Philippines-German firms seen investing less

MANILA, Philippines — More than half of German-Philippine businesses are likely to make fewer or put off any investment in the next 12 months given the impact of the coronavirus disease 2019 or COVID-19 pandemic to operations, according to a survey of the German-Philippine Chamber of Commerce and Industry (GPCCI).

GPCCI’s survey showed 56 percent of 45 company respondents plan to invest less or not at all within the next 12 months.

This, as the same survey showed 36 percent of the participating companies consider their current situation as bad.

The survey showed 40 percent expect their business conditions to worsen within the next 12 months, and 42 percent see an even poorer situation when asked for mid-term expectations.

Business confidence of firms has been eroded as last year’s survey showed 71 percent of companies considered their situation as good, while only 20 percent claimed such this year.

Last year, 63 percent said they expected a better business environment within 12 months as opposed to just 20 percent this year.

Given the ongoing COVID-19 crisis and its impact businesses, 24 percent said they expect sales to decline by 10 to 25 percent, while 24 percent anticipate up to 50 percent drop in sales, and 13 percent see sales falling by more than 50 percent.

Asked about what firms already experienced or expected of COVID-19, travel restriction (82 percent) and postponed or cancelled investments (60 percent) topped the list, followed by anticipated problems with the supply chains (55 percent) and lack of products and services (49 percent).

Nearly half or 49 percent said they foresee lack of demand for their products and services.

When it comes to the biggest risks to businesses, the firms identified demand (58 percent), financing (44 percent), economic framework (40 percent) as well as legal security (36 percent).

Despite gloomy forecasts in this year’s survey, the German-Philippine business community said it is keeping employees, with 47 percent saying they would maintain their headcount and nine percent even planning to hire more.

GPCCI said the survey results show the need for more government support for companies.

GPCCI also said financial instruments should be deployed and procedures for quick access to loans have to be put in place.