The Iloilo Economic Development Foundation, Inc. (ILEDF), in cooperation with the Iloilo City Government, Iloilo City business sectors, and Global Shapers Iloilo, conducted an online survey during the second week of June 2020.
More than 200 micro, small, medium and large business owners responded with 34 percent of the respondents reported an asset size of Php3.0M to Php15.0M and 29 percent have an asset size of more than Php100M.
The following survey findings highlight the profound impact of the current crisis on the locally-owned businesses that are the backbone of Iloilo economy.
1. While the general economy is deteriorating in the next 3-6 months as indicated by almost all of the respondents, 89.4% of the respondents believed that the Iloilo economy will be much stronger, although they perceived decreasing investments in the next 12 months.
2. The businesses perceived that sales and revenues and subsequent profits will significantly decrease in the next 3 months. The critical concerns include declining consumer demand, cost of lease and rentals, wages, logistics and supply of raw materials and information, communication and technology infrastructure. In addition, climate condition is also seen as a moderate concern for businesses. Other
constraints in moderate levels include bank interest, compliance with workplace protocols and safety regulation imposed by the government.
3. To address these constraints, the respondents are thinking of the following measures: a. Avail of low interest rates on loans from banks and financial institutions (48.9 percent); b. Obtain tax discounts and credits (51.1 percent); c. Reduction of manpower (38.3 percent);
4. 78.7 percent of respondents also think that government should provide assistance in the form of market linkages and business continuity planning.
5. Other measures include: reduced work hours (78.7 percent), temporary lay-off (36.7%)
6. More than 50 percent of the respondents believed that technology and digital platforms are important to connect suppliers, customers and financiers.
Key takeaways from the survey results:
1. No matter how long it takes for the economy to recover, things aren’t going to look like they once did before COVID-19 pandemic. The general business and investment landscape will look different, as some businesses are adapting new measures to address constraints brought about by COVID-19 pandemic.
2. Businesses are moving slowly to cut costs and labor force to weather the first throes of the pandemic. With the government announcement of “reopening” the local economy, buoying up consumer confidence would take a multi-pronged governmentprivate sector approach focusing on improving supply links, pumping financial assistance and grants will be critical to driving sales and revenue good enough to deal with a potential waves of COVID-19 cases.
3. While many businesses continue to cut costs, the general expectation of poor business conditions and decreasing expectations of investments in the next 3-6 months may signal a hint of decreased optimism about business activities in terms of the expected sales/revenues, profitability and capital expenditures.
4. Putting high importance on technology and digital platforms to connect to customers, suppliers and financiers will define the prospects of the expectation of a stronger economy in the next 12 months.