Maldives: Quarterly Business Survey - 3Q 2017

Transcription

1. QUARTERLY BUSINESS SURVEY THIRD QUARTER 2017 VOLUME 5 ISSUE 3 PASS
2. About the survey The Quarterly Business Survey is conducted by the MMA with the aim of obtaining a quick assessment of current business trends and expected future economic activity . The respondents of the business survey are senior managers or top management of businesses who has an overall view of the business situation. The questions cover the views of the senior management (for the past quarter and expectation for the next quarter) on the direction of change in various business variables such as sales, output, prices, exports, capacity utilisation and employment which are useful for analysing and predicting economic activity. The qualitative response for these questions takes the form of either increase, decrease or no change. The business survey for Q3-2017 was conducted from 1st October 2017 to 12th October 2017. Survey forms were sent out to 143 large enterprises in the construction; tourism and; wholesale and retail trade sectors. The survey sample is based on information provided by the Maldives Inland Revenue Authority. A total of 97 enterprises responded during the survey period which represents an overall response rate of 68%. The accounting concept, net balance approach, has been used in converting qualitative responses to quantitative numbers. All responses are weighted based on their relative size within their respective sector. Net balances measure the difference between the percentage of respondents who gave positive responses and the percentage of respondents who gave negative responses. Care should be taken when interpreting the results of individual sectors as constraints in sample selection limit the representativeness of certain industries within each sector. The MMA would like to thank all the parties who contributed to the survey, especially the survey respondents.
3. Summary of survey results According to the Quarterly Business Survey carried out for the third quarter of 2017 , majority of the businesses in the construction and, wholesale and retail trade sector reported an increase in the level of business activity in Q3-2017 compared with Q2-2017, while most of the businesses in tourism sector reported a decline. Looking ahead, all three sectors anticipate an improvement in business activity during Q4-2017 over Q3-2017, as indicated by positive net balances. With regard to the current level of employment, the majority of businesses in the construction sector reported an increase in hiring in Q3-2017 over Q2-2017. However, businesses in the tourism sector and, the wholesale and retail trade sector indicated no change in employment numbers. Looking ahead, majority of the businesses in all three sectors anticipate no change in hiring in Q4-2017 compared with Q3-2017. As for business costs, most of the respondents from the tourism and, wholesale and retail sector reported no change in labour costs in Q3-2017 compared with Q2-2017 while businesses in the construction sector indicated an increase. As for other input costs, respondents from the construction sector and, the wholesale and retail trade sector reported an increase while, the tourism sector stated no change. Meanwhile, businesses in the construction sector and tourism sector anticipate an increase in both labour and other input costs in Q4-2017 while businesses in the wholesale and retail trade sector foresee no change in both costs. With regard to prices charged, most of the businesses in the tourism sector stated a decline in average room rates in Q3-2017 over Q2-2017 while businesses in the wholesale and retail trade sector, and the construction sector indicated no change. Meanwhile, respondents from the tourism and construction sector expect an increase in prices charged in Q4-2017 compared with Q3-2017. However, businesses in the wholesale and retail trade sector anticipate no change.
4. Summary of responses by sector Construction sector Current situation The performance of the construction sector during Q3-2017 remained strong as indicated by positive net balances for the volume of construction activity and the volume of orders received during the period (52% and 10%, respectively). Additionally, the majority of the respondents indicated an increase in the number of employees, representing a net balance of 57%. With regard to business costs, 64% and 72% of the respondents indicated an increase in labour costs and input prices in Q3-2017 compared with Q2-2017, respectively. Reflecting this, 41% of businesses cited an increase in the prices charged by them during the period; however, 59% reported no change. Fiftynine percent of the businesses also reported higher capital expenditure while remaining businesses indicated no change during the quarter. As for the financial situation of the company, 59% of businesses noted no change, while 39% of businesses indicated an improvement in Q3-2017 compared with the previous quarter (Figure 1). Further, 53% of businesses stated no change in access to credit while 33% stated it tightened in Q3-2017 compared with Q22017 (net balance of -18%). Expectations for the next quarter Looking ahead, majority of the businesses in the construction sector anticipate the volume of construction activity to increase although all respondents expect no change in the volume of incoming orders in Q4-2017 when compared with Q3-2017 (Figure 2). As for employment numbers, 50% of the businesses expect no change in hiring while 41% of the respondents anticipate an increase in 1 | Quarterly Business Survey, Q3-2017 Figure 1: Changes in business indicators in Q3-2017 compared with Q2-2017 Volume of construction activity Volume of orders received Number of employees Prices charged on average Wages and other labour costs Price of inputs Capital expenditure Access to credit Financial situation of the company -100 -80 -60 -40 -20 0 20 40 60 80 100 * Changes in business indicators are shown as net balances. This is the difference between the percentage of business units choosing positive answers (increase/better/ease) and that choosing negative answers (decrease/worse/tight). ** Detailed survey responses are provided in Table 1 of appendix.
5. employment numbers . Looking at prices charged, majority of the businesses foresee an increase in Q4-2017 while 30% of the businesses expect to see no change in prices during the period. With regard to business costs, 52% and 63% of respondents anticipate an increase in labour and other input costs in Q4-2017, respectively. As for investment plans, 53% of businesses plan to increase their capital expenditure while 46% of the businesses mentioned no change. Meanwhile, 33% of the businesses expect their financial situation to improve, while 64% expect no change. Similarly, 33% of the respondents anticipate access to credit to ease in Q4-2017 compared with Q3-2017 (net balance of 31%). Factors limiting business growth As per the survey respondents, the most significant factors that limit business growth in the construction sector are delays in payments made by clients. Additional factors noted by the respondents include cost of raw materials, access to bank credit, shortage of skilled labour and competition (Figure 3). Figure 2: Expectations on changes in business indicators in Q4-2017 compared with Q3-2017 Volume of construction activity Volume of orders received Number of employees Prices charged on average Wages and other labour costs Price of inputs Capital expenditure Access to credit Financial situation of the company -100 -80 -60 -40 -20 0 20 40 60 80 80 90 100 Figure 3: Significant factors limiting business activities in Q3-2017 Delays in payment Cost of raw materials Access to bank credit Shortage of skilled labour Competition Cost of labour Shortage of materials Cost of finance Regulatory framework Access to foreign exchange Shortage of local labour Insufficient demand 0 10 20 30 40 50 60 70 100 Quarterly Business Survey, Q3-2017 |2
6. Tourism sector Current situation Reflecting the off-peak season for the tourism industry , majority of the respondents from the tourism sector indicated a decline in total revenue and average room rates in Q3-2017 compared with the previous quarter― net balances of -3% and -65%, respectively (Figure 4). Sixty-one percent of respondents reported an increase in resort bookings, while 36% reported a decrease in Q3-2017 compared with Q2-2017. Looking at employment numbers during the period, 62% of respondents indicated that it remained the same during the quarter. As for business costs, 49% and 53% of businesses reported no change in labour-related costs and other input prices, respectively. Additionally, 50% of respondents reported no change in capital expenditure, while 44% stated that it increased in Q3-2017 over Q2-2017. During the review quarter, 69% of businesses indicated no change in their financial situation, recording a net balance of 3%. Similarly, 91% of respondents reported that access to credit remained unchanged in Q3-2017 over Q2-2017 (net balance of -2%). Expectations for the next quarter Looking ahead, the tourism sector is expected to pick up in Q4-2017 with the commencement of the peak season of the industry. Accordingly, 90% and 65% of respondents expect an improvement in total revenue and resort bookings in Q4-2017 compared with Q3-2017, respectively. Similarly, majority of the businesses also expect average room rates to increase, recording a net balance of 74%. Fifty-eight percent of respondents expect no change in the number 3 | Quarterly Business Survey, Q3-2017 Figure 4: Changes in business indicators in Q3-2017 compared with Q2-2017 Total revenue Resort bookings Number of employees Average room rate Wages and other labour costs Price of inputs Capital expenditure Access to credit Financial situation of the company -100 -80 -60 -40 -20 0 20 40 60 80 100 * Changes in business indicators are shown as net balances. This is the difference between the percentage of business units choosing positive answers (increase/better/ease) and that choosing negative answers (decrease/worse/tight). ** Detailed survey responses are provided in Table 1 of appendix.
7. of employees on the payroll during Q4-2017 while 41 % expect an increase. Looking at business costs, 50% and 56% of the respondents expect labour costs and other input prices to increase in Q4-2017, respectively. With regard to future investment plans, 58% of respondents expect no change in capital expenditure during Q4-2017 while, 33% of the respondents plan to increase their capital expenditure during the quarter. Sixty-five percent of respondents expect their financial situation to remain the same in Q4-2017 compared with Q3-2017, while 31% of respondents anticipate an improvement. As for access to credit, 92% of the businesses expect it to remain unchanged in Q4-2017 (net balance of 2%). Factors limiting business growth In analysing the factors that limit growth opportunities for businesses in the tourism sector, the most significant factor highlighted by the businesses was competition within the sector. Additionally, insufficient demand and cost of labour were also reported as some of the constraints (Figure 6). Figure 5: Expectations on changes in business indicators in Q4-2017 compared with Q3-2017 Total revenue Resort bookings Number of employees Average room rate Wages and other labour costs Price of inputs Capital expenditure Access to credit Financial situation of the company -100 -50 0 50 100 Figure 6: Significant factors limiting business activities in Q3-2017 Competition within the sector Insufficient demand Cost of labour Shortage of local labour Shortage of skilled labour Regulatory framework Cost of finance Access to bank credit 0 10 20 30 40 50 60 70 80 90 Quarterly Business Survey, Q3-2017 100 |4
8. Wholesale and retail trade sector Current situation The performance of the wholesale and retail trade sector remained strong in Q3-2017 as shown by the key indicators . Fifty-seven percent and 49% of businesses reported an increase in the total volume of sales and the volume of orders placed with suppliers in Q3-2017 over Q2-2017, respectively (Figure 7). Looking at employment numbers, 32% of businesses mentioned an increase and 58% stated no change during the quarter. In comparison to Q2-2017, 67% of the respondents reported no change in the average selling price while 18% reported a decrease in Q3-2017 (net balance of -3%). Moreover, 51% stated no change in wage costs while 65% indicated an increase in cost of sales. However, 50% of the participants indicated an increase in capital expenditure during the quarter. Meanwhile, 60% of businesses indicated no change in the financial situation in Q3-2017 compared with Q2-2017. Sixty-two percent of the participants also reported no change in access to credit while, 33% indicated it tightened during the quarter (net balance of -27%). Expectations for the next quarter Looking ahead, most of the businesses in the wholesale and retail trade sector expect the volume of sales and the volume of orders placed with supplier to increase in Q4-2017 compared with Q3-2017, recording net balances of 54% and 51%, respectively (Figure 8). Meanwhile, 73% of businesses anticipate employment numbers to remain the same in Q4-2017 and 78% of the respondents foresee no change in average selling prices. Seventy-one percent of respondents reported labour costs to remain unchanged in Q4-2017 over Q3-2017, while the remaining indicated an increase. Moreover, 50% of businesses expect cost of sales to remain unchanged in Q4-2017, representing 5 | Quarterly Business Survey, Q3-2017 Figure 7: Changes in business indicators in Q3-2017 compared with Q2-2017 Total volume of sales Volume of orders placed with suppliers Volume of stock Number of employees Average selling prices Wages and other labour costs Cost of sales Capital expenditure Access to credit Financial situation of the company -100 -80 -60 -40 -20 0 20 40 60 80 100 * Changes in business indicators are shown as net balances. This is the difference between the percentage of business units choosing positive answers (increase/better/ease) and that choosing negative answers (decrease/worse/tight). ** Detailed survey responses are provided in Table 1 of appendix.
9. a net balance of 48 %. Reflecting the positive outlook, 52% of the participants plan to increase their capital expenditure in Q4-2017. As for the financial condition, the majority of the respondents predict no change in their financial situation in Q4-2017, while 68% of respondents anticipate no change in access to credit over the next quarter. Factors limiting business growth Businesses in the wholesale and retail trade highlighted insufficient access to foreign exchange as the most significant factor limiting their business growth. In addition, rent, competition within the sector and shortage of skilled labour were also highlighted as significant factors limiting business growth (Figure 9). Figure 8: Expectations on changes in business indicators in Q4-2017 compared with Q3-2017 Total volume of sales Volume of orders placed with suppliers Volume of stock Number of employees Average selling prices Wages and other labour costs Cost of sales Capital expenditure Access to credit Financial situation of the company -100 -80 -60 -40 -20 0 20 40 60 80 100 Figure 9: Significant factors limiting business activities in Q3-2017 Access to foreign exchange Rent Competition Shortage of skilled labour Shortage of local labour Access to bank credit Logistical constraints Cost of finance Insufficient demand Cost of labour Regulatory framework 0 10 20 30 40 50 60 70 80 90 Quarterly Business Survey, Q3-2017 100 |6
10. Appendix Table 1 : Views on the direction of change in business indicators by sector Assessment of Q3-2017 compared with Q2-2017 Percentage of enterprises choosing Increase/ Better/Ease No change Decrease/ Worse/Tight Net balance Expectations for Q4-2017 compared with Q3-2017 Percentage of enterprises choosing Increase/ Better/Ease No change Decrease/ Worse/Tight Net balance Construction sector Volume of construction activity 72 8 20 52 69 20 11 59 Volume of orders received 32 46 22 10 0 100 0 0 Number of employees 66 24 10 57 41 50 10 31 Prices charged on average 41 59 0 41 69 30 1 68 Wages and other labour costs 64 35 1 63 52 48 0 52 Price of inputs 72 27 1 71 63 37 0 63 Capital expenditure 59 41 0 59 53 46 1 52 Access to credit 15 53 33 -18 33 64 2 31 Financial situation of the company 39 59 1 38 33 64 2 31 Overall business situation 41 46 13 28 63 37 0 63 Total revenue 45 6 49 -3 90 2 8 82 Resort bookings 61 3 36 26 65 11 24 42 Number of employees 25 62 13 12 41 58 1 40 Average room rate 11 14 75 -65 81 11 8 74 Wages and other labour costs 42 49 9 33 50 47 2 48 Tourism sector (resorts) Price of inputs 44 53 4 40 56 44 0 56 Capital expenditure 44 50 6 39 33 58 10 23 Access to credit 3 91 6 -2 5 92 3 2 Financial situation of the company 17 69 14 3 31 65 4 27 Overall business situation 14 48 38 -24 62 30 9 53 *Percentages may not total 100 due to rounding. *Net balance is the difference between the percentage of business units choosing positive answers (increase/better/ease) and that choosing negative answers (decrease/worse/tight). 7 | Quarterly Business Survey, Q3-2017
11. Assessment of Q3-2017 compared with Q2-2017 Percentage of enterprises choosing Increase / Better/Ease No change Decrease/ Worse/Tight Net balance Expectations for Q4-2017 compared with Q3-2017 Percentage of enterprises choosing Increase/ Better/Ease No change Decrease/ Worse/Tight Net balance Wholesale and retail trade sector Total volume of sales 57 11 32 25 63 28 9 54 Volume of orders placed with suppliers 49 14 37 13 61 30 9 51 Volume of stock 53 21 26 27 43 38 19 24 Number of employees 32 58 9 23 20 73 7 13 Average selling price 15 67 18 -3 9 78 12 -3 Wages and other labour costs 47 51 2 46 29 71 0 29 Cost of sales 65 29 6 59 49 50 1 48 Capital expenditure 50 50 0 50 52 41 6 46 Access to credit 6 62 33 -27 2 68 30 -27 Financial situation of the company 21 60 19 2 32 55 13 19 Overall business situation 42 44 14 28 39 55 6 33 Prepared by: Research Division, Maldives Monetary Authority Tel: (960) 332-8028 Fax: (960) 331-7604 Email: surveys@mma.gov.mv Website: www.mma.gov.mv Quarterly Business Survey, Q3-2017 |8
12. Boduthakurufaanu Magu Male ’ - 20182 Republic of Maldives Tel: (960) 3312343 Fax: (960) 3323862 Email: mail@mma.gov.mv Website: www.mma.gov.mv