Brunei Darussalam Central Bank (BDCB) yesterday published Brunei Darussalam’s Business Sentiment Index (BSI) for the month of December 2022. The index is based on surveys conducted on over 600 micro, small, medium and large-sized businesses from 11 economic sectors in Brunei Darussalam, across all districts.
The monthly index is designed to measure the level of business confidence/sentiment in the country covering various aspects including current and future business conditions, investments, employment of workers, as well as costs of running the businesses. Therefore, BSI serves as a leading macroeconomic indicator with its forward-looking element.
The BSI and sub-indices can be interpreted as below: Above 50 – expansion/optimism compared to the previous month; 50 – similar/no change compared to the previous month; and below 50 contraction/less optimism compared to the previous month.
There are nine sub-indices within the BSI. The Current Business Conditions sub-index, which is the main headline index for the BSI, was 50.0 in December 2022 compared to 50.3 in November 2022.
In general, private sector businesses experienced similar business conditions in December compared to the previous month. A number of businesses expected better performance with higher demand for their products and services; new projects; coupled with the holiday and festive season; and end of year sale promotions.
While December is typically the month when many employees receive their annual salary bonuses, some companies projected dampening of domestic demand and sales with expectations of many residents travelling abroad.
Looking ahead, businesses were generally slightly optimistic about their performance in January 2023 compared to December 2022 as indicated by the index for one month ahead, which stood at 50.1. This was driven by expectations of more projects and events in the new year including the Chinese New Year, and lessened overseas travel with the start of the school term.
The Investment sub-index was 50.0 for the current month, 50.0 for one month ahead and 50.6 for three months ahead. This indicates that, in general, businesses expected to maintain their investment expenditures and only increase it in the next three months.
Businesses planned to invest in various aspects from farm infrastructure; purchase of materials for new projects, new company vehicles, machinery, office equipment and systems as part of digitalisation effort, office renovations; opening of new branches; and stocking up on inventory for the festive season.
The Employment sub-index was 50.0 for the current month, and 50.4 for one month ahead.
This indicates that in December 2022, most businesses generally expected to maintain their number of workers as per previous month.
However, businesses stated plans of hiring more the following month to replace those who have left, as well as to expand their workforce, in line with expansion plans and increased number of projects.
The Costs sub-index was 50.3 for the current month, and 50.0 for one month ahead. This indicates that companies generally expected the costs of running their businesses to increase in December 2022.
Several factors were cited, such as higher project costs; shipping costs; increased expenditure on repairs and maintenance; salary expenses including staff bonuses, increased marketing activities; and the increased airfares for outgoing foreign employees. Businesses also expected costs for the month of January 2023 to be similar to December 2022.
In terms of economic sectors, five out of 11 sectors recorded optimism in December 2022.
Three sectors showing the biggest increase in sentiment are impacted by the holiday season.
These are the transport and communication sector which were optimistic as December is the peak period where residents travel abroad during the school holidays; other private services sector with higher demand for their services, and hotels and restaurants sector due to the increase in events and functions as well as occupancy rates in hotels.
Two other sectors which showed slight optimism are the agriculture, forestry, fisheries and livestock sector, and oil and gas related sectors. Both sectors recorded an increase in their performance with higher production levels.
On the other hand, two sectors indicated pessimism in December 2022, where the construction sector reported fewer projects towards the year end, and wholesale and retail trade sector was not experiencing a boost in domestic spending.
Meanwhile, several other sectors reported similar business conditions in December 2022 compared to November 2022.
In terms of the index by business size, micro- and small-sized businesses reported pessimism due to an expectation of a quieter month with fewer projects and more people travelling out of the country.
Meanwhile, medium-and large-sized companies reported similar business conditions in December 2022 compared to the previous month.
