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Businesses expected to slightly increase investment expenditures

The Investment sub-index was 50.1 for the current month, 50.1 for one month ahead and 50.2 for three months ahead. This indicates that, in general, businesses are expected to slightly increase their investment expenditures and only increase it in the next few months.

These investment expenditures include new outlets for business expansion, renovation and purchase of new equipment and machinery. Several businesses also mentioned the need to purchase more project materials and equipment as well as stock up inventory for the year-end bonus season and festivities.

This was revealed when Brunei Darussalam Central Bank (BDCB) yesterday published Brunei Darussalam’s Business Sentiment Index (BSI) for the month of September 2023.

The index is based on surveys conducted on over 500 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.

A view of Kampong Ayer and the Raja Isteri Pengiran Anak Hajah Saleha Bridge. PHOTO: BORNEO BULLETIN STOCK PHOTO
A woman selling produce at a local market. PHOTO: ABDUL HAFIZ BIN ABDUL HAMID

The BSI and sub-indices can be interpreted with 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 50.1 in September 2023 indicating a slight optimism conditions in the private sector.

In general, factors for the optimism included a recovery in demand for goods and services after August school holiday as well as an overall increase in business activities due to more sales, new clientele and projects. For October 2023, the index for one month ahead stood at 50.4, indicating a higher level of optimism among businesses due to expectations of higher production levels and increased sales from marketing campaigns and promotions.

The Employment sub-index was 50.3 for the current month, and 50.2 for one month ahead. This indicates that in September 2023, most businesses planned to increase their number of employees for September and October 2023 as they need more manpower for expansion, accommodate new projects and serve new clients.

The Costs sub-index was 50.3 for the current month, and 50.2 for one month ahead. This indicates that companies generally expected the costs of running their businesses to increase in September and October 2023. Several factors were cited, such as an increase in staff-related expenses, higher import prices and material costs; project expenses, maintenance and repair works. Similar to last month, some businesses shared the increase in the National Retirement Scheme (SPK) contributed to a rise in the costs of running their businesses. In terms of economic sectors, eight out of 11 sectors recorded optimism in September 2023.

Three sectors showing the highest increase in optimism and are expected better business conditions with more activities and increased profit for the month. The finance and insurance sectors, construction and other private services sectors all recorded 50.3, while oil and gas, transport and communication, health and education, manufacturing, agriculture, forestry, fisheries and livestock sectors recorded 50.1.

Meanwhile, real estate and ownership of dwellings, hotels and restaurants and wholesale and retail sectors recorded 50.0 and reported similar business conditions to August 2023.

In terms of the index by business size, micro- and small-sized businesses reported expectations of better business conditions in September 2023 due to the higher levels of business activities and demand for goods and services. Meanwhile, micro-sized businesses reported similar business conditions in September to the previous month.