Brunei Darussalam Central Bank (BDCB) yesterday published Brunei Darussalam’s Business Sentiment Index (BSI) for the month of September 2022. The index is based on surveys conducted on more than 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 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, being the main headline index for the BSI, was 50.1 in September 2022.
In general, private sector businesses were slightly optimistic towards their current business conditions on expectations of an increase in activities, sales and projects following the September school holiday period and multiple events throughout the month.
However, businesses in several sectors expected sales to drop due to the increased number of people travelling abroad during the school holidays, while others also expected their general performance to be more or less the same in September compared to the previous month.
Looking ahead, businesses were generally optimistic of their performance in October 2022 as indicated by the index for one month (1M] ahead, which stood at 50.5. This was driven by expectations of more projects and activities, compared to September 2022.
The Investment sub-index was 50.1 for the current month, 50.1 for 1M ahead and 50.2 for three months (3M] ahead. This indicates that, in general, businesses expected to increase their investment expenditures in September 2022, as well as one month and three months ahead.
These, among others, included the purchase of materials for projects, machinery, equipment and company vehicles; undergoing renovations and expansion of premises including farm sites; opening of new outlets/branches; and stocking up on inventory.
The employment sub-index was 49.9 for the current month, and 49.9 for 1M ahead. This indicates that businesses generally expected to have a reduced headcount in September and October 2022.
Among the factors reported included early retirement packages; resignation; and end of employment contract. Several businesses do not plan to hire more workers for the time being, partly due to fewer projects and business activities.
Nonetheless, a number of companies have indicated their intention to continue hiring as they are still experiencing a shortage of workers while facing challenges in retaining local employees and bringing in foreign workers.
The costs sub-index was 50.5 for the current month, and 50.6 for 1M ahead. This shows that companies generally expected the costs of running their businesses to increase in September and October 2022. Several factors were cited such as increased costs of food ingredients and raw materials such as cement and stones; higher shipment costs; more expenditure due to maintenance works; project and salary expenses; and flight tickets for outgoing foreign employees.
In terms of economic sectors, six out of 11 sectors recorded optimism in September 2022. The transport and communication sector showed the largest increase in sentiment with the forecast of increase in demand for flight tickets especially during school holidays.
The finance and insurance sector also expected an improvement in their performance with higher demand for their products and services. On the other hand, manufacturing; wholesale and retail trade; and other private services showed pessimism in September 2022 as they cited fewer projects and sales due to more people travelling abroad.
Meanwhile, oil and gas related; and agriculture, forestry, fisheries and livestock sectors reported similar sentiments regarding their business conditions in September 2022 compared to August 2022.
In terms of the index by business size, micro-, small- and large-sized businesses reported optimism in September 2022 with improved overall business conditions due to more projects and demand in general. Meanwhile, medium-sized businesses expected similar business conditions to last month.