Brunei Darussalam Central Bank (BDCB) yesterday published Brunei Darussalam’s Business Sentiment Index (BSI) for June 2023. The index is based on surveys conducted on over 500 micro, small, medium and large businesses from 11 economic sectors in the Sultanate.
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 and costs of running the businesses. Therefore, the BSI is 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 50.0 in June 2023, indicating similar expectations to those as of May 2023, where opinions were somewhat mixed across sectors.
Survey results show that some reasons for businesses’ optimism were the expectations of better performance with new projects, more sales with sufficient inventory, and promotion of new products and services.
On the other hand, some businesses expressed pessimism with lower sales in the post-festive period. They also observed cross-border consumer spending which affected the businesses domestically.
Looking ahead, the index for one month (1M) ahead stood at 50.6. Indicating businesses generally expected better conditions in July 2023 compared to June 2023. Most of the optimism was attributed to expectations of higher sales and more activities due to His Majesty Sultan Haji Hassanal Bolkiah Mu’izzaddin Waddaulah ibni Al-Marhum Sultan Haji Omar ‘Ali Saifuddien Sa’adul Khairi Waddien, Sultan and Yang Di-Pertuan of Brunei Darussalam’s birthday in July where there were festivities and promotions during the month.
There are also expected new projects, the opening of new outlets and expansion of customer base.
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 businesses are generally expected to raise their investment expenditure in June 2023 and the next few months.
Several factors attributed to the plans to increase investment include expectations of renovating facilities and expanding their businesses purchasing new equipment and machineries, information technology (IT) systems upgrade and investment in human resource training.
The employment sub-index was 50.3 for the current month and 50.3 for 1M ahead.
Continuing the trend from previous months, businesses are expected to increase their employee headcount in June and July 2023 due to their expansion efforts.
Some companies expressed ongoing hiring challenges of local and foreign employees.
The costs sub-index was 50.3 for the current month and 49.5 for 1M ahead. Companies generally expected the costs of running their businesses in June 2023 to be higher than the previous month for several reasons, including increased recruitment costs and raw material costs besides maintenance work.
Some businesses also expected higher business costs in June 2023 with the revision of Customs import and excise duties on plastic products effective May 17, 2023.
For July 2023 a handful of large companies expected lower operating and maintenance and raw material costs, contributing to the overall lower costs sub-index for the month ahead.
In terms of economic sectors, only three out of 11 sectors recorded better business conditions in June 2023.
The finance and insurance sector showed the highest optimism at 50.8, revealing better conditions with more loans extended and sales of insurance products.
The index for the health and education sector was 50.2, due to the provision of new services. The hotels and restaurants sector also stood at 502, indicating that businesses in these sectors generally expected higher business activities due to organised events in June 2023.
On the contrary, four sectors reported slightly pessimistic business conditions, namely the construction, manufacturing, oil and gas, transport and communication sectors.
Meanwhile, the wholesale and retail trade sector is the most affected, with an index of 49.6 due to reduced consumer spending domestically. The other private services sector the agriculture, forestry, fisheries and livestock sector, and the real estate and ownership of dwellings sector reported similar business conditions to the previous month.
In terms of the index by business size, micro- and large-sized businesses reported expectations of better business conditions in June 2023 compared to May 2023.
Generally, these businesses expected uptake in business activity due to more projects and higher demand for their products and services. Meanwhile, small and medium-sized businesses expected similar business conditions to May 2023 for June 2023.
