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Central bank publishes Business Sentiment Index

The Brunei Darussalam Central Bank (BDCB) yesterday published Brunei Darussalam’s Business Sentiment Index (BSI) for January, an index 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, as well as costs of running the businesses. The BSI serves as a leading macroeconomic indicator with its forward-looking element in the country.

There are nine sub-indices within the BSI. The main headline index, which is the current business conditions sub-index, was 50.2 in January, indicating expectations of slightly better business conditions compared to December 2023.

Generally, businesses attributed their optimistic sentiments to the resumption of domestic spending following the end of the holiday period, as well as projects/orders related to the royal wedding to boost business performance. The index for one month (1M) ahead was 50, indicating that businesses expected similar conditions to January. While some businesses had expectations of sustained domestic spending and increased activities in preparation for Chinese New Year celebrations in February, others shared concerns about the shorter calendar month and public holidays affecting business activities during the
month.

The investment sub-index was 50 for the current month, 50.1 for 1M ahead, and 50.2 for three months ahead. This indicates that, in general, businesses are expected to maintain similar levels of investments compared to the previous month. These expenditures included office and store renovations, as well as procuring materials, equipment, and machinery related to upcoming projects. Businesses expect to increase their investment expenditures slightly in the months ahead, mainly driven by business premises expansion and stocking up inventories in preparation for Hari Raya Aidilfitri.

The employment sub-index was 50.3 for the current month and 50.2 for 1M ahead. In general, businesses planned to increase their employee headcount for January and February. Many businesses expressed the need to increase their workforce as part of business expansion plans and preparation for upcoming events and projects.

The costs sub-index was 50.2 for the current month and 50.6 for 1M ahead. Businesses generally expected the costs of running their businesses to increase due to several factors, including higher salary payments from increased employee headcount, overtime pay, bonus payouts, yearly increments, and purchases of more raw materials for upcoming projects.

Some businesses also attributed higher operational costs to their involvement in the Consumer Fair in January, which led to increased marketing and promotional expenses. For the month ahead, some businesses expressed expectations for costs to increase further compared to the previous month. In addition to higher overall labour costs due to scheduled bonus payouts, a few businesses also expected higher costs related to Chinese New Year celebrations.

In terms of economic sectors, eight out of 11 sectors recorded optimism in their business conditions in January. The hotel and restaurants sector recorded the highest optimism, with an index of 50.8. Along with the manufacturing sector, they attributed their optimism to their involvement in projects/orders related to the royal wedding and continued consumer bonus spending from December 2023. Meanwhile, the health and education sector expressed their expectations for better performance in January with the re-opening of schools and higher student enrolments. The wholesale and retail trade sector attributed their optimism to ongoing projects, sustained consumer spending and the seasonal trend following the end of the holiday period. In contrast, the construction sector expected more incoming projects. The agriculture, forestry, fisheries and livestock sector also expressed similar optimistic sentiments owing to better weather conditions and lower production costs. The oil and gas related sector reported slight optimism in business conditions for January due to expectations of higher profit margins, while the finance and insurance sector also reported slightly better conditions due to increased demand for their products and services. On the other hand, the transport and communication sector reported pessimism amid the end of peak travel season, whereas the real estate and dwellings sector expressed slight pessimism, expecting lower performance in January. Meanwhile, the other private services sector expected business conditions similar to December 2023.

In terms of the index by business size, small, medium, and large-sized companies reported expectations of better business conditions in January compared to the previous month due to projects related to the royal wedding along with the resumption of business-as-usual activities as consumers return from their holiday. Meanwhile, only micro-sized businesses expressed slightly pessimistic sentiments compared to December 2023.

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