PACIFIC BUSINESS MONITOR SURVEY 5 - FOCUS

IMPACTS ON BUSINESSES IN THE PACIFIC • There has been a decrease in business confidence since our Wave 3 survey, with only 69% of respondents now confident their businesses will survive COVID-19. • Fewer businesses are confident they will return to business-as-usual revenue this year (11%, a INTRODUCTION decrease from 18% in July). There is still increasing The COVID-19 outbreak has caused a global health uncertainty in the market, with over a third of emergency and a global economic slowdown businesses responding that they are unsure when revenue will return to pre-COVID-19 levels. impacting millions of small and medium-sized • COVID-19 continues to have a negative impact on enterprises (SMEs) around the world, including the businesses in the Pacific as borders remain closed. Pacific . As tourism plays a major role in local The level of impact is similar to the last three Pacific economies, travel bans and restrictions on surveys, with just under two-thirds of businesses gatherings in particular are affecting businesses reporting a very negative impact. The proportion across this region. of businesses reporting a decline in revenue due Pacific Trade Invest (PTI) has commissioned Fifth to COVID-19 has increased to 91%. • 36% of businesses have reported being partly Quadrant, an independent research agency, to run operational, an increase from the July survey (30%) a regular survey to understand the ongoing effects indicating that more businesses have reopened. of COVID-19 on the Pacific’s private sector. The fifth wave of PTI’s Pacific Business Monitor surveys includes responses gathered from 31 July–16 August 2020 from 199 businesses across the Pacific Islands. CHALLENGES & This report includes data from the top four Pacific SUPPORT NEEDED countries that provided responses, giving insight into the nuances between different Pacific countries and • The top three challenges as a result of COVID-19 remain unchanged: the effect COVID-19 is having on the private sector. » Impact of closed international borders (93%). It is a long road ahead and through the regular » Not knowing how long the crisis will last (92%). PTI Pacific Business Monitor surveys, the objective » Poor cashflow (88%). is to provide governments, donors and stakeholders • The top two initiatives businesses require with valuable data on how businesses in the Pacific assistance with are financial support (45%, a are coping. decrease from 57% in Survey 4) and reviewing/ updating financial position (39%). ABOUT PACIFIC TRADE INVEST The PTI Network is an agency of the Secretariat and is the Pacific’s leading trade PERSONAL IMPACTS ON and investment promotion agency. BUSINESS DECISION-MAKERS With offices in , and , the PTI Network develops and promotes trade and • The negative toll on business has increased investment across international markets. with 66% of business-owners/decision-makers reporting an impact on their mental health, an increase from 55% in Survey 4. • The number of people reporting they felt optimistic and happy in the last two weeks has decreased since Survey 4. • The proportion of businesses reporting that COVID-19 is having a negative impact on community wellbeing has increased by 6% since the Survey 4 to 86%. p.1 CURRENT IMPACT OF COVID-19 ON BUSINESSES IN THE PACIFIC

REPORTED REPORTED NEGATIVE IMPACT ON BUSINESS* A NEGATIVE 89% IMPACT DUE 68% NEW CALEDONIA TO COVID-19 Very negative impact Slightly negative impact

91% 95% COVID-19 continues to have a 88% 90% 86% 89% 90% 86% negative impact on businesses 68% as borders remain closed. The 20% 78% 65% 65% 64% 63% 66% 63% 85% level of impact COVID-19 is having on businesses is consistent with 48% the last three surveys, with just 23% 25% 22% 26% 24% 23% 13% 10% under two-thirds reporting a very SOLOMON NEW COOK WAVE 1 WAVE 2 WAVE 3 WAVE 4 WAVE 5 NIUE SOLOMON NEW CALEDONIA ISLANDS negative impact. ISLANDS CALEDONIA ISLANDS The impact is significantly lower in New Caledonia with 68% of ALL PACIFIC ISLANDS businesses reporting a negative impact

REPORTED A DECLINE IN REVENUE* REPORTED A 91% DECLINE IN Significant decline Slight decline 80% NEW CALEDONIA REVENUE 100% 92% 92% 90% 90% 88% 91% 87% 80% The proportion of businesses reporting a decline in revenue has 28% 66% 68% 71% 68% 90% increased to 91 per cent. In line with 79% 71% 70% previous surveys, over two-thirds 52% of businesses continue to report a 24% 13% 22% 17% 20% 24% 17% significant decline in revenue due to 10% WAVE 1 WAVE 2 WAVE 3 WAVE 4 WAVE 5 NIUE SOLOMON NEWNEW COOKCOOK COVID-19. ISLANDS CALEDONIACALEDONIA ISLANDSISLANDS

ALL PACIFIC ISLANDS

BELIEVE COVID-19 HAS BELIEVE NEGATIVE IMPACT ON THE LOCAL ECONOMY* NEGATIVELY 93% IMPACTED Very negative impact Slightly negative impact 96% NEW CALEDONIA THE LOCAL ECONOMY 96% 100% 95% 92% 91% 90% 93% 93% 93% The negative impact on businesses 48% is reflected in the perception of the 61% 79% 71% 73% 69% 71% 71% local economy, with 93 per cent 90% reporting a negative impact on the 48% local economy. 32% 21% 18% 21% 22% 22% 15% 10% WAVE 1 WAVE 2 WAVE 3 WAVE 4 WAVE 5 NIUE SOLOMON NEWNEW COOKCOOK ISLANDS CALEDONIACALEDONIA ISLANDSISLANDS

ALL PACIFIC ISLANDS

*Percentages rounded to nearest whole number p.2 CURRENT IMPACT OF COVID-19 ON BUSINESSES IN THE PACIFIC CONT...

ARE CONFIDENT THAT THEIR CONFIDENCE IN BUSINESS SURVIVAL AFTER COVID-19 BUSINESS WILL Not confident at all Not very confident Somewhat confident Very confident 69% SURVIVE THE WAVE 1 10% 25% 47% 18% 65% 80% NEW CALEDONIA COVID-19 CRISIS WAVE 2 10% 20% 48% 22% 70% WAVE 3 5% 21% 49% 25% 74% 80% of business owners in New WAVE 4 10% 19% 51% 21% 72%

Caledonia are confident that ISLANDS PACIFIC ALL their business will survive this WAVE 5 8% 23% 53% 16% 69% is significantly higher than the Pacific region (69% down from 72% in Wave 4) NIUE 5% 24% 56% 15% 71%

SOLOMON ISLANDS 10% 13% 47% 30% 77%

NEW CALEDONIA 20% 52% 28% 80%

COOK ISLANDS 5% 15% 70% 10% 80%

Not confident at all Not very confident Somewhat confident Very confident

FULLY PARTLY TEMPORARILY PERMANENTLY OPERATIONAL OPERATIONAL CLOSED CLOSED

88% 46% 33% 43% 36% 29% 30% 26% 31% 22% 8% 4% 2% 1% 1% 0% WAVE 1 WAVE 3 WAVE 5 NEW WAVE 1 WAVE 3 WAVE 5 NEW WAVE 1 WAVE 3 WAVE 5 NEW WAVE 1 WAVE 3 WAVE 5 NEW CALEDONIA CALEDONIA CALEDONIA CALEDONIA ALL PACIFIC ISLANDS ALL PACIFIC ISLANDS ALL PACIFIC ISLANDS ALL PACIFIC ISLANDS

WHEN WILL REVENUE RETURN TO PRE-COVID-19 LEVELS? Confidence in business survival has dropped and WAVE 5 businesses are 35% less likely to expect NEW CALEDONIA a return to pre- 24% 25% 24% 24% COVID revenue this 16% 17% year. There is real 12% 8% uncertainty in the 5% 4% 4% 2% market with 35 per 0% 1% 0% cent of respondents Revenue is at Q3 2020 Q4 2020 Q1-Q2 2021 Q3-Q4 2021 2022 or Never Don’t know/ (up from 25 per cent pre-COVID-19 (Aug - Sep) (Oct - Dec) (Jan – Jun) (Jul – Dec) later hard to last survey) not sure levels predict when their revenue will return.

p.3 ACTIONS TAKEN TO REDUCE COST/DAMAGE TO BUSINESS

ALL PACIFIC ISLANDS 66% 59% 58% 56% 52% 48% 49% 49% 50% WAVE 1 WAVE 3 WAVE 5 NEW CALEDONIA 42% 43% 38% 34% 33% 33% 28% 28% 29% 29% 24% 22% 22% 20% 17% 16% 17% 12% 12% 6% 9% 8% 8%

ReducedReduced other operationalother ReducedReduced working working hours ReducedReduced staff numbersstaff DiversifiedDiversified ReducedReduced wages staff of staff PivotedPivoted the business the to SpokenRequested to the landlord rent NoNo actions actions taken operationalcosts costs hours (permanent/casual)numbers products/servicesproducts/services wages businesssell/do more to sell/do online aboutrelief rent relief more online

BARRIERS TO ACTIONING INITIATIVES “Regulation about the work from home or office. Banks 50% 50% (20% New Caledonia) reported 20% barriers preventing them from should be of better support.” New Caledonia actioning initiatives to support their – SME, Information, Media & business (down from 52% last wave). Telecommunications, 27% New Caledonia Lack of government support/stimulus 24% 33% 40% 33% “Banks are very cautious Lack of finance/revenue/cashflow 36% 30% and are unable to make 40% long-term commitments. 21% ALL PACIFIC ISLANDS And promised funding Closed borders/lockdown 20% 20% from government has not 0% materialised.” Wave 1 6% Wave 3 – SME, Agriculture, Forestry & Lack of knowledge & skilled staff 11% 14% Wave 5 Fishing, PNG 0% New Caledonia

TOP 4 CHALLENGES TOP 4 INITIATIVES NEEDED TO ACTION NOW

IMPACT OF CLOSED NEED FINANCIAL INTERNATIONAL SUPPORT BORDERS 45% 93% (57% last wave) 92% NEW CALEDONIA 28% NEW CALEDONIA (90% last wave)

NOT KNOWING HOW DIVERSIFY LONG THE CRISIS BUSINESS 92% WILL LAST 34% (33% last wave) 92% NEW CALEDONIA (93% last wave) 48% NEW CALEDONIA

POOR REVIEW/UPDATE CASHFLOW FINANCIAL POSITION 88% 39% (31% last wave) 72% NEW CALEDONIA (89% last wave) 40% NEW CALEDONIA

IMPACT OF LOCKDOWN ACCESS TO NEW IN YOUR COUNTRY MARKETS 78% (81% last wave) 33% (28% last wave) 76% NEW CALEDONIA 56% NEW CALEDONIA

p.4 GOVERNMENT SUPPORT

HAS YOUR BUSINESS ACCESSED ANY SUPPORT? SATISFACTION WITH GOVERNMENT RESPONSE

25% Yes, the government has provided 32% 70% some support 45% 55% 52% 51% 44% 29% 43% 41% 43% Not yet, but we will require support 31% 31% 28% from the government 23% 20% 24% 21% 8% 25% 5% 16% 32% 10% 24% 24% 23% 27% Our government has not provided 22% 19% 20% 20% 16% 10% any support to businesses 20% 12% WAVE 1 WAVE 2 WAVE 3 WAVE 4 WAVE 5 NIUE SOLOMON NEW COOK ISLANDS CALEDONIA ISLANDS 11% 15% No support required 12% ALL PACIFIC ISLANDS ALL PACIFIC ISLANDS 28%

3% Wave 1 0% Don’t know Wave 3 2% Extremely dissatisfied Somewhat dissatisfied 0% Wave 5 New Caledonia

PERSONAL WELLBEING

WELLBEING OF THE PERSONAL MENTAL COMMUNITY FINANCIAL SITUATION HEALTH 89% 83% 86% 67% 87% 80% 86% 64% 61% 60% 66% 48% 8% 4% 13% 16% 20% 22%

Very Negative Very Negative Very Negative 46% 41% 52% 53% 53% 44% 60% Slightly Negative 56% Slightly Negative Slightly Negative 54% 45% 40% 44%

No Impact No Impact No Impact 45% 43% 31% 27% 33% 44% Slightly Positive Slightly Positive 27% Slightly Positive 25% 29% 28% 25% 29% 7% 13% Very Positive 7% Very Positive Very Positive 6% 3% 7% 8% 7% 4% 5% 3% 5% 4% 4% 5% 4% 2% 6% 8% 9% 2% 3% 4% 1% 5% 4% 4% WAVE 1 WAVE 3 WAVE 5 NEWNew New New Wave 1 Wave 3 Wave 5 WAVEWave 11 WaveWAVE 3 WaveWAVE 55 NEW WAVEWave 1 1 WAVEWave 33 WaveWAVE 5 NEW CALEDONIACaledonia CALEDONIACaledonia CaledoniaCALEDONIA

ALL PACIFIC ISLANDS ALL PACIFIC ISLANDS ALL PACIFIC ISLANDS

The proportion of those COVID-19 continues to have a The negative toll on mental reporting the pandemic as significant impact on business health has increased, with 66 per having a negative impact on decision-makers’ personal cent now reporting a negative community wellbeing has financial situations, with 86 per impact on their mental health. increased since the last survey cent reporting a negative impact. Those reporting a very negative to 86 per cent. impact has doubled to 1 in 5 (from 1 in 10 Wave 4).

Very negative Slightly negative No impact Slightly positive Very positive p.5 PERSONAL WELLBEING CONT...

FELT WORRIED OVER FELT ANGRY OVER THE LAST 2 WEEKS* THE LAST 2 WEEKS*

95%

86% 87% 80% 80% 82% 83% 76% 75% 7% 5% 7% 15% 10% 5% 55% 66% 10% 24% 32% 33% 32% 61% 3% 32% 2% 52% 32% 40% 50% 48% 48% 30% 16% 2% 46% 23% 3% 3% 40% 6% 7% 8% 10% 5% 7% 8% 25% 51% 40% 46% 47% 44% 40% 43% 39% 35% 33% 41% 38% 40% 40% 34% 40% 32% 25%

WAVE 1 WAVE 2 WAVE 3 WAVE 4 WAVE 5 NIUE SOLOMON NEW COOK WAVE 1 WAVE 2 WAVE 3 WAVE 4 WAVE 5 NIUE SOLOMON NEW COOK ISLANDS CALEDONIA ISLANDS ISLANDS CALEDONIA ISLANDS

ALL PACIFIC ISLANDS ALL PACIFIC ISLANDS

FELT OPTIMISTIC OVER FELT HAPPY OVER THE THE LAST 2 WEEKS* LAST 2 WEEKS*

96% 86% 90% 86% 85% 84% 82% 80% 82% 81% 84% 8% 79% 77% 78% 81% 5% 12% 15% 4% 70% 3% 8% 10% 6% 14% 20% 9% 6% 70% 20% 70% 11% 6% 15% 25% 25% 44% 10% 25% 31% 25% 27% 40% 26% 30% 34% 28% 20% 26% 27% 20% 27% 68% 48% 46% 53% 47% 50% 46% 43% 40% 44% 45% 43% 42% 41% 37% 36% 35% 33%

WAVE 1 WAVE 2 WAVE 3 WAVE 4 WAVE 5 NIUE SOLOMON NEW COOK WAVE 1 WAVE 2 WAVE 3 WAVE 4 WAVE 5 NIUE SOLOMON NEW COOK ISLANDS CALEDONIA ISLANDS ISLANDS CALEDONIA ISLANDS

ALL PACIFIC ISLANDS ALL PACIFIC ISLANDS

Percentages rounded to nearest whole number

METHODOLOGY

This is the fifth wave of PTI’s Pacific Business Monitor surveys 5-minute questionnaire All surveys completed online All respondents are decision-makers/owners in small and medium- sized businesses Responses were collected 31 July–16 August 2020 FOR FURTHER INFORMATION CATH COOKSLEY-LITTLE A wide selection of The information in this General Manager - Marketing, industry sectors are report is based on 199 Communications & Tourism represented respondents from across [email protected] the Pacific region p.6