Confidence among CEOs in Asia Pacific continues to get stronger, a new report by PwC finds. Forty-six percent of executives in the region now say they are “very confident” of growth in the next 12 months, up 10 points from 2012 and four points from last year, despite slowing growth in China, the economic engine for the region.
PwC’s study, “New Vision for Asia Pacific: Connectivity creating new platforms for growth,”surveyed more than 600 business leaders about prospects for business in the region. It was recently released at a meeting of the Asia Pacific Economic Cooperation (APEC) in Beijing.
The survey found that 67 percent of executives plan to increase investment in the APEC region over the next 12 months. Their plans are spread over each of the 21 APEC member economies, with China, the US, Indonesia, Hong Kong-China and Singapore the most popular destinations for investment. Vietnam ranked 7th among top 10 economies, with 45 percent CEO polled said they plan to increase investment in Vietnam.
"PwC Vietnam has been observing ongoing high levels of foreign direct investment (FDI) into the country with US$22.3 billion licensed in 2013 and US$13.7 billion licensed in the first 10 months of 2014. Investment has primarily been into the manufacturing sector since Vietnam continues to be viewed as a stable, low cost location with a plentiful supply of labour. FDI has primarily been from Asian countries/ territories such as Korea, Japan and Taiwan but we have observed increasing interest from South East Asian investors in the last 2 - 3 years. In addition, there has been an uptick in real estate investment after a long period of relative inactivity with a number of funds investing significant amounts into the country.” – says Stephen Gaskill, Advisory Partner at PwC Vietnam.
Capital spending is a part of it; 57 percent of respondents said they are either building or expanding facilities in APEC economies in the next 3 to 5 years, in which 15 percent chose to spend their capital in Vietnam, helped to rank Vietnam the 6th among top 10 of private sector capital destinations in the Asia Pacific region. Most also plan to hire: 38 percent of respondents expect headcount in their organisations globally to expand by at least 5 percent a year over the next 3-5 years.
Supporting this confidence is a vision of an Asia Pacific region that is more connected, both physically and virtually, and an outlook for more balanced regional growth. For example, nearly 60 percent of executives say they are now more willing to share insights and resources with business partners in order to speed product development and gain market access. And more than 40 percent say their company will likely enter a business combination outside of their core industry.
“Asia Pacific today stands at a turning point as advancing technologies move beyond national boundaries and create new demands and even new industries,” says Dennis M. Nally, Chairman of PricewaterhouseCoopers International Ltd. “CEOs see the need to be bold in breaking down the barriers to growth. They want to finalise the Trans-Pacific Partnership, address intellectual property issues and encourage regulatory harmony in the region.”
The survey found that data-driven changes are having an impact in the region; 57 percent of executives say they are more confident of their ability to respond to changes in the marketplace, and half say they are more skilful at forecasting demand. These executives are more likely to be “very confident” of growth (67 percent) than their peers.
“Businesses are investing in a different Asia Pacific with rising numbers of urban middle-income consumers demanding new, technologically advanced products and services from business and governments,” says Mr Nally. “In its 25th year, APEC has an ongoing and important role to play in helping to meet these demands and advancing growth throughout the region.”
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