CEBU. The construction sector was the most bullish for the current quarter, as firms noted favorable business conditions are expected to help sustain demand for construction services for both public and private entities. (Sun.Star File)
WHILE most of the country’s businesses were less optimistic for the first quarter of 2015, businesses in Central Visayas that participated in the Bangko Sentral ng Pilipinas’ (BSP) Business Expectations Survey had a better outlook.
According to the most recent survey, respondents in other regions, including the National Capital Region, firms were “generally less buoyant” for the first quarter of the year due to the seasonal slack in demand during this period. The report, however, cited the exception of those in Central Visayas, whose respondents were more bullish for both the first and second quarter.
“Firms cited the transfer of operations of business process outsourcing (BPOs) to Cebu from other countries and more real estate investments as reasons for their optimism,” the report stated.
Samples for the quarterly survey came from a combined list of top 7,000 corporations listed by the Securities and Exchange Commission and the 2013 list of Business World’s top 1,000 corporations by region.
For Central Visayas, 389 corporations were in the list while 146 corporations were in the actual sample of the survey. Majority of the firms surveyed came from the manufacturing and trade sectors.
The survey was conducted between Jan. 5 and Feb. 10 from 1,523 firms nationwide. Six hundred six companies were based in NCR while the rest were from other regions in the country.
Decline
The nationwide overall confidence index declined to 45.2 percent for the current quarter from 48.3 percent in the fourth quarter of 2014, which indicated that the number of optimists declined but continued to outnumber pessimists during the quarter.
Firms expect a usual slowdown of business activity and moderation of consumer demand following the holidays during the first quarter, which was one of the reasons for the less upbeat outlook. Other factors included effects of past typhoons on crop production, concerns over the backlog of deliveries due to the port congestion and a lack of supply of fish due to Indonesia’s stricter marine laws limiting the fishing ground of local fishermen and closed fishing season for sardines.
The next quarter outlook jumped to 58.2 percent, as it suggests an acceleration of economic growth. Respondents anticipate an increase in demand during the secondary harvest and open fishing seasons; graduation and enrollment periods; an influx of local and foreign tourists during summer; increases in orders and projects that lead to higher production; expansion of businesses and new product lines; and the introduction of new and enhanced business processes. Positive sentiments were also fueled by expectations of an acceleration in the rollout of infrastructure and development projects under the public-private partnership (PPP) program, stable inflation, low interest rates, sustained foreign investment inflows and the steady stream of overseas Filipino remittances.
Exporters
Researchers, however, noted that for the same period last year, business confidence was is higher, as overall confidence index recorded for the first quarter of 2014 was 37.8 percent.
Exporters and those that participate in both export and import activities were optimistic, as they expected gains from the improving US economy and tariff waiver program of the European Union. However, those catering to domestic activities and those that only imported goods had less favorable expectations for the current quarter. Sentiments improved for the next quarter due to expectations of higher consumer demand during summer and enrollment, and more construction projects during the dry season.
Most bullish
The construction sector was the most bullish for the current quarter, as firms noted favorable business conditions are expected to help sustain demand for construction services for both public and private entities. They also cited the low prices of fuel and construction materials as factors for their positive outlook.
Over 50 percent of respondents cited domestic competition as one of the major business constraints they are facing this quarter, while 27 percent identified insufficient demand leading to low sales volume. “However, the percentage of businesses that identified the above-mentioned constraints continued to decline. The easing of these business constraints indicate that business conditions are improving,” the report read.
Published in the Sun.Star Cebu newspaper on March 13, 2015.
