Download Vote of confidence in the promise of ASEAN www.pwc.com/apec The ASEAN cut

PwC 2015 APEC CEO Survey
The ASEAN cut
Vote of confidence in the
promise of ASEAN
www.pwc.com/apec
Preface
The ASEAN cut of the PwC 2015 APEC
CEO Survey summarises the measures
of business confidence and analysis of
notable trends, risks and opportunities
from the perspectives of executives
based in the 7 APEC economies which
are also member states of ASEAN, i.e.
Brunei Darussalam, Indonesia, Malaysia,
The Philippines, Singapore, Thailand
and Viet Nam. This report highlights a
number of key findings for the ASEAN
region, and we hope that the information
contained in this report stimulates
discussion and provides clarity on
newer avenues for engagement with
the private sector, public sector and
policymakers in the ASEAN region.
In this report we have presented
descriptive key findings in our 2015
survey for the 7 APEC economies in
ASEAN. It covers a variety of indicators,
measuring levels of business confidence,
allocation of business investments,
estimation of the demand for services,
effects of possible disruptive scenarios,
outlooks of the business environment
in 2020, and factors that foster
connectivity and inclusive growth.
Where possible, comparisons with
2013 and 2014 have been presented.
The ASEAN promise remains attractive
to business leaders. Following the
establishment of the ASEAN Economic
Community (AEC) in December 2015,
the full implementation of strategic
measures for the AEC in the coming
years will integrate ASEAN as a single
market and product base, making the
region highly competitive regionally
and globally. 60% of the business
leaders in 7 APEC economies in ASEAN
identified this as the key game changer
for their organisations. Their belief
in the ASEAN promise is also seen in
their investment plans for the next 12
months, which sees 6 out of 7 APEC
economies in ASEAN expecting increases
in investments from ASEAN compared
to the views a year ago. However, it
is worth noting that executives in the
region are less optimistic on reduction
of trade barriers and red tapes in the
wider APEC business environment, and
any escalation of geopolitical tension
in the region will certainly cause
them to be on edge about the future
of their businesses and investments.
Despite the recent market volatility and
uncertainties in the growth outlook in
major economies China and the United
States, business confidence in revenue
growth remained high among business
leaders in the 7 APEC economies
in ASEAN compared to their peers
from the rest of APEC. 79% of them
are confident of the prospects for the
12-month timeframe while 94% says the
same for the 3-5 year horizon. Riding
on their confidence, a large majority of
business leaders plan to increase their
organisations’ headcount across the Asia
Pacific in the coming years, and demand
more advanced computer systems and
technologies for their operations and
participation in the digital economy.
Vote of confidence in the promise of ASEAN |
1
Key findings
D
| PwC 2015 APEC CEO Survey – The ASEAN cut
1. Confidence in revenue growth consistently
higher in the 7 APEC economies in ASEAN
than the rest of APEC
Business confidence in revenue growth over the next 12 months remained high among business leaders in the 7 APEC
economies in ASEAN (79%) compared to those from the rest of APEC (61%), despite the market volatility in the recent
months and uncertainties in the growth outlook in China and the United States. About 94% of business leaders are
confident about the prospect for revenue growth in the 7 APEC economies in ASEAN over the next 3-5 years, with
Confidence in revenue growth consistently higher in the 7 APEC economies in ASEAN
insignificant differences compared to the levels of confidence recorded in our 2013 and 2014 surveys.
than the rest of APEC
Confidence in revenue growth in the
7 APEC economies in ASEAN versus the
rest of APEC over the next 12 months
Confidence in revenue growth in the
7 APEC economies in ASEAN versus the
rest of APEC over the next 3-5 years
94%
93%
95%
94%
86%
79%
88%
89%
95%
90%
80%
61%
2013
2014
2015
2013
2014
7 APEC economies in ASEAN
2015
Rest of APEC
Vote of confidence in the promise of ASEAN |
3
2. APEC economies remain attractive to
business leaders in the 7 APEC economies
in ASEAN
APEC economies remain attractive to business leaders in the 7 APEC economies in
Business leaders in the 7 APEC economies in ASEAN are more inclined to increase their investments globally in the
ASEAN
next 12 months (58%) compared to their peers in the rest of APEC economies (51%). They also plan to allocate a larger
proportion of the increase to APEC’s 21 economies than the rest of the world.
Proportion of the increase in business
investments in the next 12 months by
business leaders in the
7 APEC economies in ASEAN
27%
73%
Rest of
the world
APEC's 21
economies
Proportion of the increase in business
investments in the next 12 months by
business leaders from the rest of APEC
34%
66%
Rest of
the world
APEC's 21
economies
3. Business leaders in the 7 APEC economies in
ASEAN plan to increase their investments
more within ASEAN
For business leaders in the 7 APEC economies in ASEAN, ASEAN remains the region of choice to increase their
investments
the next
12 months.
After
comparing with
the results
fromto
ourincrease
2014 survey,
6 out
of 7 APEC economies
Business over
leaders
in the
7 APEC
economies
in ASEAN
plan
their
investments
in
ASEAN
will
see
increases
in
the
proportion
of
business
leaders
planning
to
increase
their
investments
in 2016. Outside
more within ASEAN
ASEAN, China and the United States will see the most increases in investments in the coming year.
% investments will increase over the next 12 months in…
49%
43%
44%
41%
37%
22%
The
Philippines
4
Indonesia
Viet Nam
| PwC 2015 APEC CEO Survey – The ASEAN cut
33%
26%
Singapore
ASEAN member states
2014
2015
Non-ASEAN member states
2014
2015
33%
28%
22%
21%
People's
Republic
of China
Malaysia
27%
18%
The United
States
21%
24%
Thailand
4. Scientific research and development less
demanded among businesses in the 7 APEC
economies in ASEAN
Business
leaders research
in the 7 APEC
in ASEAN
the demand
in their
organisations
for7computer
Scientific
andeconomies
development
lessexpect
demanded
among
businesses
in the
APEC systems
(82%),
management
and
technical
consulting
services
(79%),
risk
reduction
services
(79%)
and
legal
services (78%)
economies in ASEAN compared to the rest of APEC
to grow over the next 3-5 years.
Demand for services over the next 3-5 years in the 7 APEC economies in ASEAN
Computer systems
(e.g. design, integration)
51.5%
Management and technical
consulting
58.8%
Risk reduction
55.8%
Legal
63.5%
Financial services
52.3%
Accounting, auditing and
book-keeping
60.2%
Tax
56.8%
Logistics and supply chain
43.2%
Advertising
49.2%
Construction and related
services
32.2%
Scientific research and
development
33.5%
15.7%
49.2%
Architecture and
engineering
32.8%
14.1%
46.9%
To some extent
30.7%
82.2%
20.6%
23.6%
14.1%
22.0%
12.4%
14.5%
22.4%
9.9%
18.6%
79.4%
79.4%
77.6%
74.3%
72.6%
71.3%
65.6%
59.1%
50.8%
To a great extent
However, after comparing the demand by business leaders in the 7 APEC economies in ASEAN with their peers from
the rest
of APEC, research
it is worth noting
that only 49%less
of them
expect theamong
demandbusinesses
for scientific in
research
and development
Scientific
and development
demanded
the 7 APEC
services
to
grow
versus
70%
of
the
business
leaders
from
the
rest
of
APEC.
This
difference
between
the
7 APEC
economies in ASEAN compared to the rest of APEC
economies in ASEAN and the rest of APEC is the largest among the list of services we surveyed this year.
The 7 APEC economies
in ASEAN
33.5%
Rest of APEC
41.0%
To some extent
15.7%
28.6%
49.2%
69.6%
To a great extent
Vote of confidence in the promise of ASEAN |
5
5. Businesses in the 7 APEC economies in
ASEAN look set to expand in the coming
years, riding on their leaders’ strong
confidence in talent acquisition
79% of business leaders in the 7 APEC economies in ASEAN expect their organisations’ headcount in the Asia Pacific
region to increase over the next 3-5 years, higher than their peers from the rest of APEC (69%). A large majority of them
Businesses
in the 7inAPEC
economies
in ASEAN
look
set toskills
expand
the coming
years,
(79%)
remain confident
securing
the right talents
with the
required
in theinregion
to perform
globally.
riding on their leaders’ strong confidence in talent acquisition
Expected changes to organisations' headcount
in the Asia Pacific over the next 3-5 years
4.5%
8.6%
The 7 APEC economies
in ASEAN
41.3%
Rest of APEC
36.5%
Decrease
22.7%
21.8%
14.5% 78.5%
10.8%
69.1%
Increase by less than 5% annually
Increase by 5-8% annually
Increase by
more
than
annuallyin the coming years,
Businesses in the 7 APEC economies in ASEAN
look
set
to8%
expand
riding on their leaders’ strong confidence in talent acquisition
Confidence about securing the talent and skills
needed to perform globally
79%
The 7 APEC
economies
in ASEAN
6
| PwC 2015 APEC CEO Survey – The ASEAN cut
80%
Rest of APEC
6. Most business leaders in the 7 APEC
economies in ASEAN fear an escalation of
geopolitical tension in the region which will
adversely affect their organisations
An overwhelming majority of business leaders in the 7 APEC economies in ASEAN (91%) feel that an escalation of
geopolitical tension in the region would adversely affect their organisations. Any occurrence of a cyber-attack on
Most business leaders in the 7 APEC economies in ASEAN fear an escalation of geopolitical tension in the
critical infrastructure in their economies or a food safety crisis will also cause them on edge more than their peers
region which will adversely affect their organisations
from the rest of APEC, among many possible disruptors that may affect their organisations.
21.0%
29.2%
Escalation of geopolitical tension
in the region
Major disruption of Internet or a
cyber-attack on critical infrastructure
in your principal economy
Food safety crisis in your principal
economy
The 7 APEC
economies in ASEAN
70.2%
56.9%
50.0%
43.7%
35.3%
29.1%
19.3%
14.8%
To a great extent
To some extent
47.9%
34.6%
Rest of APEC
91.2%
86.1%
85.3%
72.8%
67.2%
49.4%
To a great extent
To some extent
Vote of confidence in the promise of ASEAN |
7
7. More needs to be done to remove the
barriers and restrictions to facilitate
business growth and trade in the Asia
Pacific
Business leaders in the 7 APEC economies in ASEAN are not as optimistic as their peers from the rest of APEC on the
likelihood of fewer barriers and restrictions to facilitate business growth and trade in the Asia Pacific by 2020. The
ongoing negotiations to promote free trade and economic integration between economies and trade blocs did not seem
to impress as many business leaders in the 7 APEC economies in ASEAN, a signal to governments that they do not
foresee the red tapes and policy hindrances which still persist in limiting the growth possibilities in APEC economies
are going away any time soon.
On the prospect of the Chinese yuan becoming a global and viable reserve currency by 2020, less proportion of
business leaders in the 7 APEC economies in ASEAN (26%) felt that it would be likely compared to their peers from the
rest of APEC (46%). Although the International Monetary Fund (IMF) has announced the inclusion of the yuan in the
On theofprospect
the removal
of barriers
and restrictions
to facilitate
business
growth
basket
its Special of
Drawing
Rights (SDR)
by September
2016, it remains
to be seen whether
more
central banks will
and trade
inthe
theyuan
AsiainPacific,
business
leaders
in the
7 APEC
economies
in ASEAN
begin
holding
their foreign
exchange
reserves,
as well
as the pace
of adoption
to changeare
the composition of
not as
optimistic as their peers from the rest of APEC
their
reserves.
Likelihood of scenarios about the business environment in APEC
Establishment of Free Trade Area of the Asia Pacific (FTAAP)
57%
61%
Fewer barriers to procuring a range of services from across the region
56%
59%
Fewer barriers to skilled people moving across APEC economies
51%
54%
Fewer barriers to importing or exporting goods across the region
50%
67%
Fewer restrictions on foreign business investment
46%
60%
China's yuan becomes a global and viable reserve currency
26%
The 7 APEC economies in ASEAN
46%
8
| PwC 2015 APEC CEO Survey – The ASEAN cut
Rest of APEC
8. Expansion of digital infrastructure and
trade facilitation more preferred in
fostering regional connectivity by business
leaders in the 7 APEC economies in ASEAN
31% of business leaders in the 7 APEC economies in ASEAN feel that expanding broadband access and increasing
participation in the digital economy will provide the greatest opportunity for their organisations. Agreements to
Expansion
of digital
trade
facilitation
more preferred
fostering
facilitate
trade and
remove infrastructure
trade barriers andand
tariffs
are also
more preferred,
compared tointhe
lower preference for
regional
connectivity
by
business
leaders
in
the
7
APEC
economies
in
ASEAN
the development of land and maritime transport corridors.
Frequency of being ranked first
15%
15%
Development of
new land transport
corridors
31%
27%
Expanded broadband
access and increased
participation in the
digital economy
27% 25%
23%
16%
Trade Facilitation
Agreement (TFA)
Regional or bilateral
trade agreements
6%
17%
Development of
maritime corridors
The 7 APEC economies in ASEAN
Rest of APEC
Vote of confidence in the promise of ASEAN |
9
9. If fully implemented, the ASEAN Economic
Community will be the ‘mega regional’ game
changer for business leaders in the 7 APEC
economies in ASEAN
The ASEAN Economic Community (AEC) will establish ASEAN as a single market and production base, which will
provide abundant opportunities for businesses to grow and expand across ASEAN member states. It is therefore
not surprising that majority of business leaders in the 7 APEC economies in ASEAN (60%) identified the full
implementation of AEC as the greatest game changer for their organisations. The preference for the direct benefits of
AEC in trade and movement of talents trumps that of the wider but less direct promise of the Regional Comprehensive
If fully implemented,
the ASEAN
will be(FTA)
the ‘mega
regional’
game
Economic
Partnership (RCEP),
which is Economic
the proposedCommunity
free trade agreement
between
ASEAN and
the six states
changer
for business
leaders
in the
APEC economies
in ASEAN
that
the regional
bloc has existing
FTAs
with7(Australia,
People’s Republic
of China, India, Japan, Republic of Korea and
New Zealand).
60%
7%
13%
24%
29%
ASEAN
Economic
Community
(AEC)
Regional
Comprehensive
Economic
Partnership
(RCEP)
Trans-Pacific
Partnership
(TPP)
4%
1%
3%
Bilateral trade
agreements
16%
12%
Pacific Alliance
(Chile, Colombia,
Mexico, and
Peru)
The 7 APEC economies in ASEAN
Rest of APEC
10
| PwC 2015 APEC CEO Survey – The ASEAN cut
10. Expanding access to high-quality education
is the most direct enabler to promote
inclusive growth in the region
Consistent with the view from the rest of APEC, a large majority of business leaders in the 7 APEC economies in
ASEAN (84%) believe that the key enabler to promote inclusive growth and reduce inequality is expanding access
to high-quality education at all levels. 4 out of 10 business leaders consider it as the best way to enable people who
are currently on the margins of the economy to participate in and benefit from growth and trade in APEC.
Expanding
high-quality
education
most
direct
enablerthe
toimprovement
promote of
Close
to 80% ofaccess
businessto
leaders
in the 7 APEC
economiesisinthe
ASEAN
have
also identified
inclusive
growth
in
the
7
APEC
economies
in
ASEAN
transportation infrastructure as another key enabler to promote inclusive growth in the region.
84%
Expanded access to high-quality
education at all levels
73%
79%
Improved transport
(roads, rail, ferries, airports)
66%
55%
Expanded access to healthcare
45%
Greater economic incentives for savings
and access to financial services
48%
More reliable access to power and
electricity
47%
49%
More stable food prices
Raising minimum wages
More affordable high-speed internet
access
Improved access to water and sanitation
Expanded worker protections
(overtime pay, maternity leave, etc)
60%
40%
28%
39%
35%
37%
48%
32%
38%
29%
49%
The 7 APEC economies in ASEAN
Rest of APEC
Top ranked #1 option in the
7 APEC economies in ASEAN
Vote of confidence in the promise of ASEAN |
11
About the 7 APEC economies in ASEAN:
ASEAN Member
States
Population1
GDP (USD)2
Percentages
Brunei Darussalam
417,394
$ 17,256,754,269
Indonesia
254,454,778
$ 888,538,201,025
The 7 APEC economies in ASEAN
represent:
Malaysia
29,901,997
$ 326,933,043,801
• 87.9% of total ASEAN population
The Philippines
99,138,690
$ 284,582,023,121
Singapore
5,469,700
$ 307,871,907,186
Thailand
67,725,979
$ 373,804,134,912
Viet Nam
90,730,000
$ 186,204,652,922
Sub-Total:
547,838,538
$ 2,385,190,717,236
Cambodia
15,328,136
$ 16,709,432,403
Lao PDR
6,689,300
$ 11,771,725,798
Myanmar
53,437,159
$ 64,330,038,665
APEC
2,828,142,431
$ 44,045,128,984,835
ASEAN
623,293,133
$ 2,478,001,914,102
APEC member
economies
Non-APEC member
economies
• 96.3% of total ASEAN GDP
• 19.4% of total APEC population
• 5.4% of total APEC GDP
• The 7 ASEAN Member States which are part of APEC represent more than 96% of total GDP produced in the
ASEAN region. The top 6 ASEAN economies are all APEC economies. Business growth and performance in these
economies will have direct impact on the trajectory of the ASEAN regional economy as a whole. Level of confidence
among the business leaders in these economies will also affect revenue and investment outlook for ASEAN.
• The total GDP produced in the entire ASEAN region are approximately US$ 2,478 billion, ranked just after the GDP of the
United States, People’s Republic of China, and Japan.
• The total GDP produced in the 7 APEC economies in ASEAN are approximately US$2,385 billion, also ranked just after the
GDP of the United States, People’s Republic of China, and Japan.
The population numbers were extracted and calculated based on the statistics available on the website:
The World Bank Group (2015): Data > Population, total, via http://data.worldbank.org/indicator/SP.POP.TOTL.
All population numbers are for 2014.
1
2
12
The GDP numbers were extracted and calculated based on the statistics in the following online publication:
The World Bank Group, 18 September 2015: Gross domestic product 2014. World Development Indicators database, World Bank, 18 September 2015. Access via http://databank.worldbank.org/
data/download/GDP.pdf. All GDP figures are for 2014.
| PwC 2015 APEC CEO Survey – The ASEAN cut
Profile of respondents
The PwC 2015 APEC CEO Survey was implemented between June and August 2015. This is an enterprise survey and
a mix of quantitative and qualitative methods were used. The sample size for the 7 APEC economies in ASEAN is 262
(Brunei Darussalam 1, Indonesia 44, Malaysia 7, The Philippines 110, Singapore 55, Thailand 6, Viet Nam 39), and the
Profile
respondents
from
the
7 APEC
economies
in ASEAN (cont’d)
distributions
of theofsample
by sector
and
firm
revenue
are as follow:
15%
Banking & Capital markets
8%
Business &
Professional Services
41%
Others
4%
Construction &
Civil Engineering
Sector distribution
of the ASEAN
sample
6%
Consumer goods
9%
Energy (incl. oil/gas)
4%
4%
Transportation
& Logistics
Industrial manufacturing
4%
5%
Retail & Distributive wholesale
Technology
Profile of respondents from the 7 APEC economies in ASEAN (cont’d)
3%
16%
Don’t know
US$10
billion or greater
32%
Less than US$100 million
8%
US$5 billion
to less than US$10 billion
6%
US$2.5 billion
to less than US$5 billion
Distribution of
sample by
revenue in the
last fiscal year
10%
10%
US$1 billion
to less than US$2.5 billion
US$100 million to
less than US$250 million
3%
US$750 million
to less than US$1 billion
5%
US$500 million
to less than
US$750 million
7%
US$250 million
to less than US$500 million
Vote of confidence in the promise of ASEAN |
13
www.pwc.com/apec
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 208,000
people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us
at www.pwc.com.
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not
act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or
implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PwC does
not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance
on the information contained in this publication or for any decision based on it.
© 2015 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity.
Please see www.pwc.com/structure for further details.