Philippines’ small businesses top growth forecast for second straight year.
Seven-in-10 found that investments in technology improved profitability by 2022.
Rising costs, especially materials, were most damaging to companies.
MANILA, PHILIPPINES –
Media OutReach – May 9, 2023 – Nearly nine out of 10 Filipino small businesses expect to grow this year, with technology investment driving momentum. This is according to a new study carried out by one of the world’s largest professional accounting bodies.
CPA Australia’s Asia-Pacific Small Business Survey gathered the views of 4,280 small businesses in 11 Asia-Pacific markets, including 306 from the Philippines. Philippine companies outperformed all markets for growth expectations for the second consecutive year.
Three-quarters of Philippine small businesses grew in 2022, up 10 percentage points from 2021. A robust economy contributed to 89 percent predicting growth this year. This optimism is reflected in the plans to hire more employees this year (58 per cent).
“Due to increasing domestic demand and a rapid recovery in the service sector, especially in tourism, many Filipino small businesses expanded solidly. They continue to be one of the most dynamic in the Asia-Pacific region,” said CPA Australia’s Regional Manager for Emerging Markets, Mr. Nicklaus Wee.
A strong focus on maintaining customer relationships and using social media contributed to growth. 44 percent identified customer loyalty as a positive factor. Over 90 percent used social media for business purposes, including promoting to potential customers (65 percent) and selling products or services (59 percent).
The ability of Filipino small businesses to identify the right technologies to invest in and take advantage of further strengthened their competitiveness. Seven-in-10 said their investments last year had improved profitability, well above the survey average of 55 percent.
“The Covid pandemic has fundamentally changed consumer behavior. The survey shows that Filipino small businesses are taking a more customer-centric approach, including increasing their interaction with potential customers. Using customer feedback allows them to quickly identify the best opportunities, including technology solutions to meet customer needs,” explained Wee.
Nevertheless, rising costs and difficulties in accessing external funds can hamper financial returns and development plans. Four in 10 said increased costs negatively affected their businesses, the highest result of any market surveyed. The cost of materials (42 percent) ranks as the cost experienced most by local businesses, followed by fuel (38 percent) and utilities (36 percent).
Despite over three-fifths requiring external funding last year, only 25 per cent said they found it easy to access funding. This was the lowest result of the markets surveyed. 78 percent expect to seek funding this year, primarily for growth, but only 23 percent expect this process to be easy.
“Many Philippine micro, small and medium enterprises (MSMEs) are suffering from skyrocketing costs. To combat high inflation, the central bank raised interest rates, making financing conditions more challenging for MSMEs.
“The Philippine government has several loan programs to strengthen financial inclusion, such as Pondo sa Pagbabago by Pag-asenso (P3) and KAYA loans. The share of small businesses that last year borrowed from banks, non-financial institutions and investors, increased significantly from 2021.
“While the Bangko Sentral ng Pilipinas (BSP) predicts that inflation will begin to moderate this year, small businesses continue to face a challenging period. To help them navigate this economic transition, Filipino small businesses should consider seeking professional advice Their trusted accountant can help them better understand financing conditions, improve cash flow and diversify funding sources.
“More than a third (34 percent) monitored their energy and water use, and 24 percent spent time and resources on supply chain sustainability. Small businesses should increase their focus on reducing energy costs and optimizing supply chains from procurement to production. This will help to reduce energy cost volatility as they strive for sustainable expansion.”
53 percent expect overseas sales to grow this year. “With the Regional Comprehensive Economic Partnership (RCEP) agreement coming into effect in June, it will provide more opportunities for small businesses to tap into overseas markets.”
Hashtag: #CPAAustralia #SME #Business #Economics
The issuer is solely responsible for the content of this announcement.
—————————————————-
Source link