Poll says businesses yet to feel worst of global crunch

MANY privately held businesses expect 2009 to be worse than last year, as they brace for the full effects of the global financial crisis, according to Grant Thornton International Business Report 2009.

The report, released locally by Punongbayan & Araullo, shows that most survey respondents from the Philippines, while still positive, anticipate weaker growth this year.

Fewer local companies expect good profits this year, as a 33-percent balance among respondents see profitability amid the slowdown, down from 67 percent of the respondents in the 2008 report.

More respondents also see sales slowing, with those expecting growth down to 37 percent from 61 percent last year. For exporters, the optimists dropped from 45 percent in last year’s survey to 31 percent this year.

The so-called percentage “balance” is the difference between the number of respondents who expect an increase vis-à-vis those who expect a decrease in a certain survey indicator.

The audit, tax and advisory firm noted that export expectations dipped lower than other indicators.

“We expect certain sectors in the local export industry to fare better than others. The garments and electronics sectors will definitely suffer as the economies of their major markets contract. But other sectors, like business process outsourcing, wellness, and other service industries are in a good position to remain resilient,” Greg Navarro, the firm’s CEO and managing partner, said.

Many local businesses surveyed for the report as well deem that this year would not be the best time to adjust selling prices, as only 39 percent said they would probably raise prices this year, compared with 66 percent last year. Only 30 percent expect to invest more in new buildings down from 49 percent last year, and just 36 percent expect to invest in plant and machinery compared with 55 percent in 2008.

Navarro, however, said that some bright spots remain in the domestic economy. “The business process industry reported late last year that it is on track to meet its full-year 2008 target of $6.8 billion, and outsourcing firms are continuously hiring workers. And while overseas Filipino workers’ remittances are expected to slow down this year, dollar remittances will still help fuel consumer spending, as the Bangko Sentral ng Pilipinas and government policies stimulate the market and encourage local banks to keep lending,” he said.

“So we’re weathering the storm. Local privately held businesses just need to focus on cost-cutting and productivity improvements, take the slack time to train and re-train both management and employees, so that they can emerge on the other side of this crisis stronger, better trained, more innovative, more competitive and more productive,” he said.

Despite the gloom, Filipino respondents were more optimistic than most of their Asian counterparts, Navarro said. “Thailand, for example, reported a negative balance for turnover, profitability and exports for the second year in a row, while Singapore, Hong Kong, China and Malaysia all registered negative expectations for profitability this year,” he said.

About 7,200 privately held businesses in 36 countries participated in this year’s report. They were polled about their expectations on the following economic indicators: exports, investment in new buildings, investment in plant and machinery, profitability, selling prices and turnover. –Ben Arnold O. de Vera, Reporter, Manila Times