COVID-19 lockdown forces 40 percent of Philippines firms to close shop in July

The survey of 74,031 firms, carried out between July 7 to 14, 2020, was conducted to assess the impact of the pandemic on the firm's activities.

The survey said that 77 percent of firms were forced to close in April 2020 when the strictest enhanced community quarantine (ECQ) measures came into effect in mid-March.

With easing community quarantine measures in the following months, the survey said that some firms re-opened while others remained closed.

In July 2020, the survey said that 40 percent of firms reported the temporary suspension of their operations -- 20 percent by government mandate and 20 percent voluntarily, adding that about 15 percent of firms reported having closed permanently.

The survey said that reported sales revenue had gone down by 64 percent on average between April and July 2020, with 89 percent of firms reporting a continued reduction in sales.

According to the survey, the negative impact on employment is also extensive as one out of two firms reported having reduced payments to employees.

"Close to half or 48 percent of firms reported that they reduced the number of their employees, while the rest maintained the level of employment with only 1 percent reporting new employment," the survey said.

The survey said that almost two-thirds of firms turned to digital solutions for sales, marketing, and payment methods to adapt to the new normal. "A sizable share of firms also invested in digital solutions (23 percent) or repackaged their product mix (40 percent)," added the survey.

The survey said firms expressed a high degree of uncertainty and general pessimism about their operations, sales, and employees for the next three months.

"Such lack of confidence will likely limit additional investment and employment, restraining firms' growth. These suggest that business activities are expected to stay subdued for an extended period," the survey said.

"Firms say the most useful form of government support are those that would improve their liquidity, such as cash transfers, subsidized interest rates, deferral of loan, rent, or utility payments, and tax exemptions or reductions," the survey said.

The Philippine government imposed strict community quarantine measures in mid-March in an effort to contain the disease that emerged in the country in January.