Asia Pacific investment to continue to rise

The majority of chief executive officers (70%) say they plan to increase Asia Pacific Investment, according to PricewaterhouseCoopers International Ltd (PwC) in a new report.

Forty-two percent of CEOs in the region reported being “very confident” of revenue growth over the coming year, compared to 36% in 2012.

In this study, ‘Towards resilience and growth: Asia Pacific business in transition’, which was released at a meeting of the Asia Pacific Economic Cooperation (APEC) in Bali, Indonesia, almost five hundred business leaders were asked about their attitudes regarding doing business in the Asia Pacific region.

According to the study authors, confidence in the region is rising. Over the long term 52% of business leaders said they were “very confident” of revenue growth.

Asia Pacific investment is expected to rise for three main reasons:

  • The need for infrastructure development
  • The emergence of the local middle class
  • The progressive urbanization of most economies in the region

Dennis M. Nally, Chairman of PricewaterhouseCoopers International Ltd., said:

“Executives in the Asia Pacific region are in the midst of a major transformation taking place within the region driven by a gradual but steady rise in income and economic opportunity for millions of people. While overall confidence in growth in Asia Pacific remains undiminished, APEC economies now also face many of the uncertainties of slower growth, previously limited to the more developed markets.”

Asia Pacific investment “dark horse” pick

Business leaders were asked to pick an economy which could surprise everyone with more business opportunities than currently expected, known as a “dark horse” pick. Below are the countries they picked, in order:

  1. Indonesia
  2. Myanmar
  3. China
  4. The Philippines
  5. Viet Nam

The most cited attractive qualities included infrastructure improvement plans, political stability, natural resources, increased transparency and an expanding middle class.

The study also reported:

  • About 70% of regional CEOs welcome multiple trade discussions among APEC economies. However, 22% wonder whether they will lead to more administrative costs and uncertainty.
  • Regulatory consistency across the Asian Pacific countries would lead to further investment. Harmonization of rules regarding corporate governance and services and intellectual property rights would encourage CEOs to invest more.
  • Almost 90% of CEOs say their strategies are influenced by the expanding middle-income consumer market. Nearly half of all investment growth is focused on areas for serving the middle class.
  • The CEOs mostly agreed that developing urban transport and broadband network will boost economic growth, as will changes in regulatory and legal barriers and trade infrastructure.

Mr. Nally said “Investment prospects are looking positive across Asia Pacific. However, if governments use the APEC meeting in Bali to effectively tackle CEOs’ concerns about regulatory and legal barriers, and to speed up progress on trade negotiations, this could unleash an even greater wave of new investment and help secure CEO confidence in the region.”

APEC was established in 1989 by 12 countries. It aims to foster growth and prosperity by “facilitating economic cooperation and expanding trade and investment throughout the region. APEC’s 21 member economies today account for 55% of global GDP.”