GERMAN companies operating in the Philippines said the new coronavirus disease 2019 (COVID-19) has led to an erosion of their business confidence in the country.
Martin Henkelmann, executive director of the German-Philippine Chamber of Commerce and Industry (GPCCI), quoted findings of the AHK World Business Outlook Survey — Spring 2020 which showed these companies strongly feel the negative impact of COVID-19.
The survey showed 36 percent of the participating companies consider their current situation as bad while 40 percent expect their business conditions to become worse within the next 12 months. A slightly higher proportion of 42 percent forecast an even poorer mid-term expectations.
The erosion of confidence becomes particularly obvious when comparing the results to last year’s outcome when : 2019, 71 percrnof companies considered their situation as good (20 percent in 2020), 63 percent forecasted an even better business environment within 12 months (20 percent in 2020)
More than half or 56 percent of the companies said they will invest less or not at all within the next 12 months even as 47 percent of the participating companies plan to keep their headcount, while 9 % percent even intend to grow.
When asked about the impact of the COVID-19 pandemic, almost a quarter of the companies (24 percent) expect a decline in sales by 10 to 25 percent, the same number of companies anticipate a decline between 25 and 50 percent, 13 percent even more than 50 percent.
Expected effects of the pandemic include travel restriction (82 percent) and postponed or canceled investments (60 percent), problems with the supply chains (55 percent), lacking products and services (49 percent) and missing demand for their products and services (49 percent).
The survey identified demand (58 percent), financing (44 percent), economic framework (40 percent) as well as legal security (36 percent) as the largest risks.
“Judging from the results, we see that COVID-19 has led to an erosion of business confidence in the Philippines. This is understandable as the worldwide fight against the virus has caused the government to impose lockdowns, affected business activities and disrupted the general flow of goods,” Henkelmann said.
Tristan Arwen Loveres, GPCCI president, said the survey findings show the urgent need for more governmental measures to assist the companies.
“The instruments to permit companies to quickly access financial support should be deployed. Companies should be supported when keeping their workforce as this avoids rising unemployment and will set up companies to ramp-up fast as we go back to normal operations,” Loveres said.
AHK WBO is based on a regular DIHK survey among member companies of the German chambers of commerce abroad, delegations and representative offices . It encompasses the feedback from more than 3,700 German companies, branches, and subsidiaries worldwide.
The participating 45 firms in the GPCCI survey are companies that are related to German-Philippine business relations.