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CORONAVIRUS - The situation in Philippines

General situation

Beginning 1 March 2022, the National Capital Region (NCR) and 38 other areas were placed under Alert Level 1. This risk classification is implemented on a two-week period and the government may once again raise the alert level if cases and hospital utilization rates increase.

Under Alert Level-1, conditions that qualifies an area are 1) minimal to low-risk classification of case transmission; 2) total hospital beds utilization is less than 50%; 3) 70% of area’s target population has been fully vaccinated and; 4) 80% of area’s target Senior citizens population has been fully vaccinated. The Philippines is still at a level where it is transitioning to a new normal and the state of public emergency is still in effect.

Under Alert Level-1, all business establishments can operate at full capacity with the required minimum health and safety protocols (vaccination, ventilation, social distancing, amongst others) strictly observed such as:

  • Well-fitted face masks shall be worn at all times, whether outdoors or in indoor private or public establishments, including in all public transportation;
  • 100% on-site workforce for agencies and instrumentalities of the government;
  • All private offices and workplaces, including public and private construction sites, may operate at full 100% capacity. However, flexible and alternative work arrangements may continue as deemed appropriate based on function or individual risk;
  • Public transportation in areas under Alert Level 1 shall be at full seating capacity. For intrazonal and interzonal travels involving public land transportation between an area with a higher alert level classification and an area under Alert Level 1, the passenger capacity shall be that which has the lower passenger capacity rate between the point of origin and point of destination. 100% capacity for aviation, maritime and rail public transport operating in and out of Alert Levels 1 areas;
  • Presentation of proof of full vaccination shall be required before entry into indoor establishments and or participation in mass gathering(s). Children ages 17 and below shall not be required to present proof of vaccination status.

Full guidelines:

Vaccination roll-out

The government is aiming to vaccinate more people as it reopens the national economy. As of end February, the country has fully vaccinated 63.1 million people (57.6% of population), while 68.73 million have received an initial dose and 10.14 million booster shots has been administered. National Capital Region is the most vaccinated region with 109% of its target population fully vaccinated.

Pediatric vaccination started in early February with the Government’s goal to inoculate 15.5 million children aged 5-11 in the country.

Travel restrictions and Quarantine Protocol

Per Resolution No. 160-B series 2022  (https://pcoo.gov.ph/wp-content/uploads/2022/02/20220203-RESO-160B-RRD.pdf)

The Government relaxed international travel restrictions and temporarily suspended its COVID-19 country risk classifications (green-yellow-red list system) allowing the entry of fully vaccinated travellers from most countries.  Foreign nationals traveling to the Philippines for business and tourism purposes may enter the Philippines without visas, subject to the following conditions:

  • A citizen/national of countries entitled to a stay not exceeding thirty (30) days (Executive Order 408, S. 1960, as amended);
  • fully vaccinated, as defined in Section A(2) of  Resolution No 160-B, except only for minor children below twelve (12) years of age traveling with their fully vaccinated foreign parent/s;
  • Carry/possess an acceptable proof of vaccination against COVID-19 recognized under existing Philippine regulations which shall be presented prior to departing/boarding from the country of origin/port of embarkation and upon arrival in the country:
    • World Health Organization International Certificates of Vaccination and Prophylaxis; OR
    • VaxCertPH; OR
    • National/state digital certificate of the foreign government which has accepted VaxCertPH under a reciprocal arrangement unless otherwise permitted by the IATF.

*Per IATF Resolution No. 154-E dated 29 December  2021,  EU COVID-19 vaccination certificate issued by Belgium is now recognized in the Philippines.

  • Present a negative RT-PCR test taken within forty-eight (48) hours prior to the date and time of departure from the country of origin/first port of embarkation in a continuous travel to the Philippines, excluding layovers; provided, that, he/she has not left the airport premises or has not been admitted into another country during such lay-over;
  • Have passports valid for a period of at least six (6) months at the time of their arrival in the Philippines;
  • have valid tickets for their return journey to the port of origin or next port of destination not later than thirty (30) days from date of arrival in the Philippines;
  • Obtain, prior to arrival, a travel insurance for COVID-19 treatment costs from reputed insurers, with a minimum coverage of USD 35,000.00 for the duration of their stay in the Philippines.

Visa-free foreign nationals who fail to fully comply with the conditions and requisites set forth in Section A(1) to (3) of said resolution  shall be denied admission into the country and shall be subject to the appropriate exclusion proceedings.

Once admitted into the country, facility-based quarantine is no longer required but shall self-monitor for any sign or symptom for seven (7) days with the first day being the date of arrival. However, they are required to report to the local government unit (LGU) of their destination should they manifest any symptoms.

For further information on travel to the Philippines, it is highly recommended to contact the Philippine Embassy in Brussel https://brusselspe.dfa.gov.ph/

Economic Recovery and Prospects

In 2021, the Philippine economy rebounded with full-year growth of 5.6% from its record contraction of 9.6% in 2020.

The Government’s strategies in 2021 have culminated in a full-year growth that exceeded targets and expectations. The economic expansion in 2021 show a reversal from a temporary downturn with the ramping up the vaccination program and allowing more sectors to open. The recovery efforts were sustained in the second half of the year amid the surge from the Delta variant and impact of super typhoon in December as result of further recalibration of strategies. The economy safely re-opened by shifting to the alert level system with granular lockdowns allowed the mobility of people and expansion of business operations. Unemployment rate declined to its lowest level since the start of the pandemic. This growth performance was much faster than most analyst forecasts, making the country’s expansion among the highest in the region sending a strong signal that the Philippines are on track to rapid recovery.

Contributors to the 2021 economic growth are1:

  • industry and services sectors with 8.2% and 5.3%, respectively, representing a strong rebound from the contractions experienced by these sectors in 2020. The agriculture sector, however, experienced a slight decline of 0.3% brought about by the challenges the sector continued to face, such as the African Swine Fever and super typhoons, which affected agricultural production.
  • private consumption by 4.2%, a reversal from previous year’s contraction of 7.9%. This indicates returning consumer confidence as a result of relaxed quarantine restrictions and the accelerated vaccination program. The government also continues to be a contributor to economic activity as its spending accelerated by 7.0 % overall in 2021.
  • external trade recovered at a faster pace in 2021. Exports grew by 14.5% compared to -16.3% in 2020 while imports of goods surged by 31.1 % from its value in 2020.
  • investments which recorded a robust growth of 19 %rebounding from -34.4 % in 2020, supported by a 37.4 % growth in public construction as the government proceeded full-steam ahead with the implementation of the Build, Build, Build infrastructure program.

Moving Forward - 2022 Prospects

With the increased traction in its economic recovery efforts in 2021, the Government is optimistic that it will not only rebound to the pre-pandemic level in 2022, but achieve the upper-middle income country status. The government is targeting 7-9% growth for 2022. Recovery of the local economy is seen to be driven by a wider vaccination rollout, accommodative fiscal and monetary policies, and infrastructure spending.

Although COVID-19 risks intensified at the beginning of the year due to the Omicron variant, its risk management strategy with the vigorous vaccination drive and the improvements in the healthcare system enabled the safe reopening of the economy. With the relaxation of the quarantine restrictions to the lowest level on 1st March 2022, it is expected that the economy will get significant boost as it transitions to a “new normal”.

1) source: https://innovate.dti.gov.ph/about/btipr-services/statistics/

In the remaining few months of its term, the Duterte administration commits to rebuilding a stronger economy with structural reforms that will make the country more resilient against future crises and solidify the growth prospects.

The urgent passage of the three landmark economic liberalization bills2 into law will be crucial in accelerating growth in 2022 onwards. The Philippines is currently the most restrictive in foreign investments in the region, and the third most restrictive in the world according to the Organization for Economic Cooperation and Development in 2020. This has led to the country lagging behind in terms of logistics and internet performance.

The economic measures namely the 1) Amendments to the Retail Trade Liberalization Act, 2) Foreign Investments Act, and 3) the Public Service Act, will help attract more investments, generate employment, introduce innovation, lower prices, and improve the quality of goods and services

  1. Final amendments to the Retail Trade Liberalization Act (Republic Act No. 11595), approved in December 2021, will further simplify and lower barriers to entry in the retail sector. This significantly lowers the minimum investment hurdle for foreign retailers which is reduced to the minimum paid-up capital requirements of Php25 million from the previous US$2.5 million (around Php125 million) under the 20-year-old Retail Trade Liberalization Act of 2000 (RA 8762). The amendment also removes the requirement for a certificate of pre-qualification to the Philippine Board of Investments (BOI), and lowers the investment requirements for each store owned by a foreign enterprise. Retail sector accounted for 23% of the total service industry in the Philippines3.
  1. The Amendments to the Foreign Investments Act (Republic Act No. 11647)4 signed on 2 March 2022 eases the rules on foreign investments and would allow up to 100% ownership of some enterprises unless participation of non-Philippine nationals in the enterprise is prohibited or limited to a smaller percentage by existing law and/or under the provisions of this Act. Aimed at attracting foreign investments activities, the passage of the law is expected to spur more innovation that will contribute to the country’s national industrialization and socio-economic development.
  1. The Amendments to the Public Service Act seeks to open key sectors such as transport and telecommunications that would allow 100% foreign ownership. Telecommunications, domestic shipping, railways and subways, airlines, expressways and tollways, and airports have been excluded from the definition of public utility. Since these are no longer considered as public utilities, they will no longer be subject to the 40% foreign ownership cap under the Constitution. The bill ratified by Congress is certified urgent by President Rodrigo R. Duterte.

Moreover, the National Economic and Development Authority (NEDA) has proposed a 10-point policy agenda to accelerate and sustain the country’s economic recovery from the COVID-19 pandemic and prepare the country for future pandemics. The 10-point policy agenda covers the following areas: 1) metrics; 2) vaccination; 3) healthcare capacity; 4) economy and mobility; 5) schooling; 6) domestic travel; 7) international travel; 8) digital transformation; 9) pandemic flexibility bill; and 10) medium- term preparation for pandemic resilience.

2) https://neda.gov.ph/timely-passage-of-econ-liberalization-bills-to-boost-ph-post-pandemic-recovery-neda/; http://www.investphilippines.info/arangkada/legislative-reform-tracker/

3) Philippines Amends Retail Trade Liberalization Act to Attract Foreign Investment (aseanbriefing.com)

4) https://www.officialgazette.gov.ph/2022/03/02/republic-act-no-11647/

The preparations to intensify the foundations for four important priorities namely the Smarter infrastructure, regional equity, innovation, and climate change are also in place and is hoped that the next administration will continue.

Despite the optimism, long-term economic outlook is still fragile for which the new government has to manage well: emergence of new virus variants, steady remittance flows which may not be sufficient to spur consumer spending coupled with the reduced household savings amidst the prolonged pandemic; weak labour market which has yet to show real signs of recovering5; inflationary conditions; the country’s largest debt load6; and geopolitical impacts.

On the other hand, the next government should continue reforms in taxation, ease of doing business, boost investment not only in infrastructure, but also education and harness information technology for learning, greater support for the agricultural sector to establish food security.

On 9 May, a general election will be held and the next president will take office on 1st July.

Trade barriers

No import/export restrictions are implemented during the pandemic period.

On the other hand, the importation of health equipment and supplies deemed critical or needed to address the COVID-19 public health emergency shall be exempt from duties, taxes, and fees pursuant to Republic Act No. 11469, otherwise known as “Bayanihan to Heal as One Act”. Import requirements, application and registration process of needed medical supplies, equipment and protective equipment as COVID-19-critical commodities have been streamlined.

Department of Agriculture’s Bureau of Animal Industry issued Guidelines in the Acceptance of Electronic Export Health Certificate/International Veterinary Certificate to facilitate cargo clearance processing.  

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Dossier Coronavirus

Het coronavirus heeft een wereldwijde impact, niet alleen op de gezondheid maar ook op de economie. Ook uw export kan hiervan gevolgen of zelfs hinder ondervinden.

FIT monitort de risico's dagelijks en ons buitenlands netwerk informeert u over alle implicaties voor Vlaamse exporteurs op hun internationale activiteiten.

In het dossier Coronavirus vindt u een aantal nuttige tips, adviezen en inzichten in de economische impact van de verspreiding van het virus op internationaal ondernemen.

Met vragen over internationaal ondernemen in tijden van Corona, kan u terecht bij exportadvies-corona@fitagency.be.

7 maart 2022