Half of Vietnamese CEOs confident about next 12 months

A market of over 90 million people, rapid middle-income growth, and record foreign investment contribute to this sentiment.

PwC surveyed over 1,100 business leaders in 21 APEC economies in the run up to the annual APEC CEO Summit in Lima, Peru, from November 17-19.

Over half (53 per cent) of businesses in APEC’s 21 economies surveyed by PwC this year plan to increase their investments over the next 12 months despite reporting fragile confidence in prospects for revenue growth over the next year and disappointment with the pace of progress in free trade in the region.

Overall, just 28 per cent of APEC business leaders remain “very confident” about revenue growth over the next 12 months. This is the second year in a row CEOs have had such a subdued outlook. However, businesses leaders in APEC’s youthful, faster-growing economies tend to have higher levels of confidence than before.

Long term, it’s good news for APEC economies, with over two-thirds (69 per cent) of increased investment to stay within APEC economies. China, the US, Singapore and Indonesia are set to attract greater investment.

A regional diversification strategy is also apparent. On average, APEC businesses PwC surveyed invest in seven other economies. Last year, on average, they were investors in six. Almost one-third (31 per cent) of businesses plan to focus investment increases in economies outside of APEC.

This year, while more CEOs reported seeing significant progress towards the goal of free trade in Asia-Pacific than did two years ago, the majority (53 per cent) in this year’s survey continue to see progress as slow.

Executives in ASEAN economies are probably more likely to say free trade is progressing. For example, 44 per cent of CEOs in Vietnam say progress toward the goal of free trade in Asia-Pacific has been “significant” over the past year, compared with just 14 per cent of US executives and 9 per cent of executives in Japan.

At the same time, the competitive environment in APEC economies is changing. More CEOs today see the leading company in their competitive set as either a multinational based in emerging economies (18 per cent) or a regional leader in APEC economies (20 per cent). This compares with 10 per cent and 12 per cent, respectively, in 2014. The biggest competitive threat remains multinationals from developed economies.

In a warning sign for leaders in APEC economies, CEOs point to continued uncertainty around policy-related costs. Only 14 per cent of all respondents say they’ve become “more confident” that they’re able to forecast compliance costs and tax liabilities than they were at this time last year.

Respondents are more likely to rank the regulatory environment (transparent rules, lack of corruption) as the factor that matters the most in cross-border investment decisions within the region. Over half (58 per cent) expect the regulatory environment to exert “more influence” on their investment decisions in APEC economies over the next three to five years.

The findings suggest that business investment is now more likely to flow to APEC economies with the right policy environment and talent pools as well as dynamic growth prospects.

APEC businesses are also turning to wider strategies for revenue growth. CEOs report that digital upgrades throughout the enterprise are helping them target results in operational and cost efficiencies, improving the customer experience and asset optimization.

Over the next three years, the findings suggest that real-time or near real-time data collection in logistics, equipment, and point of sale devices will become ubiquitous in the region. One-third of respondents expect new sources of revenue as a result of integrating the role of connected devices in their businesses.