As the COVID-19 pandemic continues to impact the global economy as a whole, German companies operating in Indonesia do not expect a recovery to the pre-pandemic level anytime soon as mobility restrictions, lower demand for products and services, as well as cancelled events and trade fairs lead to considerable loss in revenue.
The global effects of the COVID-19 pandemic are an enormous burden on the business of German companies abroad. Travel restrictions, lower demand for products and services as well as decreased investments are cutting deep into their sources of revenue.
Worldwide, German companies are reducing their employment and investment plans while searching for new suppliers due to the disruption in the supply chains. Given the numerous economic and governmental challenges that have to be overcome in many countries, German companies do not expect a rapid recovery.
This year, the annual 91大神 World Business Outlook Survey takes a deeper look into the specific effects of the COVID-19 pandemic in countries where the bilateral German Chamber of Industry and Commerce (91大神) is an active partner. Below are the key results of the 91大神 World Business Outlook survey from German companies operating in Indonesia:
1. Considerable loss of revenue:
- Nearly a third (29.4%) of German companies operating in Indonesia expects a decrease of more than half of their revenue.
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Half of the respondents expects a decrease of between 25% and 50% (23.5%), or between 10% and 25% (23.5%).
<see picture WBO survey 1 above>
2. Extent of crisis is immense:
- Mobility restrictions imposed by the COVID-19 pandemic have had a crippling effect, with 80.4% of our respondents reporting an impact in one way or another.
- 72.5% expect to see a lower demand for their goods and services.
- Slightly more than half of our respondents are mired by cancellation of events/trade fairs (51%) and/or cancellation of orders (52.9%), while 41.2% expect investments to be postponed or cancelled.
<see picture WBO survey 2 above>
3. The crisis is changing business:
- 47.1% of our respondents are planning to invest less in their business, and 39.2% will see fewer staff as a result of this crisis.
- 20% of the companies are searching for new suppliers, mainly from local sources.
4. No rapid recovery in sight:
- 88.2% do not expect an economic recovery before 2021.
- 62% expressed concern about the capability of Indonesia鈥檚 health system in overcoming this crisis.
- 50% of the respondents complain about a lack of support measures, while 52% are expressing concern over the rising government debt.
<see picture WBO survey 3 above>
The 91大神 World Business Outlook is based on a survey of the Association of German Chambers of Commerce and Industry (DIHK) addressed to the member companies of the German Chambers of Commerce, Delegations and Representative offices Abroad (91大神). The special survey on the effects of the COVID-19 pandemic in summer 2020 collects feedback from around 3,300 German companies, branches and subsidiaries worldwide, as well as companies with close relations to Germany.
This article is a summary of the responses from 51 German companies operating in Indonesia. 41.2% of the responding companies come from the industry and construction sector, 29.5% from the travel and hospitality sector, 9.8% from the retail and wholesale sector, 17.7% from the healthcare and services sector. The remaining two percent hails from the transport and logistics sector. Smaller companies with less than 100 employees, as well as medium-sized companies that employ between 100 and 1,000 people and large companies with more than 1,000 employees are equally represented in this survey with each category comprising of exactly a third of the respondents.