Introduction

The Philippines has been hit hard by the COVID-19 pandemic, and its economy has

suffered greatly. With the pandemic still ongoing, engaging in business in the Philippines

presents several challenges. This critical concept paper will examine the current economic

situation in the Philippines and explore the opportunities and challenges of engaging in business

in the country, given the poor economy and post-pandemic situation.

Shinozaki and Rao (2021) investigated the COVID-19 impact on micro, small, and

medium-sized enterprises under the lockdown in the Philippines. The study revealed that

toward the year 2021, Asian economies gradually shifted to the recovery stage. However, the

overall business environment has yet to adjust; there is a continued sharp drop in demand and

revenue according to the follow-up survey in the Philippines covering August and September

2020. Business and employment conditions differ by firm size, but MSMEs are evolving under a

new normal that requires a more contactless society. Assistance for MSMEs to shift their

business to digital transactions is another policy priority given that their traditional business

model requires physical and personal contact. Six months after the outbreak, MSMEs have

started introducing work-from- home arrangements. However, working capital shortages are

continuing to rise, as the follow-up survey found. There is increased need among MSMEs for

further financial assistance from the government. COVID-19 containment will continue into

2021. Given the different abilities of MSMEs to adjust by firm size, the government could pay

more attention to a phased approach and differentiate policy measures by firm size and sector.

Now is the time to consider an optimal approach that offers targeted assistance yet ensures

fiscal sustainability in a post-COVID-19 environment.

 Hidalgo, Janeo, Padojinog, Terosa, L.U., and Yap (2021) studied the COVID-19 outbreak

and its impact on business establishments. The study focused on the challenges and strategic

approaches that business establishments undergone in order to bounce back after the

pandemic. An online survey of pre-selected thirty-three (33) representatives from key priority

sectors which recorded sharp contractions in the first two quarters of 2020 and which had a

share to GDP of above 1 percent was conducted. To validate the survey results, stakeholder

interviews were also conducted with more than 10 firms via the zoom video conferencing

platform. The survey results confirmed the negative impact of the pandemic at the firm-level

(i.e., decrease in employee compensation, decline in headcount, loss of revenue and other

liquidity crunches, prolonged collection periods, problems in logistics, delayed or cancelled

projects and disrupted supply chains and access to labor; among others). Some have had to

close branches or altogether cease operations. The sudden and likely permanent shift towards

digitization of operations has disrupted operations and exerted pressure to digitally transform

business operations in order to survive in the so-called “new normal.” Moreover, this requires

investments in equipment and training. Additional costs and investments are also needed to

meet health and safety standards and protocols. Thus, required assistance commonly cited by

firms were loans, subsidies, and tax relief. In the short term, the national government must

restore consumer confidence and deploy its fiscal powers to stimulate aggregate demand. With

assistance, business can invest in platforms and meeting health and safety protocols for workers

and customers to return to work and patronize their business, whether on site or online.

Resuscitating the economy is not solely the responsibility of government. It also requires

solidarity and coordinated response from the private sector. Over the long term, both
government and business must build more resilient organizations and strategies. This would

include adopting digital transformation by both private and public sectors for a more nimble

and agile economy. Business may also revisit the concept of “coopetition”. The

interconnectedness of each industry calls for a more collaborative approach among businesses.

When firms who have been negatively affected by the pandemic recover, this can also increase

the rate at which the economy bounces back.

Current Economic Situation in the Philippines

The COVID-19 pandemic has significantly impacted the Philippine economy, which has

been struggling for some time. The country's GDP contracted by 9.6% in 2020, marking its worst

recession since the end of World War II. The unemployment rate rose to 10.4% in 2020, and

many small and medium-sized businesses have closed down.

The Philippines has also faced challenges in terms of foreign investment. Although the

country has a large and young population, an abundance of natural resources, and a strategic

location, foreign investment has been relatively low due to issues such as corruption, political

instability, and lack of infrastructure.

Opportunities and Challenges of Engaging in Business in the Philippines

Despite the economic challenges, there are still opportunities for engaging in business in

the Philippines. The country has a large and growing middle class, a strong consumer market,

and a young and educated workforce. The government has also been implementing policies to
attract foreign investment, such as tax incentives and streamlined processes for starting a

business.

However, engaging in business in the Philippines also presents several challenges. The

country's infrastructure is underdeveloped, which can make it difficult to transport goods and

access remote areas. Corruption remains a significant issue, and navigating the bureaucracy can

be challenging. The lack of political stability and ongoing security concerns can also pose a risk

to businesses operating in the country.

Post-Pandemic Situation

With the ongoing COVID-19 pandemic, businesses in the Philippines must also consider

the post-pandemic situation. The pandemic has accelerated digitalization and e-commerce,

which can present opportunities for businesses that can adapt to these changes. However,

businesses must also consider the impact of the pandemic on consumer behavior and the

overall economy.

The pandemic has also highlighted the importance of sustainability and social

responsibility in business. Consumers and stakeholders are increasingly demanding that

businesses take responsibility for their impact on the environment and society. Businesses that

prioritize sustainability and social responsibility may be better positioned to succeed in the post-

pandemic environment.

Conclusion
 Engaging in business in the Philippines presents both opportunities and challenges,

given the poor economy and post-pandemic situation. Businesses must navigate issues such as

corruption, political instability, and lack of infrastructure while considering the impact of the

pandemic on consumer behavior and the economy. However, the country's large and growing

middle class, strong consumer market, and young and educated workforce present

opportunities for businesses that can adapt to the changing landscape. Businesses that

prioritize sustainability and social responsibility may also be better positioned to succeed in the

post-pandemic environment.

References:

Hidalgo, A., Janeo, V. Y., Padojinog, W. C., Terosa, C., L.U., P., and Yap, J. (2021). The COVID-19

outbreak and its impact on business establishments: a study on challenges and strategic

approaches. Accessed from: https://econ.upd.edu.ph/pre/index.php/pre/article/view/1015.

Shinozaki, S., and Rao, L. N. (2021). COVID-19 impact on micro, small, and medium-sized

enterprises under the lockdown: Evidence d=from a rapid survey in the Philippines. Accessed

from: https://www.adb.org/sites/default/files/publication/677321/adbi-wp1216.pdf.