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FRIDAY, December 08, 2023

Business mood bright across region

Business mood bright across region
FRIDAY, May 18, 2018

TWENTY years after the Asian financial crisis brought many Southeast Asian nations to their knees, business sentiment is buoyant in a region that functions as one of the primary engines of global growth, according to a survey of chief executives.

Around 84 per cent of executives surveyed across six Asean states – Thailand, Indonesia, Malaysia, Myanmar, the Philippines and Vietnam – had positive or very positive expectations for local business conditions in the coming 12 months, while 72 per cent were likely or very likely to make a significant capital investment.
The upbeat results emerged from the inaugural Business Barometer: Oxford Business Group in Asean CEO Survey.
They reflect Asia’s emergence as the main driver of global economic expansion. The IMF forecasts the GDP of the Asean-5 – defined by the fund as Indonesia, Malaysia, the Philippines, Thailand and Vietnam – to grow by 5.4 per cent and 5.3 per cent in 2018 and 2019, respectively. It projects that emerging and developing Asia will expand by 6.5 per cent annually over the same period, making it the fastest-growing geographic grouping by some distance.
“This is the first time we have collated our proprietary data from individual Asean markets covered by OBG into a collective sample, allowing us to provide commentary on regional investor sentiment, as well as observe differing national perceptions within the bloc,” Oxford Business Group (OBG) said. 
As Asean’s main trade partner and an increasingly important source of foreign direct investment and inbound tourists, China’s growing influence is reflected by the fact that 33 per cent of CEOs surveyed across the six countries cited a slowdown in Chinese demand as the top external factor that could impact their national economies in the short to medium term.
China’s trade with Asean grew 13.8 per cent to hit a record high of US$514.8 billion in 2017, according to official Chinese figures. While its share of global trade in the mid-1970s was just 0.5 per cent, it is now the world’s largest exporter and the top trading partner for all six countries covered in our survey. 
It notes that the two countries in the survey with the greatest concern about a potential slowdown in Chinese demand – Thailand and Indonesia – have been cited in various studies as among the Asean members most vulnerable to China’s economic rebalancing towards consumption as the main growth driver. Thailand’s vulnerability stems from its particularly close trade linkages and Indonesia’s from being a net commodities exporter.
With the exception of Singapore, no Asean country features in the top echelons of respected global indicators on national business environments or competitiveness.
Overall, 47 per cent of respondents said transparency in their market was high or very high relative to the region, while 41 per cent said it was low or very low. 
This varied picture was replicated on the matter of tax competitiveness, with half of the respondents saying their country’s tax environment was either uncompetitive or very uncompetitive on a global scale, while 41 per cent said it was competitive or very competitive. CEOs from Malaysia, Vietnam and Thailand were more positive about their respective tax environments.
Further disparities can be observed in regard to access to credit, with 55 per cent saying it is either easy or very easy, and 40 per cent saying it is difficult or very difficult, the survey found. 
Perhaps what this mixed picture of the business environment demonstrates above all else is that despite ongoing efforts towards the harmonisation of certain laws, standards, regulations and practices across the bloc, significant development disparities and competing fiscal regimes remain obstacles to the smooth integration of the Asean Economic Community (AEC), which by 2025 aims to create a cohesive single market and production base that promotes “shared prosperity” among all members.
On education systems in the region, Asean states have consistently ranked relatively low in international assessments over the years, with the exception of world-leading Singapore. 
Recognising the need for improvements in human capital, 31 per cent of respondents across the six participating countries chose leadership as the skill in greatest need, while 28 per cent opted for engineering.
However, the perceived absence of leadership qualities represents a more fundamental challenge that will need to be addressed, as the region looks to cultivate a new generation of innovators that can translate ideas into sustainable wealth and job generation, OBG said.