Business & Investment

2021: Better new normal?

“The good news is coming in 2021,” said Bill Gates. But it’s not for the whole world. Perhaps there is optimism in the United States, Donald Trump has left and a mass vaccination program has begun. Gates acknowledges that reductions in infections and mortality occur “at least in wealthy countries.”

Sadly for the Philippines, we are far from normal, far from the better new normal.

Consider the following:

1. The world is pleased with the introduction of some vaccines, but the Philippines will not immediately benefit from them. According to Francisco Duque III, Director of Health, the best scenario is to start vaccination in the second quarter of 2021. But the first best scenario is wishful thinking. In reality, the next best thing is that it works. (In economics, the “first best” is really just an abstraction that is superseded by the second or third best. Countries with weak institutions like the Philippines are the third or fourth. Settle down to the best.)

“Someone dropped the ball” does not help. The incompetence and systematic turmoil of civil servants that undermines the state’s response to COVID-19 predicts how the government will handle vaccination programs.

In addition, the logistical and financial requirements for mass vaccination are enormous. Budget allocation for 2021 vaccination is inadequate. Healthcare professionals must first be trained in the vaccine protocol. A storage facility needs to be installed or upgraded. Social preparation is needed and people must be informed about the safety and efficacy of vaccines. It is still uncertain that a September 2020 survey by Social Weather Stations (SWS) showed that one-third of Filipinos do not want to be vaccinated with COVID-19.

So even if you don’t have the vaccine, you have no choice but to dance with the virus.The comfort we get—thanks but not—is some form aliw (Entertainment) From an overly excited song by a presidential spokesman who spits super saliva.

2. Undoubtedly, the worst financially is over. The economy has bottomed out.

The economic downturn was sharp, with gross domestic product (GDP) declining 16.9% in the second quarter of 2020 and 11.9% in the third quarter. For the full year, the economy is expected to shrink by about 10%.

This is far worse than the twilight recession of the Marcos dictatorship. the difference? Although Marcos didn’t have a reliable scapegoat (even if some apologies blamed Imerda’s proficiency), Duterte could turn his finger to Coronavirus Disease 2019 (COVID-19).

But “the worst is over” shouldn’t be optimistic. In a fourth-quarter survey of SWS, only 16% of Filipinos said they were not poor, and 30% thought their quality of life would deteriorate in 2021 (compared to 32% who expected improvement).

Moreover, in the long run, the economic situation is not very bright. The scars in the Philippines are so deep that the economy will suffer chronic effects.Consultancy Oxford Economics (and economist) Has published its research and modeling, showing which countries are most vulnerable to long-term economic scars and which are likely to recover fastest.

To quote (December 15, 2020): “But the difference between emerging and developed economies masks big fluctuations. The Philippines and India have particularly bleak growth prospects, while China and Brazil have better performance. Expected. The Philippines was ranked the worst in the overall survey, mainly due to the labor market, high unemployment rate and lack of skills, and dependence of the economy on tourism. “

3. Now, economic authorities can no longer rely on the economic reforms and profits that took place before the pandemic occurred. Indeed, policy reforms, especially with regard to taxation, are an asset for recovery. They show credibility and creditworthiness. But a better New Normal comes with a new set of challenges and a new generation of reforms.

However, the momentum of reform seems to have lost momentum recently. Evidence of this is the stagnation of bills aimed at rationalizing financial incentives, responding to stimuli in the short term, and making corporate income tax competitive in the long term. A bill titled CREATE (Corporate Recovery and Tax Incentives) has always been a priority. Executives proved its urgency long ago.

Still, its passage has been delayed several times. Some people package their CREATE pass as an early Christmas gift. At the end of the year, it has not been announced when the bicameral conference committee will approve CREATE.

What is clear is that CREATE has been held hostage by politicians and vested interests. While Congress confused CREATE, the Philippine Senate, contrary to the spirit of CREATE, was forced to speed up railroads to give San Miguel Aerocity unnecessary financial incentives. So far, executives have been silent about this.

Does this mark the beginning of President Lame Duck? This can make vested interests happy, but it can also mitigate investor uncertainty.

Therefore, 2021 is bumpy, unpredictable and dangerous. Please note that the debate over intensifying political conflicts and human rights abuses is not yet understood.

Still, I will give a safe and healthy greeting to everyone in 2021 and pray that we will take care of people.

Filomeno S. Sta. Anna III coordinates actions for economic reform.

2021: Better new normal? 2021: Better new normal?

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