Business Outlook Survey Do It



	In this part, respondents briefly review their performance in 2001, share their views about the environment for doing business and the internal and external issues that most directly affect their businesses' success. Performance 2001 Companies were asked how they assess their performance in 2001 27 respondents (63%) consider their performance to be in line with expectations. Only 2 companies (5%) considered their performance better than they had projected while fourteen companies (33%) suffered from a decline in their anticipated performance. Of the fourteen companies reporting a decline in performance, eight have an annual turnover of over $1,000Mn, two of between $600Mn and 700Mn, one of between $700Mn and $1,000Mn, one of between $600Mn and $700Mn, one of between $100Mn and 200Mn and one with less than $50Mn. These companies are from a range of industries including distribution/retail, manufacturing, mining, agriculture, financial and services In the 2001 Survey, 76% of respondents anticipated increased revenue while 82% had expected increased profitability. 12% had anticipated that turnover would decrease while 6% expected no increase or decrease. Ram and McRae's Comments The companies responding to this year's Survey need not be the same companies from last year's Survey. It must be a concern to all that the decline is where it matters most - larger companies with high levels of sales and employment. Core Issues *Respondents were asked to rank twenty-nine external factors on their likely impact on the success of their company* The issues considered likely to have the most impact on the success of companies in 2002 were identified as: Consumer spending/ demand – 33.8% Political stability (risk) - 33.2% Exchange rate – 32.2% Electricity supply & rates – 31.8% Interest rates –31.2% Other areas which a significant number of respondents consider as likely to impact their businesses include government policy (30.4%), finding new customers and markets (30.2%), shortage of skills (30%) and fuel prices (29%). Significantly, the lowest ranked issues are the large number of businesses for which the commercial banks have appointed receivers, domestic and international freight, environmental legislation and the opening of the Merchant Bank. Ram & McRae's Comments It is instructive to note the low degree of concern about the level of business failures and, as seen in other sections of this Report, the attitude of respondents to those businesses in difficulties as well as the little interest in the Merchant Bank. While political stability remains a significant issue, its weighting has fallen from 43.8% to 33.2%, due perhaps to the Dialogue between the leaders of the two main political parties. Of course at the time of the last Survey, the country was apprehensive about impending general elections which have since taken place. *Respondents were asked to rank from seven operating issues those that are most important to their businesses* Measured on a weighted average basis, electricity supply and improving product/service quality are the operating issues identified by respondents as the two most important operating issues facing their businesses. Last year the preparation of financial information was considered the most important operating issue but is ranked only third this year. As last year, Customs procedures and inventory management are considered important while environmental issues are considered least important. Ram & McRae's Comments In the 2000 Survey, shortly after the privatisation of GEC, electricity supply was identified as a major concern to respondents. Two years later it is considered by respondents as of even greater concern and one of the most important operational issues they face. On a weighted average basis, the percentage who identified electricity supply as a key operating issue moved from 38% in Outlook 2000 to 43% in this year's Survey. Respondents were asked to rank from six financial issues, those that are most important to their businesses On a weighted average basis, the Survey identified cash flow management (36%), access to capital (31%) and timely information (29%) as the three most critical financial issues they face. Of less importance were foreign currency availability (26%), debt servicing (25%) and the buildup in receivables/ inventory (20%). Ram & McRae's Comments Cash flow management, which was identified by the respondents to last year's survey as the number four critical issue, came in number one this year. This perhaps is indicative of the general business climate, the effect of the rising number of business failures and a recognition that the commercial banks are less tolerant of defaulting customers. Respondents were asked to rank from three marketing/sales issues, those that are most important to their businesses. The most significant marketing issue was the consequence of the slowdown in the economy (57%). Increased competition (34%) came a far second ahead of marketing costs (30%). Ram & McRae's Comments Once again, the business community's major concern is the country's economic performance which inevitably affects their sales levels. Increased competition is now seen as the #2 issue (2001-#4). *Respondents were asked to rank from eight human resource issues, those that are most important to their businesses* 50.2% of the survey's respondents identified employee productivity as the human resource issue most important for success. Other important issues are retention of key personnel (49.8%) followed by recruiting of key personnel (42%). Employee fraud, industrial relations and incentive schemes were the least critical human resources issues. Ram and McRae's Comments The top three issues all speak of the importance to the success of a company of recruiting and retaining efficient and qualified personnel. Although companies are increasingly recognising the importance of employees to their business, offering attractive incentive schemes was not a top priority. Economic Outlook *Respondents were asked how confident they are that the economy would improve in 2002* Like last year, only one of the forty-three respondents (2.5%) express unreserved confidence that the economy will improve in 2002. Two (4.6%) are confident and six (13.9%) are fairly confident that the economy will improve. Thirty-four companies were either not confident (25.6%) or not very confident (53.4%) about the prospects for the economy in 2002. Unlike earlier years, there was no "Don't know". Ram & McRae's Comments *Of the forty-three Survey respondents, thirty-four (79%) are pessimistic about improvements in the economy compared with 58% in the previous year.* *Respondents were asked whether they felt the economic conditions in 2002 would be more favourable, less favourable or neither more nor less favourable for privately owned businesses.* Twenty-one respondents (49%) expect that the economic conditions in 2002 will be neither more nor less favourable for the private sector while nineteen (44%) think it will be less favourable. Only three respondents expect that it would be more favourable. *From a list of fifteen items, respondents were asked to rate what national or international events, if any, make them more or less optimistic about the economy* Respondents are more optimistic than pessimistic about the PPP/C-PNC-R relationship, (14/4/23), the publication of the Investment Code (13/4/23), environment legislation (9/6/29) and interest rate policy (5/1/26) although the majority are neither more nor less optimistic. The majority of the respondents are less optimistic about the world economic outlook (2/35/4), international terrorism/war (2/34/5), level of business failures (5/33/4) and corruption (1/32/8). Other significant causes for pessimism are crime/drugs (2/27/12), the value of the Guyana dollar (4/27/11), management of the economy (3/26/12), smuggling (2/25/14) and Government support for business and investment (10/16/16). More Optimistic/ Less Optimistic/ Neither more optimistic nor less pessimistic Ram & McRae's Comments This year, the Survey group shows more confidence in the country's political situation due to improved dialogue between the two major parties. Not unlike last year, respondents are more pessimistic than optimistic about thirteen of the fifteen issues identified in the Survey Questionnaire. The majority of respondents are neither less pessimistic nor more optimistic about the border disputes with neighbours Suriname and Venezuela. In last year's Survey, against the background of the expulsion of the CGX oil rig by Suriname, this was a cause for overwhelming pessimism. *Respondents were asked to indicate their agreement with Government action on three key issues* Thirty-two companies (76%) do not agree with the compulsory acquisition of the Toolsie Persaud Ltd. land by the Government for development into a market area for street vendors. Four respondents (10%) agree with this decision while the remaining six respondents (14%) had no views. Government's support for businesses in distress found respondents equally divided while eight companies (20%) had no views. Only two respondents (5%) agree with publication of the Investment Code without legal force while an overwhelming twenty-seven respondents (64%) disagree and thirteen (31%) had no views on this issue. Ram and McRae's Comments *It is clear that the Government has failed to communicate its policies and to convince the business community on some of the more critical issues affecting them.* Ram and McRae's Comments *It is clear that the Government has failed to communicate its policies and to convince the business community on some of the more critical issues affecting them* *Respondents were ask to indicate whether or not they support the GMA's call for a Buy Local Campaign* Thirty-five respondents (85%) support the buy-local campaign while six companies (14%) do not. Two companies did not respond to the question. Businesses' Expectations *From a list of eighteen measures, companies were asked to rank five on which they wanted to see the Government take action.* The top five issues identified were: 2002 2001 % % Lowering direct taxation 69.8 54 Reducing interest rates 65.1 62 Controlling inflation 53.5 44 Long term plan to assist manufacturers 48.8 32 Taking steps to lower exchange rates 46.5 48 Other measures which respondents identify as important for Government input are the provision of investment incentives (39.5%), higher public expenditure (32.6%), and the removal of property taxes (30.2%). Respondents' demonstrate no appetite for import/export licence controls (9.3%), provision of financial assistance/grants to distressed businesses (11.6%) and the de-regulation of telecommunications (20.9%). Ram & McRae's Comments For three consecutive years lowering of direct taxation is at the top of the respondents' wish list. Clearly our businesses consider the rates of tax on corporate income (35%/45%) too high. With the country's manufacturing sector in decline, the call for Government support has increased significantly.