Brunei Darussalam Central Bank (BDCB) recently published Brunei Darussalam’s Business Sentiment Index (BSI) for the month of March 2022, showing index based on surveys conducted on more than 500 micro, small, medium and large-sized businesses from the eleven economic sectors in Brunei.
The monthly index is designed to measure the level of business confidence/sentiment in the country and cover various aspects including current and future business conditions; current and future investments; current and future employment of workers; as well as current and future costs of running the businesses.
Therefore, BSI serves as a leading macroeconomic indicator with its forward-looking element.
Within the BSI, there are nine sub-indices.
The Current Business Conditions sub-index, which is the main headline index for the BSI, was 50.3 in March 2022.
This was the sixth expansion since October 2021, slightly higher than the 50.1 recorded in February 2022.
A number of factors cited by businesses include increasing oil price, more business activities, higher demand from government and the public, as well as more projects compared to the month before.
However, quite a number of businesses also observed worse or similar conditions than February 2022 from the impact of the highly transmissible Omicron variant that had reduced the number of customers frequenting the stores and also the reduction in manpower with employees undergoing quarantine order either from tested positive for COVID-19 or identified as close contacts.
The index for the one month ahead Business Conditions was recorded at 50.6 which reflected that despite challenging conditions, businesses were hopeful with the expectation of an increase in sales and activities with the upcoming Hari Raya Aidilfitri and that the daily COVID-19 cases seemed to have peaked in early March and had started to decline.
The Investment sub-index was 50.1 for the current month, 50.6 for one month ahead and 50.1 for three months ahead. This indicates that in general businesses have increased investment activities and inventory in March 2022. Some have plans to increase investment expenditures in April 2022 such as improvement of office infrastructure and business premises, and purchases of equipment, company vehicles and raw materials.
The Employment sub-index was 50.2 for the current month and 50.2 for the month ahead, indicating that most businesses were hiring more employees in March 2022 and will continue to hire in the next month.
Overall, businesses still faced an overall shortage of workers as they were unable to replace the foreign workers whose permits expired and have to return to their home countries.
Businesses also faced difficulties to secure local workers to fill the gap and some resorted to hire part timers. Despite this, businesses hope for an improvement in the procurement of labour procedures and welcome any efforts to resolve the persistent manpower challenges.
The Costs sub-index was 50.2 for the current month and 50.2 for the month ahead, indicating that businesses continued to face increased costs of running their businesses in March 2022 and April 2022.
Businesses expressed concerns regarding the rising costs over the months which in turn had lowered their profits.
In general, businesses cited increases in the prices of ingredients such as meat and raw materials such as fertilisers and oil, plus higher freight and shipping costs. Higher operational costs are also caused by additional employee-related expenses such as paying overtime to existing employees to cover manpower shortages, and the purchase of Antigen Rapid Test kits, sanitisers and face masks.
In terms of economic sectors, there was a slight improvement from February 2022 with five out of eleven sectors recording pessimism with indices below the threshold of 50; with the largest contractions in two sectors: Wholesale & Retail Trade and Hotels & Restaurants.
The reasons cited for the lower performances observed by the businesses include lower sales compared to the previous month and manpower shortages due to COVID-19 cases amongst employees.
Two sectors namely Oil & Gas Related and Finance & Insurance indicated optimism in March 2022. Other sectors reported similar current business conditions in March 2022 compared to February 2022.
In terms of the index by business size, businesses of all sizes have generally reported contraction with medium-sized businesses shown to have hit the hardest by the third wave of COVID-19 which began in February 2022. The latest wave has caused a widespread workplace disruption among micro, small, medium and large enterprises in terms of staff shortages and temporary closures.
This article was first published on 16 April 2022 in our Weekly Epaper issue 189 |
THE BRUNEIAN | BANDAR SERI BEGAWAN
