Business confidence at many areas of the economy is at a record low, a new survey has indicated.
The Solomon Islands Chamber of Commerce and Industry (SICCI) 2020 Business Confidence Survey suggests that most businesses (43%) expect their business situation to remain the same during the next six (6) months due to the Coronavirus global pandemic.
Twenty three percent (23%) of respondents to the survey expect their situation to deteriorate while twenty-eight (28%) remain optimistic of an improved business situation for this year, 2021.
The survey, conducted among 46 businesses in December 2020, covered all the industry sectors and different business sizes based on the number of employees.
Thirty-two percent (32%) of respondents expect no improvement in the local business environment in Solomon Islands saying it will remain the same, while another thirty-two (32%) expects the general business situation to deteriorate.
Ms Natalina Hong, Chief Executive Officer (CEO) of SICCI, said: “In many instances, these results are a cause for concern and that is why it is critical that Government create the right settings for future private sector growth to bolster the COVID-19 recovery and support businesses.
“As a Chamber, we believe all stakeholders including Government will need to work together to find a better path to follow where the right balance between managing the health and security challenges while also addressing the economic hits.
The survey found the shortage of Finance (30%) and Demand (32%) are among the main factors most limiting business ability to expand activities.
The survey also found that businesses are finding it harder to get skilled or specialist labour but easier to get unskilled Labour.
SICCI CEO, Ms Hong said that this survey results highlighted again the growing challenge of unemployment now facing the Solomon Islands economy.
She added: “There is a clear warning that a possible rise in unemployment is now inevitable as businesses adjust to a new normal.
The survey highlighted that thirty-six percent (36%) reported a reduction of fulltime employees in the last 12 months, while more than half of the respondents (57%) reported also a reduction in profitability.
“The immediate priority for many businesses is survival.”
Sixty percent (60%) of businesses that participated in the survey reported a need for improvement in Government services while thirty-five percent (35%) stated it has worsened in the past 12 months.
As for this year (the next 12 months), thirty-five percent (35%) expects Government services to remain the same, forty-two percent (42%) expected it to worsen and twenty-two percent (22%) are hoping for improvements.
The survey further highlighted that fifty-six (56%) of businesses expect changes in Government policy and budget in response to COVID-19 to have a negative effect on their businesses. Twenty-three percent (23%) expect positive effects while eight (8%) expected no effect at all.
Forty-one percent (41%) have high confidence their business will survive the extended State of Public Emergency (SOPE) while thirty-four percent (34%) have moderate confidence and ten percent (10%) low confidence.
SICCI has conducted the Business Confidence Survey since 2017.
SICCI Membership and Services Officer, Ms Naomi Mara, who takes lead in conducting Chamber surveys, said this exercise is a pulse-test to identify the level of business confidence perceived by participating members from within the Chamber’s diverse membership.
The survey identifies trends and conditions in the private sector. Increased business confidence is an indicator of economic growth, associated with increased spending and more economic activity. On the other hand, a decrease in business confidence may indicate a slowing of the economy.
“The data gathered enables the Chamber to consolidate business experience that informs how it progresses issues with Government. The outlook for business, also informs the wider private sector and partners to Government, of the standing of the economy as a whole,” Ms Mara said.
This issue marks the fourth SICCI Business Confidence Survey.
Solomon Islands Chamber of Commerce & Industry
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