Confidence in revenue growth among business leaders from the 21 Asia-Pacific Economic Cooperation (APEC) member economies currently stands at its highest level in three years.
Results of a PwC survey show that 37 percent of APEC CEOs are very confident of revenue growth during the next 12 months, up from 28 percent in 2016, despite uncertainty in trade policy and related political tensions in many of the group’s member economies.
PwC surveyed more than 1,400 business leaders with responsibility in each of the 21 APEC economies in the runup to the annual APEC CEO Summit held last week in Vietnam.
In the next year, a net 50 percent of businesses surveyed by PwC will increase their global investments (including those outside the APEC region), up from 43 percent in the preceding year, as APEC businesses increase their foothold and influence on the global economy.
Seventy-one percent of those surveyed – those who are raising investment – will be pouring the increases into APEC economies in 2018, and 63 percent 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. Vietnam, China, Indonesia, the US and Thailand are the top APEC targets for business leaders’ overseas investment. Those who expect to expand globally comprise 89 percent of the Malaysian CEOs surveyed and 86 percent of Vietnam CEOs.
Bob Moritz, PwC global chairman, says, “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 percent of CEOs expecting to rely more on business partnerships/joint ventures in the future.
“CEOs’ concerns about restrictive trade conditions, particularly the movement of labor and goods, have to be a key area of discussion for APEC leaders at the upcoming summit as it directly impacts competition and growth. Thirty percent of business leaders want APEC, as a forum, to take the lead on exploring labor mobility solutions.
“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 toward deepening economic integration. Of the CEOs in the US, 31 percent say progress on free trade in Asia-Pacific has stalled or reversed, compared with 18 percent across the region.”
As shown by the survey results, almost a quarter of APEC CEOs admit they experienced a more restrictive trade environment, particularly focused around employing foreign labor (23 percent) or in moving goods across borders (19 percent).
In the near term, 30 percent expect labor restrictions to intensify, and a quarter of the respondents expect barriers on moving goods to increase in the next 12 months. Half of the 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 percent) expect to rely more on business partnerships and joint ventures in response to a changing trade environment, and 68 percent plan to expand or boost their business domestically, or in economies with which their countries have bilateral ties.
The drive to perform on a regional level continues to intensify, 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 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 percent). Almost a third (32 percent) believe developed nation multinationals are their biggest rival, down from 41 percent 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 percent automating certain functions, 40 percent investing in machine learning and emerging technologies, and 41 percent identifying workers that are skilled at using new automation tools.
For Asean businesses, automation is high on the agenda as a key building block in their strategy to develop a digital workforce.
Bob Moritz, PwC Global Chairman, comments: “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.”
Catherine H. Santos is an Assurance partner, and Assurance Transformation partner, of Isla Lipana & Co., a member firm of the PwC network. For more information, please email email@example.com. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.