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About the survey
The Quarterly Business Survey is conducted by the MMA with the aim of obtaining a quick assessment of current business trends and
expected future economic activity.
The respondents of the business survey are senior managers or top management of businesses who has an overall view of the business
situation. The questions cover the views of the senior management (for the past quarter and expectation for the next quarter) on the
direction of change in various business variables such as sales, output, prices, exports, capacity utilisation and employment which are
useful for analysing and predicting economic activity. The qualitative response for these questions takes the form of either increase,
decrease or no change.
The business survey for Q1-2015 was conducted from 25 March 2015 to 7 April 2015. Survey forms were sent out to 143 enterprises in
three main sectors of the economy which are construction; tourism; and wholesale and retail trade. A total of 77 enterprises responded
during the survey period which represents an overall response rate of 54%.
The accounting concept, net balance approach, has been used in converting qualitative responses to quantitative numbers. All responses
are weighted based on their relative size within their respective sector. Net balances measure the difference between the percentage of
respondents who gave positive responses and the percentage of respondents who gave negative responses.
Care should be taken when interpreting the results of individual sectors as constraints in sample selection limit the representativeness of
certain industries within each sector.
The MMA would like to thank all the parties who contributed to the survey, especially the survey respondents.
Summary of survey results
According to the Quarterly Business Survey carried out for the first quarter of 2015, businesses across all sectors surveyed, namely tourism, construction, and
wholesale and retail trade reported an increase in the level of business activity in Q1-2015 compared to Q4-2014. Looking ahead, business in all sectors except for
the tourism sector, are predicting further improvements in business activity in Q2-2015 when compared to Q1-2015.
With regard to the current level of employment, businesses across all sectors indicated an increase in Q1-2015 compared to Q4-2014. Similarly, all sectors
surveyed (except for tourism sector, which expects a decline) anticipated an increase in employment during Q2-2015 as well, reflecting the optimism shown by
majority of businesses in this quarter.
With regard to prices charged, majority of businesses in the wholesale and retail trade sector and construction sector reported no change in Q1-2015 over Q42014, while businesses in the tourism sector reported an increase. Looking ahead, majority of businesses in all sectors expect prices to remain the same except
for the tourism sector, where prices are expected to decline. As for business costs, businesses across all sectors experienced an increase in all labour-related costs
and other input costs (except for the construction sector which reported a decline) in Q1-2015 when compared to Q4-2014. Looking ahead, all sectors—except for
businesses in tourism sector which expects a decline in other input prices—anticipate a further increase in all business costs in Q2-2015 as well.
Summary of responses by sector
Construction sector
Current situation
In the construction sector, 26% of the survey respondents indicated an
increase in the volume of construction activity in Q1-2015 compared to Q42014 (68% indicated no change). Similarly, during the same period 28% of
respondents reported an increase in the volume of orders received while 70%
reported no change. Reflecting the increase in construction activity, 60% of
respondents indicated an increase in employment, while 39% indicated that
there was no change compared to Q4-2014. Furthermore, 64% of respondents
reported an increase in labour costs while the remaining businesses reported
no change. As for other input prices, 37% of respondents reported no change
while 28% indicated an increase in Q1-2015 compared to Q4-2014. Looking at
prices charged, 69% of businesses indicated no change in the prices charged
by them in Q1-2015 compared to Q4-2014 (net balance of 14%). Twenty-nine
percent of respondents indicated that access to credit tightened compared
to the previous quarter (68% reported no change), while 61% of businesses
indicated an improvement in their financial situation in Q1-2015 compared to
the previous quarter (Figure 1).
Expectations for the next quarter
Looking ahead, most businesses in the construction sector expect the volume
of construction activity and the volume of incoming orders to increase in Q22015, when compared to Q1-2015 (Figure 2). Reflecting the positive outlook
for activity levels, the majority of businesses expect an increase in their
employment in Q2-2015 over Q1-2015 (net balance of 65%). Looking at prices
charged, 66% of businesses expect no change in prices in Q2-2015 compared to
1
| Quarterly Business Survey, Q1-2015
Figure 1: Changes in business indicators in Q1-2015 compared to Q4-2014
Volume of construction activity
Volume of orders received
Number of employees
Prices charged on average
Wages and other labour costs
Price of inputs
Capital expenditure
Access to credit
Financial situation of the company
-100
-80
-60
-40
-20
0
20
40
60
80
100
* Changes in business indicators are shown as net balances. This is the difference between the
percentage of business units choosing positive answers (increase/better/ease) and that choosing
negative answers (decrease/worse/tight).
** Detailed survey responses are provided in Table 1 of appendix.
Q1-2015, while 25% of respondents expect an increase during the same period.
As for business costs, 66% of businesses expect no change in their labour costs
(net balance of 34%) and 68% of businesses expect other input prices to remain
the same as well in Q2-2015 when compared to Q1-2015 (net balance of 30%).
Regarding investment plans, 66% of businesses plan to increase their capital
expenditure (31% anticipate no change). Sixty percent of businesses expect
their financial situation to improve in Q2-2015 compared to Q1-2015, while
39% expect no change. Meanwhile, 28% of businesses expect access to credit
to further tighten in Q2-2015 compared to Q1-2015 (67% expect no change)
(figure 2).
Figure 2: Expectations on changes in business indicators in Q2-2015 compared to Q1-2015
Volume of construction activity
Volume of orders received
Number of employees
Prices charged on average
Wages and other labour costs
Price of inputs
Capital expenditure
Factors limiting business growth
The most significant factors highlighted by survey respondents that limit
business growth include limited availability of foreign exchange and access to
bank credit. Other significant factors include delays in payment by clients, cost
of raw materials, shortage of skilled labour, cost of finance and competition
within the sector (Figure 3).
Access to credit
Financial situation of the company
-100
-80
-60
-40
-20
0
20
40
60
80
80
90
100
Figure 3: Significant factors limiting business activities in Q1-2015
Competition
Access to foreign exchange
Delays in payment
Shortage of materials
Cost of raw materials
Insufficient demand
Regulatory framework
Cost of labour
Shortage of local labour
Shortage of skilled labour
Cost of finance
Access to bank credit
0
10
20
30
40
50
2
60
70
100
| Quarterly Business Survey, Q1-2015
Tourism sector
Current situation
Reflecting the peak season of the tourism industry, respondents from the
tourist resorts indicated an increase in total revenue and resort bookings in
Q1-2015 compared to the previous quarter (net balances of 76% and 24%,
respectively) (Figure 4). Eighty-eight percent of respondents also reported an
increase in average room rates in Q1-2015 compared to the quarter before.
Looking at employment numbers during the period, 27% of respondents
indicated an increase in hiring while 68% reported no change. As for business
costs, 49% of businesses reported no change in labour-related costs (net
balance of 32%) while 49% indicated an increase in other input prices (45%
reported no change) in Q1-2015 over Q4-2014. Reflecting the strong growth
in business activity, more respondents reported an improvement in their
financial situation in Q1-2015 compared to Q4-2014 over those reporting a
decline (net balance of 48%).
Expectations for the next quarter
Looking ahead, as the tourist peak season comes to end in Q2-2015, a
significant majority of respondents expect total revenue, resort bookings and
average room rates to decline in Q2-2015 compared to Q1-2015, as indicated
by the large negative balances (Figure 5). Eighty-eight percent of respondents
expect no change in the number of employees on the payroll during Q2-2015
while 10% of businesses expect a decline. Looking at business costs, 76%
percent of respondents expect labour costs to remain the same (net balance
of 13%) and 82% expect other input prices to remain the same (net balance of
-13%) in Q2-2015 compared to Q1-2015. With regard to future investment, 44%
of respondents plan to increase their capital expenditure in Q2-2015 compared
to Q1-2015 (net balance of 36%). Furthermore, access to credit is expected
3
| Quarterly Business Survey, Q1-2015
Figure 4: Changes in business indicators in Q1-2015 compared to Q4-2014
Total revenue
Resort bookings
Number of employees
Average room rate
Wages and other labour costs
Price of inputs
Capital expenditure
Access to credit
Financial situation of the company
-100
-80
-60
-40
-20
0
20
40
60
80
* Changes in business indicators are shown as net balances. This is the difference between the
percentage of business units choosing positive answers (increase/better/ease) and that choosing
negative answers (decrease/worse/tight).
** Detailed survey responses are provided in Table 1 of appendix.
100
to worsen as indicated by a negative net balance of 48% (47% indicated no
change). Reflecting the decline in activity levels in the tourism industry, 33% of
respondents expect their financial situation to deteriorate in Q2-2015 compared
to Q1-2015 (59% expect to see no change).
Factors limiting business growth
In analysing the factors which limit growth opportunities for businesses in
the tourism sector, the most significant factor highlighted by the businesses
was competition within the sector. Additionally, insufficient demand, labour
market difficulties, such as shortages in both skilled labour and local labour,
and the weaknesses in the regulatory framework were also reported as
significant constraints (Figure 6).
Figure 5: Expectations on changes in business indicators in Q2-2015 compared to Q1-2015
Total revenue
Resort bookings
Number of employees
Average room rate
Wages and other labour costs
Price of inputs
Capital expenditure
Access to credit
Financial situation of the company
-100
-80
-60
-40
-20
0
20
40
60
80
100
Figure 6: Significant factors limiting business activities in Q1-2015
Insufficient demand
Regulatory framework
Competition within the sector
Cost of labour
Shortage of local labour
Shortage of skilled labour
Cost of finance
Access to bank credit
0
10
20
30
40
4
50
60
70
80
90
100
| Quarterly Business Survey, Q1-2015
Wholesale and retail trade sector
Current situation
According to 68% of respondents surveyed in the wholesale and retail trade
sector, the total volume of sales increased in Q1-2015 compared to Q4-2014
(9% reported no change). Similarly, 67% of businesses reported an increase
in the volume of orders placed with suppliers (net balance of 44%). As for
employment, 74% of businesses indicated an increase in hiring while 26% of
businesses reported no change. Looking at prices charged, 81% of businesses
reported no change in their selling prices in Q1-2015 over Q4-2014 while 17%
reported a decline. Business costs also increased in Q1-2015 as indicated by
the positive net balances for labour costs and cost of sales. Forty-eight percent
of businesses indicated an improvement in access to credit compared to Q42014 with a net balance of 24%. Access to credit normally shows a negative
net balance trend. However, the positive balance in Q1-2015 reflects positive
responses by few large companies which dominated the overall direction of
the indicator. Meanwhile, more businesses reported an improvement in their
financial situation than those reporting a decline (net balance of 52%) (Figure
7).
Figure 7: Changes in business indicators in Q1-2015 compared to Q4-2014
Total volume of sales
Volume of orders placed with suppliers
Volume of stock
Number of employees
Average selling prices
Wages and other labour costs
Cost of sales
Capital expenditure
Access to credit
Financial situation of the company
-100
-80
-60
-40
-20
0
Looking ahead, more businesses in the wholesale and retail trade sector
expect the volume of sales and the volume of orders placed with suppliers to
increase in Q2-2015 compared to Q1-2015, than those expecting a decrease. As
for selling prices, 91% of surveyed respondents expect it to remain the same
while 8% of the businesses expect it to decline. As for business costs, more
businesses expect a further increase in their labour costs and selling costs
in Q2-2015 than those anticipating a decrease. Regarding future investment
plans, 60% of businesses expect an increase in their capital expenditure
5
| Quarterly Business Survey, Q1-2015
40
60
80
100
* Changes in business indicators are shown as net balances. This is the difference between the
percentage of business units choosing positive answers (increase/better/ease) and that choosing
negative answers (decrease/worse/tight).
** Detailed survey responses are provided in Table 1 of appendix.
Expectations for the next quarter
20
while the rest respondents expect it to remain the same. Meanwhile, 57% of
businesses expect their financial situation to improve in Q1-2015 while 42%
expect it to remain the same (Figure 8).
Factors limiting business growth
Businesses in the wholesale and retail trade highlighted insufficient access to
foreign exchange as the most significant factor limiting their business growth.
In addition, competition within the sector, rent and labour market difficulties
such as the cost of labour and the shortage of both skilled and local labour
were also highlighted (Figure 9).
Figure 8: Expectations on changes in business indicators in Q2-2015 compared to Q1-2015
Total volume of sales
Volume of orders placed with suppliers
Volume of stock
Number of employees
Average selling prices
Wages and other labour costs
Cost of sales
Capital expenditure
Access to credit
Financial situation of the company
-100
-80
-60
-40
-20
0
20
40
60
80
100
Figure 9: Significant factors limiting business activities in Q1-2015
Access to foreign exchange
Logistical constraints
Insufficient demand
Regulatory framework
Competition
Cost of labour
Shortage of local labour
Shortage of skilled labour
Rent
Cost of finance
Access to bank credit
0
10
20
30
40
6
50
60
70
80
90
100
| Quarterly Business Survey, Q1-2015
Appendix
Table 1: Views on the direction of change in business indicators by sector
Assessment of Q1-2015 compared with Q4-2014
Percentage of enterprises choosing
Increase/
Better/Ease
No change
Decrease/
Worse/Tight
Volume of construction activity
26
68
5
Volume of orders received
28
70
2
Net
balance
Expectations for Q2-2015 compared with Q1-2015
Percentage of enterprises choosing
Net
balance
Increase/
Better/Ease
No change
Decrease/
Worse/Tight
21
68
26
6
62
26
73
26
1
72
Construction sector
Number of employees
60
39
1
59
66
33
1
65
Prices charged on average
22
69
9
14
25
66
9
17
Wages and other labour costs
64
36
0
64
34
66
0
34
Price of inputs
28
37
36
-8
31
68
1
30
Capital expenditure
35
65
0
35
66
31
3
63
Access to credit
3
68
29
-26
5
67
28
-22
Financial situation of the company
61
37
2
58
60
39
1
60
Overall business situation
38
60
2
36
29
70
1
28
Total revenue
86
4
10
76
6
5
89
-83
Resort bookings
48
28
24
24
14
12
75
-61
Number of employees
27
68
5
22
2
88
10
-7
Average room rate
88
7
5
83
6
5
89
-83
Wages and other labour costs
42
49
9
32
19
76
6
13
Price of inputs
49
45
6
43
2
82
16
-13
Capital expenditure
38
44
18
20
44
47
9
36
Tourism sector (resorts)
Access to credit
70
21
9
62
2
47
50
-48
Financial situation of the company
52
44
4
48
8
59
33
-25
Overall business situation
17
81
2
14
6
86
8
-2
*Percentages may not total 100 due to rounding.
*Net balance is the difference between the percentage of business units choosing positive answers (increase/better/ease) and that choosing negative answers (decrease/worse/tight).
7
| Quarterly Business Survey, Q1-2015
Assessment of Q1-2015 compared with Q4-2014
Percentage of enterprises choosing
Increase/
Better/Ease
No change
Decrease/
Worse/Tight
Net
balance
Expectations for Q2-2015 compared with Q1-2015
Percentage of enterprises choosing
Increase/
Better/Ease
No change
Decrease/
Worse/Tight
Net
balance
Wholesale and retail trade sector
Total volume of sales
68
9
23
45
49
37
14
35
Volume of orders placed with suppliers
67
11
23
44
29
46
26
3
Volume of stock
75
15
10
65
30
56
14
15
Number of employees
74
26
0
73
16
84
0
16
Average selling price
2
81
17
-15
2
88
10
-9
Wages and other labour costs
25
68
7
18
18
78
4
14
Cost of sales
69
22
9
60
28
63
8
20
Capital expenditure
58
42
0
57
33
67
0
33
Access to credit
48
29
23
24
2
73
25
-22
Financial situation of the company
56
40
4
52
26
72
1
25
Overall business situation
11
79
10
1
23
63
14
9
Prepared by:
Economic Research and Analysis Section, Maldives Monetary Authority
Tel: (960) 332-8028 Fax: (960) 331-7604 Email: [email protected] Website: www.mma.gov.mv
8
| Quarterly Business Survey, Q1-2015
Boduthakurufaanu Magu
Male’ - 20182
Republic of Maldives
Tel: (960) 3312343
Fax: (960) 3323862
Email: [email protected]
Website: www.mma.gov.mv