Impact of The COVID-19 Pandemic On MSMEs in The Cebu City The Philippines

The Impact of the COVID-19 pandemic on
Implementing Cebu City’s Creative Agenda for

Achieving the Sustainable Development Goals in the
Philippines
The Impact of the COVID-19 pandemic on Implementing Cebu City’s Creative Agenda for Achieving the Sustainable Development Goals in the Philippines | CARUNGAY | NOVEMBER 2020
The COVID-19 pandemic has adversely

impacted many sectors worldwide – disrupting plans
and upending businesses – on an unprecedented
scale. In the Philippines, the cultural and creative
industries (CCI) constitute one of the sectors most
affected by the pandemic.
The present final report synthesizes the

results of a study focused on examining the effects
of the COVID-19 pandemic on the Philippines and,
specifically, on Cebu City's CCI sector. The report
presents the relevant research findings; outlines the
features of existing government and private sector
COVID-19 assistance; and offers policy
recommendations on means of alleviating the
impacts of the pandemic on micro-, small and
medium-sized enterprises (MSMEs) within the CCI
sector.
The project, which entailed a consultancy

assignment carried out over the course of seven
months, resulted in the production of several interim
reports and deliverables
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Abbreviations and acronyms

Philippine Government agencies
CITEM: Center for International Trade Expositions and Missions
COA: Commission on Audit
DICT: Department of Information and Communications Technology
DOH: Department of Health
DOLE: Department of Labor and Employment
DSWD: Department of Social Welfare and Development
DOT: Department of Tourism
DTI: Department of Trade and Industry
NCCA: National Commission for Culture and the Arts, Philippines
NCR: National Capital Region of the Philippines (a.k.a Metro Manila)
PSA: Philippine Statistics Authority
SSF: Shared Service Facilities (project)
Philippine quarantine- and COVID-19-related terminology

ECQ: enhanced community quarantine (highest risk)
MECQ: modified enhanced community quarantine (high risk)
GCQ: community quarantine (moderate risk)
MGCQ: modified general community quarantine (lowest risk)
CFR: case fatality ratio (number of deaths/number of cases)
Other abbreviations and acronyms

ASEAN: Association of Southeast Asian Nations
BCP: business continuity plan
BMA: Blue Mango Awards
BPO: business process outsourcing
BRT: business recovery toolkit
CCG: Creative Cebu Grid
CCP: Creative Cebu Portal
COD: Cities of Design
DCP: Design Center of the Philippines
GDP: gross domestic product
GRDP: gross regional domestic product
ITSO: Innovation and Technology Support Office
LGU: local government unit
MSMEs: micro-, small and medium-sized enterprises
OFW: overseas Filipino worker
PNS: Philippine national standards

PR: public relations
PWDs: persons with disabilities
R&D: research and development
SWS: Social Weather Stations
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1 | Introduction
1.1 Country context
The Philippine archipelago, situated in Southeast Asia on the western fringe of the Northern
Pacific Ocean, comprises about 7,641 islands. The second largest assemblage of islands in the world, the
Philippines is classified under three main geographical divisions from north to south: Luzon, Visayas and
Mindanao.
Manila is the capital city of the

Philippines and Quezon City is its most
populous city. Both are components of
Metro Manila, or the National Capital
Region (NCR), on Luzon Island.
The country, which is a founding

member of the Association of Southeast
Asian Nations (ASEAN), has the sixth
highest gross domestic product (GDP)
per capita within ASEAN, after
Singapore, Brunei Darussalam, Malaysia,
Thailand and Indonesia.
The Philippines is considered an upper-

middle-income country by the World Bank. In 2020, the International Monetary Fund (IMF) ranked the
Philippines as the world’s thirty-first largest economy by nominal GDP and the thirteenth largest in Asia.1
Primary exports include semiconductors and electronic products, transport equipment, ores and
minerals, petroleum products, coconut oil and fruits i.2 Major trading partners include the United States
of America, Japan, China, Singapore, the Republic of Korea, Thailand, Germany and the Netherlands.
Owing to its high literacy rates and English-speaking population, the Philippines is a major
offshoring and outsourcing destination and, for two years, surpassed India as the world’s leader in
business process outsourcing (BPO) in 2008. A majority of the top United States BPO firms have a
presence in the Philippines and the country is a constant fixture on the Tholons Services Globalization
Index 2020 (TSGI).3 In 2019, the BPO sector is estimated to have generated $26.3 billion in revenue and
engaged 1.3 million employees. In 2020, the Philippines was ranked sixth in this annual listing of the top
digital countries.
Tourism accounted for 12.7 per cent of local GDP in 2019 ($49.6 billion).4 The Philippines,
whose rich biodiversity is considered its main tourist attraction, attracted 8.2 million foreign arrivals in
2019, with the Republic of Korea, China and the United States being the top three source countries for
those arrivals .. Its cultural and natural resources are among the country's most popular tourist
destinations. Tourists are attracted by the rich historical and cultural heritage of the Philippines,
including its festivals and indigenous traditions. Popular tourist destinations include Cebu, Boracay,
Palawan and Siargao.
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"Overseas Filipino worker" (OFW) is a term used to refer to Filipino migrant workers who reside
outside the Philippines for a limited period for employment. Numbering 2.2 million in 2019, they are
estimated to have remitted US$ 34 billion, representing 11 per cent of total GDP, to the Philippines in
2018.5
Figure II | Philippines at a glance
The MSME sector in the Philippines comprises

993,080 establishments, representing 99.54 per cent of the
total number of registered establishments in the country
(1,003,111) in 2018 .6 Microenterprises constitute the
largest proportion (89.53 per cent) of MSMEs, followed by
small enterprises (9.59 per cent) and medium-sized
enterprises (0.43 per cent). The composition of the MSME
sector in the Philippines is at par with the composition of
the MSME sector of other ASEAN countries. Together, those
MSMEs generated a total of 4,784,870 jobs, accounting for
61.61 per cent of the country’s total employment. Microenterprises accounted for the biggest share
(29.43 per cent). Small enterprises followed closely behind (with a share of 25.34 per cent), while
medium-sized enterprises lagged far behind (with a share of 6.83 per cent).
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Prior to the onset of the COVID-19 pandemic, the

Philippines was experiencing robust growth,
according to IMF projections. In the 2015 Hong
Kong and Shanghai Banking Corporation
(HSBC)Trade Winds Report, the Philippine
economy was projected to be the fifth largest in
Asia and the world's sixteenth largest economy by
2050.7 This forecast was attributed to rapid
urbanization, reduction of exposure to natural
disasters, political stability, availability of persons
with English-language skills, trade openness and
population growth.
1.2 Regional context
In the centre of the Philippine archipelago lies the historic - and dynamic - city of Cebu. For over
500 years, it has been a hub of trade, a cultural centre and a model of resiliency. Cebu is home to a
population of over 1 million and the aggregation comprising and its neighbouring cities constitutes the
second largest metropolitan area in the Philippines. It is the seat of government of the island Province of
Cebu, which is located in the Central Visayas region (Region Seven). Based on asset size, Cebu is the
country’s most prosperous province.8
Considered by many to be the country’s design capital, Cebu is home to thousands of creative
enterprises and numerous internationally recognized talents working in a variety of disciplines, including
furniture, crafts, fashion and artistic multimedia. Cebu, which is also a major tourism centre, boasts the
country’s largest seaport and its award-winning airport is the second busiest in the Philippines. It is the
venue for Sinulog - the country's premier festival - which celebrates the city's distinction as the Cradle of
Christianity in Asia. More recently, Cebu has become a global hub for the information technology (IT)
outsourcing industry which specializes in creative multimedia.
Cebu, which was designated as the ASEAN City of Culture from 2010 to 2011, is a favourite of
international travellers. It has made numerous appearances over the years in many polls, most recently
in the Conde Nast Traveler’s Readers’ Choice Awards as the best island in Asia for 2020. Cebu boasts
more twin towns than any other city in the Philippines, with nearly 20 sister city agreements in place. In
October 2019, it was designated by the United Nations Educational, Scientific and Cultural Organization
(UNESCO) as a UNESCO global Creative Cities Network City of Design
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Figure V | Cebu at a glance
1.3 Cebu’s economy
As the economic powerhouse of the central Philippines, Cebu contributes the lion's share to the
Region Seven economy. Based on its 69 per cent share of business establishments, Cebu accounts for
almost $15 billion in gross regional domestic product (GRDP). If the proportion of employment is utilized
(83 per cent), then this figure increases to just over $18 billion. It is to be observed that the Philippines
does not break down GDP by province, which accounts for the above extrapolations.
Table 1 | Cebu gross regional domestic product (GDRP), 2018 (estimated)

Gross Regional Domestic Product Philippine Peso (000) In US Dollas (2018)
GRDP-REGION 7 ₱1,156,592,259.94 $ 22,030,328,761
GRDP-Cebu* ₱795,748,258.47 $ 15,157,109,685
GRDP-Cebu** ₱961,382,273.09 $ 18,312,043,297
Source: Philippine Statistics Authority, "2018 List of Establishments".
a
Extrapolation based on percentage of business establishments.
b
Extrapolation based on percentage of employment.
For over two decades, the business process outsourcing (BPO) industry has been a key driver of
growth in the Philippines, particularly in its two largest metropolitan areas: Manila and Cebu. Both are
ranked as top super cities in the Tholons Services Globalization City Index.9 In 2019, Cebu - for the first
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time and as the first Philippine city - entered the Euromonitor International list of the Top 100 City
Destinations.10
BPO, manufacturing, wholesale and retail, accommodations and food service, and education are
the top five sectors with respect to employment. If number of establishments were to be used as a
measure, then financial and insurance firms would replace education in the list of the top five.
Figure VI | Cebu’s top industries
Source: Philippine Statistics Authority, "2018 List of Establishments".
1.4 Cultural and creative industries
The cultural and creative industries (CCI) - which include arts and crafts, advertising, design,
entertainment, architecture, books, media and software - have become an increasingly vital force for
acceleration of human development . These industries “empower people to take ownership of their own
development and stimulate the innovation that can drive inclusive and sustainable growth”.11
CCI is an evolving concept which builds on the interplay between (a) human creativity and the
ideas it generates and (b) intellectual property, knowledge and technology. Essentially, it encompasses
the knowledge-based economic activities that enable the creative industries to develop. The creative
economy comprises all of the parts of the creative industries, including trade, labour and production.
Today, the creative industries are among the most dynamic sectors in the world economy, providing
new opportunities for developing countries to leapfrog into its emerging high-growth areas.12
UNESCO estimates that the world’s CCIs were responsible for US$ 2.2 trillion of world GDP in
2019, employed 30 million individuals worldwide, and has the potential to generate 10 per cent of
annual world GDP in the years to come.13 The cultural and creative industries are offering new
opportunities to address gender inequalities, as evidenced by the fact that nearly half of the people who
work in those industries are women. Through their impact on income generation, job creation and
export earnings, the cultural and creative industries have become major drivers of economies and trade
strategies in both developed and developing countries.
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The United Nations Conference on Trade and Development (UNCTAD) characterizes the CCIs as
:14
■ Encompassing the cycles of creation, production and distribution of goods and services that
use creativity and intellectual capital as primary inputs
■ Comprising a set of knowledge-based activities, focused on but not limited to the arts,
potentially generating revenues from trade and intellectual property rights
■Comprising tangible products and intangible intellectual or artistic services with creative
content, economic value and market objectives
■ Existing at the crossroads where the artisan, services and industrial sectors meet
■ Constituting a new, dynamic sector of world trade
More specifically, UNCTAD categorizes the different disciplines within the CCIs under nine
subsectors, as:
In the Philippines, creativity has long been considered one of the country’s defining capabilities.
The current Government has articulated the role of CCIs as a key driver of future prosperity and the
Philippine Development Plan (PDP) 2017-2022 is in fact the first policy directive to include promotion of
culture and values underpinned by the creative industries as a strategic priority. In December 2019,
Ramon Lopez, Secretary of the Department of Trade and Industry (DTI), announced that the aim of the
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Philippines in this regard is to be the top creative economy in the ASEAN region, as measured by size
and value, by 2030. The Department has facilitated the development of a creative economy road map
which has prioritized initiatives and subsectors where public and private sectors can collaborate in
accelerating the growth of the economy. The priority initiatives include the following areas: policies,
industries, clusters, cities, tourism and education. Priority sectors include advertising, film, animation,
game development, and graphic arts and design.15
1.5 COVID-19 impacts
On 30 January 2020, the first case of COVID-19 in the Philippines was identified at San Lazaro
Hospital in Metro Manila. On 6 March 2020, the Philippine Department of Health confirmed the first
case of local transmission of COVID-19 in the country after verification with the Bureau of Immigration
showed that the patient had had no recent travel history16
While the Government of the Philippines announced the first community quarantine in Metro
Manila on 15 March 2020, this action may have been taken too late. By the end of March, the country
had already officially logged 1,546 COVID-19 cases around the archipelago. Based on its current
accumulation of 371,630 cases of infected individuals, the Philippines ranks twentieth among countries
worldwide with the most COVID-19 cases.
1.5.1 COVID-19 health impacts
As of October 2020, it appears that the Philippines may have been spared the worst of the
COVID-19 health impacts. While the United States of America and Europe have seen record numbers of
new cases in the last week, the Philippines is currently logging a number of new daily infections that is
75 per cent lower than the peak of 6,725 recorded on 10 August 2020.
Other metrics paint a more hopeful picture of the COVID-19 pandemic health situation in the
country. While global rankings of the Philippines for number of infections and COVID-19-related deaths
have climbed, the outlook depicted by the figures appears much less dire when adjusted for the
country’s large population. Although, the country does not score well with respect to the number of
COVID-19 tests performed per million, this has been mitigated by the fact that case fatality ratios have
been consistently low. The country's current case fatality ratio of 1.89 per cent ranks ninety-sixth
highest among countries worldwide.
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Figure VIII | Summary of COVID-19 health metrics
Source: Worldometer Corona Tracker, WHO Coronavirus (COVID-19) Dashboard, as of 26 October 2020.
1.5.2 Socioeconomic impacts of the COVID-19 pandemic
It has been seven months since the first lockdown was announced and the entire country is still
under a state of emergency and areas are under some form of community quarantine. The
unprecedented limitations placed on movement and the suspension of activities have triggered both
supply and demand shocks which have resulted in extreme declines in key socioeconomic parameters.
In its latest report released on 29 September 2020, the World Bank revised its forecasts for the
GDP of the Philippines, with a worst-case scenario entailing a 10 per cent contraction at the end of the
year.17 Should this occur, the resulting decline would be the worst since 1961, surpassing even the
declines during the People Power Revolution of 1986, the 1997 Asian Financial crisis and the recession
of 2007-2008.
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Figure IX | Comparative GDP growth rates
Comparative GDP Growth (annual %) 1961-2020*

15.00%
10.00%
5.00%
0.00%
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
-5.00%
-10.00%
-15.00%
Philippines OECD East Asia and Pacific World
Sources: World Bank national accounts data; and Organisation for Economic Co-operation and Development (OECD) national
accounts data files.
The nationwide COVID-19 lockdown had an immediate impact on the lives of working Filipinos
who could not work from home. The April 2020 Labor Force Survey of the Department of Labor and
Employment (DOLE), found that unemployment had jumped threefold from the same period in 2019,
while underemployment had climbed by 39 per cent to 18.9 per cent. As some areas eased out of a
state of rigid lockdown in May and June, the numbers improved in July but were still significantly higher
than their pre-pandemic levels.
Figure X | Philippines: underemployment and unemployment
Jul-19 Apr-20 Jul-20

18.90%
20.00% 17.30% 17.70%
15.00% 13.60%
10.00%
10.00%
5.40%
5.00%
0.00%
Underemployment Rate Unemployment Rate
Source: Department of Labor and Employment, Philippine Labor Force Surveys.
The Department of Labor and Employment (DOLE) of the Philippines released comparative
employment rates per sector for July 2019 and July 2020 based on the findings of a recent study. The
arts, entertainment and recreation subsector exhibited the steepest declines, registering a -73 per cent
year-on-year decrease, followed by the accommodation and food service activities subsector, with a
year-on-year reduction of -36 per cent.
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Figure XI | Philippines Q2 GDP data, by subsector
Source: Philippines Department of Labor and Employment, "Employment situation in July 2020", released 3 September
2020.
An Asian Development Bank

simulation shows that, without
substantial fiscal support provided to
poor and near poor families, the
national poverty rate for the
population could increase from 16.6
per cent in 2018 to 20.7 per cent in
2020, which means that 5.5 million
more Filipinos would fall into poverty
as a result of the pandemic’s effects
on incomes. This represents a 68.6 per
cent increase in the number of
impoverished persons in the National
Capital Region and a 31.3 per cent
increase in the total number of poor
persons in the Philippines, threatening to reverse the country’s gains in poverty reduction in recent
years.18
The Social Weather Stations (SWS), considered to be the foremost public-opinion polling body in
the Philippines, has been tracking COVID-19-related sentiment since the onset of the pandemic. In a
survey conducted in September 2020,19 it found that the incidence of total hunger in the country had
surpassed 30 per cent. This not only surpassed the incidence of 24 per cent reported in 2012 but was
the highest ever recorded. Of those who reported experiencing hunger, 8.7 per cent, or 2.2 million
households, experienced severe hunger, i.e., they often or always went hungry within the last three
months. In their July 2020 surveys, SWS found that 79 per cent of Filipinos felt that they were
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worse off in the last 12 months and 36 per cent expected their quality of life to get even worse
in the following year.
Figure XIII | Social Weather Stations metrics
Source: SWS, 21 August 2020.
1.5.3 Impact of COVID-19 on Cebu CCIs
On 18 March 2020, one day after a state of community quarantine was declared in Cebu, the
city announced its first COVID-19 case. In the first month of lockdown, very few COVID-19 cases were
reported but in mid-April a surge began in one community and in the city jail. After this initial rise in
infections, the
number quickly
climbed in late
April and early
May. On 10 May,
Cebu briefly
surpassed Quezon
City in Metro
Manila as the city
with the greatest
number of COVID-
19 cases in the
country.
A brief easing of
quarantine
restrictions in early
June resulted in
another increase in
the number of
cases and an
alarming upsurge in the utilization of critical care facilities in local hospitals. At that point in time, Cebu
was considered the country's COVID-19 epicentre. The President of the Philippines, Rodrigo Duterte,
ordered an even tighter lockdown which was enforced by the military and overseen by the Secretary of
Environment and Natural Resources, Roy Cimatu, former Chief of Staff of the Armed Forces of the
Philippines. Utilizing proved contact tracing measures, strictly enforced restrictions and proper
coordination, Mr. Cimatu and his team were able to flatten the Cebu COVID-19 curve in approximately
one month. By 1 September 2020, Cebu had been downgraded to the lowest quarantine tier. On 25
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October 2020, the city logged only two new cases, the lowest number seen up until then under the
quarantine.
2 | Methodology
To assess the impact of the COVID-19 pandemic on MSMEs in Cebu’s creative industries sector,
this study utilized the following data-collection methodologies:
(a) First, a literature review was conducted to build knowledge on benchmarks and metrics and
identify gaps in existing data gathering efforts. The scope of the literature review encompassed
government policy reports, public online databases, academic journals, and peer-reviewed
articles;
(b) Focus group discussions with key stakeholders, including policymakers and MSME
entrepreneurs, were conducted to facilitate a deeper understandings of the impact of the
pandemic;
(c) Online surveys were developed and disseminated to enable the formulation of data sets
which were then analysed further;
(d) Peer consultations with design community stakeholders and policymakers were utilized for
the exchange of ideas, formulation of hypotheses and gaining of insights;
(e) Arrangements were made for participation in a series of capacity-building events and
webinars hosted by various organizations such as the UNESCO Cities of Design Network, the Arts
and Culture and Creative Industries Bloc of the Eighteenth Congress of the Philippines, the
Bandung Creative City Forum and the Department of Economic and Social Affairs of the United
Nations Secretariat (UN DESA);
(f) Accumulated learning materials derived from the aforementioned sources were analysed and
synthesized to enable the presentation of findings, recommendations and conclusions.
Figure XV | Methodology
Two surveys were conducted, in May-June and August 2020. Results of the surveys were used to
track the impact of the COVID-19 pandemic on subsectors of the creative industries sector of Cebu. They
were also utilized in the development of the business reboot toolkits (BRTs) for creative industries. Both
surveys had a similar sample size covering just a little under 10 per cent of the estimated 1,300 MSMEs
in the city's creative industries sector. Both surveys were circulated among Cebu-based MSMEs
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included in the Cebu UNESCO City of Design database, the Cebu Design Week database, the database of
the Department of Trade and Industry for Region Seven and the databases of creative industry
associations, and business support organizations. The second survey was also sent to all respondents to
the first survey. Sixteen per cent of MSMEs interviewed responded to both surveys.
Figure XVI | Survey objectives and metrics
3| Findings
While regional socioeconomic data for Cebu City have not yet been made available by the
Philippine Statistics Authority, they are expected to reflect the overall declines seen at the national level.
The present section will examine the results of the two proprietary surveys conducted in May-June and
August 2020 to assess the impacts of the COVID-19 pandemic on the city's cultural and creative
industries.
Both surveys were also designed to enable baseline data to be gathered on the composition of
Cebu’s cultural and creative industries, as very little information of this kind had been available
previously. With a contribution estimated at 7 per cent of local GDP, or US$ 500 million, Cebu’s CCIs
figure in all the subsectors identified by UNCTAD under its classification of creative industries. As Cebu
is home to many long-established and world-renowned enterprises in the fields of furniture and fashion,
it is not surprising that functional design should constitute the largest subsector of the city's cultural and
creative industries sector.
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Figure XVII | Composition of the cultural and creative industries sector of Cebu
The surveys showed that the effects of the lockdown were felt immediately by the CCIs of Cebu:
almost all of them lost revenues and 92 per cent had to shut down or institute working from home. Of
those surveyed, 65 per cent experienced cancellations, 39 per cent had to confront disruptions in their
supply chains and only 21 per cent received government assistance.
Figure XVIII | Initial impacts of COVID-19 on Cebu’s CCIs
Source: Cebu UNESCO City of Design survey, May 2020.
As the COVID-19 situation started to improve and restrictions were eased at the time when the
second survey was disseminated, Cebu’s CCIs began to experience some improvement. At the time of
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the second survey, 94 per cent of MSMEs interviewed indicated that they had lost revenue while on
lockdown, with 68 per cent specifying that their losses were 50 per cent greater than the losses
sustained before the onset of the COVID-19 outbreak.
Figure XIX | Decreases in sales during lockdowns and severity of decreases by proportion of
respondents
Source: Cebu UNESCO City of Design survey, August 2020.

Most of Cebu’s CCIs made the shift to online sales during the lockdown and utilized Facebook as
their primary selling platform. Instagram was the second most utilized online selling channel. One fifth
of survey respondents indicated that they generated more than 80 per cent of their revenue through
online sources.
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Figure XX | Online Percentage profile of Cebu’s CCIs
To compensate for decreased revenue, 45 per cent of Cebu’s CCIs pivoted to other fields during the
lockdown, with the two most prevalent being digital content creation (19 per cent) and food production
(18 per cent). A majority of those that shifted (54 per cent) indicated they would continue to operate in
those fields even once restrictions were eased.
Figure XXI | Top pivots of Cebu’s CCIs
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Another goal of the second survey in August 2020 was to assess the effects of the COVID-19
pandemic at the subsector level. Seven risk parameters were identified and each respondent was asked
to rate how dependent they were on each of them on a linear scale from 1 to 5.
Figure XXII| COVID-19 risk parameters
Aggregated with data from the May survey, the aforementioned analysis showed that MSMEs in
the new media subsector were least affected by the lockdown, while those in the performing arts
subsector were the most exposed.
Figure XXIII| Sub sectoral comparison: effect of the lockdown on new media MSMEs versus performing
arts MSMEs
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The results from the first survey conducted in May showed that the number of freelancers and
multiple-job holders within the MSMEs of Cebu's cultural and creative industries sector was high. These
findings were confirmed by the second survey conducted in August which showed that 43 per cent of
those in Cebu’s CCI MSMEs engaged in freelancing activities, a figure slightly higher than the figure of 35
per cent reported in a 2019 study carried out by the international compensation tracker Payoneer.20
MSMEs in the visual arts and audio visual subsectors accounted for the largest numbers of freelancers,
while those in the cultural sites subsector had the lowest proportions. Sixty-per cent of those
surveyed indicated that they held multiple jobs. This high combination of freelancing and the holding of
multiple jobs suggests that many of Cebu’s MSMEs in the cultural and creative industries sector may be
part of the economy's informal sector, rendering them ineligible for access to government services and
aid.
Figure XXIV | Proportion of freelancers and multiple-job holders within Cebu’s creative sectors
Source: Cebu UNESCO City of Design survey, August 2020.
In the first survey, nearly 80 per cent of respondents indicated they had not received any kind of
government assistance. The second survey uncovered a slight improvement: the proportion of non-
recipients had fallen to 69 per cent. This may indicate that MSMEs gradually benefited from government
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assistance programmes, although the majority are still engaged in a lonely battle against COVID-19. Of
those that did not receive aid, a substantial majority (77 per cent) had not applied, while the remaining
23 per cent had applied but were rejected.
Figure XXV | Recipients of government aid
Source: Cebu UNESCO City of Design survey, May-June and August 2020.
Sixty-three per cent of freelancers did not apply for government aid, while 11 per cent applied
but were denied aid. The remaining 26 per cent were able to secure government assistance and it is
assumed that the assistance was obtained through their jobs in the formal sector.
As regards business continuity plans (BCPs), 32 per cent of respondents in the first survey and 30
per cent of respondents in the second survey reported having prepared such a plan. The proportion of
respondents who reported not having a BCP doubled over the period from the first to the second
survey, from 14 to 29 per cent. Over the same period, the proportion of those that did not have a BCP in
place but were in the process of formulating one decreased, from 55 to 41 per cent. The decreasing
trend may indicate that some MSME entrepreneurs ended up forgoing preparation of a BCP, either
because they were able to manage their businesses during the pandemic without one or because their
business activities were halted. The trend could also indicate that MSME entrepreneurs have not
received the advice or training needed to help them prepare plans. The business reboot toolkits
delivered through this consultancy assignment, which incorporate BCP elements, could therefore be
useful to MSME entrepreneurs.
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Figure XXVI | | Proportion of survey respondents with a business continuity plan
Source: Cebu UNESCO City of Design survey, May-June 2020 and August 2020.
Every dimension of value chains has been impacted both positively and negatively by COVID-19.
Figure XXVII | Creative value chains
Forced lockdowns drove many MSME entrepreneurs to quickly pivot their business with a view
to mitigating the effects of revenue reductions. This resulted in unexpected shifts and new approaches
to selling and delivering products and accelerated the adoption of online payment and mobile
disbursement arrangements. On the negative side, quarantine restrictions created choking points at
every step owing to the imposition of closures and restrictions on movement. They also made the
performance of functions such as quality assurance and reverse logistics difficult. On the demand side,
sales of certain products, such as groceries, personal protective equipment (PPE), medicine and home
entertainment, did well but overall demand declined as people spent less in order to save more.
4 | Existing policy frameworks for support to cultural and creative industries sector MSMEs in
the Philippines
Currently, there is no department or agency of the Government of the Philippines that

singlehandedly covers the entire CCI ecosystem as characterized by UNCTAD. Figure XXVIII shows how
the different subsectors can be clustered together and placed under the purview of the appropriate
organizations.
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Figure XXVIII | Characterization and clustering of CCI subsectors
The functions, frameworks and objectives of the key government agencies presented in figure
XXVIII are discussed in the present section.
4.1 Department of Trade and Industry (DTI) Micro, Small and Medium Enterprise Development Plan
2017-2022
The Micro, Small and Medium Enterprise Development Plan 2017-202221 constitutes the growth
plan for the MSME sector in the Philippines. The Development Plan's vision encompasses “more globally
competitive MSMEs that are regionally integrated, resilient, sustainable, and innovative, thereby
performing as key drivers of inclusive Philippine economic growth” (p. 2). To realize this vision, the Plan
has three focus areas with corresponding themes or points of emphasis:
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Figure XXIX | DTI MSME Development Plan focus areas
Goals, corresponding strategies and action plans under the Development Plan are discussed below.
4.1.1 Business environment
Improved business environment
The basic strategy adopted by the Plan is to “simplify, standardize, and harmonize MSME-related rules
and regulations at all levels which will encourage MSMEs to tap the opportunities available under
macroeconomic policy, infrastructure development and trade deals”. Under this strategy, the action
plans include the following:
(a) Expediting delivery of MSME assistance services;

(b) Streamlining business permit and licensing systems;
(c) Removing restrictions, provide incentives and promote job-creating investments;
(d) Reducing the regulatory burden;
(e) Fostering in all government entities a convergence mindset which recognizes the centrality of
MSME development in achieving dynamic and inclusive economies.
Improved access to finance
The Plan strategy calls for streamlining and simplifying loan application and disbursement processes for
MSMEs, creating the necessary enabling environment that encourages local banks and relevant financial
institutions to reach MSMEs at the grass-roots level while equipping them with the knowledge and
incentives needed to facilitate access to formal financial channels. Under this goal and strategy, the
action plans include the following:
(a) Streamlining and simplifying loan requirements and processes for MSMEs and cooperatives;
(b) Building capacities of financial institutions and cooperatives to provide business development
assistance for MSMEs;
(c) Providing financial literacy training opportunities for MSMEs;
(d) Instituting innovative financing policies and programmes;
(e) Developing, promoting and expanding alternative financial instruments to better serve MSMEs’
financing requirements.
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4.1.2 Business capacity
Enhanced management and labour capacities

The strategy for enhancing management and labour capacities entails expanding and strengthening the
human resources capacity of MSMEs through optimal application of a combination of mentoring, group
training, field outreach and online training; and improving the MSME knowledge base using gender and
other parameters. Under this goal and strategy, the action plans include the following:
(a) Encouraging and promoting entrepreneurship and equal opportunities for all, including women and
youth;
(b) Enhancing labour capacities through human resources development and gender sensitivity
programmes for MSMEs;
(c) Intensifying advocacy and education campaigns on laws and policies relevant to labour and related
policies.
4.1.3 Improved access to technology and innovation
To improve access to technology and innovation, the Plan strategy is to support linkages between
MSMEs and large corporations; develop more inclusive business models and social enterprises; establish
feasible domestic economic zones for MSMEs; and make innovative technologies, including sustainable
and resilient practices, affordable, cost effective and accessible to MSMEs across all regions of the
country. Under this goal and strategy, the action plans include the following:
(a) Expanding facilities that can be shared by MSMEs;

(b) Providing financing programmes for equipment and machinery acquisition;
(c) Facilitating promotion of Philippine National Standards (PNS) by national government agencies
(NGAs) and their adoption by MSMEs;
(d) Developing internationally harmonized industry performance standards;
(e) Fostering wider MSME clustering to achieve economies of scale through clustering models such as
cooperatives, “corporatives”, nucleus farming and other MSME collective mechanisms;
(f) Promoting commercialization of technology and building capabilities to foster industry clustering.
4.1.4 Business opportunities
Improved access to markets
To improve access to markets, the Plan strategy is to strengthen value- and supply-chain linkages, as
well as to ensure that market information, analysis, learning, contacts, matching, and interactions on
domestic and export markets are timely, accurate, inexpensive and available to MSMEs. Under this goal
and strategy, the applicable action plans include the following:
(a) Maximizing opportunities that expand access to existing and new markets as presented under the
Association of Southeast Asian Nations (ASEAN) Economic Community and other preferential trading
agreements;
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(b) Promoting e-commerce;

(c) Organizing local and international marketing events;
(d) Designing export programnes.
4.1.5 Cross-cutting strategies
To the extent that they cut across the abovementioned strategies and goals owing to their overall
relevance, other issues or strategies need to be pursued, namely:
(a) Expanding MSME assistance centres;
(b) Strengthening the role of local government units (LGUs);
(c) Promoting green growth;
(d) Promoting women and youth entrepreneurship; (e) Maximizing opportunities in the digital and
Internet economy.
All of these goals, strategies and objectives are encapsulated in the Department of Trade and
Industry 7M framework which was launched in 2017 to help the nation’s MSMEs level up and thrive in
an overly complex and increasingly competitive business environment.
Figure XXX | Department of Trade and Industry 7M strategy
4.2 National Commission for Culture and the Arts
The National Commission for Culture and the Arts, Philippines (NCCA), is the overall policy-
making, coordinating and grant-awarding agency for the promotion, development and preservation of
Philippine arts and culture. NCCA - which, as an independent commission, is not attached to any existing
government department - is the executing agency for the policies it formulates. The Commission also
administers the National Endowment Fund for Culture and the Arts (NEFCA), a funding mechanism
focused exclusively on the implementation of cultural and arts programmes and projects.
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The aims of NCCA are to promote Filipino culture and values; enhance the social fabric; and lay
the foundation for inclusive growth and for the creation of a high trust and resilient society
characterized by a globally competitive knowledge economy. To achieve these aims, the National
Commission endeavours to:
(a) Make Filipino culture more accessible;
(b) Advance the value of creative excellence;
(c) Inculcate values for the common good;
(d) Strengthen culture-sensitive governance and development.
Figure XXXI | NCCA framework
Source: NCCA website.
4.3 Design Center of the Philippines
The Design Center of the Philippines (DCP) supports the country’s creative and design industries
through programmes and services tailored to address the design-related needs of MSMEs, designers,
government and the public. Through these endeavours, the Center strives to help boost the value of
Philippine design and promote consistent enrichment of contributions to the country’s creative and
design industries. In addition, the Center advocates, as an important goal, the cultivation of a design-
centric culture - one that gives primary importance to the value of user experiences as a basis for
simplifying complex problems and creating meaningful interactions through design.
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Figure XXXII | Framework for the Design Center of the Philippines
Source: DCP website.
4.4 Arts and Culture and Creative Industries Bloc (ACCIB)
In August 2020, the Arts and Culture and Creative Industries Bloc (ACCIB) of the Eighteenth
Congress of the Republic of the Philippines was mobilized to address the needs of the CCI subsectors.
The Bloc, which is currently composed of 28 members of the House of Representatives of the Eighteenth
Congress, has a six-point agenda22 comprising the following items:
1. LEGISLATION: ACCIB shall introduce and/or support legislation that protects, promotes and
bolsters arts and culture as well as creative industries.
2. RESOLUTIONS: ACCIB shall file resolutions celebrating milestones and achievements of the
sector and its stakeholders, thereby promoting and raising awareness of arts and culture as well
as creative industries among the Filipino people.
3. BUDGETARY SUPPORT: ACCIB shall assist government agencies and instrumentalities that deal
with issues related to arts and culture, as well as creative industries, in lobbying for appropriate
funding for their programmes and projects so as to enable them to become more responsive to
the issues under their mandates.
4. LEGISLATIVE OVERSIGHT: ACCIB shall ensure that existing laws and statutes pertaining to arts
and culture, as well as creative industries, are properly implemented and are fully responsive to
the needs arising within the rapidly changing socioeconomic landscape.
5. FOSTER COLLABORATION: ACCIB shall help identify intersectionalities and help foster
collaboration across agencies on the efficient use of their resources and effective
implementation of programmes in support of arts and culture as well as creative industries.
6. SERVE AS FRONTLINERS: To facilitate enactment of legislation, ACCIB shall endeavour to enable
private and public sector stakeholders in arts and culture as well as creative industries to voice
their concerns and be heard.
5 | Existing programmes of assistance to the CCIs of Cebu
5.1 Government programmes in support of MSMEs
5.1.1 Department of Trade and Industry COVID-19 response
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During the lockdowns, the Department of Trade and Industry (DTI) was mandated to regulate
the activities of businesses in the Philippines and launch programmes aimed at helping MSMEs cope and
become resilient to external risks introduced by the pandemic. DTI has launched a series of programmes
in support of MSMEs focused on:
5.1.1.a Optimizing the business environment

Guidelines for enterprises and establishments that have been allowed to operate under the
different phases of quarantine which included limitations - to different extents - on operational
capacity, hours and the application of safety protocols
• Rent holidays and concessions for MSMEs in areas with the strictest quarantine controls
• Refund concessions for events and activities that were affected by the public health
emergency
• Streamlining requirements for registration of a new business by removing the Mayor’s
Permit as one of the mandatory requirements
5.1.1.b Improving access to finance

To help cushion the financial impacts of the pandemic on MSMEs, the Department of
Trade and Industry introduced numerous targeted programmes which, in some instances, it
implemented together with government agencies. The programmes included:
• COVID-19 Assistance to Restart Enterprises (CARES) programme which was launched with
the Small Business Corporation. This facility provides a zero interest rate loan with no
service fees and generous grace periods for repayment. Microenterprises with an asset size
of not more than $60,000 may borrow a minimum of $200 and up to $5,000. Small
enterprises with an asset size of not more than $200,000 may borrow amounts not
exceeding $10,000
• Small business wage subsidy (SBWS) measure which provides, through the Social Security
System (SSS), a wage subsidy of $120-$160 (based on the regional minimum wage) per
month per eligible employee
• A community-based safety net programme under the Department of Labor and
Employment (DOLE), which provides temporary wage employment to informal economy
workers, such as (but not limited to) underemployed, self-employed, and displaced
marginalized workers who have lost their livelihood or whose earnings were affected owing
to the community quarantine instituted to fight the spread of COVID-19
5.1.1.c Enhancing management and labour capacities
To encourage productivity during lockdown and to enhance MSME entrepreneurial

skills, a series of initiatives have been offered including:
• CTRL + BIZ: a series of free webinars targeted towards MSMEs that need to transform
their business digitally
• A Google website designed to provide information to MSMEs on the different
technology tools, applications, platforms and resources available to assist in coping with
the challenges of community quarantine
• A free mentoring session on the official Go Negosyo Facebook page with the
participation of prominent Go Negosyo mentors and business experts to enable
32 | P a g e
discussion of business issues and concerns and provide technical and practical know-
how on managing micro- and small businesses
5.1.1.d Improving access to technology and innovation
FabLabs were mobilized to produce face shields and aerosol boxes which were made
manually or with the use of digital fabrication machines such as 3D printers and laser
cutters. Other FabLabs were incentivized to produce ethyl alcohol, scrub suits, reusable masks
and ventilators.
5.1.1.e Access to markets
DTI:
• Piloted the online National Trade Fair website on shopee.ph and on MSME food
producers' mobile app
• Facilitated a mobile-discounted wholesale caravan for micro stores to enable them to
offer basic goods priced at, or below, the suggested retail price
• Extended the complimentary trial period for easybuilder.pro, a website building
platform specifically designed to enable non-information technology (IT) professionals
to create a website to serve their own business and personal needs
5.1.2 Mapping study of the Philippine design economy
The Design Center of the Philippines (DCP) and the British Council Philippines will be launching a
mapping study which is underpinned by a baseline survey designed to develop an understanding of the
existing Philippine design economy. The recommendations of the study will serve as the basis for the
formulation and drafting of a national design policy as well as for the plans and programmes of the
Design Center of the Philippines and the British Council 23
The objectives of the design economy mapping study are to:
(a) Raise the profile of the Philippine design economy and underline its critical role in implementation of
the country’s development agenda;
(b) Provide an evidenced-based overview of the Philippine design economy and its key subsectors and
facilitate a deeper understanding of the sector - an understanding particularly of its scope, structure
and ecosystem as well as its behaviour and patterns of activity - in order to determine its economic
value and the value of the design industries to the wider economy;
(c) Guide the formulation of a Philippine national design policy that is data-driven, and evidence-based,
and which, through a more informed and stakeholder-sensitive approach is able torecognizes the power
of design within Philippine industries and within the context of everyday pursuits;
(d) Serve both as a baseline for measurement of the impact of Design Center initiatives and as a guide
for development of future plans, activities and programmes focused on nurturing the Philippine design
economy;
(e) Strengthen collaboration of networks within the country with the United Kingdom of Great Britain
and Northern Ireland including designers and other creative professionals, academia, business and
government. This research project is also part of a wider British Council creative economy research
programme across Southeast Asia.
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The purpose of this initiative is to:

(a) Generate new, applicable and relevant evidence on the state of the creative economy in Southeast
Asia;
(b) Test and develop effective new research methodologies which help to improve baseline
understanding of sector trends and the impact of interventions;
(c) Generate new detailed, relevant and transferable evidence on specific policy and partnership
activities (focus areas) which are seen as being of strategic importance in each country;
(d) Build new and sustainable partnerships with research experts of Southeast Asia and the United
Kingdom in, e.g., universities, consultancies and municipalities;
(e) Share evidence and approaches at the regional and international levels with a view to building new
channels for exchange of professional knowledge and mutuality;
(f) Build long-term strategic relations with the United Kingdom.
Cebu has been identified as a priority city with respect to commencement of the mapping exercise.
Discussions have already been initiated with the Design Center of the Philippines on how the outputs of
the present consultancy assignment can be utilized in the exercise.
5.1.3 Launch of Manila FAME+
On 15 October 2020, Manila FAME, the premier design and lifestyle promotion event in the
Philippines, pivoted to FAME+, a new digital trade platform for the home, fashion and lifestyle
industries. FAME+ provides exhibitors with a new channel for showcasing their products and creativity
to the world. This endeavour is organized by the Center for International Trade Expositions and Missions
(CITEM), an agency of DTI.
Through FAME+, CITEM seeks to build its community by onboarding exhibitors, encouraging
buyers to register, and sharing stories and content through its online magazine, Touchpoint. FAME+ will
also host digital events for its registered members focusing on information, creativity and
entertainment, while ensuring that the experience of using the website will be an engaging one.
Among the benefits in joining FAME+ are 24/7 year-round promotion of products in a virtual
showroom, a digital storefront for each exhibitor, complimentary digital content production and
curation for 100 exhibitors, one-on-one consultations with product development specialists, and access
to forecasts and industry insights as a means of keeping stakeholders updated on the latest trends.
The website has messaging and conferencing features designed to connect exhibitors with
buyers and other brands and manufacturers. The CCIs of Cebu that engage in exportation can build their
online presence and enjoy these benefits at no initial cost until October 2021.
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Figure XXXIII | Manila FAME+
5.2 Private sector MSME support programmes
5.2.1 Cebu Design Week 2020
Cebu Design Week, held from 26 to 28 October 2020, marked the convening of a virtual design
summit which brought together 20 thought leaders, creative trailblazers and proved innovators to
discuss relevant topics, consider possibilities and offer their individual insights on how to reboot in the
midst of a pandemic crisis without precedent. Each day, the summit - whose overarching theme was
"the Great ReCREATE" - focused on one of several different subthemes which included a creative check-
in and subthemes on deriving opportunity from adversity, and rethinking tomorrow. Over 500
participants joined over the course of the five sessions with many more expected to view the videos
once they were uploaded to the Cebu Design Week YouTube channel on 30 October 2020.
35 | P a g e
Figure XXXIV | Cebu Design Week: the Great ReCreate
The Blue Mango Awards, Cebu Design Week’s vehicle for incentivizng productivity while on
lockdown and reinforcing the message that creativity can be discovered every day and in everyone,
launched eight timely and inclusive challenges under three different prize tiers. The business reboot
toolkit (BRT), which was a component of the assignment, has been included as a major category of the
Blue Mango Awards to incent onboarding. Significant cash prizes await the winners – courtesy of Cebu
Landmasters, the leading property developer in Cebu, and Smart Communications, the country's largest
telecommunications company. To encourage greater participation, the deadline for entries has been
extended to 25 November 2020 with the virtual award ceremony to be held in the first half of December
2020.
Figure XXXV | Blue Mango Awards 2020
By the fourth quarter of 2020, Cebu Design Week will have launched a Philippine Design Book,
whose purpose will be to raise awareness and appreciation of traditional Filipino design. Readers will be
encouraged to utilize their creativity to reinterpret traditional forms and motifs in personal and
contemporary ways, with an interactive page provided next to each figure for that purpose.
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Figure XXXVI | Philippine design book mock-up
5.2.2 Creative Cebu Grid (CCG)
One of the key components of Cebu's 2019 UNESCO Creative Cities bid was a five-year
developmental plan for Cebu’s creative industries. A key component of that plan is the Creative Cebu
Grid, which comprises local and national government, academia and the private sector. While
international collaborators are not technically part of the grid, the appearance of their names in the
lower part of the pictorialization signifies their importance. The CCG taps existing institutions,
movements and relationships and harnesses them in a highly structured manner.
The CCG has three main functions which entail utilization of both bottom-up and top-down
approaches to performing continuous resource mapping, gap analysis and strategic alignment for
maximization of resources, reduction of redundancies and achievement of synergies.
Figure XXXVII | Creative Cebu Grid
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The COVID-19 pandemic has delayed the full activation of the CCG and its major initiatives. It
has, however, been utilized in the last few months, albeit to a limited extent.
6 | Recommendations
The present section utilizes the DTI areas of focus to frame recommendations in a coherent and
relevant manner. The recommendations are not limited to the DTI and will ultimately involve other
government branches and agencies, non-governmental entities, academia and the private sector.
6.1 Business environment
(a) DTI endeavours to formalize the status of cultural and creative industries sector (CCI) MSMEs
should be accelerated, expanding their access to government services and support.
Encouragement of CCI MSME formalization requires clear and compelling communication of its
benefits;
(b) Map current policy gaps related to CCI MSMEs and recommend possible policy
recommendations to be championed by ACCIB in the national Congress; (c) Advocate
investment incentives in infrastructure conducive for MSME CCI growth with ACCIB. Many
studies have suggested that investment in CCI infrastructure may be impaired in the short to
medium term owing to the COVID-19 pandemic. It is therefore important to pre-empt this
possible scenario by incenting new capital investments so that the sector's future prospects of
are not disadvantaged.
38 | P a g e
6.2 Access to financing
(a) Advocate with DTI and the Small Business Corporation, its financing arm, for further
streamlining and simplification of loan requirements for CCI MSMEs that may not meet the
current minimum eligibility standards;
(b) Deliver online multilingual financial literacy training for CCI MSMEs;
(c) Explore how digital financial services can accelerate the MSME formalization process as more
informal-sector entrepreneurs have adopted mobile disbursement modalities owing to the
massive shift to online business activities during the pandemic;
(d) Develop, promote and expand alternative financial instruments to better serve the financing
requirements of CCI MSMEs;
(e) Institute policies and programnes for innovative financing; (f) Engage and integrate angel and
impact investors in Cebu’s CCI community.
6.3 Capacity-building
(a) Conduct a more comprehensive needs assessment for Cebu’s CCIs;
(b) Map existing efforts of various government agencies, business support organizations and
researchers and match them with the demands of Cebu’s CCIs;
(c) Tap key players in the mew media subsector to encourage them to leverage and share their
experience in the areas of e-commerce and online business with the city's other CCIs;
(d) Continue to support Cebu Design Week as a year-round platform for information sharing,
collaboration and upskilling among CCI MSMEs;
(e) Formally include the business reboot toolkits in DTI MSME supporting policies and conduct
in-person workshops in this regard whenever possible.
6.4 Access to technology and innovation

(a) Conduct a mapping and assessment of the current DTI Shared Service Facilities (SSF);
(b) Advocate for the inclusion of Cebu in the “Smart City” pilot of the Department of Information
and Communications Technology (DICT) to improve access to broadband internet facilities; (c)
Align with the Ramon Aboitiz Foundation to unlock possible synergies though the communitech
hubs that the Foundation is launching in a few of the city's public schools.
6.5 Access to markets

(a) Include a selection of CCI MSMEs in the DTI National Trade Fair website pilot on shopee.ph;
(b) Initiate discussions with CITEM on how the FAME+ platform can be modified for the local
market; (c) Explore the possibility of creating a Cebu brand for the city’s CCI MSMEs which could
be used for joint promotions and marketing.
6.6 Cross-cutting concerns
(a) Philippine design economy mapping:

(i) Assist the Design Center of the Philippines (DCP) in formulating and implementing the
mapping, as Cebu is one of the pilot cities;
(ii) Provide DCP with all of the outputs from the present consultancy assignment so that
it can use the material to fast-track the mapping;
(iii) Advocate for the inclusion of subsectors that may not have been originally
encompassed in the scope of the project;
39 | P a g e
(b) Creative Cebu Grid (CCG) and Creative Cebu Portal (CCP):
(i) Convene a CCG steering committee with co-chairmanship to be held by the top DTI
official together with the official's private sector counterpart;
(ii) Fully activate both the CCG and the CCP in the next six months; (iii) Accelerate small-
scale proofs of concept in the interim to demonstrate CCG viability;
(c) Youth empowerment:

(i) Develop a series of “business of creativity” videos targeted towards the youth for
dissemination through the DTI Youth Entrepreneurship Program in order to build
awareness and activate creativity while encouraging entrepreneurship; (ii) Explore
means through which the Department of Education K12 Art and Design Track can be
tapped and leveraged;
(d) Vertical and horizontal scaling:

(i) Initiate regional clustering discussions and integrate this within DCPdesign mapping
under 6.6 (a) (i);
(ii) Utilize existing networks to disseminate learning in Cebu and help scale successful
projects around the country; (iii) Continue to leverage Cebu as the pilot city for testing
and deploying initiatives;
(e) Local government unit (LGU) engagement:

(a) Formalize linkages with the Cebu City Tourism Commission and the CCG to help
legitimize the mandate of the CCG as the focal point for Cebu’s CCIs;
(b) Initiate discussions with the city mayor on the “Digital City” pilot, with DICT to
provide complimentary ubiquitous broadband access throughout Cebu City; (c) Develop
and propose a plan on how Cebu’s CCI MSMEs can contribute to the 2021 year-long
commemoration of the 500-year anniversary of the Magellan-Elcano circumnavigation
of the world;
(f) Sustainability and resiliency:

(i) Anchor all CCG projects on the 2030 Agenda for Sustainable Development (General
Assembly resolution 70/1) and determine which SDGs are being specifically impacted
under each initiative; (ii) Replicate this process with established partners such as the
Ramon Aboitiz Foundation so that other collaborators can be motivated to tie in their
programming with the SDGs, thereby magnifying impact.
7| Conclusions
There is no doubt that the COVID-19 pandemic has exerted substantial impacts around the
world and will continue to do so, with no clear signs of abatement at present. While the Philippines may
have been spared the worst health-related effects of the pandemic, along socioeconomic dimensions,
the country has been devastated. The abrupt halting of robust growth spanning years threatens to
reverse gains that took decades to achieve. The second quarter of 2020 saw unprecedented declines
along nearly every socioeconomic dimension. On the other hand, the number of cases of infection has
been reduced since then and most of the country is currently at the lowest quarantine level.
40 | P a g e
Cebu’s CCI MSMEs were also greatly affected, as the pandemic disrupted every part of the
creative industries’ value chain. Some subsectors, such as performing arts, were more affected than
others owing to their greater dependency on large public gatherings, close human contact and
utilization of public spaces, which rendered them particularly vulnerable to the spread of COVID-19.
Other sectors – most notably new media – fared much better, as they were well positioned to take
advantage of the behavioural shifts that were triggered by the pandemic.
The pandemic also amplified weaknesses within Cebu’s CCIs that had already been present
before the COVID-19 pandemic struck. The high incidence of freelancers and persons holding multiple
jobs in Cebu’s CCIs signifies that many of them are in the informal business sector and are thus unable to
access the full range of services that are available to those in the formal sectors. Formalizing MSMEs is
already a key DTI goal but the process needs to be accelerated. Currently, a pressing challenge is how to
motivate MSME entrepreneurs to formalize their business, given that past attempts were not
particularly successful. The financial and different types of transaction costs connected with starting a
business in the Philippines are still high. Many in the informal sector harbor a mistrust of government
and are unwilling to accept the trade-offs – such as higher taxes and scrutiny – associated with
formalization.
The COVID-19 pandemic also accelerated many transformational changes that were well on
their way to accomplishment before the pandemic. Perhaps the phenomenon with the strongest long-
term implications is the acceleration of digital adoption, which is estimated to have leapfrogged five
years of growth in a matter of months. This shift to digital has unlocked many opportunities such as
expansion of distribution channels, new revenue streams and the capacity to realize greater efficiency.
However, this transformation also brings with it many challenges which, if left unmanaged, have the
potential to further widen societal gaps and cause long-term disparities. Paramount among these is the
growing digital divide, as a consequence of which already disadvantaged members of society are further
marginalized. It is therefore crucial that efforts be made to bridge such gaps, through investing, for
example, in the national digital infrastructure so as to expand public access to Internet facilities. From an
educational standpoint, digital literacy needs to be improved in a variety of subject areas. Within the
context of hardware and connectivity, access to affordable devices and fast, reliable broadband needs to
be democratized.
The survey conducted in August 2020 found that 80 per cent of Cebu’s CCI MSMEs expected
their revenues to return to the pre-COVID-19 level by the end of 2021. With Europe and the United
States of America already in the grip of the second wave of the pandemic, it is almost certain that
recovery from this current crisis will be a very long process. The economy of the Philippines is heavily
reliant on exports, international tourist arrivals and remittances from overseas Filipino workers – which
will all be subjected to intense pressures and uncertainties over the next several months.
It may be still too early to determine how the second wave of the COVID-19 pandemic will affect
the global economy and what the recovery trajectory will look like. What is certain is that the arts,
culture and design sector will continue to face daunting challenges at least through the near future.
Many CCI MSMEs around the world are facing existential threats – from shifts in demand to cuts in
public funding – and it is important that every effort be made to preserve them.
To ensure the survival of Cebu’s CCIs, the importance of CCI MSMEs needs to be recognized as
well as their roles in building a sustainable future for the city. It needs to be understood that creativity
is not only essential in itself, but also critical for communities if they are to flourish inclusively and
41 | P a g e
sustainably. Stakeholders in Cebu’s CCI MSMEs need to (a) work more closely together and in a way
that is smarter, (b) align with government and other institutions and (c) agree on a path forward that
ensures maximization of the efficiency of limited resources - effectively, inclusively and sustainably for
the community and its environment.
2
Trademap, International Trade Center. Accessed on 27October 2020.
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The Impact of the COVID-19 pandemic on

Implementing Cebu City’s Creative Agenda for

The COVID-19 pandemic has adversely

The present final report synthesizes the

The project, which entailed a consultancy

Abbreviations and acronyms

Philippine quarantine- and COVID-19-related terminology

Other abbreviations and acronyms

PNS: Philippine national standards

Manila is the capital city of the

The country, which is a founding

The Philippines is considered an upper-

Figure II | Philippines at a glance

The MSME sector in the Philippines comprises

Prior to the onset of the COVID-19 pandemic, the

1.2 Regional context

Figure V | Cebu at a glance

1.3 Cebu’s economy

Table 1 | Cebu gross regional domestic product (GDRP), 2018 (estimated)

Figure VI | Cebu’s top industries

Source: Philippine Statistics Authority, "2018 List of Establishments".

1.4 Cultural and creative industries

use creativity and intellectual capital as primary inputs

potentially generating revenues from trade and intellectual property rights

■ Constituting a new, dynamic sector of world trade

1.5 COVID-19 impacts

1.5.1 COVID-19 health impacts

Figure VIII | Summary of COVID-19 health metrics

1.5.2 Socioeconomic impacts of the COVID-19 pandemic

Figure IX | Comparative GDP growth rates

Comparative GDP Growth (annual %) 1961-2020*

Philippines OECD East Asia and Pacific World

Figure X | Philippines: underemployment and unemployment

Jul-19 Apr-20 Jul-20

Figure XI | Philippines Q2 GDP data, by subsector

An Asian Development Bank

Figure XIII | Social Weather Stations metrics

Source: SWS, 21 August 2020.

1.5.3 Impact of COVID-19 on Cebu CCIs

Figure XVI | Survey objectives and metrics

Figure XVIII | Initial impacts of COVID-19 on Cebu’s CCIs

Source: Cebu UNESCO City of Design survey, May 2020.

Source: Cebu UNESCO City of Design survey, August 2020.

Figure XX | Online Percentage profile of Cebu’s CCIs

Figure XXI | Top pivots of Cebu’s CCIs

Figure XXII| COVID-19 risk parameters

Source: Cebu UNESCO City of Design survey, August 2020.

Figure XXV | Recipients of government aid

Figure XXVI | | Proportion of survey respondents with a business continuity plan

Figure XXVII | Creative value chains

Currently, there is no department or agency of the Government of the Philippines that

Figure XXVIII | Characterization and clustering of CCI subsectors

Figure XXIX | DTI MSME Development Plan focus areas

4.1.1 Business environment

Improved business environment

(a) Expediting delivery of MSME assistance services;

Improved access to finance

4.1.2 Business capacity

Enhanced management and labour capacities