The Impacts of COVID‐19 and Implications for Sustainable Development in the

(ongoing study for the UN System in the Philippines)

RIN Workshop

12 October 2020 | 1:00 P.M.

1 The PIDS Study Team

Adoracion M. Navarro, Ph.D. Celia M. Reyes, Ph.D. Kris F. Abrigo, Ph.D.

Ronina Asis (Research Associate) Arkin Arboneda (Research Assistant) Anna Rita Vargas (Research Assistant)

2 General context and recent developments

Outline of the COVID‐19 impacts and trajectories of development Presentation • “People” pillar • “Prosperity and planet” pillar • “Peace” pillar

3 General Context and Recent Developments

4 Progress in the SDGs

SDG 1: End Poverty SDG 4: Quality Education In 2018, 16.7% of poor Filipinos were living below the Performance indicators in basic education, such as national poverty line. This is lower than 2015 rate (23.5%). completion and cohort survival rates, have significantly Moreover, poverty reduction has been slower in rural improved. Improvements in education quality have also areas than in urban areas. been observed as passing rates in licensure exam for higher education increased to 37.9% in 2018 and the certification rate for TVET increased to 94.3% in 2019. SDG 2: Zero Hunger In 2015, only about a third of Filipino households (31%) meet the 100% recommended energy intake. There were SDG 5: Gender Equality improvements in stunting and wasting among children, Greater representation of women in the private and but there was a slight regression in being overweight. government positions has been observed. There have also been significant decreases in violence towards women.

SDG 3: Good Health and Well-Being In 2017, the country has expanded health care access for SDG 6: Clean Water and Sanitation mothers and infants, with 84.4% of births handled by Implementation of programs and projects identified in skilled personnel and 77.7% delivered in a health facility. integrated river basin master plans has declined to 21.2% Mortality rates attributed to cardiovascular disease, in 2019. Moreover, the amount of water‐ and sanitation‐ cancer, diabetes or chronic respiratory disease slightly related ODA that is part of a government‐coordinated declined from 4.6 in 2016 to 4.5 in 2018. However, spending plan through the LWUA slightly declined from vulnerability to HIV continues to worsen. USD62 million in 2016 to USD60 million in 2019.

Source: PSA’s SDG Watch Updates as of 30 March 2020 5 Progress in the SDGs

SDG 7: Affordable and Clean Energy SDG 10: Reduced Inequalities More Filipinos have access to electricity, at 95.3% in 2018. The average household income per capita of the bottom Energy efficiency improved as the use of energy per real 40% of the population is growing faster than that of the GDP declined from 6.7 TOE/M Php of real GDP in 2016 to general population. However, poverty remains a rural 6.4 TOE/M Php in 2018. However, there was a decline in phenomenon. 2018 poverty incidence in ARMM was the share of renewable energy in total energy production 61.3% whereas it was 2.2% in the NCR. from 24.2% in 2016 to 23.3% in 2018.

SDG 11: Sustainable Cities and Communities SDG 8: Decent Work and Economic Growth In FIES 2018, informal settlers make up 2.32% (2.45 Economic growth until 2019 was robust and has been million) of the population. As of 2015, only 47% of highly largely fueled by the services sector. Unemployment also urbanized and other major urban centers follow ambient continued to decline, from 5.4% in 2016 to 5.1% in 2019. air quality guidelines. About 18.6% of youth (aged 15‐24 years) are not in education, employment or training in 2019.

SDG 9: Industry, Innovation and Infrastructure SDG 12: Responsible Consumption and Production6 The country still exhibits a relatively low level of Hazardous waste generated per capita by industries was industrialization given that manufacturing value added as a 0.0145 in 2016 and increased to 0.0427 in 2017 proportion of GDP per capita remains low. R&D expenditure as a proportion of GDP stood at a mere 0.07% of GDP in 2019.

Source: PSA’s SDG Watch Updates as of 30 March 2020 Progress in the SDGs

SDG 13: Climate Action SDG 16: Peace, Justice and Strong Institutions The country has already established an integrated plan Although both the number of homicide and murder which increases its ability to adapt to the adverse cases decreased from 2009 to 2018, the number of rape impacts of climate change and has also identified cases increased. For corruption, there is a slight nationally determined contributions. Resilience building, decreasesinsmallscalecorruptionbuttheperceptionof however, shows mixed results. overall corruption in the country has remained relatively constant. SDG 14: Life Below Water The coverage of protected areas as a proportion of SDG 17: Partnerships for the Goals marine areas, National Integrated Protected Areas Strong fiscal management continued, with government System, and locally managed marine protected areas revenues as a percentage of GDP exhibiting increases. was 0.647 in 2016 and increased to 1.4 in 2019. ODA as a proportion of total domestic budget increased from the 2016 baseline of 2.8% to the 2018 level of 5.8%. FDIs as a proportion of total domestic budget, SDG 15: Life on Land however, declined from the 2016 baseline of 18.4% to Greater effort is needed in protecting the country’s the 2019 level of 11.5%. 7 forests and sites for terrestrial and inland freshwater ecosystems. ODA and public expenditure on conservation and sustainable use of biodiversity and ecosystems was USD15.97 million in 2016 and USD32.72 million in 2018.

Source: PSA’s SDG Watch Updates as of 30 March 2020 Creation of the Autonomous Region of Muslim Mindanao (BARMM) Composition after the 2019 plebiscite: . Provinces of , , , , and Tawi‐Tawi Peace agreements between the MILF . Cities of , and and the government were signed . 63 barangays in North Cotabato

1990 2018 Key statistics: . Population: 4,273,149 (2015) . Land area: 12,711.79 sq. km. . Share to GDP: 0.6% (2018) . Poverty incidence: 61.3% (2018) 2012 . Prevalence of stunting: 45.2% (2015) . Prevalence of wasting: 8.2% (2015) 2014 . Cohort survival rates in elementary: Republic Act No. 6734 Republic Act No. 11054 77.9% (SY 2018‐2019) (Organic Act for ARMM); (Bangsamoro Organic Law) First regional election on February 17 COVID‐19 and the Philippine Economy

So far, the Philippines has the highest number of COVID‐19 cases in Southeast Asia. However, the slower transmission of the virus per latest data (Rt=0.86) is a source of optimism.

The country officially entered a recession on the second quarter of 2020, bringing the first semester contraction to 9%. This large contraction puts into question the validity of previous Philippine development planning assumptions and the existing national strategies.

9 Bayanihan 2 as a fiscal response:

Government’s Response ‐ biggest share: soft loans to badly hit groups such as MSMEs, transport, tourism and agriculture sectors • Bayanihan 1 law (US$7.44 B or Php360.46 B fiscal response) ‐ funds for health‐related responses • Monetary policies (retroactive payment of the • Bayanihan 2 law (US$3.4 B or Php165 B fiscal response) Php100,000 (or US$2,063) hazard pay, emergency employment of health workers, augmentation of operations Revised Marcoeconomic of DOH hospitals, risk allowance for health workers, procurement of PPEs, Assumptions due to COVID‐19 construction of quarantine facilities) ‐ public and private education subsidies ‐ one‐time cash aid to displaced Indicator 2020 2021 2022 teaching and non‐teaching personnel GDP growth/(contraction)(%) (4.5) ‐ (6.6) 6.5‐7.5 6.5‐7.5 ‐ authorizes the reprogramming and realignment of funds NG and LGUs) Inflation (%) 1.75‐2.75 2‐4 2‐4 ‐ suspends the application of personnel services cap on LGUs; other relaxed regulatory measures.

10 COVID‐19 Impacts and Trajectories of Development

“People” Pillar

11 Containing the spread of the virus and enabling quick economic recovery depends not only on lockdowns and the cooperation of the public but also on the capacity of the health system to respond to the pandemic.

UNESCAP Preparedness Dashboard, Non‐COVID‐related health service delivery is 2010‐2018 averages for the already being affected Philippines: . Re‐emergence of polio due to low public . physicians per 10,000 people = 12.8 confidence in vaccination → pandemic caused (in the median) delays in anti‐polio vaccination campaign . hospital beds per 10,000 people = 10 . Disruptions in HIV, hepatitis and STI services, and (among the three lowest countries) restricted access to reproductive and maternal . nurses and midwives per 10,000 health services → declining access to contracepon people = 2 (at the bottom) . Restricted access to reproductive and maternal The government, nevertheless, has health services  Feared rise in maternal deaths upgraded its COVID response by (up to 670 additional deaths in 2020, a 26% increasing its testing capacity, ICU bed increase from 2019 level) and increased teenage and mech vent capacity, quarantine pregnancies (18,000 additional in 2020) facilities, no. of health workers)

12 Mobility restrictions, disruption in economic activities, and income losses gave rise to serious food insecurity and reduced nutrition among households.

In a nationwide survey of 1,389 respondents by the Innovations Experienced involuntary hunger for Poverty Action conducted between 18 June to 01 July 2020: at least once in the past 3 . 26% had to limit meal portion sizes more than once in the past week months: . 20% had to reduce the numbers of meals eaten in a day 5.2 million families (20.9%) . 70% had difficulty in buying the usual amount of food because of July 3 to 6, 2020 dropped household income . 70% had to deplete savings to pay for food Source: Social Weather Station . 60% had difficulty in going to food markets due to mobility At least mildly food insecure: restrictions . 89% have received food/cash support from the government 53.9% of households (2018) . Of those who receive regular government transfers, 38% have From 66.1% in 2015 experienced difficulty in accessing payments Source: National Nutrition Survey

13 Although the SDG trajectory for education suggests that significant improvements were happening before the pandemic, the drastic change in education service delivery modes might worsen inequality unless critical investments in ICT infrastructure are made.

2019 National ICT Household Survey: To fast‐track digital connectivity across the . 47.1% of Filipino households have communal radios Philippine archipelago to ensure better delivery of education and other services, . 82.7% of households have television at home the government must accelerate investments on ICT infrastructure. . 17.7% of households have their own internet access at home The new common tower policy, which . only 8.2% of households have their own fixed weakens the hold of the existing duopoly telephone line (PLDT‐SMART and Globe Telecom) on ICT infrastructure, is a step in the right direction. . 24.0% of households have communal cellphones . 23.8% of households have communal computers.

14 Simulating the Philippine HDI given COVID‐19 resulted in HDI of 0.701, implying that human development in the Philippines might be set back by about 5 years. 2020 Indicator 2018 (projected) Assumptions, data inputs Set back to 2019 level, UN World Life expectancy at birth Population Prospects (years) 71.1 71.16 Using 2019 projection of expected yearsofschooling(basedonLFS Expected years of schooling 12.7 11.88 data), then using 2020 projected population of learners and DepEd estimate of decline in enrolment as of Sept 1 Mean years of schooling 9.4 9.40 Assuming 2 years of annual growth in mean years of schooling are missed, i.e., back to 2018 level GNI per capita in 2011 PPP$ 9,540 9,112.63 Conversion inputs used: GNI per capita in 2017 PPP $ of WB, NEDA‐ DBCC projected real GNI growth, Philippines’ HDI 0.712 0.701 and PSA population projection

Source: UN Human Development Report 2019 for the 2018 figures, Authors’ projections for the 2020 figures 15 COVID‐19 Impacts and Trajectories of Development

“Prosperity and Planet” Pillar

16 Sector‐specific Impacts: Firms and Businesses

The containment measures for COVID‐19 pushed many business enterprises to temporarily close, limit, or permanently cease their operations.

In terms of employment management, the three most prevalent measures done to augment the contraction of business operations are to: (1) reduce the working hours of employees (2) grant them leaves, and (3) reduce their salary/wages/benefits.

17 Sector‐specific Impacts: Labor and Employment

There is a decrease in the employment in the Services and Industry sectors, heavily affecting workers in private establishments, service and sales workers, elementary occupations, and self‐ employed individuals.

Source of basic data: Labor Force Survey (Various Years) 18 Sector‐specific Impacts: Labor and Employment

Work opportunities for many international migrant workers were also affected by the mass grounding of cruise ships, slow economic growth of affected countries, as well as the travel bans implemented to curb the rise of COVID‐19 infections.

Consequently, we note a decrease in cash remittances, making it unlikely for OFW remittances to keep us buoyant during this crisis.

Source: Data are based on bank reports submitted to the Bangko Sentral ng Pilipinas. 19 Sector‐specific Impacts: Energy

Higher energy consumption for Energy sales by sector: MERALCO service area, 1H2015 – 1H2020 (in thousand GWh) residential areas is noted. This may be a consequence of the lockdown Sector 2015 2016 2017 2018 2019 2020 since households were forced to Industrial 5.4 5.7 5.9 6.4 6.7 5.5 spend more time at home, perform Commercial 7.0 7.7 8.0 8.5 9.0 7.4 theirworkathome,andhavetheir Residential 5.3 6.2 6.3 6.7 7.1 8.1 children attend their classes remotely. Street lights 0.1 0.1 0.1 0.1 0.1 0.1 All sectors 17.8 19.7 20.3 21.7 22.8 21.1 Energy consumption meanwhile, is Source: MERALCO down for industrial and commercial sectors.

20 Sector‐specific Impacts: Environment

The containment measures imposed to curb COVID‐19 infections has altered energy demand for different sectors, leading to a decrease in CO2 emissions during the quarantine period.

However, data for select ASEAN countries shows that this is only temporary and Co2 emissions rebounded back to its pre‐COVID level after the quarantine was lifted or relaxed.

Source: LE QUÉRÉ ET AL. NATURE CLIMATE CHANGE (2020); GLOBAL CARBON PROJECT 21 Sector‐specific Impacts: Environment

Additional Total Possible The COVID‐19 pandemic has also Medical Production City Population highlighted the problem with Waste over 60 days medical waste management (PPE: (tons/day) (tons) mask, gloves, head cover, shoe cover,goggles,asurgicalmask, 14 Million 280 16,800 surgical gown; used COVID‐test kits). Jakarta 10.6 Million 212 12,750

ADB projects Manila to produce an Kuala Lumpur 7.7 Million 154 9,240 additional 280 metric tons of medical waste daily because of the Bangkok 10.5 Million 210 12,600 pandemic. Ha Noi 8 Million 160 9,600

Source: Asian Development Bank 22 Pre‐existing Issues that Complicate COVID‐19 Policy Response

While some businesses resorted to work‐from‐home set‐up to continue their operations, most of the occupations in the country is not appropriate for teleworking or work‐from‐home set‐up. This means that under extreme lockdown measures, only limited sectors of our economy will remain operational and this could impact economic growth in the short‐run.

23 Pre‐existing Issues that Complicate COVID‐19 Policy Response Proportion of households with selected amenities by household income decile: Philippines, 2018 Not all households have the resources that Number of Share (%) of households with: would allow for work‐from‐home set‐up. Household households Electricity Computer Mobile While mobile phone ownership is generally income decile phone high in all regions in the country, allowing for 1 – Poorest 2,475,274 78.71 1.37 73.42 remote communication with co‐workers; 2 2,474,182 87.82 3.07 81.22 computer ownership on the other hand is 3 2,474,910 91.26 5.10 84.79 very low. 4 2,474,570 93.33 7.90 87.64 More importantly, we note a digital divide 5 2,474,662 94.67 10.53 88.69 wherein the bottom 40 percent of poorest 6 2,474,915 95.34 16.18 89.71 households in the country consistently have 7 2,474,557 96.58 23.00 91.50 weaker access to electricity, mobile phones 8 2,474,778 97.11 32.13 93.06 and computer. 9 2,475,122 97.89 44.55 94.88 Hence, if digitalization is the way forward to 10 – Richest 2,474,204 98.38 62.76 96.08 future‐proof jobs as well as education of All households 24,747,174 93.11 20.66 88.10 future generations, these households will be left behind.

Source: Family Income and Expenditure Survey 2018 24 While treated as a major hurdle for economies in 2020, the COVID‐19 pandemic offers some opportunities for the Philippines while putting forward some meaningful policies and reforms

Opportunity to work on government infrastructure projects The government‐imposed lockdown allowed the DPWH to work on road repairs and construction as well as the Department of Transportation (DOTr) to do maintenance work on the trains, uninterrupted by 1 road traffic or passengers → quicker turnover of government infrastructure projects.

Rethinking public transportation The suspension of public transportation allowed for the push for greener transportation alternatives ‐‐‐ 2 the DOTr is pursuing a budget allocation for a Manila‐wide bike lane network. The lockdown also provided the government time to redesign and build additional bus stops in .

Reduced energy consumption and greenhouse gas emissions The temporary closure of non‐essential businesses has led to the decrease in energy sales in the 3 industrial and commercial sector, by 1.2GWh and 1.6GWh, respectively. Lockdowns also appears to have favorable short‐run contribution to greenhouse gas emissions due to the suspension of transportation.

25 While treated as a major hurdle for economies in 2020, the COVID‐19 pandemic offers some opportunities for the Philippines while putting forward some meaningful policies and reforms

Rise of low carbon energy Based on the report by the International Energy Agency on the impact of COVID‐19 on the global energy 4 demand, low carbon technologies are now overtaking coal as the primary source of global electricity, and this is expected to continue in 2020 → transion to cleaner energy sources

Opportunity to rethink our ways and build back better . Online meetings, given the availability of electricity, computer and internet access, allowed the working public to function remotely. . The COVID‐19 pandemic was able to showcase to the world the value of e‐commerce and has likewise hasten digitalization in the Philippines, 5 . The pandemic highlighted the importance of self‐sustainability, e.g. people started producing food via backyard farming . The pandemic highlighted the importance of proper hygiene and behavior. . Proper ventilation in buildings and establishments were brought to the public’s attention

26 COVID‐19 Impacts and Trajectories of Development

“Peace” Pillar

27 Peace, access to justice, and governance The pandemic and containment measures are affecting the nexus between humanitarian, peace building efforts, development, and human security in the conflict‐affected areas of Mindanao and other parts of the country. . Land issues as major driver of conflict . Plight of indigenous peoples . Internal displacement . Violent extremism and governance challenges . Budget as a peace enabling instrument In the COVID environment, extra effort is needed to ensure that peace dividends are protected and stakeholders do not slide back on commitments.

28 Insecure land rights . Since the Congress enacted the agrarian reform law in 1988, around 4.8 million hectares of land has already •Land dispossession in been distributed to almost three million beneficiaries Mindanao continues to be . Many of the ownership rights were in the form of affected by multiple factors collective land ownership agreements (CLOAs); only (WB‐IOM): about 53% of distributed lands were in the form of • weak land administration individual titles. and management . In BARMM, around 80,528 hectares of land with • laws and policies prejudicial collective CLOAs (excluding ancestral domains) are yet to Moros and IP ownership to subdivided as of October 2019. of land • unregulated commercial . The Bangsamoro Development Plan 2020‐2022 interests reported that land use conversion is carried out • cycles of violent conflict without approval of authorities. • displacements caused by . The passage of the proposed National Land Use Act environmental factors will provide avenues to address land‐related issues.

29 Internally displaced persons . The UNHCR Dashboard shows that a total of 73,343 families (consisting of 343,322 individuals) are •Challenges related to displaced in Mindanao as of 31 July 2020. economic and security Group Families Individuals disruptions on the Group A (displaced within one month) 1,059 5,295 internally displaced must Group B (displaced for > 30 to < 180 days) 1,396 6,964 be addressed and Group C (displaced for > 180 days) 70,888 331,063 resources must be made . Long standing ridos (feuds among families or clans), available for ensuring that which add to displacements, are also not easily settled their risk of virus exposure due to longer and difficult access to the justice system. in cramped living . Internal displacement due to conflicts and natural conditions is minimized, disasters is costly in terms of lost opportunities to earn and that they are able to during the period of displacement → Php779 (or eventually be integrated US$16.07) per person per day in the agriculture sector into communities.

30 Governance challenges . There is a need to strengthen the capacity of civil • Highly emotional nature of society and community‐based leaders to manage community dialogues conflict, arrest their escalation, and formulate effective • Differing historical and legal responses and interventions. interpretations of various past agreements and legal . A Mindanao‐wide coordination between numerous instruments in peacebuilding levels of actors and complex institutional • Social conflict over land arrangements, considering implementation capacity deficiencies, is important claims • Slow‐moving peace process . Localized peace engagements in areas influenced by with the Communist Party of communist insurgency must also be able to the Philippines‐New People’s demonstrate successes not only in terms of number of Army‐National Democratic rebel surrenderers but also impactful developmental Front projects.

31 The budget as a peace enabling instrument •There have been . The national government is regularly honoring its headways in fixing the appropriations commitments to BARMM in the form of arrangements for the annual block grant, special development fund, and sharing of national share in taxes, fees, and charges. government revenues . The Intergovernmental Fiscal Policy Board is mandated with BARMM in order to to give recommendations that address revenue imbalances and fluctuations in regional financial needs allocate greater and revenue‐raising capacity of the Bangsamoro resources for the region, government. and work on this aspect must continue unhampered despite the pandemic.

32 Projects for Decommissioned Combatants (and/or their families) under the Normalization Program Big concern: How to fund the Normalization Program Construction of Equipped Rural Tulong Panghanapbuhay sa Ating Health Units with Birthing Facilities Disadvantaged/Displaced Workers • One of the key provisions in the Annex on Normalization of the Registration/Authentication of Birth, Construction of Community‐Level Comprehensive Agreement on Marriage, or Death Certificates Water System in Communities/ MILF the Bangsamoro is the Camps decommissioning of MILF forces. Health Insurance Grant Housing Assistance • Phase 2 completed; each Bangsamoro Grants‐in‐Aid for Higher Alternative Learning System in the decommissioned combatant Education Program Bangsamoro received Php100,000 (US$2,063) Integrated Skills Development Electrification Program for MILF transitory cash assistance. Training Camps / Communities • Both the national government Livelihood Investment Support Socioeconomic Programs for and the Moro Islamic Liberation Normalization in the Bangsamoro Front are sticking to the 2022 Peaceful Return and Aggressive Construction and Rehabilitation of target for the Exit Agreement. Inclusion Social Entrepreneurship Irrigation Systems

33 Philippine Institute for Development Studies Surian sa mga Pag‐aaral Pangkaunlaran ng Pilipinas Thank you

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