Brunei businesses generally reported higher business running costs in July, mainly due to employee-related costs, according to a Business Sentiment Index (BSI) for the month published by Brunei Darussalam Central Bank (BDCB) yesterday. However, significantly lower maintenance costs faced by several large companies brought down the current costs sub-index. For August, many businesses expected to face higher running costs, including maintenance and salary expenses, in line with additional hiring.
The index is based on surveys conducted on more than 500 micro, small, medium and large businesses from 11 economic sectors in the Sultanate, 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, investment, employment of workers, as well as costs of running the businesses. The BSI serves as a leading macro economic indicator with its forward-looking element in the country. BSI value above 50 indicates expansion or optimism compared to the previous month while value at 50 shows similar or no change for the same time period. BSI value below 50 indicates contraction or less optimism compared to the previous month.
The main headline index, current business conditions sub-index, was 50 in July. Businesses generally experienced similar business conditions in July compared to June, with mixed performance depending on sectors. Many events and promotions related 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 celebrations boosted demand for goods and services. Some businesses expressed optimism, while others shared concerns of muted performance due to consumers travelling abroad during the two long public holiday weekends.
The index for one month ahead was 50.3, indicating businesses expecting higher productivity and performance in August due to several factors, including better weather conditions and new projects.
The investment sub-index was 50 for July, 50.2 for one month ahead, and 50.1 for three months ahead. In general, businesses expected to maintain their current level of investments in July, mainly because they have sufficient machinery and equipment for ongoing projects and operations. For the next few months, businesses planned to increase spending, including building new facilities, relocating and renovating stores, opening new branches, and purchasing new machinery and equipment.
The employment sub-index was 50.2 for July and 50.3 for one month ahead. Continuing the trend from previous months, businesses expressed the need to hire employees to meet their operational needs and replace those who have resigned.
In terms of economic sectors, three out of 11 sectors expected slightly optimistic business conditions in July. The hotels and restaurants sector recorded the highest optimism with an index of 50.3, generally owing to higher demand and promotions related to His Majesty’s birthday celebrations. The other private services and finance and insurance sectors attributed better performance during the month due to the increase in demand for their products and services. Meanwhile, the manufacturing, oil and gas related, construction, real estate and ownership of dwellings, and transport and communications sectors expected similar business conditions to June. On the other hand, three sectors showed pessimism for July. The health and education, agriculture, forestry, fisheries and livestock, and wholesale and retail trade sectors shared expectations of slower market activity due to expectations of consumers travelling abroad during the public holidays.
In terms of business size, businesses across all sizes expected similar business conditions in July compared to the previous month due to ongoing projects. Optimistic sentiments on performance linked with events and celebrations in July were somewhat offset by the widespread concerns of slower market activity with many domestic consumers travelling abroad during the public holidays.
