Bangkok--25 Jan--PwC
ASEAN CEOs aren't as confident as the rest of the world
Business leaders in the region worry about revenue growth, economic outlook
• Confidence in 12-month revenue growth falls
• Nonetheless, 63% of ASEAN CEOs plan to increase the number of jobs
• Lack of skilled workers remains the biggest threat to businesses
Chief executives in South-East Asian nations are more worried about this year's prospects than their counterparts around the world, according to PwC's 20th Annual Global CEO Survey.
The PwC survey of 1,379 CEOs from 79 countries, including seven from South East Asia, revealed that only 32% of ASEAN CEOs were very confident of growing their company's revenue in the next 12 months. That's 6 points below this year's global average of 38%.
Their confidence on the global growth outlook also weakened, with just 28% expecting economic growth to increase over the next 12 months, down 11 points from last year and a point below this year's global average of 29%. Some 35% think the global economy will decline, more than double the global average of 17%.
Sira Intarakumthornchai, CEO for PwC Thailand, said that while CEOs around the world are more positive about their outlook, ASEAN business leaders have greater concerns about weak demand, a bleak export outlook and slow productivity output.
Other countries such as Spain, Mexico and Japan also saw confidence levels dropping. Japan alone saw confidence plunge to 14% from 28% in 2016.
"With the region coming under pressure from rising protectionist sentiment, ASEAN's economic outlook in 2017 remains highly uncertain," Sira said.
"Weak demand, low commodity prices and the slowdown in China's economy have all contributed to a weakening level of confidence across many ASEAN members. The continued build-up of Chinese corporate debt and renewed dollar strength should continue to add to downside risks, limiting opportunities for earnings growth.
"But even though CEOs in the region are less confident about their prospects this year, these markets have a history of surprising investors. Many businesses in ASEAN can withstand the impact of rising external risks better, and have been extremely resilient to headwinds in the past."
Sira's comments reflect growing worries about protectionism. Some 59% of CEOs globally expressed concerns about protectionism, including 64% of the CEOs in the US and Mexico.
ASEAN CEOs ranked economic uncertainty as the biggest risk to the region's policies and economy at 83%, followed by exchange rate volatility at 82% and overregulation at 78%, the 2017 PwC Survey showed.
Of business threats, 88% of ASEAN CEOs stated the availability of key skills, with changing consumer behaviour at 82% and the speed of technological change trailing at 80%.
Where ASEAN CEOs look for growth
Despite predictions of a Trump slump and the potential adverse effects of the Brexit decision, this year's survey shows that the US and the UK have become bigger priorities for more CEOs across the world.
Asked to name the top five most important countries for growth, ASEAN CEOs mentioned China (43%), the US (28%), Indonesia (22%), Vietnam (17%), and India (15%).
Similarly, city-state Singapore, Kuala Lumpur, Jakarta, New York and London were identified as the top five cities most important to overall growth prospects over the next 12 months.
The PwC survey, which was conducted in the fourth quarter of 2016, found that 63% of ASEAN CEOs expect to increase their headcount in the next 12 months, with just 13% planning to cut their workforce. This is on a par with CEOs in the UK but more than China (60%) and the global average (52%).
Looking by industry, CEOs in Asset Management (64%), Healthcare (64%) and Technology (59%) have the most ambitious hiring plans, with leaders in the Government and public sector (32%) have the least.
When asked about talent strategy, top priorities included promoting talent diversity and inclusiveness, moving talent to where it's needed, and changes in people strategy to reflect the skills and employment structures needed for the future.
Skills and jobs
A majority of CEOs globally (77%) agree that the availability of skills is a concern for the future of business practice, particularly in Asia Pacific (82%) and Africa (80%), the survey showed.
"What we're going to see is how robots and computer automation will transform the entire job sector within 10-20 years.
"In the developed world, this trend is already taking place in many fields, and so the only limitation we have is our ability to adapt, exploit, and sharpen our skills fast enough," added Sira.
More than half of the business leaders interviewed (52%) are already exploring the benefits of how humans and machines can work together, and two out five (39%) are considering the impact of artificial intelligence on future skills needs.
Because of the speed of technological change, skills in creativity and innovation, leadership, and emotional intelligence would be the most valuable for CEOs in recruiting candidates.
Digital and STEM (science, technology, engineering, and mathematics) skills are also a recruitment challenge for business leaders.
Some 57% of ASEAN CEOs believe technology has either completely reshaped or has had a significant impact on competition in their industry over the past five years alone. And 72% say it will have a major impact in the next five years.
On the flip side, they are also finding it tougher to gain and keep stakeholder's trust in this tech-driven environment. Some 63% of ASEAN CEOs have needed to address breaches of data privacy and ethics, 52% have had to deal with cyber security breaches, and 48% have encountered IT outages and disruptions.
When asked what drives growth and profitability, organic expansion topped the agenda for 82% of ASEAN CEOs, while 67% plan cost reductions and 62% eyed new strategic alliances and joint ventures.