Manila, Philippines – Amidst a strong recovery from COVID-19 in 2021, small businesses in the Philippines are bullish about their growth for this year, new data from CPA Australia shows.
According to the data, 65% of respondents reported growing and 41% increased employee numbers. This can be attributed to the fact that there has been evident strong customer satisfaction and business strategy. Over the past three years, respondents nominated customer loyalty and improved customer satisfaction as the top factors positively influencing their businesses.
Leslie Leow, general manager for emerging markets at CPA Australia said, “To stand out from competitors and win more customers, it’s pivotal for micro, small and medium-sized enterprises (MSMEs) to adopt a customer-oriented strategy. This will assist them to provide the products or services customers’ demand.”
He added, “Filipino small business owners are typically young, vibrant and skilful at using digital technologies in their business and to engage with customers and potential customers.”
The data also noted that 91% expect to grow, far outstripping the survey average of 62%. Around 45% stated they will introduce a new product, service or process to the market in 2022, while 62% expect to hire more employees. Both results are the second highest among all surveyed markets. In addition, 62% of respondents expect revenue from overseas markets to grow, outperforming the region.
“The Philippines are investing resources in revitalising industries hard-hit by COVID-19, such as tourism and hospitality. With border restrictions set to relax this year, foreign tourists and opportunities from overseas markets should spur MSMEs’ confidence and expansion prospects,” Leow added.
Aside from the pandemic, increasing costs remains the biggest barrier to Filipino small businesses. Materials costs (42%) and utility costs (39%) were the costs that caused the most detriment.
In terms of financing, 66% of respondents sought external funds last year while 80% expect that they will require additional funds this year. Covering increasing expenses was one of the major reasons for seeking finance. Financing conditions improved significantly for Filipino businesses in 2021. About 38% of respondents found access to finance ‘easy’ or ‘very easy’, up from 13% in 2020. However, this result is still below the survey average of 46%.
Leow further explained, “Easier access to finance is most likely due to the strong shift by local businesses to family or friends as their main source of finance, which was up from 21% in 2020 to 45% in 2021. The survey shows that family and friends are typically the easiest source for finance to access. While the Department of Trade and Industry Philippines released a total of PHP5.9b this year to MSMEs, funding roadblocks are still hindering local MSME’s growth.”
