HHM COVID-19 UPDATE - 27 MARCH 2020
Seven days have passed since our last update and a lot has happened. The US has become the epicenter of the COVID-19 pandemic, Mexico moved into phase 2 of the Coronavirus contingency and today The Netherlands reports the highest number of COVID-19 related deaths so far. How is the situation being handled?
Many of us are concerned about our health, our jobs, companies and futures. Holland House Mexico is sharing tools and information with you in the coming weeks aimed to help you and your organization during this crisis. Please feel free to contact us at any time.
COVID-19 in Mexico
Mexican president Andrés Manuel López Obrador (AMLO) announced on Tuesday, 24 March that Mexico has officially entered phase 2 of the COVID-19 contingency – days after the WHO declaration. This means that infections are no longer due to importation, but rather the virus is spreading from sources within the Mexican territory.
The following measures effective for phase 2 have been announced:
- No greetings that include kisses or hugs
- Application of sanitary filters at schools and workplaces
- Extra protection and care for senior citizens and other high-risk groups
- Suspended classes throughout the National Educational System until April 19
- Temporary suspension of events and gatherings of 100 people or more
- All private, public, social or governmental meetings are to be avoided
- Temporary suspension of activities that require people to commute from their homes to work or public spaces.
Furthermore, the government suspended all “non-essential” activities, including non-essential activities at government institutions. Social distancing is being promoted in the form of “Susana Distancia”, a cartoon that keeps 1,5 m distance from other people. Notably home office is not mandatory.
In economic terms, Mexico’s federal government remains slow to react and prepare for the imminent crisis that is bound to hit the country. While Mexico’s state governments are taking measures, the federal government has yet to announce any measures to support the Mexican economy, beyond a million loans of around US$1,000 that will be available for informal businesses. Unless President López Obrador gets serious about protecting jobs, many Mexicans might find themselves unemployed in the near future. The president refuses to grant tax waivers or relief measures, stating that "the neoliberal model no longer applies.” Some state governments are offering a 50 to 75 percent discount on payroll taxes, while others are considering eliminating this and other local taxes. Furthermore, several privately owned financial institutions are stepping in by introducing measures to aid SMEs, including payment facilities on credits, periods of exemption from 6 to 12 months and payment in capital.
Regarding international trade, an official statement issued yesterday by the Mexican Hacienda and Customs office reiterates that all Mexican borders are open and that there are no restrictions to international commerce.
Monitor the spread of the Coronavirus in Mexico: (see map here).
Sources: 1, 2, 3, 4
COVID-19: How to minimize financial risks in times of crisis
Karel van Laack, President and CEO of Atradius in Mexico, presented the following practical approach to keep your company financially healthy during crisis during this weeks webinar.
- In times of economic turmoil, “…Cash is King..” and cash management becomes crucial.
- A company’s objective should be to still be a viable Company after the crisis.
- If possible, focus on export business to take advantage of the peso depreciation.
- Postpone non-critical investments and reduce expenses.
- Communicate with your suppliers! Explain your difficulties, keep them informed at all times and don’t give them surprises.
- Your (core) supplier is your partner and your lifeline during and after a crisis. Coordinate a payment plan and pay your partners as agreed.
- Find quick solutions for your supply chain problems, both products, locations and ways of transportation.
- Keep your credit standard high. Avoid the Credit Bureau.
- Know Your Customer, now more than ever. Sharpen your own credit management: how well do you know your client’s financial situation, the markets he sells to?
- The world has changed. Your client may have, too.
COVID-19 in The Netherlands
Unlike other countries in the European Union, The Netherlands is not on lock-down. However, the government has implemented a series of measures to prevent further spread of the Coronavirus. These include social distancing, home schooling and home office for all citizens. Starting this week, gatherings of groups of more than 3 people are prohibited. Find the complete list of measures here (in Dutch). You can follow the latest news on this website.
The Dutch government is taking additional measures to keep international trade going as much as possible. The State is expanding the possibilities for export credit insurance from 26 March onwards. The measures help prevent companies from experiencing greater payment risks, additional liquidity problems or international projects being forced to stop.
The Council for Financial Statements comes with the main points for attention for the 2019 annual reporting based on existing legislation and regulations (RJ-Uiting 2020-5). 83% of companies in the Netherlands expect to have to cut jobs in the near future because of a loss of turnover due to the corona crisis, according to reports from business organizations VNO-NCW and MKB-Nederland. They rely on a survey conducted between March 21 and 23 among 158 directors of industry associations in various sectors. Two-thirds of industry executives surveyed believe that most companies need additional financing or credit to avert bankruptcy.
An overview of measures and implications regarding import/export to The Netherlands can be found here. You can monitor the spread of the Coronavirus in The Netherlands here.
How are you?
Complete the Survey
Dutch entrepreneurs worldwide are facing several challenges due to the Corona virus. As your trusted local Business Council our aim is to support you in every way we can. To be able to give you the right support, we have set up a short survey in collaboration with NLinBusiness, with questions regarding the impact of the Corona virus on businesses worldwide. The results of this survey will be used to adapt our services if necessary, and to give you an insight on the impact of this virus in different countries.
Completing the survey will take you 3-4 minutes. We would really appreciate it if you could take a few minutes of your time to participate in this survey. We will share the results of the survey with you. Thank you in advance!
Fill out the survey here.