The COVID-19 pandemic has caused a global health emergency and an economic slowdown impacting millions of small and medium-sized enterprises (SMEs) around the world.
Since April, the Pacific Trade Invest Network has regularly reached out to SMEs across the sixteen Forum Island nations.
With a particular emphasis on the Cook Islands Business Survey Report PTI NZ reached out to the Cook Islands Chamber of Commerce to get their thoughts on the results, and what measures they had put in place to mitigate the economic disruption to their economy and peoples.
According to CEO Eve Hayden, the PTI Network Pacific Business Monitor survey results indicate accurately what is happening on the ground in the Cook Islands.
In April 2020 when the first PTI Network Pacific Business Monitor results were released the top three challenges as a result of COVID-19 were impact of closed international borders; not knowing how long the crisis will last; and poor cash flow.
These indicators have not changed since then across all the Blue Pacific nations.
The latest survey reports 91% of businesses reported a negative impact due to COVID-19. The extent and severity of the pandemic worsened in October with 61% reporting a very negative impact.
93% Cook Island businesses reported a decline in revenue, this is the highest response since tracking began. The impact on revenue has also increased in severity, with the proportion of businesses reporting a significant decline in revenue increasing to 70%.
Cashflow continues to be a major issue with Ms Hayden advising this week the Cook Islands Chamber of Commerce submitted their latest recommendations to the government which include one-off grants to qualifying businesses, insurance-specific grants, and reducing the thresholds for qualifying for the wage subsidy.
Eve says the insurance-specific grants were included as we have recognised that businesses with no cash flow are having to slash further operating costs and insurance is a large cost to business.
“We have recommended reducing the thresholds for qualifying for the wage subsidy as many businesses are failing to demonstrate a 50% in revenue, however they are still operating at a loss. The risk of not adjusting this will be further employee lay-offs.”
The Pacific Business Monitor Cook Island focussed report also showed the negative toll on business owners with 67% reporting a negative impact on their mental health, the highest since tracking began.
Eve says that mental health has been a big factor in the Cook Islands.
“Thinking the border is going to open and then having to change as the situation in NZ changes has been challenging. The Private Sector Taskforce has organised a series of mental health workshops for both businesses and employees, which have been well attended and appreciated.”
General health concerns are now coming to the forefront as all annual specialist visits from outside of the Cook Islands have been cancelled and many New Zealand medical appointments are now well overdue.
“There is no way of knowing time-frames for disruptions to business and health and we have had some stop/starts as a safe corridor to NZ is being planned and each time the situation in New Zealand changes, especially as is has done in the last 28 days we have to reset and readjust our timeline expectations for that. That is wearying and worrying.”
Glynis Miller, Acting Trade Commissioner for PTI NZ says, “Obviously closed borders are taking a toll on businesses in the region. With the corridor between New Zealand and the Cook Islands nearing government’s decision this will have a positive impact on the Cook Islands’ economy.
On a positive note 74% of businesses in the Cook Islands are confident that they will survive the COVID-19 crisis. This is six percent higher in comparison to the Pacific as a whole.
Eve is upbeat, “All in all, the Cook Islands have been in a fairly good economic position compared with other Pacifica countries as the financial prudence measures put in place when the economy was booming are no being used to implement some social protection measures, along with some much needed support for the private sector.”
“The readiness of the private sector to resume business-as-usual once the border opens, will be pivotal to the resumption of tax collection and payments which in turn will provide the Government with much-needed income.”
In April 2020, the Cook Islands Government’s COVID-19 Economic Response Plan (ERP) Phase I was enacted and July 1 saw the Cook Islands Government’s COVID-19 ERP enter Phase II– this was a $76m plan providing comprehensive financial support to carry the country towards a post-COVID-19 future.
The second ERP focussed on keeping the wage subsidy and sole trade grants, but also introduced some stabilisation measures such as low interest loans to deal with continue operating losses, and heavy interest subsidisation of loan-related interest.
Glynis says, “not all the countries have been able to respond as quickly as the Cook Islands have to ensure their economy doesn’t enter a recession. The Cook Islands Chamber of Commerce has played a key role in linking economic assistance with the wider private sector community. We’re glad our Pacific Business Monitor survey and reports have been helpful to decision makers during this difficult time.”
The next round of Pacific Business Monitor is now live. This is Wave 9 – December. Click on the photo or link to complete.