Baguio City To Lose P480M Projected Take Due To ECQ

April 26, 2020 Metro BLISTT

BAGUIO CITY (April 24, 2020) — Baguio City has admitted that it might not be able to collect more or less P480 million from its projected income for 2020 with the backlash of the ECQ on the city’s economy.

Based on the initial computations of the city’s finance managers, Baguio stands to lose some P40 million monthly in projected income due to the virtual halt of the local economy, Mayor Benjamin Magalong told the Baguio City council this week.

While the Luzonwide enhanced community quarantine will be lifted soon, he claimed the city’s economy will not be able to recover immediately as there will be a gradual opening of businesses limited to the essential ones, thus, it will not translate to the resumption of normal business activities.

While young Baguio City born economist and UP Baguio schooled Ruben Carlo Asuncion, measured how the ECQ and the eventual downgrading of the quarantine rules after May 15 affects the local economy.

Asuncion, chief economist of the Union Bank’s Corporate Planning Group – Economic Research Unit cited OECD (Organization for Economic Cooperation and Development, an intergovernmental economic organization with 36 member countries) that computes that one (1) month of non-pharmaceutical intervention impact (like an enhanced community quarantine/economic lock down) on the economy results to a decline of 2.0% of annual GDP growth.

“If for example, initial annual economic growth expectation for Baguio City is 7.3% (This is RGDP growth of CAR in 2019), the one month lock down will result to a 5.3% GDP growth for the year. He claims that a modified community quarantine (MCQ) or a relaxed ECQ would have a lower economic impact than a full-blown ECQ, estimating the impact to be less than the 2.0% anticipated by the OECD, or about 0.5% to 1.0% for a full month of an MCQ.

This would have a corresponding impact to the general economy eventually with tourism is a huge source of revenue, Asuncion said. In 2018, tourist arrivals settled to a total of 1,760,729 (Domestic = 1,724,469; Foreign = 35,234; and, Overseas = 1,026).

Each tourist type spending per day is as follows: Domestic = US$40/day (2016); Foreign = US$120/day (2019); and, Overseas = US$46.46/day (2016).

Asuncion said that to get a feel of the potential impact, and assuming that each person/visitor will stay a minimum of one (1) day: Domestic = US$40 X 1,760,729 = US$70,429,160; Foreign = US$120 X 35,234 = US$4,228,080; and, Overseas = US$46.46 X 1,026 = US$47,667.96.

Total tourism minimum receipts at an estimate of US$74,704,908 per year (PhP50:US$1) or PhP3,735,245,400 per year. Also citing the composition of business permits issued in 2019 pie chart studied by Asuncion, “I believe that Retail/Wholesale (51.4%) will be largely hit because local demand has literally stopped.”

Although there are essential products within retail/wholesale, a lot of these businesses are also driven by demand from not just local demand, but also tourism demand, he said.

Hardest hit is the accommodation sector (21.6%), Asuncion said; with the absence of tourists in the city. 21.6% of businesses is quite significant and may not readily recover when the lock down is lifted. Also, the amusement sector which is highly correlated to the number of tourist arrivals will be whipped hard, the young economist added.

Although the food sector may be hit, it is very important during the pandemic, Asuncion said. The young economist forecaster also sees the manufacturing sector (0.8%), a very small part of the local economy, holding up as factories resume. These might just be located at the PEZA-BCEZrelated firms. Asuncion also noted that BPOs become critical. Jobstreet said there are about 6,000+ vacancies coming from customer service-related jobs from BPOs even with the Covid-19 pandemic.

”I assume that there is demand from outside Metro Manila and that Baguio City may be one of the sites.” Overall, Baguio City’s employment will take a hit as much of the local economy will bear the brunt with the Covid-19 containment efforts, Asuncion believes. Magalong said the city government will slowly open up on some essential sectors such as the transport, construction, food, among other essentials, with measures in place following the prescribed standards on physical distancing, mandatory wearing of masks, among others.

The city government will try to look into the possibility of re-opening some essential sectors depending on the outcome of the ongoing deliberations within the inter-agency task force thus it is important for the city to prepare governing guidelines for the implementation of a localized enhanced community quarantine that will not aggravate the situation but instead allow the heavily impacted sectors to slowly recover from the slump.

Artemio A. Dumlao/ABN