanwhile, 72% of micro and small businesses were strongly affected.

More than 60% of firms with “very good” cash flow and “highly efficient” inventory management were hurt by the lockdown.

Nine percent of interviewed companies expect a permanent shutdown, with SMEs reporting to be twice as likely as large firms to predict closure within three months.

But Philippine firms may be more resilient than their regional counterparts.

“We can see that 36% of interviewees in other Asian countries in the region say they were at the risk of shutting down. So in perspective and comparatively, the result in the Philippines is not as bad,” ITC Economist Valentina Rollo said at an online launch event.

The respondents said that tax waivers and cash transfers were the most helpful government measures to help them cope with the crisis, but almost 60% of respondents said that they found it difficult to access government assistance.

The survey found that Filipino firms’ ability to compete reduces their exposure to shocks during the pandemic. Competitive firms have strong cash flow, efficient inventory management, and have full capacity utilization.

“It is easier for companies with a strong business plan and a track record of meeting market requirements to stop their businesses temporarily and then restart them after the crisis ends,” the report said.

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