Business leaders in Asia-Pacific are less confident now about prospects for revenue growth, but majority still plan to increase their investments, particularly in China, U.S., Indonesia, Philippines, Vietnam, and Singapore, according to PricewaterhouseCoopers’ (PwC) fifth annual APEC CEO Survey.
The survey found that volatility in the financial markets this summer took a toll on the confidence of CEOs in the Asia-Pacific Economic Cooperation (APEC), with just 28% of business leaders now “very confident” that their organization will see business growth over the next 12 months. This is down from 46% a year ago, and it is the lowest level since PwC started tracking 12-month confidence for Asia-Pacific CEOs in 2012.
Furthermore, cyber security, exposure to natural disaster risks, and regional geopolitical tensions are seen as additional threats to business investment and growth.
But confidence differs across the region, with 51% of business leaders very confident of business growth in the Philippines during the next year, compared with 34% in the US and 20% in China.
Confidence levels by size of company also differ markedly, with mid-sized firms less than half as confident as both large and small companies, as they begin to feel the squeeze of expanding beyond their traditional markets but being not large enough to easily weather some shocks to the system.
For the 2015 APEC CEO Survey, “CEO Confidence in Asia Pacific Shaken but Strong,” 800 business leaders across 52 nations with operations in all 21 APEC economies were surveyed about the prospects for business, growth, and free trade in the region.
Despite their dwindling confidence, majority of CEOs (53%) still plan to increase investments over the next 12 months, with most of that investment (68%) planned for the APEC region.
Investments are going to be diversified. While China, the U.S., and Indonesia remain the main draws for CEO business investments, the Philippine, Vietnam, and Singapore economies are where around half of CEOs say they plan to raise investments during the next year.
“After a year of historically high foreign direct investment into developing Asian economies, APEC CEOs have become very sensitive to financial market signals and the likely impact on revenue growth. Nonetheless, they are still expanding into new APEC locations,” said Dennis Nally, chairman of PricewaterhouseCoopers International Ltd.
More of the surveyed point at expanded broadband access and increased participation in the digital economy as holding the most promise for their business from regional connectivity, ahead of regional trade projects or new infrastructure in underdeveloped areas of the region. They believe modernization through technology will be widespread in the Asia-Pacific region by 2020. For instance, 66% think it’s likely advances—such as robotics, Internet of Things or 3D printing—will transform manufacturing by 2020, and 63% expect a new wave of business spending to modernize operations.
APEC CEOs are optimistic on free trade. As regional integration proceeds on several fronts, they believe a free trade area in Asia-Pacific could be a reality by 2020. For more CEOs, the ASEAN Economic Community is the “mega regional” game changer, while there are also hopes that Trans-Pacific Partnership will boost exports and fuel regional growth.
Photo: Fabro Aro
