Download Focus on: ASEAN International Business Report

Focus on: ASEAN
International Business Report 2012 – Economy focus series
About this report
The ASEAN economy
This report looks at one of the fastest growing and
most dynamic regions in the world – Southeast Asia
– drawing on economic data from the International
Monetary Fund (IMF) and business sentiment data
from the Grant Thornton International Business
Report (IBR), a quarterly survey of 3,000 businesses
in 40 economies.
In 2011, the combined economies of ASEAN
accounted for 3.1% of global output. The largest
members are Indonesia, which accounts for 39% of
regional output, Thailand (16%), Malaysia (13%),
Singapore (12%) and the Philippines (10%).
Despite the slowdown in the global economy
as a result of the continuing sovereign debt crisis
in the eurozone, the region is expected to grow
robustly in the medium-term. In the period
2012-16, these economies are expected to expand
by 10% per annum on average, double the rate of
the global economy. This growth is expected to
account for 6.5% of total global growth over the
next five years, increasing the share of global
output of the ASEAN region to 3.9% in 2016.
The Association of Southeast Asian Nations
The Association of Southeast Asian Nations
(ASEAN) was established on 8 August 1967 by
Indonesia, Malaysia, the Philippines, Singapore and
Thailand. Brunei Darussalam, Vietnam, Laos PDR,
Myanmar and Cambodia have since joined the
group, the aims of which includethe acceleration of
economic growth and the expansion of trade.
FIGURE 1: GROWTH RATES IN THE ASEAN REGION
GDP GROWTH (%)
6.0 7.4
Myanmar
8.4 9.3
Laos
5.6 8.9
Vietnam
5.5 7.0
4.2 7.1
Thailand
Philippines
6.2 10.3
Cambodia
4.4 8.1
Malaysia
3.2 0.4
Brunei Darussalem
2.7 4.5
Singapore
2012
6.1 14.5
2012-16
Indonesia
SOURCE: IMF 2012
International Business Report results
FIGURE 2: STAYING POSITIVE
NET PERCENTAGE OF BUSINESSES INDICATING OPTIMISM OVER PESSIMISM (NEXT 12 MONTHS)
60
50
40
30
20
10
0
Q2: 2012
Q1: 2012
Q4: 2011
Q3: 2011
Q2: 2011
Q1: 2011
Q4: 2010
Asia Pacific (excl. Japan)
33
29
23
25
49
60
50
ASEAN
23
27
0
52
50
61
57
Global
23
19
0
3
31
34
23
SOURCE: GRANT THORNTON IBR 2012
FIGURE 3: BUSINESS OPERATIONS
NET PERCENTAGE OF BUSINESSES INDICATING AN INCREASE (NEXT 12 MONTHS)
86
80
78
70
70
60
59
53
50
51
52
40
30
48
50
46
42
38
44
38
40
34
27
20
20
19
22
20
19
14
12
10
0
Vietnam
Revenue
Profitability
APAC ex. Japan
Singapore
Global
ASEAN
Thailand
Malaysia
Exports
SOURCE: GRANT THORNTON IBR 2012
Business confidence
Revenue & profit
Business optimism slipped slightly in the ASEAN1
region in Q2-2012, falling from net 27% to net
23%. Globally, business confidence picked up
slightly to net 23%, up from net 19% in Q1-2012
on the back of improvements in mainland China
and the United States.
Within the region there are some significant
variations in business confidence. Businesses in the
Philippines remain very optimistic about their
economy over the next 12 months (90%), behind
only Peru. Businesses in Malaysia are much less
confident (0%), with Singapore (12%), Thailand
and Vietnam (both 8%) also lower down.
Net 51% of ASEAN businesses expect to see
revenues rise over the next 12 months, very similar
to the global average (net 52%), but well below the
APAC (ex.Japan) figure of net 70%. Businesses in
Vietnam are the most positive about seeing revenues
rise (86%), and those in the Philippines
the least (44%).
Businesses in Singapore are not expecting huge
rises in profits over the next 12 months. Just 19%
expect to see profitability increase, compared with
78% in Vietnam and the ASEAN average of 42%.
Businesses in Malaysia are the most positive about
increasing exports (34%).
1
Businesses in five ASEAN economies are interviewed in IBR: Malaysia, the
Philippines, Singapore, Thailand, Vietnam
Philippines
“The Philippines has made significant gains in improving its standing
not only in the ASEAN community, but globally as well. The
government’s prudent fiscal management has paved the way for a
succession of credit rating upgrades that are expected to attract even
more foreign direct investments into the country. Local business leaders
feel this momentum, so we expect this upbeat atmosphere to continue.”
MARIVIC C. ESPAÑO
PUNONGBAYAN & ARAULLO GRANT THORNTON, PHILIPPINES
FIGURE 4: HIRING WORKERS
NET PERCENTAGE OF BUSINESSES INDICATING AN INCREASE (PAST 12 MONTHS)
60
50
50
48
44
40
40
42
40
36
33
30
27
27
25
26
20
20
14
22
12
10
0
Malaysia
Q2: 2012
Philippines
Thailand
ASEAN
Singapore
Global
APAC ex. Japan
Vietnam
Q1: 2012
SOURCE: GRANT THORNTON IBR 2012
Employment
The proportion of businesses in the ASEAN region
expanding their workforce climbed to net 40% in
Q2-2012, up from net 27% three months previously.
The largest rise was observed in Malaysia, where
hiring climbed from net 20% in Q1-2012 to net
50% in Q2-2012.
Prospects for jobs creation are also more positive
in the ASEAN region than elsewhere. Globally, net
29% of businesses plan to hire more workers over
the next 12 months, rising to net 31% in APAC
(ex.Japan) and net 35% in ASEAN. In Thailand, net
42% of businesses plan to expand their workforces
in the coming months.
Investment
Despite huge uncertainty in the global economy, the
results suggests that ASEAN businesses are far from
reluctant to invest in the future growth of their
operations. Net 24% expect to increase investment
in new buildings over the next 12 months, and net
39% are planning to increase investment in plant &
machinery, both above the global average.
A further net 28% plan to increase R&D spend,
although this is well below the APAC (ex.Japan)
figure of net 50%. Within ASEAN, 34% of
businesses in Thailand are planning investment in
R&D over the next 12 months, followed by Vietnam
(32%) and the Philippines (30%).
FIGURE 5: INVESTING IN R&D
NET PERCENTAGE OF BUSINESSES INDICATING AN INCREASE (NEXT 12 MONTHS)
APAC ex. Japan
50
Thailand
34
Vietnam
32
Philippines
30
ASEAN
28
Malaysia
28
Global
25
Singapore
16
SOURCE: GRANT THORNTON IBR 2012
“Recent measures to boost access to finance for
small and medium sized businesses is welcome.
However, whilst these pro-growth measures could
run the risk of reintroducing destabilising rates
of inflation this outcome is considered unlikely.”
KEN ATKINSON
GRANT THORNTON VIETNAM
FIGURE 6: INFLATIONARY PRESSURES
NET PERCENTAGE OF BUSINESSES INDICATING AN INCREASE (NEXT 12 MONTHS)
80
80
78
79
75
70
73
68
66
70
60
50
40
30
30
24
24
Vietnam
Global
20
20
31
33
37
38
10
0
Malaysia
Selling prices
Philippines
ASEAN
APAC ex. Japan
Singapore
Thailand
Increase salaries
SOURCE: GRANT THORNTON IBR 2012
Inflation
Inflationary pressures look set to be slightly
higher in the ASEAN region than globally over
the next 12 months. Net 31% of ASEAN businesses
plan to increase selling prices, and a further 75%
plan to raise employee salaries at least in line with
inflation. Businesses in Thailand (38%) and
Singapore (37%) are planning the biggest price
increases.
Meanwhile, workers in the Philippines (80%),
Singapore (79%) and Malaysia (78%) are most
likely to receive a pay rise over the next 12 months.
Those in Vietnam (66%) are least likely although
this is only marginally below the global average
(68%).
Constraints
A lack of skilled workers is the key constraint on
growth for businesses in the ASEAN region, cited
by 43% of businesses. It is also cited as a major
constraint by businesses in the wider APAC
(ex.Japan) region (37%), well above the global
average (28%). This lack of talent is a particular
problem for businesses in Singapore (53%),
Malaysia and Vietnam (both 46%).
FIGURE 7: LACK OF SKILLED WORKERS
NET PERCENTAGE OF BUSINESSES CITING AS A MAJOR CONSTRAINT ON GROWTH
Singapore
53
Vietnam
46
Malaysia
46
Thailand
44
ASEAN
43
APAC ex. Japan
37
Global
28
Philippines
24
SOURCE: GRANT THORNTON IBR 2012
The cost of finance is also cited as a major
growth constraint by ASEAN businesses (32%), led
by Vietnam (50%). Globally, regulations and red
tape emerges as the top growth constraint (34%),
but only Thailand in the ASEAN region comes in
above this figure (40%). In Vietnam, the slowdown
in global trade is a particular concern – shortage of
orders/reduced demand emerges as the top
constraint (56%).
The ASEAN Economic
Community (AEC)
The ASEAN nations are committed to
regional economic integration by 2015, in the
form of the ASEAN Economic Community
(AEC), its key aims being to develop:
• a single market and production base
• a highly competitive economic region
• a region of equitable economic
development
• a region fully integrated into the global
economy.
Business leaders in Singapore, Thailand and
Vietnam were asked for their views on the
creation of the AEC, and which other
countries and regions they would like their
governments to develop closer trade links with.
60% of business leaders in these countries
are supportive of efforts to develop the AEC,
with just 7% unsupportive. The greatest
perceived benefit of the AEC is greater
integration into the global economy (62%).
This is followed by the elimination of tariffs,
streamlined customs clearance procedure (both
58%) and easier movement of capital (56%).
And a further 51% believe the AEC would
help with labour mobility, helping ASEAN
businesses overcome the issues they have in
finding skilled workers. Indeed, 78% of
businesses in Singapore, where businesses are
struggling to find talent, believe easier movement
of workers will be a benefit of the AEC.
Perhaps unsurprisingly given its location,
businesses in the ASEAN region would like
their governments to improve trade relations
most with China (58%). A further 26% want
better trade relations with India and 54%
mention other APAC economies. The United
States (34%) and Europe (33%) also remain
attractive for businesses in the region despite
their slower growing economies.
FIGURE 8: KEY BENEFITS OF THE ASEAN ECONOMIC COMMUNITY (AEC)
NET PERCENTAGE OF BUSINESSES
Greater integration into the
global economy
62
Elimination of tariffs
58
Streamlined customs clearance
procedure
58
Easier movement of capital
56
Easier movement of workers
51
Make the region more attractive
to foreign direct investment
51
Greater combined economic
& political power
41
SOURCE: GRANT THORNTON IBR 2012
The Grant Thornton International Business Report (IBR) is a quarterly survey of over 3,000 senior executives in businesses
all over the world. Launched in 1992 in nine European countries the report now surveys more than 12,000 business leaders in
40 economies on an annual basis providing insights on the economic and commercial issues affecting the global economy.
In May/June 2012, 250 businesses from the ASEAN region were surveyed across all industry sectors. These businesses ranged
from small to large in size with total employment of between 20 and 599.
To find out more about IBR and to obtain copies of reports and summaries please visit: www.internationalbusinessreport.com.
and to access the full results go to www.internationalbusinessreport.com/results
Participating economies
Malaysia
Argentina
Mexico
Armenia
Netherlands
Australia
New Zealand
Belgium
Peru
Botswana
Philippines
Brazil
Poland
Canada
Russia
Chile
Mainland China Singapore
South Africa
Denmark
Spain
Finland
Sweden
France
Switzerland
Georgia
Taiwan
Germany
Thailand
Greece
Turkey
Hong Kong
United Arab Emirates
India
United Kingdom
Ireland
United States
Italy
Vietnam
Japan
Contacts
Global research
Grant Thornton International
Dominic King
T +44 (0)207 391 9537
E [email protected]
Malaysia
SJ Grant Thornton
Dato’ Narendra Jasani
T +60 (0) 3 2692 4022
E [email protected]
Philippines
Punongbayan & Araullo
Marivic C. Españo
T +63 2 886 5511
E [email protected]
www.gti.org
www.internationalbusinessreport.com
© 2012 Grant Thornton International Ltd. All rights reserved.
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Singapore
Foo Kon Tan Grant Thornton
Aw Eng Hai
T +65 6331 2308
E [email protected]
Thailand
Grant Thornton
Ian Pascoe
T +66 (0)22 05 8100
E [email protected]
Vietnam
Grant Thornton Vietnam
Ken Atkinson
T +84 8 3910 9100
E [email protected]