Despite an environment of uncertainty in politics, trade policy and movement of labor, a survey among 1,400 business leaders in the 21 countries of the Asia Pacific Economic Cooperation (APEC) region suggests they are confident of global expansion.
In the next year, a net 50 percent of businesses surveyed will increase their global investments (including those outside the APEC region), up from 43 percent last year, as APEC businesses increase their foothold and influence on the global economy. 71 percent of those surveyed who are raising investment will direct those 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. 89 percent of Malaysian CEOs and 86 percent of Vietnam CEOs expect to expand globally.
Not waiting for fog of uncertainty to clear
“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,” said Bob Moritz, global chairman of PwC, which carried out the survey.
He added, “CEOs’ concerns about restrictive trade conditions, particularly the movement of labor and goods, has to be a key area of discussion for APEC leaders at the upcoming summit as it directly impacts competition and growth. 30 percent of business leaders want APEC, as a forum, to take the lead on exploring labour 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 towards deepening economic integration. 31 percent of CEOs in the US say progress on free trade in Asia Pacific has stalled or reversed, compared to 18 percent across the region.”
In the survey almost a quarter of APEC CEOs admit they experienced a more restrictive trade environment, particularly focused around employing foreign labour (23 percent) or in moving goods across borders (19 percent).
In the near term, 30 percent expect labor restrictions to increase, and a quarter expect an increase in barriers on moving goods to increase in the next 12 months. Half of CEOs in Singapore, one of the world’s global financial centres, admit they expect an increase in barriers to labor mobility in the next 12 months.
Partnerships and bilateral ties needed to tackle changing trade policies
As a result, a majority of CEOs (71 percent) expect to rely more on business partnerships and joint ventures in response to changing trade environment, and 68 percent plan to increase business domestically, or in economies with bilateral ties.
The drive to perform on a regional level continues to increase, 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.
Biggest competitor will be from an emerging economy
19 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.
Investing in automation
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 are skilled at using new automation tools.
For ASEAN businesses, automation is high on the agenda, as the key building block in their strategy to develop a digital workforce.
Bob Moritz, adds, “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.”