Rising to the challenges of disruptions

The Philippines, with special mention of Mindanao and Davao Region, is on its way to never-before seen economic prosperity when all of a sudden it hit a stumbling block.

It took a new coronavirus virus, first codenamed NCOV before renamed to Covid-19, to stop a high-speed train the country’s economy is fast shaping up into.

And with the threat of Covid-19 taking its toll on just about every aspect of the people’s daily lives in the whole world, the business community is forced to rethink and transform its global supply chain model.

The virus has exposed the vulnerabilities of many businesses, especially those which have a high dependence on China for their supply of raw materials or finished products.

China’s dominant role as the world’s biggest manufacturer means that any major disruption puts global supply chains at risk.

In fact, the lockdown being instituted by China in most of their key cities to prevent the spread of the virus, heavily affected not only Davao City but Davao Region’s importation and exportation of raw materials and finished goods as well.

Yet, business leaders are optimistic that the business sector in Davao City and the region will bounce back and will continue to thrive as these disruptions are just temporary.

They urged businesses to revisit their products and processes and to look outside the traditional enterprise walls for innovative approaches to cope up with the challenges.

Davao City Chamber of Commerce and Industry Inc. (DCCCII) president John Carlo B. Tria believes all of these disruptions are temporary and that Davao’s business sector will keep growing nonetheless by increasing food supply to keep inflation low so that even if other sectors are hit, it will continue expanding since demand and supply will still be stable.

For Tria, lowered inflation projections are good time to examine the food policy because keeping food prices low for consumers is what keeps inflation low, and will ensure long term growth and poverty reduction.

“We will also need to patronize our businesses and local tourist spots,” he said.

Tria also mentioned that the challenge of today’s disruptions is not to avoid them but to deal with them, contain the disruptions as quickly as possible, and if there are opportunities emerging from them, take advantage and keep moving on the growth path, learning valuable lessons and applying them to the next disruption.

Former Mindanao Business Council chair and business leader Joji Ilagan- Bian said with the local government leading the way in partnership with the local business community there is no reason why Davao businesses cannot mitigate the impact of the Covid-19 and all economic impediments which are all beyond control.

Bian said what the business sector can do amidst these “short term” crisis which the rest of the world is being besieged too is to take calculated steps in doing business especially those that are directly affected like tourism and the services sector which also has indirect effect on manufacturing.

“Davao has a history of a resilient economy grounded on strong and responsive private sector. We had hurdled many challenges in the past which did not seemed to have a sustainable solution. Personally I remain ‘bullish and optimistic’ in all of my outlook,” she said.

On his end, Antonio Peralta, chairman of European Chamber of Commerce of the Philippines (ECCP)-Southern Mindanao Business Council cited that the twin events of the Taal Volcano eruption and the emergence of the Covid-19 in the country have affected business sentiments.

According to him, these developments will definitely affect economic growth forecast in the country. He said that the National Economic and Development Authority (NEDA) has adjusted the growth forecast from 6.3 percent to about 6 percent.

He said the impact of COVID-19 in western economies has also led to rate cuts in order to jump start the economies and this has directly affected consumer confidence as seen from the less number of people in shopping malls.

“Supply chains have been disrupted and factories have suffered production decline. Goldman Sachs predicts that most companies have declared zero earnings for the year given the uncertainty of the outcome of Covid-19,” Peralta said.

He said that in the Philippines, the impact of Covid-19 has affected the tourism and transport industry with an estimated losses of P2.9 billion as of February 29 as per Department of Tourism (DoT).

“Airline flights have had experienced to lose a third of passengers from the usual full bookings that they have had this time of the year. Most hotels here in Davao have experienced reductions in hotel bookings and cancellation of bookings. Banana exporters also faced cancellation of shipments to China but this eventually has been restored,” he said.

However, given these developments, Peralta said the business sector has started to look at the domestic market to fill in the slack of export markets caused by Covid-19 concerns.

He said the business sector has continually maintained a cautious approach to the situation but nonetheless hopeful for a successful rebound from the losses earlier incurred from the impact of COVID-19.

Peralta cited Bio Grow Substrates, a new company, as example that expressed optimism on the opening of its coconut processing plant in Davao del Sur despite the occurrence of the COVID-19. He said the company see this situation as temporary and eventually will be resolved by pharmaceutical companies.

“The hope for a vaccine to be commercially ready for the public weighs heavy on most people as they continually hope for a conclusion to this unfortunate situation,” he said.

Arturo Milan, regional governor of the Philippine Chamber of Commerce and Industry (PCCI) said one industry that is greatly affected by Covid-19 is the region’s tourism industry as numerous conferences and conventions are being cancelled due to Covid-19.

Milan said stakeholders should stop cancelling events such as conventions and conferences and continue to encourage local travels and eat out to patronize local restaurants and eateries, however, all precautions should be strictly implemented in all hospitality facilities.

“We cannot continue cancelling conventions or conferences or refrain from going out eating outside or else our economy will collapse. Many will lose their jobs and many stores will close. We need to stand and fight this virus by not shying away from our regular routine but doing what we are supposed to do for as long as we implement the necessary protocols,” Milan said.