Bahrain’s industrial sector: not immune from the impact of Covid-19 crisis

Bahrain’s industrial sector: not immune from the impact of Covid-19 crisis

Bahrain industrial firms see fall in revenue

July 2020

Bahrains industrial sector, just like other economic segments, is grappling with the impact of Covid-19 as both its manufacturing and supply chain operations have been disrupted, according to a study conducted by the Bahrain Chamber of Commerce and Industry (BCCI).

As many as 80 per cent of business owners in the kingdom’s industrial sector expect a significant decrease in revenue in the coming months, revealed a survey titled The Economic Impact of Coronavirus on Business Owners. About 20 per cent of the surveyed in the sector see a risk of closure and bankruptcy during the upcoming period.

Industry was one of the nearly dozen sectors under review and comprised around 9 per cent of the total size of the survey which was carried out by The Studies and Initiatives Center at BCCI. The total size of the survey was 1,180 companies, ranging from small and medium enterprises to micro and large establishments.

According to the survey, 48 per cent of business owners see the risk of closure of their companies within the next one to six months if the situation protracts. On the other hand, 32 per cent do not foresee their business closing at all, while 13 per cent expect partial closure and reduction in some activities. About 7 per cent expect going out of business within the next year.

In terms of cash flow, the study found that 56 per cent of companies expected their current cash flow to maintain their operations for another six months, while 31 per cent feared their cash flows would last upto just one month. About 13 per cent of the businesses, however, were confident that it would last longer than six months.

Interestingly, a majority – 71 per cent of the business owners in the sector - have relied on government support provided through the economic stimulus/Tamkeen/Liquidity Support Fund, to manage the issues of cash flow.

About 53 per cent have tackled the challenge by delaying payment of debt/financial receivables as much as possible, while 61 per cent firms said they resorted to reduction of operating expenses, such as salaries, training, marketing, inventory, to manage cash flow matters.

The BCCI survey of the sector further revealed that as much as 64 per cent of companies have been impacted by the decision to close industrial and commercial businesses to prevent the spread of coronavirus in the kingdom. However, despite the closure decision, many of these companies have ensured continuity of business by taking unique measures such as opting for digital route; considering new products/ channels or new approach to customer services; delivery/takeaway service and others.

The study said that 43 per cent of the surveyed companies said they are conducting work through digital means, while 43 per cent were considering introducing new products or other novel ways to reach out to customers.

The findings of the survey were discussed during a meeting led by BCCI chairman Sameer Nass, with the chamber’s steering committee, headed by board member Sonya Janahi. The steering committee manages the 10 sectoral committees, whose representatives were also present.

Among key recommendations made during the meeting are a proposal by the food wealth committee to establish a food and drug authority in Bahrain to ensure food security during times of turbulence, in addition to resuming government support programmes for small and medium enterprises and to restaurants in particular.

The education committee has called for extending student loans at favourable rates, in a bid to enable students to continue their education.

As for the tourism committee, it called for urgent revival programmes and support to the sector, which has been badly affected by the Covid-19 crisis.

The meeting, which was also attended by the first and second deputies of the chairman, vice chair of the steering committee, the chief executive of and all committee heads, deliberated about a number of key issues namely the current economic situation in Bahrain, updates with regard to the obstacles facing the private sector, the initiatives and proposals of the chamber’s committees with regard to supporting the private sector, co-ordination between the chamber and the relevant government bodies, and extending support to the private sector post the coronavirus period.

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