Confidence in revenue growth is at its highest level for three years among business leaders in 21 Asia-Pacific Economic Co-operation’s (APEC) economies, according to a new survey by PricewaterhouseCoopers (PwC).
About 37% of APEC CEOs are very confident of revenue growth during the next 12 months, up from 28% in 2016 despite trade policy uncertainty and related political tensions in many of the economies that make up APEC.
PwC surveyed over 1,400 business leaders with responsibility in each of the 21 APEC economies.
In the next year, a net 50% of businesses surveyed will increase their global investments (including those outside the APEC region), up from 43% last year, as APEC businesses increase their foothold and influence on the global economy.
Seventy-one percent (71%) of those surveyed who are raising investment will direct those increases into APEC economies in 2018, and 63% of all APEC CEOs expect their broader global footprint to expand over the next three years.
The biggest domestic investment winners will be Vietnam, Russia, the Philippines, Indonesia and Malaysia. The top APEC targets for business leaders’ overseas investment are Vietnam, China, Indonesia, the U.S., and Thailand. Some 89% of Malaysian CEOs and 86% of Vietnam CEOs expect to expand globally.
Bob Moritz, PwC global chairman, said, “Business leaders’ confidence suggests they are not waiting for the fog of uncertainty to clear to push ahead with investment plans. In the short term this will drive momentum for APEC, increasing its global influence and supporting deals activity with 71% of CEOs expecting to rely more on business partnerships/joint ventures in the future.
“The majority of business leaders are bullish for growth, and see APEC becoming more economically linked over time, with three quarters seeing slow current progress towards deepening economic integration. 31% of CEOs in the US say progress on free trade in Asia Pacific has stalled or reversed, compared to 18% across the region.”
In the survey, almost a quarter of APEC CEOs admit they experienced a more restrictive trade environment, particularly focused around employing foreign labor (23%) or in moving goods across borders (19%).
In the near term, 30% expect labor restrictions to increase, and a quarter expect barriers on moving goods to increase in the next 12 months. Half of CEOs in Singapore, one of the world’s global financial centers, admit they expect an increase in barriers to labor mobility in the next 12 months.
As a result, a majority of CEOs (71%) expect to rely more on business partnerships and joint ventures in response to changing trade environment, and 68% plan to increase business domestically, or in economies with bilateral ties.
The drive to perform on a regional level continues to increase, and transform the competitive landscape for business in the APEC economies. CEOs identified increased competition from leading regional businesses in APEC economies, and emerging economies for the third year in a row. Combined they now overtake competition from traditional developed economy multinationals.
Nineteen percent (19%) believe their biggest competitor in the next three to five years will be a multinational from an emerging economy, or regional leaders in APEC economies (22%). Almost a third (32%) believe developed nation multinationals are their biggest rival, down from 41% in 2014.
With confidence increasing, perceptions of the opportunities for innovation-driven growth have improved, but business leaders’ concern about their ability to secure the right skills to compete globally is increasing.
Automation is a key recurring theme in strategies for building the workforce of the future, with 58% automating certain functions, 40% investing in machine learning and emerging technologies, and 41% identifying workers who are skilled at using new automation tools.
For Association of Southeast Asian Nations (ASEAN) businesses, automation is high on the agenda as the key building block in their strategy to develop a digital workforce.
Moritz said: “APEC economies could be a test bed for the integration of automation with the workforce of tomorrow. Businesses know best what skills they need, and now public and private sectors need to work together to create practical ways to train, develop and access those skills.”
The PwC surveyed 1,412 APEC business leaders from May to July 2017. Respondents represent businesses that are investing, on average, in six APEC economies other than their own principal economy.
Photo: Jack Moreh
