The COVID-19 outbreak has caused a global health emergency and an economic slowdown impacting millions of businesses around the world, including the Pacific region.
Travel restrictions in 2020 including border closures have affected businesses in this region, according to a report by Pacific Trade Invest (PTI) released recently.
“The negative impact has remained high across 2020, with approximately 90% of businesses experiencing negative impact,” said Pacific Trade Invest in their Pacific Business Monitor 2020 Report, pointing out significant declines in revenue
since COVID-19 began, due to border restrictions and the absence of tourists.
In order to understand the on-going effects of COVID-19 on Small and Medium Enterprises (SMEs) in the Pacific, PTI conducted run a nine-wave survey across 16 Pacific Island countries in over 100 businesses from 18 May – 13 December 2020.
The businesses were from these industries;
- Professional Services
- Agriculture,Forestry & Fishing
- Accommodation,Hospitality & Foods Service
- Other Services
The report showed that close to 90% of businesses have experienced a decline in their revenue.
The collective impact on the revenue also meant that local economies were significantly affected.
Over 90% of businesses have reported a negative impact on their local economy throughout last year.
Despite declines in revenue, around three-quarters of Pacific businesses remained fully or partly operational throughout 2020.
July and August saw a higher proportion of businesses temporarily close but most have since recovered, with less than a quarter temporarily closed and none permanently closed at the end of 2020.
To remain operational, almost all businesses have taken actions to reduce the
cost and damage to their businesses.
Most businesses were focusing on reducing operational costs including;
- Reduced working hours
- Reduced staff numbers (permanent/casual)
- Reduced staff wages
- Request rent relief.
By August 2020, 50% of businesses have begun to diversify their products/services and a quarter are selling more online.
Despite these efforts, businesses in the Pacific have faced significant challenges whilst navigating the pandemic. The report identified the top three challenges to be the uncertainty of how long the crisis will last, the impact of no international tourism due to closed borders, and lack of cash flow.
Other challenges also faced was the impact of imposed lockdowns, labour issues, wage issues, limited access to finance/capital to support the business, access to freight and increased coast of products and services.
In spite of these challenges, over three-quarters of businesses remained confident that they will survive the COVID-19 crisis as they are adapting and looking to alternative avenues and initiatives to generate revenue.
As the year has progressed, half of the businesses now expecting to return to
normal by end of 2021. One quarter finds it hard to predict, highlighting the ongoing uncertainty and dependency around when borders will reopen.
Government assistance to SMEs has increased significantly; two-thirds of businesses stated that the government has provided some support.
However, one-third have indicated that more needs to be done to support businesses through the crisis.
About Pacific Trade Invest:
The PTI Network is an agency of the Pacific Islands Forum Secretariat and is the Pacific’s leading trade and investment promotion agency. With offices in Australia, China, Europe, and New Zealand, the PTI Network develops and promotes trade and investment across international markets.