COVID-19 is huge challenge for business resilience

GENEVA - The COVID-19 pandemic has tipped the world into recession and the world’s most disaster-prone region Asia and the Pacific is really feeling the economic pain.

Tourism is a good barometer of that pain as small and medium sized enterprises make up 90% of the tourism industry in the region where 49 million jobs in the sector are now at risk as worldwide travel has ground to a halt.

Masato Takamatsu, President, Tourism Resilience Japan,  outlined the extent of the challenge in the latest webinar on lessons learned from the COVID-19 pandemic – Business Resilience in the Face of COVID-19 - organized by UNDRR’s Asia and the Pacific Regional Office and moderated by office head, Loretta Hieber Girardet.

Mr. Takamatsu, speaking to an online audience of 750 participants from 79 countries said the economic crisis was particularly hard-hitting for small island developing states almost totally dependent on tourism, from the Maldives to Vanuatu which was severely hit earlier this month by Cyclone Harold.

He praised industry efforts to play a role in the fight against COVID-19 by offering free flights and hotel rooms to medical personnel and predicted that post-recovery tourism will be very different with the focus on ensuring hygiene safety “and preventing tourism from becoming a further transmission channel.”

The challenges of being an SME in the far-flung Pacific were cited by Atin Patel, exports manager, of the major hardware supply business, Vinod Patel, a family business based in Fiji and employing 1,300 people.

“We have gone through numerous coups and cyclones, but this is taking longer than we would normally to come out of a natural disaster and we have had to completely re-think how we are doing business and it is actually a long-term change,” said Mr. Patel.

The company has avoided redundancies but reduced wages and cut other costs in the face of the twin challenge of a drop in demand and an increase in supply lead times.

The Philippines is struggling with the trade-off between the health of its citizens and wanting to re-start the economy, said Veronica Gabaldon, Executive Director, Philippine Disaster Resilience Foundation.

Health and food security were the most important issues for the country’s legion of microentrepreneurs during the extended lockdown and a government amelioration programme is in place to tide them over for the next two months.

SMEs employing 50 or more people have other possibilities. Some are considered as essential services and are allowed to operate but face limitations such as transport and PPE for their employees, but revenue is small.

“There is a strong call that we are not making too much ground in stopping the spread of the virus so there is a strong call from the science group to extend the lockdown, but business interests are opposed to it because the economy cannot sustain it,” Ms. Gabaldon said.
Chiranthi Cooray, Chief Transformation Officer, Hatton National Bank, Sri Lanka, said it was encouraging to see how the banking sector was adapting to the “new normal” by providing online services in the lockdown areas including mobile banking and contactless payments.

Hatton National Bank is keeping one-third of its branches open with minimal workforce following government restrictions, in both lockdown and non-lockdown areas.

Ms. Cooray said the digital transformation of banking services is speeding up because of the crisis; 400 bank staff are working from home and 600 are currently taking on-line courses on a digital learning platform out of a total workforce of 5,000.

Investing in the digital economy was paramount for SMEs to succeed and the banking sector is working diligently to on-board as many businesses as possible through trained “digital evangelists” working closely with business owners.

She was encouraged by “the zeal and vigour” with which SMEs were looking to the recovery period after introducing efficiencies into their businesses.

Wade Bromley, Senior Specialist, Employers’ Activities Decent Work Team, International Labour Organization, said that anything that looks like a return to normal operations is still a very long way away. Business confidence has yet to return. Everybody is in stand-by mode, but more businesses are looking at diversification as a pathway to sustainable recovery especially in economies dominated by one sector.

Mr. Bromley emphasized that dialogue with non-State actors is important. Risk does not stop at the factory gates. Businesses are dependent on infrastructure and public services and any pathway to recovery is a shared journey.

Learning from past disasters shows that support does not necessarily reach the most vulnerable especially those in the informal economy. Flexibility and innovation in relief assistance is necessary to ensure that nobody is left behind.

Aslam Perwaiz, Deputy Executive Director, Asian Disaster Preparedness Center, emphasized the importance for SMEs to be officially registered if they want to avail of government assistance.  

“SMEs are the backbone of the economy and that backbone is broken,” he said and 90% of them are in the informal sector and they are not receiving the benefit of official government assistance.

In ten years of engagement with the private sector, ADPC has been encouraging SMEs to look at alternate businesses in the wake of disasters like the Thailand floods in 2011.  It has also placed great emphasis on business continuity planning which should be done ahead of the disaster. Most recently, UNDRR partnered with ADPC to launch a toolkit designed specifically to build the resilience of small businesses through business continuity and recovery planning. The toolkit can be accessed at undrr.org/bcp-ap