02:29 (GMT +7) - Saturday 04/07/2020

Business

Businesses in good spirits

Released at: 08:23, 22/12/2018

Businesses in good spirits

Photo: Viet Tuan

Business confidence in Asia-Pacific remains high despite increasing trade tensions, the latest PwC study finds.

Business leaders across Asia-Pacific remain confident that their companies’ revenues will grow over the next 12 months despite increasing trade friction, according to PwC’s latest survey of 1,189 business leaders across the 21 Asia-Pacific Economic Cooperation (APEC) economies.

The survey found that 35 per cent of respondents were very confident about revenue growth, down slightly from 37 per cent a year ago, while a net 51 per cent plan to increase investment over the next year. PwC carried out the survey in the lead up to the APEC CEO Summit, which took place in November in Port Moresby, the capital of Papua New Guinea.

Business confidence in Vietnam

Business leaders in the US and Thailand were among the most confident, with 57 per cent and 56 per cent “very confident” about revenue growth, while respondents in China and Mexico - two of the largest trading partners with the US - showed below average confidence, at 25 per cent and 21 per cent.

In comparison, 33 per cent of respondents in Vietnam indicated that they are “very confident” about their companies’ short-term growth prospects, with another 48 per cent being “somewhat confident”. International trade is likely to continue being a source of growth for Vietnam-based firms, as 40 per cent expect an increase in revenue opportunities thanks to new bilateral trade agreements and 34 per cent anticipate such opportunities to arise from new multilateral agreements. 

In addition to being positive on revenue growth, a net 51 per cent of business leaders in APEC are planning to raise their levels of investment, up from 43 per cent two years ago. The biggest winners across APEC for foreign investment will be Vietnam, China, the US, Australia, and Thailand, with Vietnam holding the top position for the second consecutive year. 

“With major trade deals like the CPTPP, the EU-Vietnam FTA, and the ASEAN-Hong Kong FTA on the horizon, Vietnam has the potential to attract even more investment and generate new cross-border business opportunities,” said Ms. Dinh Thi Quynh Van, General Director of PwC Vietnam. “However, additional regulatory reforms, continued domestic investment, and improvements in manufacturing and labor standards are needed to fully capture the benefits from these and other trade agreements.”

Mr. Raymund Chao, Chairman of PwC China, commented on the general attitude towards trade in APEC, taking into account the recent imposition of further tariffs between the US and China. “While business leaders do not like uncertainty in any aspect of business, let alone flows of trade, they are learning to adapt to the new reality and finding ways to grow and thrive,” he said. “While around one-fifth of business leaders we spoke to had experienced new barriers to trade this year, the number of CEOs who are seeing new opportunities coming out of the new trade arrangements has doubled over last year. While there are winners and losers in any trade war, our research clearly shows that businesses are uncovering new paths to growth.”

Workforce development high on agenda

The market for employment is also looking positive, with 56 per cent of business leaders in APEC (also 56 per cent in Vietnam) creating more jobs and only 9 per cent (14 per cent in Vietnam) actively reducing headcounts as a direct impact of technology on their workforce.

However, the PwC survey showed that the right talent is not always readily available and business leaders are struggling to find the people that they need with the right skills and experience. The gap is felt acutely across science, technology, engineering and math (STEM) skills, with 65 per cent of APEC business leaders (76 per cent in Vietnam) stating that their governments need to do more to train STEM professionals and only 14 per cent (4 per cent in Vietnam) feeling their government is doing enough in this area. 

This sentiment is also reflected when business leaders were asked what could be done to make growth more inclusive for more people across APEC. The number one factor that business leaders identified was expanded access to high-quality education at all levels followed by improved transport.

“The issues of training and education are very clearly on the top of the agenda for business leaders in APEC, giving a clear message to heads of state meeting in Port Moresby about what more could be done for business to secure long-term success,” said Mr. Chao, who headed the PwC delegation at the APEC Leaders’ Week in Papua New Guinea.

Moving forward by going digital

APEC business leaders are also very well aware of the need to invest more in becoming digital. With the internet economy projected to reach over $200 billion (according to The e-Conomy SEA Spotlight 2017 report from Google and Temasek) in Southeast Asia alone by 2025, the top two investment priorities for business leaders are digital customer interactions and digital skills for their workforce. 

“When asked what policies are needed in order for Vietnam to advance in the digital economy, Vietnam-based CEOs ranked ‘improvements to the digital infrastructure’ at the top,” said Ms. Van. “While businesses need to determine their infrastructure requirements and communicate them, the government’s role is to understand these requirements and introduce policies and regulations for the sustainable development of digital infrastructure.”

Business leaders also know they need to do more when it comes to being digital. Only 15 per cent of business leaders describe their use of artificial intelligence (AI) as being highly competitive, while 33 per cent are not making use of AI at all. Those companies that describe themselves as highly competitive at AI are clear in what they need to do to build on their perceived lead: increase investment, build more capability in AI, and invest in local startups.

But while technology can provide part of the answer to sustainable growth, it is also presenting challenges in the new trade environment, with moving data across borders identified as the area where businesses have experienced the biggest increase in new barriers in the last year, at 20 per cent, up from 15 per cent in 2017.

“As APEC’s businesses become more digital and embrace new technologies such as AI, data flows will increasingly become the fuel that will drive global trade,” said Mr. Chao. “Dealing with concerns about increased barriers to data flows will remain a priority for business for some time.”

User comment (0)

Send comment