Filipino business confidence rises amid global volatility

A sharp decline in business confidence in many rapidly growing economies is raising a warning flag that global business may face continued volatility for some months to come, but the Philippines is bucking the trend with confidence levels climbing 10 points in the Regus Business Confidence Index (from 136 to 146) since April this year.

Business confidence in some of the world’s leading growth economies has dropped significantly over the last six months. Despite the fall, levels of business confidence in rapidly growing economies still remained well ahead of levels in mature economies—yet this setback should act as a warning flag for businesses across the world to stay nimble and expect further volatility before a general global upturn, according to the latest Regus Business Confidence Index (BCI) based on the views of more than 24,000 senior business people from 92 countries.

Confidence among small businesses in particular has flatlined in both mature and developing economies and given the important role of small- and medium-sized enterprises as an engine of growth and provider of jobs, this finding was of particular concern. Access to affordable credit and cash-flow management were among their biggest concerns, highlighting the need for flexible, pay-as-you go business services allowing businesses to remain flexible and agile.

The key findings and statistics of the survey included the following:

— Global confidence levels have shown little change compared to six months ago; down 2 percentage points to 111 since April 2012.

— The proportion of Filipino companies reporting revenue increases rose from 56 percent in April 2012 to 67 percent, while profits stagnated dipping from 50 percent to 49 percent;

— Three-quarters (75 percent) of Filipino respondents reported that they were satisfied with their government’s support strategies for business;

— The major challenges to small businesses and start-ups are cashflow (40 percent), sales (39 percent), cost of marketing and promotion (36 percent).

— Respondents also highlighted key measures for governments to introduce that would substantially help small businesses and start-ups. These are tax exemptions (62 percent), information services (53 percent) and low interest loans (52 percent).

“It’s clear that there’s been a stagnation in business confidence, accompanied by significant falls in some rapidly developing economies since our last BCI report in April,” said Regus, CEO for Asia Filippo Sarti. “This suggests that slowing trade with Europe and Western economies, combined with a host of national factors, is taking its toll. If there is some good news, it’s that globally, the proportion of companies reporting revenue growth is stable while profits increased slightly.”

Sarti said: “We were particularly struck by the lack of any improvement among entrepreneurs and small businesses. In order to improve their cash situation, respondents identified affordable and flexible business services—especially for overheads such as workspace, administrative support and sales/marketing. Forty-five percent of respondents, for instance, reported that one of the major burdens during the downturn has been inflexible property leases. Flexible services allow businesses to be more agile and free up cash for investment without relying on credit at a time when it is so difficult to secure.”