Playing catch-up

In the July 3 issue of The Star, NEDA Sec. Karl Chua says the P1.3 trillion ARISE Bill containing business stimulus under COVID has no funding sources, ergo, in plain talk, the legislation could be “dead in the water”. Rep. Stella Quimbo of Marikina, the bill sponsor, argues that the bill contains urgent measures to help jumpstart businesses one of which is to provide them with soft loans. Both of them happen to be correct, but why are these verbal exchanges in the papers, playing catch-up, and not in a small room where these conflict of views are resolved because of the URGENCY. Besides, the bill will still have to go to the Senate, then a “Bicam” conference, and so on and so forth, before it becomes a law.

I fully agree with Rep. Quimbo that the Executive should now take the initiative to give the much-needed capital boost to beleaguered companies, around 800,000 of them comprising estimated 80 percent of the listed firms with the SEC in 2016. There is a multiplier effect to the economy. What commercial bank would be expected to give loans with soft terms, much less non-interesting-bearing ones, to companies with doubtful repayment and in an unpredictable business environment? I read that most banks now find parking their excess funds in CB instruments more beneficial than lending them out.

I will add to the proposal by Rep. Quimbo of the Executive taking a direct hand in the stimulus loans,  that such stimulus loans should give priority to those who have, or can submit Productivity Incentives Program. A team-productivity rewards program has been proven in a meta analysis of 43 companies in a 2013 study done by Dr. Luis Gomez-Mejia of University of Notre Dame, US and Dr. Monica Franco-Santos of Cranfield School of Management, UK., to have resulted in 22 percent annual increase in productivity. The increased profitability of the company as a result of motivating the employees to work better as a team show higher probability of servicing the loans. — M. K. Tan, Quezon City