Recovery to take a year; 59% see closure risk: Bahrain survey

Businesses in Bahrain have expressed wide concern over the economic implications of the ongoing Covid-19 pandemic with a majority of them foreseeing recovery in 12 months after the end of the Covid-19, provided they survive the pandemic.

A recent survey says that around 59 per cent of them are facing the risk of shutting down in the next 6 months amid fears of significant layoffs if the pandemic continues, writes Abdulaziz Khattak.

Called ‘The Economic Impact of Coronavirus on Business Owners’, the survey was carried out by The Studies and Initiatives Center at the Bahrain Chamber of Commerce and Industry (BCCI). Around 1,180 companies, ranging from micro to large establishments in nearly a dozen sectors, were surveyed during the full and partial closure of business in the country to prevent the spread of Covid-19.

The survey said 83% of business owners have been impacted by the decision to close commercial and industrial businesses to prevent the spread of coronavirus in the kingdom.

According to the survey, 32 per cent businesses expect closure and bankruptcy if the pandemic lasts any longer, with 59 per cent of these saying they face high risk of closure in the next 1 to 6 months. About 21 per cent said they face low risk of closure and 20 per cent see no closure.

The government of Bahrain has rolled out several generous initiatives to support businesses during the pandemic. These include exemption of industrial and commercial organisations from the fees associated with renting government industrial lands in April, May and June 2020. Businesses have also been waived tourism fees associated with tourism facilities.

About 73% of business owners have benefitted from the government support provided through the economic stimulus/Tamkeen/Liquidity Support Fund, said the survey. 

By company size, an overwhelming majority of businesses (66%) seeing closure in six months are micro establishments, while 25 per cent of large establishments also felt they faced the same risk.

The tourism and hospitality industry will be the hardest hit with 71 per cent businesses expecting closure in the next 6 months if things don’t improve, followed by education (63 per cent), commercial markets (58 per cent), real estate and construction (55 per cent), technology (54 per cent), transportation and logistics (53 per cent), industry and energy (49 per cent), health (47 per cent), food (46 per cent), and finance, insurance and tax (27 per cent).

Some 67 per cent businesses expect a significant decrease in revenue in the upcoming period, and 84 per cent businesses expressed concerns regarding payment of salaries.

The BCCI survey further revealed that 39 per cent businesses were expected to lay off more than 20 per cent of their employees during the upcoming period, while the rest said layoffs would be under 20 per cent.

According to company size, the most number of redundancies will be done by medium-sized companies (67 per cent) while only 34 per cent of large establishments said they would lay off more than 20 per cent of their workforce.

The tourism and hospitality industry will be the most affected with 52 per cent businesses saying they would sack more than 20 per cent employees, followed by commercial markets (58 per cent), transportation and logistics (52 per cent), food (50 per cent), education (45 per cent), real estate and construction (41 per cent), health (37 per cent), finance, insurance and tax (33 per cent), technology (31 per cent), and industry and energy (26 per cent). 

The survey showed that businesses are hard pressed for cash, with 36 per cent saying their cash flows would only last them a month, while 49 per cent said their cash flows were enough to last them up to six months.

Businesses have taken various measures to manage cash flows. Some 73 per cent said they had secured government support, 55 per cent reduced operating expenses (salaries, training and marketing), 45 per cent delayed debt payment, 33 per cent delayed or cancelled planned investments, 30 per cent took loans, 27 per cent negotiated payments terms with creditors, and 20 per cent said they had rescheduled their existing loans.

The survey also notes that the Ministry of Works, Municipalities Affairs & Urban Planning has said it would not collect rent and beneficiary allowance from businesses that utilized the ministry's properties for a period of three months, starting April 2020. These include central markets, vendors, and tenants of small shops in malls. 

Similar measures were taken by the Supreme Council for Environment and Eskan Bank of waiving off rent of shops and lands leased from the entities for a period of three months. 

This is in addition to several private sector initiatives to support businesses.

The government has meanwhile allocated BD215 million ($569 million) towards paying the salaries of Bahrainis in the private sector.

A promising sign was seen in the businesses’ hope for recovery. According to the survey, 77 per cent businesses expected to recover within 12 months after the pandemic ends. -TradeArabia News Service

Source: http://www.tradearabia.com/news/MISC_369239.html